UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2014
[ ] 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: 000-54584
Pacific Ventures Group, Inc.
(Exact name of registrant as specified in its charter)
Delaware
75-2100622
State or other jurisdiction of
(I.R.S. Employer Identification No.)
incorporation or organization
200 Camelia Court, Vero Beach, Florida
32963
(Address of principal executive offices)
(Zip Code)
Registrant’s telephone number, including area code: (772) 231-1244
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
None N/A
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $0.001 par value
(Title of class)
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Yes [ ]
No [X]
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act.
Yes [ ]
No [X]
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 (§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 [X]
No [ ]
Indicate by check mark if disclosure of delinquent filers in response to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [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.
Large Accelerated filer ¨
Accelerated filer
¨
Non-accelerated filer ¨ (Do not check if a smaller
Smaller reporting company x
reporting company)
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).
Yes [X]
No [ ]
State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked prices of such common equity, as of the last business day of the registrant’s most recently completed second fiscal quarter: $29,440 as of June 30, 2014.
As of March 19, 2015, the registrant had 384,031 shares of common stock issued and outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
None.
FORM 10-K
FOR THE YEAR ENDED DECEMBER 31, 2014
INDEX
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| Page |
| Part I |
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| Item 1. |
| Business | 3 |
| Item 1A. |
| Risk Factors | 4 |
| Item 1B. |
| Unresolved Staff Comments | 4 |
| Item 2. |
| Properties | 4 |
| Item 3. |
| Legal Proceedings | 4 |
| Item 4. |
| Mine Safety Disclosures | 4 |
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| Part II |
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| Item 5. |
| Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities | 4 |
| Item 6. |
| Selected Financial Data | 5 |
| Item 7. |
| Management’s Discussion and Analysis of Financial Condition and Results of Operations | 6 |
| Item 7A. |
| Quantitative and Qualitative Disclosures About Market Risk | 11 |
| Item 8. |
| Financial Statements and Supplementary Data | 11 |
| Item 9. |
| Changes in and Disagreements with Accountants on Accounting and Financial Disclosure | 11 |
| Item 9A. |
| Controls and Procedures | 12 |
| Item 9B. |
| Other Information | 13 |
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| Part III |
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| Item 10. |
| Directors, Executive Officers and Corporate Governance | 13 |
| Item 11. |
| Executive Compensation | 14 |
| Item 12. |
| Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters | 16 |
| Item 13. |
| Certain Relationships and Related Transactions, and Director Independence | 18 |
| Item 14. |
| Principal Accountant Fees and Services | 18 |
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| Part IV |
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| Item 15. |
| Exhibits and Financial Statement Schedules | 19 |
| Signatures |
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| 21 |
1
FORWARD-LOOKING STATEMENTS
This report contains forward-looking statements. The Securities and Exchange Commission (the “Commission”) encourages companies to disclose forward-looking information so that investors can better understand a company’s future prospects and make informed investment decisions. This report and other written and oral statements that we make from time to time contain such forward-looking statements that set out anticipated results based on management’s plans and assumptions regarding future events or performance. We have tried, wherever possible, to identify such statements by using words such as “anticipate,” “estimate,” “expect,” “project,” “intend,” “plan,” “believe,” “will” and similar expressions in connection with any discussion of future operating or financial performance. In particular, these include statements relating to future actions, future performance or results of current and anticipated sales efforts, expenses, the outcome of contingencies, such as legal proceedings, and financial results.
We caution that the factors described herein and other factors could cause our actual results of operations and financial condition to differ materially from those expressed in any forward-looking statements we make and that investors should not place undue reliance on any such forward-looking statements. Further, any forward-looking statement speaks only as of the date on which such statement is made, and we undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date on which such statement is made or to reflect the occurrence of anticipated or unanticipated events or circumstances. New factors emerge from time to time, and it is not possible for us to predict all of such factors. Further, we cannot assess the impact of each such factor on our results of operations or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements.
2
PART I
ITEM 1. BUSINESS
BUSINESS
Organization and Corporate History
Pacific Ventures Group, Inc. (“Pacific Ventures” or the “Company”) was incorporated under the laws of the State of Delaware on October 3, 1986. Pacific Ventures operated as an insurance holding company that, through its subsidiaries, marketed and underwrote specialized property and casualty coverage in the general aviation insurance marketplace. Historically, the Company’s business had been organized into three divisions. In 1997, after selling several of its divisions, the Company’s remaining insurance operations were placed into receivership and the Company ceased operating its insurance business. Since the Company terminated its business operations, management has been focused on settling debts and closing outstanding operations.
Since the termination of its prior business, the Company has had no operations other than seeking an acquisition or merger to bring an operating entity into the Company. The Company does not propose to restrict its search for a business opportunity to any particular industry or geographical area and may, therefore, engage in essentially any business in any industry. The Company has unrestricted discretion in seeking and participating in a business opportunity, subject to the availability of such opportunities, economic conditions, and other factors.
The selection of a business opportunity in which to participate is complex and risky. Additionally, the Company has only limited resources and may find it difficult to locate good opportunities. There can be no assurance that the Company will be able to identify and acquire any business opportunity which will ultimately prove to be beneficial to the Company and its stockholders. The Company will select any potential business opportunity based on management’s business judgment.
Currently, the Company is in the process of investigating potential business ventures which, in the opinion of management, will provide a source of eventual profit to the Company. Such involvement may take many forms, including the acquisition of an existing business or the acquisition of assets to establish subsidiary businesses. At this time, the Company’s management has been focused on investigating whether there are merger and acquisition activities in certain targeted industries. To this end, management has focused on the medical and “green” energy industries. These efforts have been focused on discussions with management in these industries and research.
The Company is not currently conducting any business, nor has it conducted any business for several years. Therefore, it does not possess products or services, distribution methods, competitive business positions, or major customers. The Company does not possess any unexpired patents or trademarks and any and all of its licensing and royalty agreements from the
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insurance it sought to market in the past have since expired, and are not currently valid. The Company does not employ any employees.
The activities of the Company are subject to several significant risks which arise primarily as a result of the fact that the Company has no specific business and may acquire or participate in a business opportunity based on the decision of management which potentially could act without the consent, vote, or approval of the Company’s stockholders. The risks faced by the Company are further increased as a result of its lack of resources and its inability to provide a prospective business opportunity with significant capital.
ITEM 1A. RISK FACTORS
Not required for smaller reporting companies.
ITEM 1B. UNRESOLVED STAFF COMMENTS
None.
