Washington
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27-2432263
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(State or other Jurisdiction of Incorporation or Organization)
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(I.R.S. Employer Identification No.)
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3625 Del Amo Boulevard, Suite 385
Torrance, CA
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90503
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(Address of Principal Executive Offices)
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(Zip Code)
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Large accelerated filer ☐
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Accelerated filer ☐
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Non-accelerated filer ☐
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Smaller reporting company ☑
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(Do not check if a smaller reporting company)
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Page
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||
PART I. FINANCIAL INFORMATION
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||
ITEM 1
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Financial Statements
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3
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Balance sheets as of March 31, 2016 and December 31, 2015 (unaudited)
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3
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Statements of operations for the three months ended March 31, 2016 (Successor)
and the three months ended March 31, 2015 (Predecessor) (unaudited)
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4
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Statements of cash flows for the three months ended March 31, 2016 (Successor)
and the three months ended March 31, 2015 (Predecessor) (unaudited)
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5
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Notes to the Unaudited Interim Financial Statements
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6
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ITEM 2.
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Management's Discussion and Analysis of Financial Condition and
Results of Operations
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12
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ITEM 3.
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Quantitative and Qualitative Disclosures about Market Risk
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19
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ITEM 4.
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Controls and Procedures
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19
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PART II. OTHER INFORMATION
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21
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ITEM 1.
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Legal Proceedings
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21
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|
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ITEM 1A.
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Risk Factors
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21
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ITEM 2.
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Unregistered Sales of Equity Securities and Use of Proceeds
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21
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ITEM 3.
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Defaults Upon Senior Securities
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21
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ITEM 4.
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Mine Safety Disclosures
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21
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ITEM 5.
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Other Information
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21
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ITEM 6.
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Exhibits
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22
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SIGNATURES
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23
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AMERICAN BREWING COMPANY, INC.
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||||||||
BALANCE SHEETS
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||||||||
(UNAUDITED)
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||||||||
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||||||||
March 31, 2016
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December 31, 2015
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|||||||
ASSETS
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||||||||
CURRENT ASSETS:
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||||||||
Cash
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$
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151,115
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$
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43,856
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||||
Accounts receivable, net of allowance for doubtful accounts of zero and zero, respectively
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290,064
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259,619
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||||||
Inventories
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222,051
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196,220
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||||||
Prepaid expenses and other current assets
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5,562
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26,264
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||||||
Total current assets
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668,792
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525,959
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||||||
|
||||||||
Property and equipment, net of accumulated depreciation of $14,074 and $10,215, respectively
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62,477
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66,336
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||||||
Customer relationships, net of accumulated amortization of $83,333 and $62,500, respectively
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166,667
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187,500
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||||||
Goodwill
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389,014
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389,014
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||||||
Total assets
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$
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1,286,950
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$
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1,168,809
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||||
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||||||||
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
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||||||||
CURRENT LIABILITIES:
|
||||||||
Accounts payable
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$
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402,100
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$
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282,845
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||||
Factoring payable
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112,102
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110,663
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||||||
Accrued expenses and other current liabilities
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253,401
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177,589
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||||||
Total current liabilities
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767,603
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571,097
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||||||
Convertible note payable, net of unamortized discounts of $17,987and $0, respectively
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182,013
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-
|
||||||
Note payable, net of unamortized discounts of $113,947 and $121,069, respectively
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86,053
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78,931
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||||||
Related party debt, net of unamortized discounts of $34,194 and $36,331, respectively
|
25,806
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23,669
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||||||
Total liabilities
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1,061,475
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$
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673,697
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|||||
COMMITMENTS AND CONTINGENCIES
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-
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-
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||||||
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||||||||
STOCKHOLDERS' EQUITY:
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||||||||
Common stock, $0.001 par value, 50,000,000 shares authorized;
15,435,651 shares issued and outstanding |
15,436
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15,436
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||||||
Series A Preferred stock, $0.001 par value: 250,000 shares
authorized, 250,000 shares issued and outstanding |
250
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250
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||||||
Series B Preferred stock, $0.001 par value: 300,000 shares
authorized, 254,807 shares issued and outstanding |
255
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255
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||||||
Additional paid-in capital
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3,829,203
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3,811,049
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||||||
Accumulated deficit
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(3,619,669
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)
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(3,331,878
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)
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||||
Total stockholders' equity
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225,475
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495,112
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||||||
Total liabilities and stockholders' equity
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$
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1,286,950
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$
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1,168,809
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||||
AMERICAN BREWING COMPANY, INC.
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STATEMENTS OF OPERATIONS
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(UNAUDITED)
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Three months
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Three months
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|||||||
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ended
|
ended
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||||||
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March 31, 2016
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March 31, 2015
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||||||
Successor
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Predecessor
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|||||||
|
||||||||
REVENUES
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$
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588,800
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$
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576,863
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||||
Less: Cost of Good Sold
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499,481
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402,235
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||||||
GROSS PROFIT
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89,319
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174,628
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||||||
OPERATING EXPENSES:
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||||||||
Advertising, promotion and selling
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96,221
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51,516
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||||||
General and administrative
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169,610
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145,469
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||||||
Legal and professional
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81,645
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47,371
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||||||
Total operating expenses
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347,476
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244,356
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||||||
LOSS FROM OPERATIONS
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(258,157
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)
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(69,728
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)
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||||
OTHER INCOME (EXPENSE):
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||||||||
Interest expense
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(29,634
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)
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(2,294
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)
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||||
Total other income (expense)
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(29,634
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)
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(2,294
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)
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||||
NET LOSS
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$
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(287,791
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)
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$
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(72,022
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)
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||
|
||||||||
NET LOSS PER SHARE - BASIC AND DILUTED:
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$
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(0.02
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)
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|||||
WEIGHTED AVERAGE NUMBER OF COMMON SHARES
OUTSTANDING - BASIC AND DILUTED |
15,435,651
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|||||||
AMERICAN BREWING COMPANY, INC.
