UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2016
or
¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number: 33-131110-NY
| Regional Brands Inc. |
| (Exact name of registrant as specified in its charter) |
| DELAWARE | 22-1895668 |
| (State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
| 6060 Parkland Boulevard Cleveland, Ohio |
44124 |
| (Address of principal executive offices) | (Zip Code) |
| (216) 825-4000 |
| (Registrant’s telephone number, including area code) |
| (Former name, former address and former fiscal year, if changed since last report) |
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 x 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 (Section 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 ¨ No x
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 ¨ (Do not check if a smaller reporting company) | Smaller reporting company x |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes x No ¨
As of August 10, 2016, the issuer had 380,032 outstanding shares of common stock.
Regional Brands Inc.
TABLE OF CONTENTS
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PART I - FINANCIAL INFORMATION
REGIONAL BRANDS INC.
(Formerly 4net Software, Inc.)
CONDENSED BALANCE SHEETS
| June 30, 2016 (Unaudited) | September 30, 2015 (Audited) | |||||||
| ASSETS | ||||||||
| CURRENT ASSETS | ||||||||
| Cash | $ | 3,781,361 | $ | 1,495 | ||||
| Investments | 927,729 | — | ||||||
| TOTAL ASSETS | $ | 4,709,090 | $ | 1,495 | ||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY/DEFICIT | ||||||||
| CURRENT LIABILITIES | ||||||||
| Accounts payable and accrued expenses | $ | — | $ | 3,206 | ||||
| Related party note and interest payable | — | 234,934 | ||||||
| TOTAL LIABILITIES | $ | — | $ | 238,140 | ||||
| COMMITMENTS AND CONTINGENCIES | — | — | ||||||
| STOCKHOLDERS’ EQUITY/DEFICIT | ||||||||
| Preferred stock, $.01 par value; authorized - 5,000,000 shares - issued and outstanding - none | — | — | ||||||
| Common stock, $.00001 par value; authorized - 50,000,000 shares - issued and outstanding – 379,702 on June 30, 2016 and 9,261 on September 30, 2015 ** | 4 | 1 | ||||||
| Capital in excess of par value | 8,207,402 | 3,198,347 | ||||||
| Accumulated deficit | (3,493,929 | ) | (3,434,993 | ) | ||||
| Accumulated other comprehensive loss | (4,387 | ) | — | |||||
| TOTAL STOCKHOLDERS’ EQUITY/DEFICIT | 4,709,090 | (236,645 | ) | |||||
| TOTAL LIABILITIES & STOCKHOLDERS’ EQUITY/DEFICIT | $ | 4,709,090 | $ | 1,495 | ||||
** The capital accounts of the Company have been restated to reflect the 1 for 1,000 reverse stock split which was effective in July 2016. See Note 10 for further discussion.
See accompanying notes to these unaudited condensed financial statements.
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REGIONAL BRANDS INC.
(Formerly 4net Software, Inc.)
CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
| Three Months Ended June 30, | Nine Months Ended June 30, | |||||||||||||||
| 2016 | 2015 | 2016 | 2015 | |||||||||||||
| REVENUES | $ | — | $ | — | $ | — | $ | — | ||||||||
| OPERATING EXPENSES | ||||||||||||||||
| General and Administrative | 54,180 | 5,039 | 64,590 | 15,938 | ||||||||||||
| TOTAL OPERATING EXPENSES | (54,180 | ) | (5,039 | ) | (64,590 | ) | (15,938 | ) | ||||||||
| LOSS FROM OPERATIONS | (54,180 | ) | (5,039 | ) | (64,590 | ) | (15,938 | ) | ||||||||
| Other income | 10,766 | -- | 11,431 | -- | ||||||||||||
| Interest income/(expense), net | 3,348 | (4,184 | ) | (5,777 | ) | (11,878 | ) | |||||||||
| OTHER INCOME/(EXPENSE) | $ | 14,114 | $ | (4,184 | ) | $ | 5,654 | $ | (11,878 | ) | ||||||
| NET LOSS | $ | (40,066 | ) | $ | (9,223 | ) | $ | (58,936 | ) | $ | (27,816 | ) | ||||
| OTHER COMPREHENSIVE LOSS | ||||||||||||||||
| Unrealized loss on investments | (4,387 | ) | -- | (4,387 | ) | -- | ||||||||||
| Comprehensive loss | (44,453 | ) | (9,223 | ) | (63,323 | ) | (27,816 | ) | ||||||||
| WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING-Basic and Diluted ** | 351,206 | 9,261 | 122,827 | 9,261 | ||||||||||||
| NET LOSS PER COMMON SHARE - Basic and Diluted ** | $ | (.11 | ) | $ | (1.00 | ) | $ | (.48 | ) | $ | (3.00 | ) | ||||
** The capital accounts of the Company have been restated to reflect the 1 for 1,000 reverse stock split which was effective in July 2016. See Note 10 for further discussion.
See accompanying notes to these unaudited condensed financial statements.
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REGIONAL BRANDS INC.
(Formerly 4net Software, Inc.)
CONDENSED STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED JUNE 30, 2016 AND 2015
(Unaudited)
| 2016 | 2015 | |||||||
| OPERATING ACTIVITIES | ||||||||
| Net loss | $ | (58,936 | ) | $ | (27,816 | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Changes in assets and liabilities: | ||||||||
| Increase in accounts payable and accrued expenses | 4,259 | 2,378 | ||||||
| Issuance of stock options | 9,058 | — | ||||||
| Net Cash Used in Operating Activities | (45,619 | ) | (25,438 | ) | ||||
| INVESTING ACTIVITIES | ||||||||
| Purchase of investment securities | (932,115 | ) | — | |||||
| Net Cash Used in Investing Activities | (932,115 | ) | — | |||||
| FINANCING ACTIVITIES | ||||||||
| Proceeds from related party note payable | 7,600 | 27,900 | ||||||
| Proceeds from issuance of stock | 4,750,000 | — | ||||||
| Net Cash Provided by Financing Activities | 4,757,600 | 27,900 | ||||||
| Net Increase in Cash | 3,779,866 | 2,462 | ||||||
| CASH - BEGINNING OF PERIOD | 1,495 | 1,489 | ||||||
| CASH - END OF PERIOD | $ | 3,781,361 | $ | 3,951 | ||||
| SUPPLEMENTAL INFORMATION FOR STATEMENTS OF CASH FLOWS | ||||||||
| Conversion of notes payable – related party to common stock | $ | 251,660 | ||||||
| Cash paid for taxes | $ | - | $ | - | ||||
| Cash paid for interest | $ | - | $ | - | ||||
See accompanying notes to these unaudited condensed financial statements.