ITEM 2. PROPERTIES
The Company owns no properties and utilizes space on a rent-free basis from Brett Bertolami, the Company’s sole officer and director. This arrangement is expected to continue until such time as the Company becomes involved in a business venture which necessitates its relocation, as to which no assurances can be given. The Company has no agreements with respect to the maintenance or future acquisition of office facilities, however, if a successful merger/acquisition is negotiated, it is anticipated that the office of the Company will be moved to that of the acquired company.
ITEM 3. LEGAL PROCEEDINGS
We are not presently a party to any material litigation, nor to the knowledge of management is any litigation threatened against us that may materially affect us.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
PART II
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
The Company’s Common Stock is quoted on the OTCQB, under the symbol “PACV.”
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Quarter Ended
High Bid
Low Bid
December 31, 2014
$0.55
$0.21
September 30, 2014
$1.25
$0.35
June 30, 2014
$0.85
$0.51
March 31, 2014
$1.00
$0.30
December 31, 2013
$0.30
$0.30
September 30, 2013
$0.75
$0.30
June 30, 2013
$0.75
$0.30
March 31, 2013
$0.50
$0.30
The Company’s Common Stock is traded sporadically and has a very limited volume so the prices reflected above may not be indicative of actual prices if volume were to increase. All prices listed herein reflect inter-dealer prices, without retail mark-up, mark-down or commissions and may not represent actual transactions with retail customers.
Since its inception, the Company has not paid any dividends on its Common Stock, and the Company does not anticipate that it will pay dividends in the foreseeable future.
At March 19, 2015, the Company had approximately 230 stockholders of record and 384,031 shares of its Common Stock issued and outstanding.
Recent Sales of Unregistered Securities
None.
ITEM 6. SELECTED FINANCIAL DATA
Summary of Financial Information
The Company had no revenues in 2014 or 2013. We had a net loss of $16,297 for the year ended December 31, 2014. At December 31, 2014, we had cash and cash equivalents of $0 and a working capital of $(22,626).
The following table shows selected summarized financial data for the Company at the dates and for the periods indicated. The data should be read in conjunction with the financial statements and notes included herein beginning on page F-1.
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STATEMENT OF OPERATIONS DATA:
|
| For the Year Ended December 31, 2014 | For the Year Ended December 31, 2013 |
| Revenues | $ - | $ - |
| General and Administrative Expenses | 16,118 | 17,037 |
| Net Loss | (16,297) | (17,501) |
| Basic Income (Loss) per Share | (.04) | (.06) |
| Weighted Average Number of Shares Outstanding | 384,031 | 284,031 |
| BALANCE SHEET DATA: |
|
|
|
| December 31, 2014 | December 31, 2013 |
| Total Current Assets | $ - | $ 7 |
| Total Assets | - | 7 |
| Total Current Liabilities | 22,626 | 6,336 |
| Working Capital | (22,626) | (6,329) |
| Stockholders’ Equity (Deficit) | (22,626) | (6,329) |
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Plan of Operation
The Company is in the process of investigating potential business ventures which, in the opinion of management, will provide a source of eventual profit to the Company. Such business ventures may take many forms, including the acquisition of an existing business or the acquisition of assets to establish subsidiary businesses. The Company’s management does not expect to remain involved as management of any acquired business.
As the Company possesses limited funds, the Company will be extremely limited in its attempts to locate potential business situations for investigation. Mr. Bertolami intends to commence, on a limited basis, the process of investigating possible merger and acquisition candidates, and believes that the Company’s status as a publicly-held corporation will enhance its ability to locate such potential business ventures. No assurance can be given as to when management may locate suitable business opportunities and such opportunities may be difficult to locate; however, the Company intends to actively search for potential business ventures for the foreseeable future.
Management anticipates that due to its lack of funds, and the limited amount of its resources, the Company may be restricted to participation in only one potential business venture. This lack of diversification should be considered a substantial risk because it will not permit the Company to offset potential losses from one venture against gains from another.
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Business opportunities, if any arise, are expected to become available to the Company principally from the personal contacts of its sole officer and director. While it is not expected that the Company will engage professional firms specializing in business acquisitions or reorganizations, such firms may be retained if funds become available in the future, and if deemed advisable. Opportunities may thus become available from professional advisors, securities broker-dealers, venture capitalists, members of the financial community, and other sources of unsolicited proposals. In certain circumstances, the Company may agree to pay a finder’s fee or other form of compensation, including perhaps one-time cash payments, payments based upon a percentage of revenues or sales volume, and/or payments involving the issuance of securities, for services provided by persons who submit a business opportunity in which the Company shall decide to participate, although no contracts or arrangements of this nature presently exist. The Company is unable to predict at this time the cost of locating a suitable business opportunity.
The analysis of business opportunities will be undertaken by or under the supervision of the Company’s sole officer and director, who is not a professional analyst and who does not have significant general business experience. Among the factors which management will consider in analyzing potential business opportunities are the available technical, financial and managerial resources; working capital and financial requirements; the history of operation, if any; future prospects; the nature of present and anticipated competition; potential for further research, development or exploration; growth and expansion potential; the perceived public recognition or acceptance of products or services; name identification, and other relevant factors.
It is not possible at present to predict the exact manner in which the Company may participate in a business opportunity. Specific business opportunities will be reviewed and, based upon such review, the appropriate legal structure or method of participation will be decided upon by management. Such structures and methods may include, without limitation, leases, purchase and sale agreements, licenses, joint ventures; and may involve merger, consolidation or reorganization. The Company may act directly or indirectly through an interest in a partnership, corporation or reorganization. However, it is most likely that any acquisition of a business venture the Company would make would be by conducting a reorganization involving the issuance of the Company’s restricted securities. Such a reorganization may involve a merger (or combination pursuant to state corporate statutes, where one of the entities dissolves or is absorbed by the other), or it may occur as a consolidation, where a new entity is formed and the Company and such other entity combine assets in the new entity. A reorganization may also occur, directly or indirectly, through subsidiaries, and there is no assurance that the Company would be the surviving entity. Any such reorganization could result in loss of control of a majority of the shares. The Company’s present director may be required to resign in connection with a reorganization.
The Company may choose to enter into a venture involving the acquisition of or merger with a company which does not need substantial additional capital but desires to establish a public trading market of its securities. Such a company may desire to consolidate its operations with the Company through a merger, reorganization, asset acquisition, or other combination, in order to avoid possible adverse consequences of undertaking its own public offering. (Such
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consequences might include expense, time delays or loss of voting control.) In the event of such a merger, the Company may be required to issue significant additional shares, and it may be anticipated that control over the Company’s affairs may be transferred to others.