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STATEMENTS OF CASH FLOWS
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(UNAUDITED)
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Three months
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Three months
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|||||||
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ended
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ended
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||||||
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March 31, 2016
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March 31, 2015
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||||||
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Successor
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Predecessor
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||||||
CASH FLOWS FROM OPERATING ACTIVITIES:
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||||||||
Net loss
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$
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(287,791
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)
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$
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(72,022
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)
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||
Adjustments to reconcile net loss to net cash (used in)
provided by operating activities: |
||||||||
Depreciation
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3,859
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5,100
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||||||
Amortization of customer relationships
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20,833
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-
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||||||
Amortization of debt discounts
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9,426
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-
|
||||||
Changes in operating assets and liabilities:
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||||||||
Accounts receivable
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(30,445
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)
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(23,277
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)
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||||
Inventories
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(25,831
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)
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105,419
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|||||
Prepaid expenses and other current assets
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20,702
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5,695
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||||||
Accounts payable
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119,255
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(5,158
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)
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|||||
Accrued expenses and other current liabilities
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75,812
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3,473
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||||||
Reserve for legal settlement
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-
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5,100
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||||||
Net cash (used in) provided by operating activities
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(94,180
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)
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24,330
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|||||
CASH FLOWS FROM INVESTING ACTIVITIES:
|
||||||||
Purchases of property and equipment
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-
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(11,688
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)
|
|||||
Net cash used in investment activities
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-
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(11,688
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)
|
|||||
|
||||||||
CASH FLOWS FROM FINANCING ACTIVITIES:
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||||||||
Proceeds from convertible note payable
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200,000
|
-
|
||||||
Net factoring advances
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1,439
|
-
|
||||||
Payments on convertible notes payable to related parties
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-
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(69,000
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)
|
|||||
Repayment of notes payable and capital lease obligations
|
-
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(1,874
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)
|
|||||
Net cash provided by (used in) financing activities
|
201,439
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(70,874
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)
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|||||
|
||||||||
NET CHANGE IN CASH
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107,259
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(58,232
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)
|
|||||
CASH AT BEGINNING OF PERIOD
|
43,856
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125,312
|
||||||
CASH AT END OF PERIOD
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$
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151,115
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$
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67,080
|
||||
SUPPLEMENTAL INFORMATION:
|
||||||||
Cash paid during the period for:
|
||||||||
Interest
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$
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-
|
$
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1,861
|
||||
Income taxes
|
$
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-
|
$
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-
|
||||
|
||||||||
NONCASH INVESTING AND FINANCING ACTIVITIES:
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||||||||
Warrants issued with convertible debt
|
$
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18,154
|
$
|
-
|
|
March 31, 2016
|
December 31, 2015
|
||||||
Raw materials
|
$
|
99,105
|
$
|
46,928
|
||||
Work-in-process
|
20,192
|
5,798
|
||||||
Finished goods
|
102,754
|
143,494
|
||||||
$
|
222,051
|
$
|
196,220
|
|
March 31, 2016
|
December 31, 2015
|
||||||
Property and equipment
|
$
|
76,551
|
$
|
76,551
|
||||
Less: accumulated depreciation
|
(14,074
|
)
|
(10,215
|
)
|
||||
$
|
62,477
|
$
|
66,336
|
|
March 31, 2016
|
December 31, 2015
|
||||||
Customer relationships
|
$
|
250,000
|
$
|
250,000
|
||||
Less: accumulated amortization
|
(83,333
|
)
|
(62,500
|
)
|
||||
$
|
166,667
|
$
|
187,500
|
|
March 31, 2016
|
December 31, 2015
|
||||||