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REGIONAL BRANDS, INC.
(Formerly 4net Software, Inc.)
Notes To Unaudited Condensed Financial Statements
NOTE 1 – DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION AND BUSINESS ACTIVITY – Regional Brands Inc. (Formerly 4net Software, Inc.) (the “Company”) was incorporated under the laws of the State of Delaware in 1986. The Company is pursuing a business strategy whereby the Company is seeking to engage in acquisition, merger or other business combination transactions (each, a “Transaction”) with undervalued businesses (a “Target Company”) with a history of operating revenues in markets that provide opportunities for growth. The Company is currently engaged in identifying, investigating and, if investigation warrants, entering into a Transaction with one or more Target Companies that will enhance the Company’s revenues and increase shareholder value. The Company utilizes several criteria to evaluate Target Companies, including whether the Target Company: (1) is an established business with viable services or products, (2) has an experienced and qualified management team, (3) has opportunities for growth and/or expansion into other markets, (4) is accretive to earnings, (5) offers the opportunity to achieve and/or enhance profitability, and (6) increases shareholder value.
The accompanying condensed interim financial statements of the Company are unaudited. In the opinion of management, the interim data includes all adjustments (consisting only of normal recurring adjustments) necessary for a fair presentation of the results for the interim period. The results of operations for the three months and nine months ended June 30, 2016 are not necessarily indicative of the operating results for the entire year.
The unaudited condensed interim financial statements included herein are prepared pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosure normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to such rules and regulations. In the opinion of management, the disclosures made are adequate to make the information not misleading. These unaudited condensed interim financial statements should be read in conjunction with the financial statements and notes included in the Company’s Form 10-K for the year ended September 30, 2015.
USE OF ESTIMATES - The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
NOTE 2 - CONCENTRATIONS
The Company had amounts in excess of $250,000 in a single bank during the year. Amounts over $250,000 are not insured by the Federal Deposit Insurance Corporation. These balances fluctuate during the year and can exceed this $250,000 limit. Management regularly monitors the financial institution, together with its cash balances, in an effort to keep this potential risk to a minimum.
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NOTE 3 - CONTROL
As of March 31, 2016, Mr. Bronson beneficially owned 5,800,210 shares of the Company’s common stock (pre reverse stock split), par value $0.00001 (the “Common Stock”). Mr. Bronson’s beneficial ownership represented approximately 62.65% of the Company’s issued and outstanding shares of Common Stock. Accordingly, Mr. Bronson had effective control of the Company. Effective as of April 8, 2016, there was a change of control of the Company from Steven N. Bronson to Merlin Partners LP and Ancora Catalyst Fund LP, as more fully described in Note 8 below. Accordingly, Merlin Partners LP and Ancora Catalyst Fund LP, affiliates of Ancora Advisors, LLC, are able to elect all of the Company’s directors and otherwise direct the affairs of the Company.
NOTE 4 – INVESTMENTS
Investments are classified as available for sale. Accordingly, the investments are carried at fair value with unrealized gains and losses reported separately in other comprehensive income (loss). Realized gains and losses are calculated using the original cost of those investments. During the three months ended June 30, 2016, the Company purchased 18,400 GDL FD cumulative Preferred Series B Shares for approximately $932,000.
The valuation of such stock is based on quoted prices (unadjusted) and as a result the investments are classified within Level 1 of the fair-value hierarchy.
NOTE 5 – ASSETS AND LIABILITIES MEASURED AT FAIR VALUE
Money Market Funds
The table below presents the Company's assets and liabilities measured at fair value on a recurring basis as of June 30, 2016, aggregated by the level in the fair value hierarchy within which those measurements fall.
Assets and Liabilities Measured at Fair Value on a Recurring Basis at June 30, 2016:
| Assets | Level 1 | Level 2 | Level 3 | Balance at June 30, 2016 | ||||||||||||
| Marketable Equity Securities | $ | 927,729 | $ | — | $ | — | $ | 927,729 | ||||||||
| Money Market and CD Funds | $ | 3,781,085 | $ | — | $ | — | $ | 3,781,085 | ||||||||
The Company does not have any fair value measurements within Level 2 or Level 3 of the fair value hierarchy as of June 30, 2016.
NOTE 6 – STOCK OPTIONS
The Company accounts for stock-based compensation by recognizing the fair value of the compensation cost for all stock awards over their respective service periods, which are generally equal to the vesting period. This compensation cost is determined using option pricing models intended to estimate the fair value of the awards at the date of grant using the Black-Scholes option-pricing model. An offsetting increase to stockholders' equity is recorded equal to the amount of the compensation expense charge.
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On April 8, 2016, in connection with the transactions contemplated by the SPA (as defined in Note 8 below), the Company adopted the 2016 Equity Incentive Plan (the “Equity Incentive Plan”). The maximum number of shares of Common Stock available for issuance under the Equity Incentive Plan is 135,000,000 (pre reverse stock split) shares of Common Stock. On April 8, 2016, under the Equity Incentive Plan and pursuant to the SPA, the Company granted options to purchase 23,737,615 (pre reverse stock split) shares of Common Stock to Ancora Advisors, LLC and options to purchase 9,351,232 (pre reverse stock split) shares of Common Stock to each of Messrs. Hopkins, Anderson and Bronson. The options vest in sixty (60) equal monthly installments and expire fifteen (15) years from the date of grant. As of June 30, 2016, the Company recorded stock compensation expense of approximately $9,000.
On May 16, 2016, Mr. Bronson resigned as a director of the Company. The unvested portion of Mr. Bronson’s options were terminated upon his resignation as a director.
The number of shares of Common Stock underlying, and the exercise price of, the Company’s outstanding stock options have been appropriately adjusted to reflect the Reverse Split (as defined below).
NOTE 7 - RELATED PARTY TRANSACTIONS
Since February 3, 2009, the Company’s former president and principal executive officer had loaned the Company money to fund working capital needs to pay operating expenses. The loans were repayable upon demand and accrued interest at the rate of 10% per annum. As of March 31, 2016, the aggregate principal loan balance amounted to $186,196 and such loans had accrued interest of $65,464 through March 31, 2016. On April 8, 2016, pursuant to the SPA, the Company issued to Mr. Bronson 18,522,034 (pre reverse stock split) shares of the Company’s Common Stock in full satisfaction for Mr. Bronson’s loans to the Company.