As part of their investigation of acquisition possibilities, Mr. Bertolami may meet with executive officers of the business and its personnel; inspect its facilities; obtain independent analysis or verification of the information provided, and conduct other reasonable measures, to the extent permitted by the Company’s limited resources and management’s limited expertise. Generally, the Company intends to analyze and make a determination based upon all available information without reliance upon any single factor as controlling.
In all likelihood, the Company’s management will be inexperienced in the areas in which potential businesses will be investigated and in which the Company may make an acquisition or investment. Thus, it may become necessary for the Company to retain consultants or outside professional firms to assist management in evaluating potential investments. The Company can give no assurance that it will be able to find suitable consultants or managers. The Company has no policy regarding the use of consultants, however, if management, in its discretion, determines that it is in the best interests of the Company, management may seek consultants to review potential merger or acquisition candidates. There are currently no contracts or agreements between any consultant and any companies that are searching for “shell” companies with which to merge.
It may be anticipated that the investigation of specific business opportunities and the negotiation, drafting and execution of relevant agreements, disclosure documents and other instruments will require substantial management time and attention, and substantial costs for accountants, attorneys and others. Should a decision thereafter be made not to participate in a specific business opportunity, it is likely that costs already expended would not be recoverable. It is likely, in the event a transaction should eventually fail to be consummated, for any reason, that the costs incurred by the Company would not be recoverable. The Company’s sole officer and director is entitled to reimbursement for all expenses incurred in his investigation of possible business ventures on behalf of the Company, and no assurance can be given that if the Company has available funds they will not be depleted in such expenses.
Based on current economic and regulatory conditions, management believes that it is possible, if not probable, for a company like the Company, without assets or many liabilities, to negotiate a merger or acquisition with a viable private company. The opportunity arises principally because of the high legal and accounting fees and the length of time associated with the registration process of “going public”. However, should any of these conditions change, it is very possible that there would be little or no economic value for anyone taking over control of the Company.
RESULTS OF OPERATIONS
The Company has not had any revenue since ceasing operations. The Company continues to suffer a small loss related to maintaining its corporate status and complying with its reporting obligations.
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GOING CONCERN
The Company’s financial statements have been prepared using accounting principles generally accepted in the United States of America applicable to a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company has not generated any revenue for several years and the sole officer and director of the Company has provided capital to pay prior and current obligations. The Company requires additional capital to continue its limited operations. Furthermore, the Company’s officer and director serves without compensation. The Company assumes that these arrangements and the availability of future capital sources will continue into the future, but no assurance thereof can be given. A change in these circumstances would have a material adverse effect on the Company’s ability to continue as a going concern. The accompanying financial statements do not include any adjustments that might result from the outcome of this uncertainty.
LIQUIDITY AND CAPITAL RESOURCES
As of December 31, 2014, the Company had $0 in cash and $22,626 in liabilities. The Company has only incidental ongoing expenses primarily associated with maintaining its corporate status and maintaining the Company’s reporting obligations to the Securities and Exchange Commission. Current management has indicated a willingness to help support the Company’s ongoing expenses through loans to the Company.
For the twelve months ended December 31, 2014, the Company had $16,118 in operating expenses related to maintaining its corporate status and paying accounting and legal fees. Management anticipates continuing expenses related to investigating business opportunities and legal and accounting costs. For the year ended December 31, 2014, the Company had a net loss of $16,297 compared to a loss of $17,501 for the year ended December 31, 2013. We would anticipate losses to be in line with 2014 numbers in the future until a business opportunity is identified.
Since the Company ceased operations, it has not generated significant revenue, and it is unlikely that any revenue will be generated until the Company locates a business opportunity with which to acquire or merge. Management of the Company will be investigating various business opportunities. These efforts may cost the Company not only out of pocket expenses for its management but also expenses associated with legal and accounting costs. There can be no guarantee that the Company will receive any benefits from the efforts of management to locate business opportunities.
Management does not anticipate employing any employees in the future until a merger or acquisition can be accomplished. Management will continue to rely on outside consultants to assist in its corporate filing requirements.
OFF-BALANCE SHEET ARRANGEMENTS
Under Commission regulations, we are required to disclose our off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition,
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such as changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors. As of December 31, 2014, we have no off-balance sheet arrangements.
CRITICAL ACCOUNTING POLICIES
Our significant accounting policies are disclosed in Note 1 to our financial statements included elsewhere in this annual report on Form 10-K. The following discussion addresses our most critical accounting policies, which are those that are both important to the portrayal of our financial condition and results of operations and that require significant judgment or use of complex estimates.
Organization – Pacific Ventures Group, Inc. (the “Company” or “Pacific Ventures”) was incorporated under the laws of the State of Delaware on October 3, 1986, under the name AOA Corporation. On November 12, 1991, the Company changed its name to American Eagle Group, Inc. On October 22, 2012, the Company changed its name to Pacific Ventures Group, Inc.
Going Concern – The Company’s financial statements have been prepared using accounting principles generally accepted in the United States of America applicable to a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company has not generated any revenue for several years and the sole officer and director of the Company has provided capital to pay prior and current obligations. The Company requires additional capital to continue its limited operations. Furthermore, the Company’s officer and director serves without compensation. The Company assumes that these arrangements and the availability of future capital sources will continue into the future, but no assurance thereof can be given. A change in these circumstances would have a material adverse effect on the Company’s ability to continue as a going concern. The accompanying financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Income Taxes
The Company utilizes the liability method of accounting for income taxes as set forth in ASC 740-20, “Accounting for Income Taxes.” Under the liability method, deferred taxes are determined based on the difference between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect in the years in which the differences are expected to reverse. An allowance against deferred tax assets is recorded when it is more likely than not that such tax benefits will not be realized.
Estimates
The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
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Cash and Cash Equivalents
For purposes of reporting cash flows, the Company considers all highly-liquid debt instruments purchased with an original maturity of three months or less to be cash equivalents.
Revenue Recognition
The Company plans to recognize revenue when the following four conditions are present: (1) persuasive evidence of an agreement exists, (2) the price is fixed or determinable, (3) delivery has occurred or services are rendered, and (4) collection is reasonably assured.
Income (Loss) Per Common Share
Income (Loss) per common share is computed by dividing net loss available to common stockholders by the weighted average number of common shares outstanding during the periods presented. The Company has no potentially dilutive securities, in 2014 and 2013. Accordingly, basic and dilutive loss per common share are the same.
Fair Value
The carrying values of cash and cash equivalents, and accounts payable and accrued liabilities approximate their fair values because of the short-term maturity of these financial instruments.