Notes payable, net of unamortized discounts of $113,947 and $121,069
|
$
|
86,053
|
$
|
78,931
|
||||
Convertible promissory note, net of unamortized discounts of $17,987 and zero
|
182,013
|
-
|
||||||
268,066
|
78,931
|
|||||||
Less: current portion
|
-
|
-
|
||||||
Long-term portion, net of unamortized discounts of $131,934 and $121,069
|
$
|
268,066
|
$
|
78,931
|
|
March 31, 2016
|
December 31, 2015
|
||||||
Related party debt, net of unamortized discounts of $34,194 and 36,331
|
$
|
25,806
|
$
|
23,669
|
||||
Less: current portion
|
-
|
-
|
||||||
Long-term portion, net of unamortized discounts of $34,194 and 36,331
|
$
|
25,806
|
$
|
23,669
|
2016
|
$
|
25,155
|
||
2017
|
34,379
|
|||
2018
|
35,410
|
|||
2019
|
15,093
|
|||
2020
|
-
|
|||
$
|
110,037
|
|
Weighted Average
|
|||||||
|
Number
|
Exercise Price
|
||||||
|
||||||||
Warrants outstanding December 31, 2015
|
1,127,000
|
$
|
0.94
|
|||||
Granted
|
100,000
|
0.40
|
||||||
Exercised
|
-
|
-
|
||||||
Forfeited
|
-
|
-
|
||||||
Warrants outstanding March 31, 2016
|
1,227,000
|
$
|
0.90
|
|||||
Warrants exercisable as of March 31, 2016
|
1,227,000
|
$
|
0.90
|
· | our plans to identify and acquire products that we believe will be prospective for acquisition and development; |
· | concentration of our customer base and fulfillment of existing customer contracts; |
· | our ability to maintain pricing; |
· | the cyclical nature of the beverage industry, in particular the Kombucha tea business; |
· | deterioration of the credit markets; |
· | our ability to raise additional capital to fund future capital expenditures; |
· | increased vulnerability to adverse economic conditions due to indebtedness; |
· | our identifying, making and integrating acquisitions; |
· | our ability to obtain raw materials and specialized equipment; |
· | technological developments or enhancements; |
· | loss of key executives; |
· | the ability to employ skilled and qualified workers; |
· | costs and liabilities associated with environmental, health and safety laws, including any changes in the interpretation or enforcement thereof; |
· | our beliefs regarding the future of our competitors; |
· | our expectation that the demand for our products will eventually increase; and |
· | our expectation that we will be able to raise capital when needed. |
|
Three months ended
March 31, 2016
Successor
|
Three months ended
March 31, 2015
Predecessor
|
||||||
Net revenues
|
$
|
588,800
|
$
|
576,863
|
||||
Cost of goods sold
|
499,481
|
402,235
|
||||||
Gross Profit
|
89,319
|
174,628
|
||||||
Operating expenses
|
347,476
|
244,356
|
||||||
Other expenses
|
29,634
|
2,294
|
||||||
Net loss
|
$
|
(287,791
|
)
|
$
|
(72,022
|
)
|
|
Three months ended
March 31, 2016
Successor
|
Three months ended
March 31, 2015
Predecessor
|
||||||
Production costs/labor/freight
|
$
|
474,789
|
$
|
397,135
|
||||
Depreciation
|
3,859
|
5,100
|
||||||
Amortization of customer relationships
|
20,833
|
-
|
||||||
Cost of goods sold
|
$
|
499,481
|
$
|
402,235
|
|
Three months ended
March 31, 2016
Successor
|
Three months ended
March 31, 2015
Predecessor
|
||||||
Advertising, promotion and selling
|
$
|
96,221
|
$
|
51,516
|
||||
General and administrative
|
169,610
|
146,469
|
||||||
Legal and professional
|
81,645
|
47,371
|
||||||
Total operating expenses
|
$
|
347,476
|
$
|
244,356
|
Increase/
(Decrease)
|
||||
Advertising, promotion and selling
|
$
|
44,705
|
||
General and administrative
|
24,141
|
|||
Legal and professional:
|
||||
Legal fees
|
(41,769
|
)
|
||
Professional fees, including audit and accounting
|
76,043
|
|||
$
|
103,120
|
|
Three months ended
March 31, 2016
Successor
|
Three months ended
March 31, 2015
Predecessor
|
||||||
Interest expense:
|
||||||||
Interest expense
|
$
|
6,551
|
$
|
2,294
|
||||
Amortization of debt discount
|
9,426
|
-
|
||||||
15,977
|
2,294
|
|||||||
Factoring interest and fees
|
13,657
|
-
|
||||||
Total other expenses
|
$
|
29,634
|
$
|
2,294
|
|
March 31, 2016
|
December 31, 2015
|
||||||
Current assets
|
$
|
668,792
|
$
|
525,959
|
||||
Less: current liabilities
|
767,603
|
571,097
|
||||||
Working capital deficiency
|
$
|
(98,811
|
)
|
$
|
(45,138
|
)
|
|
Three months ended
March 31, 2016
Successor
|
Three months ended
March 31, 2015
Predecessor
|
||||||
Net cash (used in) provided by operating activities
|
$
|
(94,180
|
)
|
$
|
24,330
|
|||
Net cash used in investing activities
|
-
|
(11,688
|
)
|
|||||
Net cash provided by (used in) financing activities
|
201,439
|
(70,874
|
)
|
|||||
Net increase (decrease) in cash
|
$
|
107,259
|
$
|
(58,232
|
)
|
(i) |
inadequate segregation of duties consistent with control objectives; and
|
(ii) | ineffective controls over period end financial disclosure and reporting processes including a lack of multiple levels of supervision and review. |
Exhibit
Number
|
Description
|
|
31.1
|
Certification of Chief Executive Officer pursuant to Section 302
|
|
31.2
|
Certification of Chief Financial Officer pursuant to Section 302
|
|
32.1
|
Certification of Chief Executive Officer pursuant to Section 906
|
|
32.2
|
Certification of Chief Financial Officer pursuant to Section 906
|
|
101.INS**
|
XBRL Instance Document
|
|
101.SCH**
|
XBRL Taxonomy Schema
|
|
101.CAL**
|
XBRL Taxonomy Calculation Linkbase
|
|
101.DEF**
|
XBRL Taxonomy Definition Linkbase
|
|
101.LAB**
|
XBRL Taxonomy Label Linkbase
|
|
101.PRE**
|
XBRL Taxonomy Presentation Linkbase
|
|
** | Furnished herewith. XBRL (eXtensible Business Reporting Language) information is furnished and not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections. |
By: /s/ Brent Willis
|
|
Brent Willis
|
|
Interim Chief Executive Officer, Interim Chief Financial Officer and Director (Principal Executive Officer)
|
|
Date: May 6, 2016
|
1.
|
I have reviewed this quarterly report on Form 10-Q of American Brewing Company, 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 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 control 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 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.
|
By: /s/ Brent Willis
|
|
Brent Willis
|
|
Interim Chief Executive Officer (Principal Executive Officer)
|
|
Date: May 6, 2016
|
1.
|
I have reviewed this quarterly report on Form 10-Q of American Brewing Company, 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 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 control 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;
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(b)
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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;
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(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
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(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 that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
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5.
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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):
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(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
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(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.