On April 8, 2016, in connection with the transactions contemplated by the SPA, the Company entered into a Management Services Agreement (the “MSA”) with Ancora Advisors, LLC, whereby Ancora Advisors, LLC agreed to provide specified services to the Company in exchange for a quarterly management fee in an amount equal to 0.14323% of the Company’s shareholders’ equity (excluding cash and cash equivalents) as shown on the Company’s balance sheet as of the end of each fiscal quarter of the Company. The management fee with respect to each fiscal quarter of the Company is paid no later than 10 days following the issuance of the Company’s financial statements for such fiscal quarter, and in any event no later than 60 days following the end of each fiscal quarter. Ancora Advisors, LLC has agreed to waive payment of the management fee until such time as the Company consummates a Transaction.
Prior to May 12, 2016, the Company occupied a portion of the offices occupied by BKF Capital Group, Inc., 31248 Oak Crest Drive, Suite 110, Westlake Village, California 91361 on a month to month basis for a fee of $50 per month paid to BKF Capital Group, Inc. Steven N. Bronson, the Company’s former Chairman and CEO, is also the Chairman, CEO and controlling shareholder of BKF Capital Group, Inc.
Effective May 12, 2016, the Company relocated its principal offices to 6060 Parkland Boulevard, Cleveland, OH 44124. The Company pays no rent for the use of the offices, which are located at the corporate headquarters of Ancora Advisors, LLC.
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NOTE 8 – COMMON STOCK
On April 8, 2016, the Company entered into and closed a Securities Purchase Agreement (the “SPA”) among the Company and Merlin Partners LP, Ancora Catalyst Fund LP, and Steven N. Bronson (collectively the “Purchasers”), whereby the Company sold to the Purchasers the aggregate amount of 370,440,680 shares of Common Stock (pre reverse stock split) for the aggregate purchase price of $5,000,000 (including the cancellation of all indebtedness that had been loaned to the Company by Mr. Bronson to fund operating expenses). In connection with the SPA, the Company changed its name from 4Net Software, Inc. to Regional Brands Inc. The transactions contemplated by the SPA resulted in a change of control of the Company from Steven N. Bronson to Merlin Partners LP, which purchased 240,786,442 (pre reverse stock split) shares of Common Stock of the Company for the aggregate purchase price of $3,250,000.00, and Ancora Catalyst Fund LP, which purchased 92,610,170 (pre reverse stock split) shares of Common Stock of the Company for the aggregate purchase price of $1,250,000.00. As a result of Merlin Partners LP’s and Ancora Catalyst Fund LP’s purchase of Common Stock from the Company pursuant to the SPA, Merlin Partners LP and Ancora Catalyst Fund LP collectively beneficially own approximately 87.8% of the total issued and outstanding shares of Common Stock of the Company. Merlin Partners LP and Ancora Catalyst Fund LP are affiliates of Ancora Advisors, LLC.
Pursuant to the terms of the SPA, effective April 8, 2016 Leonard Hagan resigned as a director on the Company’s Board of Directors, and Brian Hopkins and Jeff Anderson were appointed as directors. Additionally, Steven N. Bronson resigned as the Company’s Chairman of the Board, Chief Executive Officer and President and Brian Hopkins was appointed as Chairman of the Board, Chief Executive Office and President. Messrs. Hopkins and Anderson are affiliated with Ancora Advisors, LLC.
NOTE 9 - NEW ACCOUNTING STANDARDS
In August 2014, the Financial Accounting Standards Board issued Accounting Standards Update No. 2014-15 (“ASU 2014-15”), Presentation of Financial Statements-Going Concern (Subtopic 205-40) – Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern. ASU 2014-15 requires a Company’s management to evaluate, at each reporting period, whether there are conditions or events that raise substantial doubt about the entity’s ability to continue as a going concern within one year after the date the financial statements are issued and provide related disclosures. ASU 2014-15 is effective for the annual period ending after December 15, 2016, and for annual periods and interim periods thereafter. The Company is currently evaluating the impact of the adoption of ASU 2014-15 on its consolidated financial statements.
NOTE 10 – SUBSEQUENT EVENT
On July 22, 2016, the Company filed a certificate of amendment (the “Amendment”) to the Company’s Certificate of Incorporation with the Delaware Secretary of State to effect a 1-for-1,000 reverse stock split (the “Reverse Split”) of the Company’s issued and outstanding Common Stock and to reduce the number of shares of Common Stock the Company is authorized to issue from 750,000,000 to 50,000,000 shares. The Reverse Split became effective on July 26, 2016 (the “Effective Time”). The Amendment, including the Reverse Split, was approved by the Board of Directors of the Company and the holders of a majority of the issued and outstanding shares of Common Stock by written consent in lieu of a meeting.
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As a result of the Reverse Split, at the Effective Time, every 1,000 shares of the Company’s issued and outstanding Common Stock were automatically combined and reclassified into one (1) share of Common Stock. The Company rounded up any fractional shares, on account of the Reverse Split, to the nearest whole share of Common Stock. The reverse stock split has been retroactively reflected to the financial statements as of June 30, 2016 and 2015, respectively.
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
Forward Looking Statements Disclosure
This report on Form 10-Q contains, in addition to historical information, forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 (the “Exchange Act”). You can identify these forward-looking statements when you see words such as “expect,” “anticipate”, “estimate,” “may,” “plans,” “believe,” and other similar expressions. These statements are not guarantees of future performance and are subject to certain risks, uncertainties and assumptions that are difficult to predict. Actual results could differ materially from those projected in the forward-looking statements. Factors that could cause such a difference include, but are not limited to, those discussed in the section entitled “Factors Affecting Operating Results and Market Price of Stock,” contained in the Company’s Annual Report on Form 10-K for the year ended September 30, 2015. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. We undertake no obligation to update any forward -looking statements.
The following discussion and analysis provides information which management of Regional Brands Inc. (the “Company”) believes to be relevant to an assessment and understanding of the Company’s results of operations and financial condition. This discussion should be read together with the Company’s financial statements and the notes to financial statements, which are included in this report, as well as the Company’s Annual Report on Form 10-K for the year ended September 30, 2015.