Recently Issued Accounting Pronouncements
The Company has reviewed recently issued, but not yet adopted, accounting standards in order to determine their effects, if any, on its results of operations, financial position or cash flows. Based on that review, the Company believes that none of these pronouncements will have a significant effect on its financial statements.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
Not applicable.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The financial statements of the Company are set forth immediately following the signature page to this annual report on Form 10-K.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
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ITEM 9A. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
Our management conducted an evaluation, with the participation of our President, who is our principal executive officer, principal financial officer and principal accounting officer Chief Executive Officer and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) as of the end of the period covered by this annual report on Form 10-K. Based on that evaluation, our President and Principal Financial Officer concluded that as of the end of the period covered by this report, our disclosure controls and procedures were effective such that the information required to be disclosed by us in reports filed under the Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and (ii) accumulated and communicated to our management, including our President and Principal Financial Officer, as appropriate to allow timely decisions regarding disclosure.
Management’s Annual Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act). Our internal control over financial reporting is a process designed to provide assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Therefore, even those systems determined to be effective can provide only reasonable assurance of achieving their control objectives.
Our management evaluated the effectiveness of our internal control over financial reporting as of December 31, 2014. In making this assessment, our management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in Internal Control - Integrated Framework 2013. Further, our management considered the lack of operations and revenue, the limited cash on hand, the limited transactions which occur on a monthly basis and the use of an outside CPA firm which reconciles all financial transactions prior to being delivered to our auditors. Based on this evaluation, our management concluded that, as of December 31, 2014, our internal control over financial reporting was effective.
This annual report does not include an attestation report of the Company’s registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the Company’s registered public accounting firm pursuant to rules of the Security and Exchange Commission that permit the Company to provide only management’s report in this annual report.
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Changes in internal control over financial reporting
There have been no changes in internal control over financial reporting that occurred during the last fiscal quarter that have materially affected, or are reasonably likely to materially affect, the internal control over financial reporting.
ITEM 9B. OTHER INFORMATION
None.
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
The following table sets forth information with respect to the Company’s sole officer and director. The Company’s sole director serves for a term of one year and thereafter until his successor has been duly elected by the stockholders and qualified. The Company’s sole officer serves for a term of one year and thereafter until his successor has been duly elected by the Board of Directors and qualified.
Name
Age
Positions
Brett Bertolami
46
Chairman of the Board, Chief Executive Officer, Chief
Financial Officer, Principal Accounting Officer, President and Secretary
Mr. Bertolami has served as the Company’s Chairman of the Board, Chief Executive Officer, Chief Financial Officer, Principal Accounting Officer, President and Secretary since 2013. He has over 15 years’ experience as a CEO and General Manager focusing in the areas of managing, planning, personnel management, advertising, sales, finance and accounting for Jolar Corporation, a corporation that he owned in the automotive industry. Jolar Corporation sold Toyota, Ford and Lincoln products with over $35 million in revenues for fiscal 2011. Mr. Bertolami holds a B.A. in Economics from the University of North Carolina at Charlotte, and is a member of the National Automotive Dealers Association (“NADA”). He has a degree in Automotive Management from NADA. In early 2012, Mr. Bertolami sold Jolar Corporation to a third party in a private transaction. Since the sale, he has engaged in business activities as a private investor, and expects to help the Company take advantage of business opportunities and maximize its growth potential.
Mr. Bertolami’s considerable experience in business operations, management and strategic planning qualifies him to serve as a director of our company.
Involvement in Certain Legal Proceedings
No director, executive officer, significant employee or control person of the Company has been involved in any legal proceeding listed in Item 401(f) of Regulation S-K in the past 10 years.
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Corporate Governance
Our Board has not established any committees, including an audit committee, a compensation committee or a nominating committee, or any committee performing a similar function. The functions of those committees are being undertaken by our Board. Because we do not have any independent directors, our Board believes that the establishment of committees of our Board would not provide any benefits to our Company and could be considered more form than substance.
We do not have a policy regarding the consideration of any director candidates that may be recommended by our stockholders, including the minimum qualifications for director candidates, nor have our officers and directors established a process for identifying and evaluating director nominees. We have not adopted a policy regarding the handling of any potential recommendation of director candidates by our stockholders, including the procedures to be followed. Our company has not considered or adopted any of these policies as we have never received a recommendation from any stockholder for any candidate to serve on our Board of Directors.
Given our relative size and lack of directors’ and officers’ insurance coverage, we do not anticipate that any of our stockholders will make such a recommendation in the near future. While there have been no nominations of additional directors proposed, in the event such a proposal is made, all then-current members of our Board will participate in the consideration of director nominees.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Based solely upon a review of reports furnished to the Company, and on written representations from certain reporting persons, the Company believes that, with respect to the fiscal year ended December 31, 2014, each director, executive officer and 10% stockholder of the Company’s securities made timely filings of all reports required by Section 16 of the Exchange Act.
ITEM 11. EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following tables set forth certain summary information concerning the compensation paid or accrued for each of the Company’s last three completed fiscal years to the Company’s or its principal subsidiaries’ chief executive officer and each of its other executive officers that received compensation in excess of $100,000 during such period (as determined at December 31, 2014, the end of the Company’s last completed fiscal year):
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2014 Summary Compensation Table
| Name and Principal Position | Year | Salary | Bonus | Stock Awards | Option Awards | Non-Equity Incentive Plan Compensation | Nonqualified | All Other Compensation | Total |
| Bret Bertolami, President (1) | 2014 | -- | -- | -- | -- | -- | -- | -- | -- |
|
| 2013 | -- | -- | -- | -- | -- | -- | -- | -- |
(1)
Mr. Bertolami became an executive officer on June 21, 2013.
Employment Agreements and Cash Compensation
There are no current employment agreements between the Company and our executive officer or understandings regarding future compensation. There was no cash compensation paid to any director or executive officer of the Company during the fiscal years ended December 31, 2014 and 2013. There are no agreements or understandings with respect to the amount of remuneration that officers and directors are expected to receive in the future. Management takes no salaries from the Company and does not anticipate receiving any salaries in the foreseeable future. No present prediction or representation can be made as to the compensation or other remuneration which may ultimately be paid to the Company’s management, since upon the successful consummation of a business opportunity, substantial changes may occur in the structure of the Company and its salaries or other forms of compensation which cannot presently be anticipated.
The Company’s management may benefit directly or indirectly by payments of consulting fees, payment of finders’ fees to others from consulting fees, sales of insider’s stock positions in whole or part to the private company, the Company or management of the Company, or through the payment of salaries, or any other methods of payments through which insiders or current investors receive funds, stock, or other assets or anything of value whether tangible or intangible. There are no plans, proposals, arrangements or understandings with respect to the sale of additional securities to affiliates, current stockholders or others prior to the location of a business opportunity.