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By: /s/ Brent Willis
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Brent Willis
|
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Interim Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)
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Date: May 6, 2016
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By: /s/ Brent Willis
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Brent Willis
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Interim Chief Executive Officer (Principal Executive Officer)
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Date: May 6, 2016
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By: /s/ Brent Willis
|
|
Brent Willis
|
|
Interim Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)
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|
Date: May 6, 2016
|
Document and Entity Information - shares |
3 Months Ended | |
---|---|---|
Mar. 31, 2016 |
May. 06, 2016 |
|
Document And Entity Information | ||
Entity Registrant Name | American Brewing Company, Inc. | |
Entity Central Index Key | 0001579823 | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2016 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Is Entity a Well-known Seasoned Issuer? | No | |
Is Entity a Voluntary Filer? | No | |
Is Entity's Reporting Status Current? | Yes | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 12,280,454 | |
Document Fiscal Period Focus | Q1 | |
Document Fiscal Year Focus | 2016 |
NOTE 1 - NATURE OF OPERATIONS, BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES |
3 Months Ended |
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Mar. 31, 2016 | |
Accounting Policies [Abstract] | |
NATURE OF OPERATIONS, BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES |
NOTE 1 NATURE OF OPERATIONS, BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES
American Brewing Company, Inc. (the "Company") was formed under the laws of the State of Washington on April 26, 2010. Through September 2015, the Company was a micro-brewing company and also manufactured and sold búcha® Live Kombucha, a gluten free, organic certified, sparkling kombucha tea. The Company acquired the búcha® Live Kombucha brand and the assets related to the production and sale of it in April 2015. The búcha® Live Kombucha brand is distributed in major health and grocery chains throughout North America.
On October 1, 2015, the Company sold its assets and various liabilities related to its brewery and micro-brewing operations. The assets sold consisted of accounts receivable, inventories, prepaid assets and property and equipment. The liabilities consisted of brewing-related contracts held by the Company, liabilities related to inventory as well as lease obligations. The Company recognized the sale of its brewery and micro-brewing operations as a discontinued operation in the year ended December 31, 2015. Since October 2015, the Company is focusing exclusively on its búcha® Live Kombucha business, which produces a gluten-free, organic certified sparkling kombucha tea.
Name change
On March 30, 2016, the board of directors recommended that the Company amend its articles of incorporation to change its name from American Brewing Company, Inc. to Búcha, Inc., and to effect a change to its public stock symbol. The majority shareholders acting by majority consent approved the name change. The Company has filed the necessary state and regulatory documents to effect the name change.
Basis of Presentation
The accompanying unaudited interim financial statements as of March 31, 2016 of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP") and the rules of the Securities and Exchange Commission ("SEC"), and should be read in conjunction with the audited financial statements and notes thereto contained in the Company's Annual Report on Form 10-K for the year ended December 31, 2015 filed with the SEC on April 7, 2016. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim periods presented have been reflected herein. The results of operations for interim periods are not necessarily indicative of the results to be expected for future quarters or for the full year. Notes to the financial statements which substantially duplicate the disclosure contained in the Form 10-K have been omitted.
The accompanying financial statements have been presented on a comparative basis. For periods after the acquisition of the búcha® Live Kombucha brand (since April 1, 2015), our financial results are referred to as Successor. For periods prior to the acquisition of the búcha® Live Kombucha brand, our financial results are referred to as Predecessor. Where applicable, a black line separates the Successor and Predecessor financial information to highlight the lack of comparability between the periods.
Concentrations
Receivables arising from sales of the Company's products are not collateralized. As of March 31, 2016, three customers represented approximately 58.1% (35.6%, 12.2% and 10.3%) of accounts receivable and as of December 31, 2015, three customers represented approximately 92.8% (59.0%, 22.9% and 10.9%) of accounts receivable. For the three months ended March 31, 2016 (Successor), two customers represented approximately 60.2% (42.4% and 17.8%) of revenue. For the three months ended March 31, 2015 (Predecessor), three customers represented approximately 85.6% (30.2%, 29.4% and 26.0%) of revenue.
Accounts Receivable Factoring Arrangement with Recourse
In April 2015, the Company entered into a factoring agreement to sell, with recourse, certain receivables to an unrelated third-party financial institution. Under the terms of the factoring agreement, the Company receives an advance of 80% of qualified receivables and maximum amount of outstanding advances at any one time will not exceed $500,000. For the three months ended March 31, 2016 (Successor), the Company received additional net advances from the factoring of accounts receivable of $1,439 and recognized factoring interest and fees of $13,657. The Company pays factoring fees associated with the sale of receivables at the rate of 0.67% of the gross face value of the receivable for every ten-day period or fraction thereof from the date of the advance until the receivable is paid in full. The outstanding factoring payable as of March 31, 2016 and December 31, 2015 was $112,102 and $110,663, respectively.
Goodwill
Goodwill represents the excess of the purchase price of acquired businesses over the estimated fair value of the identifiable net assets acquired. In accordance with SFAS No. 142, Goodwill and Other Intangible Assets, goodwill and other intangibles with indefinite useful lives are not amortized but tested for impairment annually or more frequently when events or circumstances indicates that the carrying value of a reporting unit more likely than not exceeds its fair value. The goodwill impairment test is applied by performing a qualitative assessment before calculating the fair value of the reporting unit. If, on the basis of qualitative factors, it is considered not more likely than not that the fair value of the reporting unit is less than the carrying amount, further testing of goodwill for impairment would not be required. Otherwise, goodwill impairment is tested using a two-step approach.
Intangible assets are recorded at acquisition cost less accumulated amortization and impairment. Definite lived intangible assets are amortized over their estimated useful life using the straight-line method, which is determined by identifying the period over which the cash flows from the asset are expected to be generated.