Regional Brands’ Business Strategy
The Company is pursuing a business strategy whereby the Company is seeking to engage in acquisition, merger or other business combination transactions (each, a “Transaction”) with undervalued businesses (a “Target Company”) with a history of operating revenues in markets that provide opportunities for growth. The Company is currently engaged in identifying, investigating and, if investigation warrants, entering into a Transaction with one or more Target Companies that will enhance the Company’s revenues and increase shareholder value. The Company utilizes several criteria to evaluate Target Companies, including whether the Target Company: (1) is an established business with viable services or products, (2) has an experienced and qualified management team, (3) has opportunities for growth and/or expansion into other markets, (4) is accretive to earnings, (5) offers the opportunity to achieve and/or enhance profitability, and (6) increases shareholder value.
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In some cases, management of the Company will have the authority to effect Transactions without submitting the proposal to the stockholders for their consideration. In some instances, however, a proposed Transaction may be submitted to the stockholders for their consideration, either voluntarily by the Board of Directors to seek the stockholders’ advice and consent, or because of a requirement of applicable law to do so.
Management believes that the successful implementation of the Company’s business strategy will allow the Company to increase revenues and earnings and achieve profitability. There can be no assurances, however, that the Company will successfully complete any additional acquisitions or that the Company will achieve profitability.
Results of Operations
For the three months ended June 30, 2016 and 2015, the Company had no revenue. Operating expenses for the three months ended June 30, 2016 and 2015 were $54,180 and $5,039, respectively. The increase in operating expenses is primarily related to professional fees in connection with the SPA and related transactions. Interest expense for the three months ended June 30, 2016 and 2015 was $0 and $4,184, respectively. The decrease was primarily due to the satisfaction of outstanding loans made by the Company’s former Chairman, CEO and President in exchange for the issuance of Common Stock pursuant to the SPA. The Company had interest income of $3,348 for the three months ended June 30, 2016 from money market accounts and certificate of deposits. In addition, the Company had other income of $10,766 for the three months ended June 30, 2016, which primarily relates to dividend income from investment in equity securities
For the nine months ended June 30, 2016 and 2015, the Company had no revenue. Operating expenses for the nine months ended June 30, 2016 and 2015 were $64,590 and $15,938, respectively. The increase in operating expenses is primarily related to professional fees in connection with the SPA and related transactions. Interest expense for the nine months ended June 30, 2016 and 2015 was $9,125 and $11,878, respectively. The decrease was primarily due to the satisfaction of outstanding loans made by the Company’s former Chairman, CEO and President in exchange for the issuance of Common Stock pursuant to the SPA. The Company had interest income of $3,348 for the nine months ended June 30, 2016 from money market accounts and certificate of deposits. In addition, the Company had other income of $11,431 for the nine months ended June 30, 2016, which primarily relates to dividend income from investment in equity securities.
Liquidity and Capital Resources
During the nine months ended June 30, 2016, the Company satisfied its working capital needs from cash on hand and the loans extended by the Company’s former Chairman, CEO and President to enable the Company to pay its expenses. As of June 30, 2016, the Company had a cash balance of $3,781,361, primarily due to the Company’s receipt of $4,750,000 of gross proceeds from the sale of Common Stock pursuant to the SPA.
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Item 4. Controls and Procedures
Disclosure controls and procedures are controls and other procedures that are designed to provide reasonable assurances that information required to be disclosed by the Company in its periodic reports filed or submitted by the Company under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to provide reasonable assurances that information required to be disclosed by the Company in its periodic reports that are filed or submitted under the Exchange Act is accumulated and communicated to the Company’s management, including our Principal Executive and Principal Financial Officer, as appropriate to allow timely decisions regarding required disclosure.
Evaluation of disclosure and controls and procedures.
As of the end of the period covered by this report, the Company carried out an evaluation, under the supervision and with the participation of management including our Principal Executive and Principal Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act). Based on the evaluation, the Company’s Principal Executive and Principal Financial Officer has concluded that the Company’s disclosure controls and procedures as of June 30, 2016 was not effective because of the identification of material weakness described below:
| · | We did not have an adequate process or appropriate controls in place to support the accurate and timely reporting of our financial results and disclosures in our Form 10-Q. As a result, errors were identified primarily related to stock splits and their accounting treatment. Accordingly, we believe we have a material weakness because there is a reasonable possibility that a material misstatement to the interim or annual financial statements would not be prevented or detected on a timely basis. |
Changes in internal control over financial reporting.
There were no changes in the Company’s internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
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During the quarter ended June 30, 2016, the Company was not a party to any material legal proceedings.
a. Exhibits
The following exhibits are hereby filed or furnished as part of this Quarterly Report on Form 10-Q or incorporated herein by reference.
|
Exhibit |
Description of Document | |
| 31* | Written Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |
| 32** | Written Certification Pursuant to 18 U.S.C. Section 1350. | |
| 101.INS* | XBRL Instance Document | |
| 101.SCH* | 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 |
* Filed herewith.
** Furnished herewith.
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.
| Dated: August 15, 2016 | Regional Brands Inc. | |
| By: |
/s/ BRIAN HOPKINS | |
| Brian Hopkins, Chairman, CEO and President | ||
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EXHIBIT INDEX
|
Exhibit |
Description of Document | |
| 31 | Written Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |
| 32 | Written Certification Pursuant to 18 U.S.C. Section 1350. | |
| 101.INS | XBRL Instance Document | |
| 101.SCH | 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 |
| 14 |
Exhibit 31
Certification Pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002
By Principal Executive and Principal Financial Officer
I, Brian Hopkins, certify that:
1. I have reviewed this Quarterly Report on Form 10-Q for the quarter ended June 30, 2016 of Regional Brands 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 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 (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(s) 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.