Outstanding Equity Awards at Fiscal Year-End
No executive officer received any equity awards, or holds exercisable or unexercisable options, as of December 31, 2014.
Long-Term Incentive Plans
There are no arrangements or plans in which the Company would provide pension, retirement or similar benefits for directors or executive officers.
15
Compensation Committee
We currently do not have a compensation committee of our Board of Directors. The Board as a whole determines executive compensation.
Compensation of Directors
Our current director does not receive separate compensation for his service on our Board of Directors. Our Board has the authority to fix the compensation of directors. We do not intend to pay employee directors a separate fee for their services. No compensation was paid to our director for his service as a director during the year ended December 31, 2014.
Director Independence
Our Board of Directors is currently composed of one member, who does not qualify as an independent director in accordance with the published listing requirements of the NASDAQ Global Market. The NASDAQ independence definition includes a series of objective tests, such as that the director is not, and has not been for at least three years, one of our employees and that neither the director, nor any of his family members has engaged in various types of business dealings with us. In addition, our Board has not made a subjective determination as to each director that no relationships exist which, in the opinion of our Board, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director, though such subjective determination is required by the NASDAQ rules. Had our Board of Directors made these determinations, our Board would have reviewed and discussed information provided by the directors and us with regard to each director’s business and personal activities and relationships as they may relate to us and our management.
Termination of Employment and Change of Control Arrangement
There are no compensatory plans or arrangements, including payments to be received from the Company, with respect to any person named in the summary compensation table above which would in any way result in payments to any such person because of his resignation, retirement, or other termination of such person’s employment with the Company or its subsidiaries, or any change in control of the Company, or a change in the person’s responsibilities following a change in control of the Company.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
The following table sets forth certain information as of March 19, 2015, with respect to the beneficial ownership of the Company’s Common Stock by each director of the Company and each person known by the Company to be the beneficial owner of more than 5% of the Company’s outstanding shares of Common Stock. At March 19, 2015, there were 384,031 shares of common stock outstanding.
16
For purposes of this table, information as to the beneficial ownership of shares of common stock is determined in accordance with the rules of the Securities and Exchange Commission and includes general voting power and/or investment power with respect to securities. Except as otherwise indicated, all shares of our common stock are beneficially owned, and sole investment and voting power is held, by the person named. For purposes of this table, a person or group of persons is deemed to have “beneficial ownership” of any shares of common stock, which such person has the right to acquire within 60 days after the date hereof. The inclusion herein of such shares listed beneficially owned does not constitute an admission of beneficial ownership.
Preferred Stock
| Name and Address of Beneficial Owner | Amount and Nature of Beneficial Ownership | Percent of Class |
| Brett Bertolami 200 Camelia Court Vero Beach, FL 32963 | 1,000,000(1) | 100% |
| All executive officers and directors as a group (one person) | 1,000,000 | 100% |
_________________
(1)
Brett Bertolami owns 1,000,000 shares of preferred stock. Such shares have a 10-to-1 voting preference whereby every one share of preferred stock is equivalent in votes to 10 shares of common stock. As such, Mr. Bertolami has over 50% of the voting control of the issued and outstanding stock.
Common Stock
| Name and Address of Beneficial Owner | Amount and Nature of Beneficial Ownership | Percent of Class (1) |
| Brett Bertolami 200 Camelia Court Vero Beach, FL 32963 | - | - |
| All executive officers and directors as a group (one person) | - | - |
| Kent and Aleta Sumner 1248 Bateman Ponds Way West Jordan, UT 84084 | 100,000 | 26.0% |
| Capital Advisors, LLC P.O. Box 901658 Sandy, Utah 84090 | 100,000 | 26.0% |
| M. Philip Guthrie 5430 LBJ Freeway, Suite 480 Dallas, TX 75240 | 60,115 | 15.65% |
_________________
17
(1)
Brett Bertolami owns 1,000,000 shares of preferred stock. Such shares have a 10-to-1 voting preference whereby every one share of preferred stock is equivalent in votes to 10 shares of common stock. As such, Mr. Bertolami has over 50% of the voting control of the issued and outstanding stock.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
Transactions with Management and Others.
We believe that all purchases from or transactions with affiliated parties were on terms and at prices substantially similar to those available from unaffiliated third parties.
For 2014 and 2013, the sole officer and director of the Company has provided office space at no cost to the Company.
On March 31, 2014, Brett Bertolami, the sole officer and director of the Company, converted advanced money to the company into a promissory note for $400. The money was used to pay operating expenses. The note will accrue interest at 2% annually until repaid. As of December 31, 2014, interest payable is $6.
On June 18, 2013, the board of directors approved a Securities Purchase Agreement with Brett Bertolami, whereby Mr. Bertolami agreed to purchase 1,000,000 shares of Series E Preferred Stock for an aggregate purchase price of $165,000.
On June 18, 2013, the board of directors approved a Repurchase Agreement with Capital Advisors, LLC, the sole preferred stockholder at the time, to buy back 1,000,000 shares of Series E Preferred Stock for $109,416 and 200,000 shares of common stock.
From September 30, 2011, to June 19, 2013, loans from the then-current officer and director were converted into promissory notes totaled $54,538. All of the money was used to pay operating expenses. All of the notes accrued interest at 2% annually until repaid, and totaled $1,046 at June 19, 2013. On June 19, 2013, all of the promissory notes were paid in full.
Between August 2005 and September 2006, a shareholder of the Company advanced $50,000 to the Company. On October 23, 2006, the Company entered into a Debt Settlement Agreement with the shareholder whereby 100% of the debt was exchanged for 1,000,000 series E Preferred Shares. Each Series E Share has voting rights equal to 10 shares of common stock, is not convertible into any other class of stock of the Company and has no preference to dividends or liquidation rights.
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
The following table shows the fees that were billed for the audit and other services provided by Anderson Bradshaw PLLC for the fiscal years ended December 31, 2014 and 2013.
18
|
|
| 2014 |
| 2013 |
| Audit Fees |
| $10,385 |
| $9,000 |
| Audit-Related Fees |
| - |
| - |
| Tax Fees |
| - |
| - |
| All Other Fees |
| - |
| - |
| Total |
| $10,385 |
| $9,000 |
Audit Fees—This category consists of the aggregate fees incurred for each of the last two fiscal years for professional services rendered by our principal accountant for the audit of our annual financial statements and review of our quarterly financial statements.