Long-lived Assets
Our long-lived assets consisted of property and equipment and customer relationships and are reviewed for impairment in accordance with the guidance of the FASB Topic ASC 360, Property, Plant, and Equipment. We test for impairment losses on long-lived assets used in operations whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. Through March 31, 2016, we had not experienced impairment losses on its long-lived assets as management determined that there were no indicators that a carrying amount of the asset may not be recoverable. |
NOTE 2 - GOING CONCERN AND MANAGEMENT'S LIQUIDITY PLANS |
3 Months Ended |
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Mar. 31, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
GOING CONCERN AND MANAGEMENT'S LIQUIDITY PLANS |
NOTE 2 GOING CONCERN AND MANAGEMENT'S LIQUIDITY PLANS
The accompanying financial statements have been prepared assuming the Company will continue as a going concern, which contemplates, among other things, the realization of assets and satisfaction of liabilities in the normal course of business. The Company had an accumulated deficit of $3,619,669 and $3,331,878 as of March 31, 2016 and December 31, 2015, respectively, had net losses of $287,791 and $72,022 for the three months ended March 31, 2016 (Successor), and for the three months ended March 31, 2015 (Predecessor), respectively, and had negative working capital of $98,811 as of March 31, 2016. These matters, among others, raise substantial doubt about the Company's ability to continue as a going concern.
While the Company is attempting to increase sales and generate additional revenues, the Company's cash position may not be significant enough to support the Company's daily operations. During the three months ended March 31, 2016, the Company borrowed $200,000 in the form of a Convertible Promissory Note, which included warrants (See Note 6), however the Company needs additional financing. If the Company is unable to obtain additional financing through the issuance of debt or equity, the Company may be unable to continue as a going concern. While the Company believes in the viability of its strategy to generate additional revenues and in its ability to raise additional funds, there can be no assurances to that effect. The financial statements do not include any adjustments relating to the recoverability and classification of assets or the amounts and classifications of liabilities that may result should the Company be unable to continue as a going concern. |
NOTE 3 - INVENTORIES |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2016 | ||||||||||||||||||||||||||||||||||||||||||||||
Inventory Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||
INVENTORIES |
NOTE 3 INVENTORIES
Inventories consist of brewing materials, tea ingredients, bulk packaging and finished goods. The cost elements of work in process and finished goods inventory consist of raw materials and direct labor. Provisions for excess inventory are included in cost of goods sold and have historically been immaterial but adequate to provide for losses on its raw materials. Inventories are stated at the lower of cost, determined on the first-in, first-out basis, or market.
Inventories consisted of the following as of:
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NOTE 4 - PROPERTY AND EQUIPMENT |
3 Months Ended | ||||||||||||||||||||||||||||||||||||
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Mar. 31, 2016 | |||||||||||||||||||||||||||||||||||||
Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||
NOTE 5 - PROPERTY AND EQUIPMENT |
NOTE 4 PROPERTY AND EQUIPMENT
Property and equipment consisted of the following as of:
Depreciation expense is computed on the basis of three to five year useful lives for all property and equipment. Depreciation expense was $3,859 and $5,100 for the three months ended March 31, 2016 (Successor) and the three months ended March 31, 2015 (Predecessor), respectively. |
NOTE 5 - CUSTOMER RELATIONSHIPS |
3 Months Ended | ||||||||||||||||||||||||||||||||||||
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Mar. 31, 2016 | |||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||
CUSTOMER RELATIONSHIPS |
NOTE 5 CUSTOMER RELATIONSHIPS
Customer relationships consisted of the following as of:
Customer relationships were evaluated as part of the tangible and intangible assets acquired in the acquisition of the búcha® Live Kombucha brand and recorded at their fair market value. Amortization expense is computed on a straight-line basis of three years determined to be the useful life. Amortization expense was $20,833 and $ -0- for the three months ended March 31, 2016 (Successor) and the three months ended March 31, 2015 (Predecessor), respectively. Amortization expense is classified as cost of goods sold in the statements of operations. |
NOTE 6 - NOTES PAYABLE |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Notes to Financial Statements | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
NOTES PAYABLE AND CAPITAL LEASES |
NOTE 6 NOTES PAYABLE
Notes payable consisted of the following as of:
In March 2015, the Company borrowed $200,000. The note bears interest at 10% per annum and is due and payable beginning December 31, 2015 maturing on March 31, 2020. Payments of interest are required quarterly. Should the Company be successful in raising $2,000,000 or more in funding, then the entire balance of the note will be due immediately. The note was issued in conjunction with an equity payment totaling 176,734 shares of Series B preferred stock that was issued with the debt. The Company has allocated the loan proceeds among the debt and the stock based upon relative fair value. The relative fair value of the stock was determined to be $142,434 and was recorded as a debt discount. The discount will be amortized over the life of the loan to interest expense. As of March 31, 2016, no payment has been made on this note and the remaining balance of this note is $200,000 ($86,053 net of the unamortized discount.)