| Dated: August 15, 2016 | |
|
/s/ Brian Hopkins | |
| Brian Hopkins, Principal Executive and Principal Financial Officer |
Exhibit 32
Written Certification
Pursuant to 18 U.S.C. Section 1350
Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned hereby certifies in his capacity as Principal Executive and Principal Financial Officer of Regional Brands Inc. (the “Company”) that
| (a) | the Quarterly Report of the Company on Form 10-Q for the period ended June 30, 2016 fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934, and |
| (b) | the information contained in such report fairly presents, in all material respects, the financial condition of the Company at the end of such period and the results of operations of the Company for such period. |
| Dated: August 15, 2016 | |
|
/s/ Brian Hopkins | |
| Brian Hopkins, Principal Executive and Principal Financial Officer |
Document And Entity Information - shares |
9 Months Ended | |
|---|---|---|
Jun. 30, 2016 |
Aug. 10, 2016 |
|
| Document Information [Line Items] | ||
| Document Type | 10-Q | |
| Amendment Flag | false | |
| Document Period End Date | Jun. 30, 2016 | |
| Document Fiscal Year Focus | 2016 | |
| Document Fiscal Period Focus | Q3 | |
| Entity Registrant Name | Regional Brands Inc. | |
| Entity Central Index Key | 0000812149 | |
| Current Fiscal Year End Date | --09-30 | |
| Entity Filer Category | Smaller Reporting Company | |
| Trading Symbol | RGBDD | |
| Entity Common Stock, Shares Outstanding | 380,032 |
CONDENSED BALANCE SHEETS [Parenthetical] - $ / shares |
Jun. 30, 2016 |
Sep. 30, 2015 |
|---|---|---|
| Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
| Preferred stock, shares authorized | 5,000,000 | 5,000,000 |
| Preferred stock, shares issued | 0 | 0 |
| Preferred stock, shares outstanding | 0 | 0 |
| Common stock, par value (in dollars per share) | $ 0.00001 | $ 0.00001 |
| Common stock, shares authorized | 50,000,000 | 50,000,000 |
| Common stock, shares issued | 379,702 | 9,261 |
| Common stock, shares, outstanding | 379,702 | 9,261 |
CONDENSED STATEMENTS OF OPERATIONS - USD ($) |
3 Months Ended | 9 Months Ended | |||||
|---|---|---|---|---|---|---|---|
Jun. 30, 2016 |
Jun. 30, 2015 |
Jun. 30, 2016 |
Jun. 30, 2015 |
||||
| REVENUES | $ 0 | $ 0 | $ 0 | $ 0 | |||
| OPERATING EXPENSES | |||||||
| General and Administrative | 54,180 | 5,039 | 64,590 | 15,938 | |||
| TOTAL OPERATING EXPENSES | (54,180) | (5,039) | (64,590) | (15,938) | |||
| LOSS FROM OPERATIONS | (54,180) | (5,039) | (64,590) | (15,938) | |||
| Other income | 10,766 | 0 | 11,431 | 0 | |||
| Interest income/(expense), net | 3,348 | (4,184) | (5,777) | (11,878) | |||
| OTHER INCOME/(EXPENSE) | 14,114 | (4,184) | 5,654 | (11,878) | |||
| NET LOSS | (40,066) | (9,223) | (58,936) | (27,816) | |||
| OTHER COMPREHENSIVE LOSS | |||||||
| Unrealized loss on investments | (4,387) | 0 | (4,387) | 0 | |||
| Comprehensive loss | $ (44,453) | $ (9,223) | $ (63,323) | $ (27,816) | |||
| WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING-Basic and Diluted | [1] | 351,206 | 9,261 | 122,827 | 9,261 | ||
| NET LOSS PER COMMON SHARE - Basic and Diluted | [1] | $ (0.11) | $ (1.00) | $ (0.48) | $ (3.00) | ||
| |||||||
CONDENSED STATEMENTS OF CASH FLOWS - USD ($) |
9 Months Ended | |
|---|---|---|
Jun. 30, 2016 |
Jun. 30, 2015 |
|
| OPERATING ACTIVITIES | ||
| Net loss | $ (58,936) | $ (27,816) |
| Changes in assets and liabilities: | ||
| Increase in accounts payable and accrued expenses | 4,259 | 2,378 |
| Issuance of stock options | 9,058 | 0 |
| Net Cash Used in Operating Activities | (45,619) | (25,438) |
| INVESTING ACTIVITIES | ||
| Purchase of investment securities | (932,115) | 0 |
| Net Cash Used in Investing Activities | (932,115) | 0 |
| FINANCING ACTIVITIES | ||
| Proceeds from related party note payable | 7,600 | 27,900 |
| Proceeds from issuance of stock | 4,750,000 | 0 |
| Net Cash Provided by Financing Activities | 4,757,600 | 27,900 |
| Net Increase in Cash | 3,779,866 | 2,462 |
| CASH - BEGINNING OF PERIOD | 1,495 | 1,489 |
| CASH - END OF PERIOD | 3,781,361 | 3,951 |
| SUPPLEMENTAL INFORMATION FOR STATEMENTS OF CASH FLOWS | ||
| Conversion of notes payable - related party to common stock | 251,660 | 0 |
| Cash paid for taxes | 0 | 0 |
| Cash paid for interest | $ 0 | $ 0 |
DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
9 Months Ended | |
|---|---|---|
Jun. 30, 2016 | ||
| Accounting Policies [Abstract] | ||
| Significant Accounting Policies [Text Block] | NOTE 1 – DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ORGANIZATION AND BUSINESS ACTIVITY – Regional Brands Inc. (Formerly 4net Software, Inc.) (the “Company”) was incorporated under the laws of the State of Delaware in 1986. The Company is pursuing a business strategy whereby the Company is seeking to engage in acquisition, merger or other business combination transactions (each, a “Transaction”) with undervalued businesses (a “Target Company”) with a history of operating revenues in markets that provide opportunities for growth. The Company is currently engaged in identifying, investigating and, if investigation warrants, entering into a Transaction with one or more Target Companies that will enhance the Company’s revenues and increase shareholder value. The Company utilizes several criteria to evaluate Target Companies, including whether the Target Company: (1) is an established business with viable services or products, (2) has an experienced and qualified management team, (3) has opportunities for growth and/or expansion into other markets, (4) is accretive to earnings, (5) offers the opportunity to achieve and/or enhance profitability, and (6) increases shareholder value. The accompanying condensed interim financial statements of the Company are unaudited. In the opinion of management, the interim data includes all adjustments (consisting only of normal recurring adjustments) necessary for a fair presentation of the results for the interim period. The results of operations for the three months and nine months ended June 30, 2016 are not necessarily indicative of the operating results for the entire year. The unaudited condensed interim financial statements included herein are prepared pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosure normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to such rules and regulations. In the opinion of management, the disclosures made are adequate to make the information not misleading. These unaudited condensed interim financial statements should be read in conjunction with the financial statements and notes included in the Company’s Form 10-K for the year ended September 30, 2015. USE OF ESTIMATES - The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. |
CONCENTRATIONS |
9 Months Ended | |
|---|---|---|
Jun. 30, 2016 | ||
| Risks and Uncertainties [Abstract] | ||