Audit-Related Fees—This category consists of assurance and related services by the independent registered public accounting firm that are reasonably related to the performance of the audit or review of our financial statements and are not reported above under “Audit Fees.”
Tax Fees—This category consists of professional services rendered by our independent registered public accounting firm for tax compliance and tax advice. The services for the fees disclosed under this category include tax return preparation and technical tax advice.
All Other Fees—This category consists of fees for other miscellaneous items.
Our board of directors has adopted a procedure for pre-approval of all fees charged by our independent registered public accounting firm. Under the procedure, the board approves the engagement letter with respect to audit, tax and review services. Other fees are subject to pre-approval by the board.
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES.
(a)(1)FINANCIAL STATEMENTS. The following financial statements are included in this report:
Title of Document
Page
Report of Independent Registered Public Accounting Firm
F-1
Balance Sheets
F-2
Statements of Operations
F-3
Statements of Stockholders’ Equity (Deficit)
F-4
Statements of Cash Flows
F-5
Notes to Financial Statements
F-6
(a)(2)FINANCIAL STATEMENT SCHEDULES. The following financial statement schedules are included as part of this report:
None.
(a)(3)EXHIBITS. The following exhibits are included as part of this report:
19
| Exhibit No. |
| Description of Document |
| Location |
| 3.1 |
| Restated certificate of incorporation of the registrant. |
| Incorporated by reference to Exhibit 3.02 to the registrant’s registration statement on Form 10, filed with the Securities and Exchange Commission on January 19, 2012. |
| 3.2 |
| Certificate of designation establishing the registrant’s Series E preferred stock. |
| Incorporated by reference to Exhibit 3.2 to Amendment No. 1 to the registrant’s registration statement on Form 10, filed with the Securities and Exchange Commission on March 21, 2012. |
| 3.3 |
| Bylaws of the registrant. |
| Incorporated by reference to Exhibit 3.03 to the registrant’s registration statement on Form 10, filed with the Securities and Exchange Commission on January 19, 2012. |
| 31.1 |
| Section 302 Certification of Principal Executive Officer and Principal Financial Officer. |
| Furnished herewith. |
| 32.1 |
| Section 906 Certification of Principal Executive Officer and Principal Financial Officer. |
| Furnished herewith. |
| 101.INS |
| XBRL Instance Document |
| Furnished herewith. |
| 101.SCH |
| XBRL Taxonomy Extension Schema Document |
| Furnished herewith. |
| 101.CAL |
| XBRL Taxonomy Extension Calculation Linkbase Document |
| Furnished herewith. |
| 101.DEF |
| XBRL Taxonomy Extension Definition Linkbase Document |
| Furnished herewith. |
| 101.LAB |
| XBRL Taxonomy Extension Label Linkbase Document |
| Furnished herewith. |
| 101.PRE |
| XBRL Taxonomy Extension Presentation Linkbase Document |
| Furnished herewith. |
__________________
20
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Pacific Ventures Group, Inc.
Date:
April 15, 2015
By:
/s/ Brett Bertolami
Brett Bertolami
Chief Executive Officer, Chief Financial Officer, Principal Accounting Officer, President and Secretary
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
| Signature |
| Title |
| Date |
|
|
|
|
|
|
| /s/ Brett Bertolami |
| Chief Executive Officer, Chief Financial Officer, Principal Accounting Officer, President, Secretary and Director (principal executive officer, principal financial officer and principal accounting officer) |
| April 15, 2015 |
| Brett Bertolami |
|
|
|
|
21
| Pacific Ventures Group, Inc. | |
| Financial Statements Table of Contents | |
|
|
|
|
|
|
|
|
|
| Report of Independent Registered Public Accounting Firm | F-1 |
|
|
|
| Balance Sheets as of December 31, 2014 and 2013 | F-2 |
|
|
|
| Statements of Operations for the years ended December 31, 2014 and 2013 | F-3 |
|
|
|
| Statements of Stockholders’ Equity (Deficit) as of December 31, 2014 and 2013 | F-4 |
|
|
|
| Statements of Cash Flows for the years ended December 31, 2014 and 2013 | F-5 |
|
|
|
| Notes to Financial Statements | F-6 |
F-1
| Pacific Ventures Group, Inc. |
| Balance Sheets |
|
|
| December 31, | ||
|
|
| 2014 |
| 2013 |
| ASSETS |
|
|
|
|
| CURRENT ASSETS |
|
|
|
|
| Cash | $ | - | $ | 7 |
| Total Current Assets |
| - |
| 7 |
| TOTAL ASSETS | $ | - | $ | 7 |
|
|
|
|
|
|
| LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT) |
|
|
|
|
| CURRENT LIABILITIES |
|
|
|
|
| Accounts payable | $ | 7,471 | $ | 4,262 |
| Notes Payable |
| 14,576 |
| 2,074 |
| Notes Payable due to officer |
| 400 |
| - |
| Interest payable |
| 173 |
| - |
| Interest payable due to officer |
| 6 |
| - |
| Total Current Liabilities |
| 22,626 |
| 6,336 |
|
|
|
|
|
|
| STOCKHOLDERS’ EQUITY (DEFICIT) |
|
|
|
|
| Preferred stock, 10,000,000 shares authorized, $0.001 par value |
|
|
|
|
| Series E Preferred stock, 1,000,000 shares authorized, issued and outstanding |
| 1,000 |
| 1,000 |
|
|
|
|
|
|
| Common stock, $0.001 par value, 100,000,000 shares authorized and 384,031 shares issued and outstanding |
| 384 |
| 384 |
| Additional paid-in capital |
| 47,075,200 |
| 47,075,200 |
| Accumulated Earnings (Deficit) |
| (47,099,210) |
| (47,082,913) |
| Total Stockholder’s Equity (Deficit) |
| (22,626) |
| (6,329) |
| TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT) | $ | - | $ | 7 |
The accompanying notes are an integral part of these financial statements.
F-2
| Pacific Ventures Group, Inc. |
| Statements of Operations |
The accompanying notes are an integral part of these financial statements.
F-3
Pacific Ventures Group, Inc.