On March 19, 2016, the Company entered into a Securities Purchase Agreement with an unaffiliated third party, whereby the Company sold a Convertible Promissory Note in an amount of $200,000. The purchaser also received a three-year Warrant to purchase 100,000 shares at an exercise price of $0.40 per share. The Convertible Promissory Note is convertible after 180 days into shares of the Company's common stock at a twenty-five percent (25%) discount to the Volume Weighted Average Price for the five (5) trading days prior to the date of conversion. The Company has allocated the loan proceeds among the debt and the warrant based upon relative fair value. The relative fair value of the warrant was determined to be $18,154 and was recorded as a debt discount. The discount will be amortized over the life of the loan to interest expense. As of March 31, 2016, no payment has been made on this note and the remaining balance of this note is $200,000 ($182,013 net of the unamortized discount.) |
NOTE 7 - RELATED PARTY DEBT |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2016 | ||||||||||||||||||||||||||||||||||||||||||||||
Related Party Transactions [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||
NOTE 7 - RELATED PARTY DEBT |
NOTE 7 RELATED PARTY DEBT
Related party debt consisted of the following as of:
In March 2015, the Company borrowed $60,000 from a member of management. The note bears interest at 10% per annum and is due and payable beginning June 30, 2015 maturing on March 31, 2020. Payments of interest are required quarterly. Should the Company be successful in raising $2,000,000 or more in funding the entire balance of the note will be due immediately. The note was issued in conjunction with an equity payment totaling 53,073 shares of Series B preferred stock that was issued with the debt. The Company has allocated the loan proceeds among the debt and the stock based upon relative fair value. The relative fair value of the stock was determined to be $42,742 and was recorded as a debt discount. The discount will be amortized over the life of the loan to interest expense. As of March 31, 2016, no payment has been made on this note and the remaining balance of this note is $60,000 ($25,806 net of the unamortized discount.) |
NOTE 8 - COMMITMENTS AND CONTINGENCIES |
3 Months Ended | ||||||||||||||||||||||||||||||
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Mar. 31, 2016 | |||||||||||||||||||||||||||||||
Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||
Commitments and Contingencies |
NOTE 8 COMMITMENTS AND CONTINGENCIES
Operating Lease Commitments
In April 2015, the Company assumed a facilities lease with a third party for the manufacture of its búcha® Live Kombucha tea, which expired February 29, 2016. In September 2015, the Company extended the facilities lease for 39 months effective March 1, 2016 and expiring May 31, 2019. The monthly base rent is $2,795 for first 12 months, $2,879 for next 12 months, $2,965 for next 12 months, and $3.054 for the balance of the term. Monthly rent payments also include common area maintenance charges, taxes, and other charges.
Future minimum lease payments under this facilities lease are approximately as follows:
Rent expense was $7,589 and $6,435 for the three months ended March 31, 2016 (Successor) and the three months ended March 31, 2015 (Predecessor), respectively.
Legal
In the normal course of business, the Company may be involved in legal proceedings, claims and assessments arising in the ordinary course of business. Such matters are subject to many uncertainties, and outcomes are not predictable with assurance. There are no such matters that are deemed material to the financial statements as of March 31, 2016. |
NOTE 9 - STOCKHOLDERS' EQUITY |
3 Months Ended | |||||||||||||||||||||
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Mar. 31, 2016 | ||||||||||||||||||||||
Equity [Abstract] | ||||||||||||||||||||||
Stockholders' Equity |
NOTE 10 STOCKHOLDERS' EQUITY
Preferred Stock
The Company is authorized to issue 1,000,000 shares of preferred stock, each having a par value of $0.001, with voting, distribution, dividend and redemption rights, and liquidation preferences and conversions as designated by the board of directors.
The board of directors has designated 250,000 shares as Series A Preferred stock, par value $.001 per share ("Series A Preferred"). Each share of Series A Preferred shall have 500 votes for any election or other vote placed before the shareholders of the Company. As of September 30, 2015, 250,000 shares of Series A Preferred are issued and outstanding.
The board of directors has designated 300,000 shares as Series B Preferred stock, par value $.001 per shares ("Series B Preferred"). The Series B Preferred is non-voting, not eligible for dividends and ranks equal to common stock and below Series A preferred stock. Each share of Series B Preferred has a conversion rate into eight shares of common stock. During the nine months ended September 30, 2015, the Company issued 229,807 shares of Series B Preferred in conjunction with two promissory notes (see Notes 7 and 8). In June 2015, the Company sold 25,000 shares of Series B Preferred for $25,000 cash. As of September 30, 2015, 254,807 shares of Series B Preferred are issued and outstanding.
Common Stock
The Company is authorized to issue 50,000,000 shares of common stock, $0.001 par value. During the six months ended September 30, 2015, new issuances of shares of common stock were as follows:
As of September 30, 2015, 15,419,401 shares of common stock are issued and outstanding.
|
NOTE 10 - COMMON STOCK WARRANTS |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2016 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Notes to Financial Statements | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
COMMON STOCK WARRANTS |
NOTE 10 COMMON STOCK WARRANTS
As of March 31, 2016, the Company had warrants to purchase 1,227,000 shares of common stock outstanding, with exercise prices between $0.40 and $1.00 and expiration dates between April 2016 and October 2019. A summary of common stock warrants activity for the three months ended March 31, 2016 is as follows:
During the three months ended March 31, 2016, the Company issued a three-year Warrant to purchase 100,000 shares at an exercise price of $0.40 per share in connection with a $200,000 Convertible Promissory Note (see Note 6).
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NOTE 1 - NATURE OF OPERATIONS, BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (Policies) |
3 Months Ended |
---|---|
Mar. 31, 2016 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation
The accompanying unaudited interim financial statements as of March 31, 2016 of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP") and the rules of the Securities and Exchange Commission ("SEC"), and should be read in conjunction with the audited financial statements and notes thereto contained in the Company's Annual Report on Form 10-K for the year ended December 31, 2015 filed with the SEC on April 7, 2016. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim periods presented have been reflected herein. The results of operations for interim periods are not necessarily indicative of the results to be expected for future quarters or for the full year. Notes to the financial statements which substantially duplicate the disclosure contained in the Form 10-K have been omitted.