| Concentration Risk Disclosure [Text Block] | NOTE 2 - CONCENTRATIONS The Company had amounts in excess of $250,000 in a single bank during the year. Amounts over $250,000 are not insured by the Federal Deposit Insurance Corporation. These balances fluctuate during the year and can exceed this $250,000 limit. Management regularly monitors the financial institution, together with its cash balances, in an effort to keep this potential risk to a minimum. |
CONTROL |
9 Months Ended | |
|---|---|---|
Jun. 30, 2016 | ||
| Stockholders' Equity Note [Abstract] | ||
| Members' Equity Notes Disclosure [Text Block] | NOTE 3 - CONTROL As of March 31, 2016, Mr. Bronson beneficially owned 5,800,210 shares of the Company’s common stock (pre reverse stock split), par value $0.00001 (the “Common Stock”). Mr. Bronson’s beneficial ownership represented approximately 62.65% of the Company’s issued and outstanding shares of Common Stock. Accordingly, Mr. Bronson had effective control of the Company. Effective as of April 8, 2016, there was a change of control of the Company from Steven N. Bronson to Merlin Partners LP and Ancora Catalyst Fund LP, as more fully described in Note 8 below. Accordingly, Merlin Partners LP and Ancora Catalyst Fund LP, affiliates of Ancora Advisors, LLC, are able to elect all of the Company’s directors and otherwise direct the affairs of the Company. |
INVESTMENTS |
9 Months Ended | |
|---|---|---|
Jun. 30, 2016 | ||
| Investments, Debt and Equity Securities [Abstract] | ||
| Investments in Debt and Marketable Equity Securities (and Certain Trading Assets) Disclosure [Text Block] | NOTE 4 – INVESTMENTS Investments are classified as available for sale. Accordingly, the investments are carried at fair value with unrealized gains and losses reported separately in other comprehensive income (loss). Realized gains and losses are calculated using the original cost of those investments. During the three months ended June 30, 2016, the Company purchased 18,400 GDL FD cumulative Preferred Series B Shares for approximately $932,000. The valuation of such stock is based on quoted prices (unadjusted) and as a result the investments are classified within Level 1 of the fair-value hierarchy. |
ASSETS AND LIABILITIES MEASURED AT FAIR VALUE |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2016 | ||||||||||||||||||||||||||||||||||||||||||||
| Fair Value Disclosures [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||
| Fair Value, Measurement Inputs, Disclosure [Text Block] | NOTE 5 – ASSETS AND LIABILITIES MEASURED AT FAIR VALUE Money Market Funds The table below presents the Company's assets and liabilities measured at fair value on a recurring basis as of June 30, 2016, aggregated by the level in the fair value hierarchy within which those measurements fall. Assets and Liabilities Measured at Fair Value on a Recurring Basis at June 30, 2016:
The Company does not have any fair value measurements within Level 2 or Level 3 of the fair value hierarchy as of June 30, 2016. |
|||||||||||||||||||||||||||||||||||||||||||
STOCK OPTIONS |
9 Months Ended | |
|---|---|---|
Jun. 30, 2016 | ||
| Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||
| Disclosure of Compensation Related Costs, Share-based Payments [Text Block] | NOTE 6 – STOCK OPTIONS The Company accounts for stock-based compensation by recognizing the fair value of the compensation cost for all stock awards over their respective service periods, which are generally equal to the vesting period. This compensation cost is determined using option pricing models intended to estimate the fair value of the awards at the date of grant using the Black-Scholes option-pricing model. An offsetting increase to stockholders' equity is recorded equal to the amount of the compensation expense charge. On April 8, 2016, in connection with the transactions contemplated by the SPA (as defined in Note 8 below), the Company adopted the 2016 Equity Incentive Plan (the “Equity Incentive Plan”). The maximum number of shares of Common Stock available for issuance under the Equity Incentive Plan is 135,000,000 (pre reverse stock split) shares of Common Stock. On April 8, 2016, under the Equity Incentive Plan and pursuant to the SPA, the Company granted options to purchase 23,737,615 (pre reverse stock split) shares of Common Stock to Ancora Advisors, LLC and options to purchase 9,351,232 (pre reverse stock split) shares of Common Stock to each of Messrs. Hopkins, Anderson and Bronson. The options vest in sixty (60) equal monthly installments and expire fifteen (15) years from the date of grant. As of June 30, 2016, the Company recorded stock compensation expense of approximately $9,000. On May 16, 2016, Mr. Bronson resigned as a director of the Company. The unvested portion of Mr. Bronson’s options were terminated upon his resignation as a director. The number of shares of Common Stock underlying, and the exercise price of, the Company’s outstanding stock options have been appropriately adjusted to reflect the Reverse Split (as defined below). |
RELATED PARTY TRANSACTIONS |
9 Months Ended | |
|---|---|---|
Jun. 30, 2016 | ||
| Related Party Transactions [Abstract] | ||
| Related Party Transactions Disclosure [Text Block] | NOTE 7 - RELATED PARTY TRANSACTIONS Since February 3, 2009, the Company’s former president and principal executive officer had loaned the Company money to fund working capital needs to pay operating expenses. The loans were repayable upon demand and accrued interest at the rate of 10% per annum. As of March 31, 2016, the aggregate principal loan balance amounted to $186,196 and such loans had accrued interest of $65,464 through March 31, 2016. On April 8, 2016, pursuant to the SPA, the Company issued to Mr. Bronson 18,522,034 (pre reverse stock split) shares of the Company’s Common Stock in full satisfaction for Mr. Bronson’s loans to the Company. On April 8, 2016, in connection with the transactions contemplated by the SPA, the Company entered into a Management Services Agreement (the “MSA”) with Ancora Advisors, LLC, whereby Ancora Advisors, LLC agreed to provide specified services to the Company in exchange for a quarterly management fee in an amount equal to 0.14323% of the Company’s shareholders’ equity (excluding cash and cash equivalents) as shown on the Company’s balance sheet as of the end of each fiscal quarter of the Company. The management fee with respect to each fiscal quarter of the Company is paid no later than 10 days following the issuance of the Company’s financial statements for such fiscal quarter, and in any event no later than 60 days following the end of each fiscal quarter. Ancora Advisors, LLC has agreed to waive payment of the management fee until such time as the Company consummates a Transaction. Prior to May 12, 2016, the Company occupied a portion of the offices occupied by BKF Capital Group, Inc., 31248 Oak Crest Drive, Suite 110, Westlake Village, California 91361 on a month to month basis for a fee of $50 per month paid to BKF Capital Group, Inc. Steven N. Bronson, the Company’s former Chairman and CEO, is also the Chairman, CEO and controlling shareholder of BKF Capital Group, Inc. Effective May 12, 2016, the Company relocated its principal offices to 6060 Parkland Boulevard, Cleveland, OH 44124. The Company pays no rent for the use of the offices, which are located at the corporate headquarters of Ancora Advisors, LLC. |