Statements of Stockholders’ Equity (Deficit)
|
| Series E Preferred Stock | Common Stock | Additional Paid-in | Accumulated | Total Stockholders’ Equity | ||
|
| Shares | Amount | Shares | Amount | Capital | Deficit | (Deficit) |
| Balance, December 31, 2012 | 1,000,000 | $ 1,000 | 184,031 | $ 184 | 47,019,816 | $(47,065,412) | $ (44,412) |
| Repurchase of preferred shares | (1,000,000) | (1,000) | 200,000 | 200 | (108,616) |
| (109,416) |
| Sale of preferred shares | 1,000,000 | 1,000 |
|
| 164,000 |
| 165,000 |
| Net loss for the year ended December 31, 2013 |
|
|
|
|
| (17,501) | (17,501) |
| Balance, December 31, 2013 | 1,000,000 | $ 1,000 | 384,031 | $ 384 | $47,075,200 | $(47,082,913) | $ (6,329) |
| Net loss for the year ended December 31, 2014 |
|
|
|
|
| (16,297) | (16,297) |
| Balance, December 31, 2014 | 1,000,000 | $ 1,000 | 384,031 | $ 384 | $47,075,200 | $(47,099,210) | $ (22,626) |
The accompanying notes are an integral part of these financial statements.
F-4
| Pacific Ventures Group, Inc. |
| Statements of Cash Flows |
|
|
| For the Years Ended | |||
|
|
| December 31, | |||
|
|
| 2014 |
| 2013 | |
| CASH FLOWS FROM OPERATING ACTIVITIES |
|
|
|
| |
| Net Income (Loss) | $ | (16,297) | $ | (17,501) | |
| Reconciliation of net loss to net cash (used in) provided by operating activities: |
|
|
|
| |
| Increase (decrease) in accounts payable |
| 3,209 |
| (715) | |
| Increase (decrease) in interest payable |
| 179 |
| (583) | |
| Net Cash (Used by) Provided by Operating Activities |
| (12,909) |
| (18,799) | |
|
|
|
|
|
| |
| CASH FLOWS FROM INVESTING ACTIVITIES |
| - |
| - | |
|
|
|
|
|
| |
| CASH FLOWS FROM FINANCING ACTIVITIES |
|
|
|
| |
| Purchase of Series B Preferred Stock |
| - |
| - | |
| Proceeds from sale of Series E Preferred Stock |
| - |
| 165,000 | |
| Purchase of Series E Preferred Stock |
| - |
| (109,416) | |
| Payments - related party payable |
| - |
| (39,235) | |
| Proceeds - related party payable |
| 400 |
| - | |
| Proceeds from notes payable |
| 12,502 |
| 2,074 | |
| Net Cash Provided by Financing Activities |
| 12,902 |
| 18,423 | |
|
|
|
|
|
| |
| NET INCREASE (DECREASE) IN CASH |
| (7) |
| (376) | |
| CASH AT BEGINNING OF PERIOD |
| 7 |
| 383 | |
| CASH AT END OF PERIOD | $ | - | $ | 7 | |
|
|
|
|
|
| |
| CASH PAID FOR: |
|
|
|
| |
| Interest | $ | - | $ | 1,046 | |
| Income Taxes | $ | - | $ | - | |
|
|
|
|
|
| |
The accompanying notes are an integral part of these financial statements.
F-5
Pacific Ventures, Inc.
Notes to Financial Statements
Note 1: Basis of Presentation and Summary of Significant Accounting Policies
Organization – Pacific Ventures Group, Inc. (the “Company” or “Pacific Ventures”) was incorporated under the laws of the State of Delaware on October 3, 1986, under the name AOA Corporation. On November 12, 1991, the Company changed its name to American Eagle Group, Inc. On October 22, 2012, the Company changed its name to Pacific Ventures Group, Inc.
Going Concern – The Company’s financial statements have been prepared using accounting principles generally accepted in the United States of America applicable to a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company has not generated any revenue for several years and the sole officer and director of the Company has provided capital to pay prior and current obligations. The Company requires additional capital to continue its limited operations. Furthermore, the Company’s officer and director serves without compensation. The Company assumes that these arrangements and the availability of future capital sources will continue into the future, but no assurance thereof can be given. A change in these circumstances would have a material adverse effect on the Company’s ability to continue as a going concern. The accompanying financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Income Taxes
The Company utilizes the liability method of accounting for income taxes as set forth in ASC 740-20, “Accounting for Income Taxes.” Under the liability method, deferred taxes are determined based on the difference between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect in the years in which the differences are expected to reverse. An allowance against deferred tax assets is recorded when it is more likely than not that such tax benefits will not be realized.
Estimates
The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Cash and Cash Equivalents
For purposes of reporting cash flows, the Company considers all highly-liquid debt instruments purchased with an original maturity of three months or less to be cash equivalents.
F-6
Pacific Ventures, Inc.
Notes to Financial Statements
Revenue Recognition
The Company plans to recognize revenue when the following four conditions are present: (1) persuasive evidence of an agreement exists, (2) the price is fixed or determinable, (3) delivery has occurred or services are rendered, and (4) collection is reasonably assured.
Income (Loss) Per Common Share
Income (Loss) per common share is computed by dividing net loss available to common stockholders by the weighted average number of common shares outstanding during the periods presented. The Company has no potentially dilutive securities, in 2014 and 2013. Accordingly, basic and dilutive loss per common share are the same.
Fair Value
The carrying values of cash and cash equivalents, and accounts payable and accrued liabilities approximate their fair values because of the short-term maturity of these financial instruments.
Recently Issued Accounting Pronouncements
The Financial Accounting Standards Board recently issued Accounting Standards Update (ASU) 2014-10, Development Stage Entities (Topic 915): Elimination of Certain Financial Reporting Requirements, Including an Amendment to Variable Interest Entities Guidance in Topic 810, Consolidation, which eliminates the financial reporting distinction of being a development stage entity within U.S. generally accepted accounting principles. The Company has complied with this Topic in this report.
The Company has reviewed recently issued, but not yet adopted, accounting standards in order to determine their effects, if any, on its results of operations, financial position or cash flows. Based on that review, the Company believes that none of these pronouncements will have a significant effect on its financial statements.
Note 2: Income Taxes
Due to losses at December 31, 2014 and 2013, the Company had no income tax liability. At December 31, 2014 and 2013, the Company had available unused operating loss carry forwards of approximately $124,491 and $108,194, respectively, which may be applied against future taxable income and which expire in various years through 2034.
The amount of and ultimate realization of the benefits from the operating loss carry forwards for income tax purposes is dependent, in part, upon the tax laws in effect, the future earnings of the Company and other future events, the effects of which cannot be determined at this time. Because of the uncertainty surrounding the realization of the loss carry forwards, the Company has established a valuation allowance equal to the tax effect of the loss carry forwards and,
F-7
Pacific Ventures, Inc.