The accompanying financial statements have been presented on a comparative basis. For periods after the acquisition of the búcha® Live Kombucha brand (since April 1, 2015), our financial results are referred to as Successor. For periods prior to the acquisition of the búcha® Live Kombucha brand, our financial results are referred to as Predecessor. Where applicable, a black line separates the Successor and Predecessor financial information to highlight the lack of comparability between the periods. |
Concentrations | Concentrations
Receivables arising from sales of the Company's products are not collateralized. As of March 31, 2016, three customers represented approximately 58.1% (35.6%, 12.2% and 10.3%) of accounts receivable and as of December 31, 2015, three customers represented approximately 92.8% (59.0%, 22.9% and 10.9%) of accounts receivable. For the three months ended March 31, 2016 (Successor), two customers represented approximately 60.2% (42.4% and 17.8%) of revenue. For the three months ended March 31, 2015 (Predecessor), three customers represented approximately 85.6% (30.2%, 29.4% and 26.0%) of revenue. |
Accounts Receivable Factoring Arrangement with Recourse | Accounts Receivable Factoring Arrangement with Recourse
In April 2015, the Company entered into a factoring agreement to sell, with recourse, certain receivables to an unrelated third-party financial institution. Under the terms of the factoring agreement, the Company receives an advance of 80% of qualified receivables and maximum amount of outstanding advances at any one time will not exceed $500,000. For the three months ended March 31, 2016 (Successor), the Company received additional net advances from the factoring of accounts receivable of $1,439 and recognized factoring interest and fees of $13,657. The Company pays factoring fees associated with the sale of receivables at the rate of 0.67% of the gross face value of the receivable for every ten-day period or fraction thereof from the date of the advance until the receivable is paid in full. The outstanding factoring payable as of March 31, 2016 and December 31, 2015 was $112,102 and $110,663, respectively. |
Goodwill | Goodwill
Goodwill represents the excess of the purchase price of acquired businesses over the estimated fair value of the identifiable net assets acquired. In accordance with SFAS No. 142, Goodwill and Other Intangible Assets, goodwill and other intangibles with indefinite useful lives are not amortized but tested for impairment annually or more frequently when events or circumstances indicates that the carrying value of a reporting unit more likely than not exceeds its fair value. The goodwill impairment test is applied by performing a qualitative assessment before calculating the fair value of the reporting unit. If, on the basis of qualitative factors, it is considered not more likely than not that the fair value of the reporting unit is less than the carrying amount, further testing of goodwill for impairment would not be required. Otherwise, goodwill impairment is tested using a two-step approach.
Intangible assets are recorded at acquisition cost less accumulated amortization and impairment. Definite lived intangible assets are amortized over their estimated useful life using the straight-line method, which is determined by identifying the period over which the cash flows from the asset are expected to be generated. |
Long-lived Assets | Long-lived Assets
Our long-lived assets consisted of property and equipment and customer relationships and are reviewed for impairment in accordance with the guidance of the FASB Topic ASC 360, Property, Plant, and Equipment. We test for impairment losses on long-lived assets used in operations whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. Through March 31, 2016, we had not experienced impairment losses on its long-lived assets as management determined that there were no indicators that a carrying amount of the asset may not be recoverable. |
NOTE 3 - INVENTORIES (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2016 | ||||||||||||||||||||||||||||||||||||||||||||||
Inventory Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||
INVENTORIES |
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NOTE 4 - PROPERTY AND EQUIPMENT (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||
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Mar. 31, 2016 | |||||||||||||||||||||||||||||||||||||
Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||
Property and equipment |
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NOTE 5 - CUSTOMER RELATIONSHIPS (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||
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Mar. 31, 2016 | |||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||
Customer relationships |
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NOTE 6 - NOTES PAYABLE (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Notes to Financial Statements | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Notes Payable and Capital Leases |
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NOTE 7 - RELATED PARTY DEBT (Tables) |
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Mar. 31, 2016 | ||||||||||||||||||||||||||||||||||||||||||||||
Related Party Transactions [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||
Related Party debt |
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NOTE 8 - COMMITMENTS AND CONTINGENCIES (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||
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Mar. 31, 2016 | |||||||||||||||||||||||||||||||
Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||
Purchase Commitments for each year |
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NOTE 10 - COMMON STOCK WARRANTS (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2015 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Notes to Financial Statements | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A summary of common stock warrants activity |