COMMON STOCK |
9 Months Ended | |
|---|---|---|
Jun. 30, 2016 | ||
| Equity [Abstract] | ||
| Stockholders' Equity Note Disclosure [Text Block] | NOTE 8 – COMMON STOCK On April 8, 2016, the Company entered into and closed a Securities Purchase Agreement (the “SPA”) among the Company and Merlin Partners LP, Ancora Catalyst Fund LP, and Steven N. Bronson (collectively the “Purchasers”), whereby the Company sold to the Purchasers the aggregate amount of 370,440,680 shares of Common Stock (pre reverse stock split) for the aggregate purchase price of $5,000,000 (including the cancellation of all indebtedness that had been loaned to the Company by Mr. Bronson to fund operating expenses). In connection with the SPA, the Company changed its name from 4Net Software, Inc. to Regional Brands Inc. The transactions contemplated by the SPA resulted in a change of control of the Company from Steven N. Bronson to Merlin Partners LP, which purchased 240,786,442 (pre reverse stock split) shares of Common Stock of the Company for the aggregate purchase price of $3,250,000.00, and Ancora Catalyst Fund LP, which purchased 92,610,170 (pre reverse stock split) shares of Common Stock of the Company for the aggregate purchase price of $1,250,000.00. As a result of Merlin Partners LP’s and Ancora Catalyst Fund LP’s purchase of Common Stock from the Company pursuant to the SPA, Merlin Partners LP and Ancora Catalyst Fund LP collectively beneficially own approximately 87.8% of the total issued and outstanding shares of Common Stock of the Company. Merlin Partners LP and Ancora Catalyst Fund LP are affiliates of Ancora Advisors, LLC. Pursuant to the terms of the SPA, effective April 8, 2016 Leonard Hagan resigned as a director on the Company’s Board of Directors, and Brian Hopkins and Jeff Anderson were appointed as directors. Additionally, Steven N. Bronson resigned as the Company’s Chairman of the Board, Chief Executive Officer and President and Brian Hopkins was appointed as Chairman of the Board, Chief Executive Office and President. Messrs. Hopkins and Anderson are affiliated with Ancora Advisors, LLC. |
NEW ACCOUNTING STANDARDS |
9 Months Ended | |
|---|---|---|
Jun. 30, 2016 | ||
| Accounting Changes and Error Corrections [Abstract] | ||
| New Accounting Pronouncements and Changes in Accounting Principles [Text Block] | NOTE 9 - NEW ACCOUNTING STANDARDS In August 2014, the Financial Accounting Standards Board issued Accounting Standards Update No. 2014-15 (“ASU 2014-15”), Presentation of Financial Statements-Going Concern (Subtopic 205-40) – Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern. ASU 2014-15 requires a Company’s management to evaluate, at each reporting period, whether there are conditions or events that raise substantial doubt about the entity’s ability to continue as a going concern within one year after the date the financial statements are issued and provide related disclosures. ASU 2014-15 is effective for the annual period ending after December 15, 2016, and for annual periods and interim periods thereafter. The Company is currently evaluating the impact of the adoption of ASU 2014-15 on its consolidated financial statements. |
SUBSEQUENT EVENT |
9 Months Ended | |
|---|---|---|
Jun. 30, 2016 | ||
| Subsequent Events [Abstract] | ||
| Subsequent Events [Text Block] | NOTE 10 – SUBSEQUENT EVENT On July 22, 2016, the Company filed a certificate of amendment (the “Amendment”) to the Company’s Certificate of Incorporation with the Delaware Secretary of State to effect a 1-for-1,000 reverse stock split (the “Reverse Split”) of the Company’s issued and outstanding Common Stock and to reduce the number of shares of Common Stock the Company is authorized to issue from 750,000,000 to 50,000,000 shares. The Reverse Split became effective on July 26, 2016 (the “Effective Time”). The Amendment, including the Reverse Split, was approved by the Board of Directors of the Company and the holders of a majority of the issued and outstanding shares of Common Stock by written consent in lieu of a meeting. As a result of the Reverse Split, at the Effective Time, every 1,000 shares of the Company’s issued and outstanding Common Stock were automatically combined and reclassified into one (1) share of Common Stock. The Company rounded up any fractional shares, on account of the Reverse Split, to the nearest whole share of Common Stock. The reverse stock split has been retroactively reflected to the financial statements as of June 30, 2016 and 2015, respectively. |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) |
9 Months Ended | |
|---|---|---|
Jun. 30, 2016 | ||
| Accounting Policies [Abstract] | ||
| Organization And Business Activities Policy [Policy Text Block] | ORGANIZATION AND BUSINESS ACTIVITY – Regional Brands Inc. (Formerly 4net Software, Inc.) (the “Company”) was incorporated under the laws of the State of Delaware in 1986. The Company is pursuing a business strategy whereby the Company is seeking to engage in acquisition, merger or other business combination transactions (each, a “Transaction”) with undervalued businesses (a “Target Company”) with a history of operating revenues in markets that provide opportunities for growth. The Company is currently engaged in identifying, investigating and, if investigation warrants, entering into a Transaction with one or more Target Companies that will enhance the Company’s revenues and increase shareholder value. The Company utilizes several criteria to evaluate Target Companies, including whether the Target Company: (1) is an established business with viable services or products, (2) has an experienced and qualified management team, (3) has opportunities for growth and/or expansion into other markets, (4) is accretive to earnings, (5) offers the opportunity to achieve and/or enhance profitability, and (6) increases shareholder value. The accompanying condensed interim financial statements of the Company are unaudited. In the opinion of management, the interim data includes all adjustments (consisting only of normal recurring adjustments) necessary for a fair presentation of the results for the interim period. The results of operations for the three months and nine months ended June 30, 2016 are not necessarily indicative of the operating results for the entire year. The unaudited condensed interim financial statements included herein are prepared pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosure normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to such rules and regulations. In the opinion of management, the disclosures made are adequate to make the information not misleading. These unaudited condensed interim financial statements should be read in conjunction with the financial statements and notes included in the Company’s Form 10-K for the year ended September 30, 2015. |