|
NOTE 3 - INVENTORIES (Details) - USD ($) |
Mar. 31, 2016 |
Dec. 31, 2015 |
---|---|---|
Note 3 - Inventories Details | ||
Raw materials | $ 99,105 | $ 46,928 |
Work in progress | 20,192 | 5,798 |
Finished goods | 102,754 | 143,494 |
Total | $ 222,051 | $ 196,220 |
NOTE 4 - PROPERTY AND EQUIPMENT - Property and equipment (Details) - USD ($) |
Mar. 31, 2016 |
Dec. 31, 2015 |
---|---|---|
Property, Plant and Equipment [Abstract] | ||
Property and equipment | $ 76,551 | $ 76,551 |
Less: accumulated depreciation | (14,074) | (10,215) |
Value after accumulated depreciation | $ 62,477 | $ 66,336 |
NOTE 5 - CUSTOMER RELATIONSHIPS - Customer relationships (Details) - USD ($) |
Mar. 31, 2016 |
Dec. 31, 2015 |
---|---|---|
Segment Reporting [Abstract] | ||
Customer relationships | $ 250,000 | $ 250,000 |
Less: accumulated amortization | (83,333) | (62,500) |
Customer relationships, accumulated amortization | $ (166,667) | $ (187,500) |
NOTE 6 - NOTES PAYABLE (Details) - USD ($) |
Mar. 31, 2016 |
Dec. 31, 2015 |
---|---|---|
Note 6 - Notes Payable Details | ||
Notes payable, net of unamortized discounts of $128,191 | $ 86,053 | $ 78,931 |
Capital lease obligations | 182,013 | |
Subtotal | $ 268,066 | $ 78,931 |
Less current portion, net of unamortized discounts of $40,690 and $0, respectively | ||
Long-term portion, net of unamortized discounts of $185,176 and $0, respectively | $ 268,066 | $ 78,931 |
NOTE 7 - RELATED PARTY DEBT - Related Party debt (Details) - USD ($) |
Mar. 31, 2016 |
Dec. 31, 2015 |
---|---|---|
Related Party Transactions [Abstract] | ||
Related party debt, net of unamortized discounts of $34,194 and 36,331 | $ 25,806 | $ 23,669 |
Less: current portion | ||
Long-term portion, net of unamortized discounts of $34,194 and 36,331 | $ 25,806 | $ 23,669 |
NOTE 2 GOING CONCERN AND MANAGEMENT'S LIQUIDITY PLANS (Details Narrative) - USD ($) |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2016 |
Mar. 31, 2015 |
Dec. 31, 2015 |
|
Accumulated deficit | $ (3,619,669) | $ (3,331,878) | |
Working Capital | 98,811 | ||
Successor [Member] | |||
Net loss | $ (287,791) | ||
Predecessor [Member] | |||
Net loss | $ (72,022) |
NOTE 4 - PROPERTY AND EQUIPMENT (Details Narrative) - USD ($) |
3 Months Ended | |
---|---|---|
Mar. 31, 2016 |
Mar. 31, 2015 |
|
Successor [Member] | ||
Depreciation expense | $ 3,859 | |
Predecessor [Member] | ||
Depreciation expense | $ 5,100 |
NOTE 7 - RELATED PARTY DEBT (Details Narrative) - USD ($) |
3 Months Ended | |
---|---|---|
Mar. 31, 2015 |
Mar. 31, 2016 |
|
Related Party Transactions [Abstract] | ||
Promissory Note for cash amount | $ 60,000 | |
Interest rate on promissory note | 10.00% | |
First payment due date | Mar. 31, 2015 | |
Loan maturity date | Mar. 31, 2020 | |
Amount to be raised that will make the entire balance of the note due immediately | $ 2,000,000 | |
Number of Series B preferred sshares equity payment issued with debt | 53,073 | |
The relative fair value of the Series B preferred stock recorded as debt discount | $ 42,742 | |
Remaining balance of this note | $ 60,000 | |
Net of the unamortized discount | $ 25,806 |
Disclosure - NOTE 8 - COMMITMENTS AND CONTINGENCIES (Details Narrative) |
Dec. 31, 2015
USD ($)
|
---|---|
Disclosure - Note 8 - Commitments And Contingencies Details Narrative | |
2016 | $ 25,155 |
2017 | 34,379 |
2018 | 35,410 |
2019 | $ 15,093 |
2020 | |
Total | $ 110,037 |
Disclosure - NOTE 8 - COMMITMENTS AND CONTINGENCIES (Details Narrative2) - USD ($) |
3 Months Ended | |
---|---|---|
Mar. 31, 2016 |
Mar. 31, 2015 |
|
Successor [Member] | ||
Rent Expense | $ 7,589 | |
Predecessor [Member] | ||
Rent Expense | $ 6,435 |
Disclosure - NOTE 9 - STOCKHOLDERS' EQUITY (Details Narrative) - $ / shares |
3 Months Ended | |
---|---|---|
Mar. 31, 2016 |
Dec. 31, 2015 |
|
Preferred stock terms of conversion |
Preferred Stock
The Company is authorized to issue 1,000,000 shares of preferred stock, each having a par value of $0.001, with voting, distribution, dividend and redemption rights, and liquidation preferences and conversions as designated by the board of directors. The board of directors has designated 250,000 shares as Series A Preferred stock, par value $.001 per share ("Series A Preferred"). Each share of Series A Preferred shall have 500 votes for any election or other vote placed before the shareholders of the Company. As of March 31, 2016, 250,000 shares of Series A Preferred are issued and outstanding. The board of directors has designated 300,000 shares as Series B Preferred stock, par value $.001 per shares ("Series B Preferred"). The Series B Preferred is non-voting, not eligible for dividends and ranks equal to common stock and below Series A preferred stock. Each share of Series B Preferred has a conversion rate into eight shares of common stock. As of March 31, 2016, 254,807 shares of Series B Preferred are issued and outstanding. |
|
Preferred Shares authorized to be Issued | 250,000 | 250,000 |
Par Value | $ 0.001 | $ 0.001 |
Common stock issuance and terms of conversion |
Common Stock
There were no new issuances of common stock during the three months ended March 31, 2016. As of March 31, 2016, 15,435,651 shares of common stock are issued and outstanding. |
|
Number of common shares authorized to issue | 50,000,000 | |
Series A Preferred Stock [Member] | ||
Preferred Shares authorized to be Issued | 250,000 | |
Par Value | $ 0.001 | |
Series B Preferred Stock [Member] | ||
Preferred Shares authorized to be Issued | 300,000 | |
Par Value | $ 0.001 |
NOTE 10 - COMMON STOCK WARRANTS (Details Narrative) - $ / shares |
3 Months Ended | |
---|---|---|
Mar. 31, 2016 |
Mar. 31, 2015 |
|
Shares | ||
Outstanding, Beginning Balance | 1,127,000 | 0.94 |
Granted | 100,000 | 0.40 |
Outstanding, Ending Balance | 1,127,000 | 0.90 |
Weighted Average Exercise Price | ||
Outstanding, Ending Balance | $ 1,127,000 | $ 0.90 |
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