|
| Use of Estimates, Policy [Policy Text Block] | USE OF ESTIMATES - The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. |
ASSETS AND LIABILITIES MEASURED AT FAIR VALUE (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2016 | ||||||||||||||||||||||||||||||||||||||||||||
| Fair Value Disclosures [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis [Table Text Block] | Assets and Liabilities Measured at Fair Value on a Recurring Basis at June 30, 2016:
|
|||||||||||||||||||||||||||||||||||||||||||
CONCENTRATIONS (Details Textual) |
Jun. 30, 2016
USD ($)
|
|---|---|
| Compensating Balances [Line Items] | |
| Cash, FDIC Insured Amount | $ 250,000 |
CONTROL (Details Textual) - $ / shares |
Jun. 30, 2016 |
Mar. 31, 2016 |
Sep. 30, 2015 |
|---|---|---|---|
| Control [Line Items] | |||
| Common Stock, Shares Issued | 379,702 | 9,261 | |
| Common Stock, Par Or Stated Value Per Share | $ 0.00001 | $ 0.00001 | |
| Majority Shareholder [Member] | |||
| Control [Line Items] | |||
| Common Stock, Shares Issued | 5,800,210 | ||
| Beneficial Ownership Percentage | 62.65% | ||
| Common Stock, Par Or Stated Value Per Share | $ 0.00001 |
INVESTMENTS (Details Textual) - Series B Preferred Stock [Member] |
3 Months Ended |
|---|---|
|
Jun. 30, 2016
USD ($)
shares
| |
| Schedule of Available-for-sale Securities [Line Items] | |
| Number Of Equity, Shares Purchased | shares | 18,400 |
| Payments to Acquire Available-for-sale Securities, Equity | $ | $ 932,000 |
ASSETS AND LIABILITIES MEASURED AT FAIR VALUE (Details) |
Jun. 30, 2016
USD ($)
|
|---|---|
| Equity Securities [Member] | |
| Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
| Assets, Fair Value Disclosure | $ 927,729 |
| Equity Securities [Member] | Fair Value, Inputs, Level 1 [Member] | |
| Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
| Assets, Fair Value Disclosure | 927,729 |
| Equity Securities [Member] | Fair Value, Inputs, Level 2 [Member] | |
| Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
| Assets, Fair Value Disclosure | 0 |
| Equity Securities [Member] | Fair Value, Inputs, Level 3 [Member] | |
| Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
| Assets, Fair Value Disclosure | 0 |
| Money Market Funds [Member] | |
| Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
| Assets, Fair Value Disclosure | 3,781,085 |
| Money Market Funds [Member] | Fair Value, Inputs, Level 1 [Member] | |
| Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
| Assets, Fair Value Disclosure | 3,781,085 |
| Money Market Funds [Member] | Fair Value, Inputs, Level 2 [Member] | |
| Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
| Assets, Fair Value Disclosure | 0 |
| Money Market Funds [Member] | Fair Value, Inputs, Level 3 [Member] | |
| Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
| Assets, Fair Value Disclosure | $ 0 |
STOCK OPTIONS (Details Textual) - USD ($) |
3 Months Ended | |
|---|---|---|
Apr. 08, 2016 |
Jun. 30, 2016 |
|
| Anderson [Member] | ||
| Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross | 9,351,232 | |
| Bronson [Member] | ||
| Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross | 9,351,232 | |
| Equity Incentive Plan 2016 [Member] | ||
| Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized | 135,000,000 | |
| Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period | 60 months | |
| Share-based Compensation Arrangement by Share-based Payment Award, Expiration Period | 15 years | |
| Share-based Compensation | $ 9,000 | |
| Equity Incentive Plan 2016 [Member] | Ancora Advisors, LLC [Member] | ||
| Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross | 23,737,615 | |
| Equity Incentive Plan 2016 [Member] | Hopkins [Member] | ||
| Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross | 9,351,232 |
RELATED PARTY TRANSACTIONS (Details Textual) - USD ($) |
6 Months Ended | |
|---|---|---|
Apr. 08, 2016 |
Mar. 31, 2016 |
|
| Related Party Transaction [Line Items] | ||
| Operating Leases, Rent Expense | $ 50 | |
| Related party transaction Management fee percentage | 0.14323% | |
| Management [Member] | ||
| Related Party Transaction [Line Items] | ||
| Related Party Transaction, Rate | 10.00% | |
| Notes Payable Related Parties Classified Current Excluding Interest | $ 186,196 | |
| Accrued Interest Related Party Current | $ 65,464 | |
| Mr. Bronson [Member] | ||
| Related Party Transaction [Line Items] | ||
| Debt Conversion, Converted Instrument, Shares Issued | 18,522,034 |
COMMON STOCK (Details Textual) |
Apr. 08, 2016
USD ($)
shares
|
|---|---|
| Merlin Partners LP and Ancora Catalyst Fund LP [Member] | Beneficial Owner [Member] | |
| Class of Stock [Line Items] | |
| Equity Method Investment, Ownership Percentage | 87.80% |
| Securities Purchase Agreement [Member] | |
| Class of Stock [Line Items] | |
| Stock Issued During Period, Shares, New Issues | shares | 370,440,680 |
| Stock Issued During Period, Value, New Issues | $ | $ 5,000,000 |
| Securities Purchase Agreement [Member] | Merlin Partners LP [Member] | |
| Class of Stock [Line Items] | |
| Stock Issued During Period, Shares, New Issues | shares | 240,786,442 |
| Stock Issued During Period, Value, New Issues | $ | $ 3,250,000 |
| Securities Purchase Agreement [Member] | Ancora Catalyst Fund LP [Member] | |
| Class of Stock [Line Items] | |
| Stock Issued During Period, Shares, New Issues | shares | 92,610,170 |
| Stock Issued During Period, Value, New Issues | $ | $ 1,250,000 |
SUBSEQUENT EVENT (Details Textual) - shares |
1 Months Ended | ||
|---|---|---|---|
Jul. 22, 2016 |
Jun. 30, 2016 |
Sep. 30, 2015 |
|
| Subsequent Event [Line Items] | |||
| Common Stock, Shares Authorized | 50,000,000 | 50,000,000 | |
| Subsequent Event [Member] | |||
| Subsequent Event [Line Items] | |||
| Stockholders' Equity, Reverse Stock Split | effect a 1-for-1,000 | ||
| Stockholders' Equity Note, Changes in Capital Structure, Retroactive Impact | As a result of the Reverse Split, at the Effective Time, every 1,000 shares of the Companys issued and outstanding Common Stock were automatically combined and reclassified into one (1) share of Common Stock | ||
| Subsequent Event [Member] | Maximum [Member] | |||
| Subsequent Event [Line Items] | |||
| Common Stock, Shares Authorized | 750,000,000 | ||
| Subsequent Event [Member] | Minimum [Member] | |||
| Subsequent Event [Line Items] | |||
| Common Stock, Shares Authorized | 50,000,000 |
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