Notes to Financial Statements
therefore, no deferred tax asset has been recognized for the loss carry forwards. The net deferred tax assets are approximately $46,435 and $40,356 as of December 31, 2014 and 2013, respectively, with an offsetting valuation allowance of the same amount resulting in a change in the valuation allowance of approximately $6,079 during the year ended December 31, 2014.
Components of income tax are as follows:
|
|
| Years Ended December 31 | ||
|
|
| 2014 |
| 2013 |
| Current | $ | - | $ | - |
| Federal |
| - |
| - |
| State |
| - |
| - |
|
|
| - |
| - |
| Deferred |
| - |
| - |
|
| $ | - | $ | - |
A reconciliation of the provision for income tax expense with the expected income tax computed by applying the federal statutory income tax rate to income before provision for income taxes as follows:
|
|
| Years Ended December 31 | ||
|
|
| 2014 |
| 2013 |
| Income tax computed at |
|
|
|
|
| Federal statutory tax rate of 34% | $ | (5,541) | $ | (5,950) |
| State taxes (net of federal benefit) 3.3% for 2014 and 2013 |
| (538) |
| (578) |
| Deferred taxes and other |
| 6,079 |
| 6,528 |
|
| $ | - | $ | - |
The Company has no tax positions at December 31, 2014 and 2013, for which the ultimate deductibility is highly certain but for which there is uncertainty about the timing of such deductibility. The Company recognizes interest accrued related to unrecognized tax benefits in interest expense and penalties in operating expenses. During the period ended December 31, 2014 and 2013, the Company recognized no interest and penalties. The Company had no accruals for interest and penalties at December 31, 2014 and 2013. Under the rules of the Internal Revenue Service, the Company’s tax returns for the previous three years remain open for examination.
Note 3: Capital Stock
Preferred Stock and Common Stock – The Company’s Board of Directors is expressly granted the authority to issue, without stockholder action, the authorized shares of the Company’s preferred and common stock. The Board of Directors may issue shares and determine the
F-8
Pacific Ventures, Inc.
Notes to Financial Statements
powers, preferences, limitations, and relative rights of any class of shares before the issuance thereof.
Preferred Stock – On October 22, 2012, the Company filed a Restated and Amended Certificate of Incorporation increasing the authorized Preferred Stock to 10,000,000 shares, par value $.001 per share.
As of December 31, 2014 and 2013, there were zero Series B Cumulative Preferred shares outstanding.
Series E Preferred Stock was authorized October 2006 for up to 1,000,000 shares. Under the rights, preferences and privileges of the Series E Preferred Stock, the holders of the preferred stock receive a 10 to 1 voting preference over common stock. Accordingly, for every share of Series E Preferred Stock held, the holder received the voting rights equal to 10 shares of common stock. The Series E preferred Stock is not convertible into any other class of stock of the Company and has no preference to dividends or liquidation rights. As of December 31, 2014 and 2013, there were 1,000,000 Series E Preferred shares outstanding.
In June 2013, the Company purchased 1,000,000 shares of Series E Preferred Stock from a shareholder for $109,416 and 200,000 shares of common stock of the Company. Also in June 2013, the Company issued 1,000,000 shares of Series E Preferred Stock for $165,000.
Common Stock – On October 22, 2012, the Company filed a Restated and Amended Certificate of Incorporation increasing the authorized common stock to 100,000,000 shares, par value $.001 per share. Effective November 8, 2012, there was reverse split of the issued and outstanding common stock of the Company on a basis of fifty (50) to one (1). All fractional shares were rounded up to the nearest whole share, with no shareholder falling below 100 shares. There were 43,089 shares issued for rounding. The effects of which have been included in these financial statements as if the split had occurred at the beginning of the first period presented.
As of December 31, 2014 and 2013, there were 384,031 shares of common stock outstanding.
Note 4: Related Party Transactions
Between August 2005 and September 2006, a company owned and controlled by an officer and director of the Company, advanced $50,000 to the Company. The officer and director resigned in September 2006. On October 23, 2006, the Company entered into a Debt Settlement Agreement whereby 100% of the $50,000 debt was exchanged for 1,000,000 Series E Preferred Shares. In June 2013, the Company repurchased these shares for $109,416 and 200,000 shares of common stock.
From December 31, 2008 until June 19, 2013, a director of the Company advanced money to the company and the amounts were converted into the following promissory notes:
| Date | Amount |
| Date | Amount |
| September 30, 2011 | $10,900 |
| November 6, 2012 | $4,000 |
| December 30, 2011 | $ 1,500 |
| February 26, 2013 | $5,000 |
| March 31, 2012 | $16,333 |
| April 2, 2013 | $ 100 |
| June 30, 2012 | $ 500 |
| May 20, 2013 | $1,300 |
| July 23, 2012 | $ 6,000 |
| June 18, 2013 | $8,903 |
F-9
Pacific Ventures, Inc.
Notes to Financial Statements
All of the money was used to pay operating expenses. All of the notes accrued interest at 2% annually until repaid. Accrued interest on these notes at the time of payoff was $1,046. The notes were paid in full on June 19, 2013.
On June 18, 2013, the board of directors approved a Securities Purchase Agreement with Brett Bertolami, whereby Mr. Bertolami agreed to purchase 1,000,000 shares of Series E Preferred Stock for an aggregate purchase price of $165,000.
On June 18, 2013, the board of directors approved a Repurchase Agreement with Capital Advisors, LLC, the sole preferred stockholder at the time, to buy back 1,000,000 shares of Series E Preferred Stock for $109,416 and 200,000 shares of common stock.
On March 31, 2014, Brett Bertolami, the sole officer and director of the Company converted advanced money to the company into a promissory note for $400. The money was used to pay operating expenses. The note will accrue interest at 2% annually until repaid. As of December 31, 2014, interest payable is $6.
For 2014 and 2013, the sole officer and director of the Company has provided office space at no cost to the Company
Note 5: Notes Payable
From December, 2013, to September, 2014, the Company borrowed funds from a private corporation to pay operating expenses. These amounts were converted into the following promissory notes. The balance of the notes payable, with interest, is $14,749 at December 31, 2014.
| Date | Principal Amount | Interest Rate Until Paid |
| September 30, 2014 | $5,630 | 2% |
| April 1, 2014 | $2,500 | 2% |
| March 31, 2014 | $4,372 | 2% |
| December 31, 2013 | $2,074 | 2% |
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Pacific Ventures, Inc.
Notes to Financial Statements
Note 6: Subsequent Events
ASC 855-16-50-4 establishes accounting and disclosure requirements for subsequent events. ASC 855 details the period after the balance sheet date during which we should evaluate events or transactions that occur for potential recognition or disclosure in the financial statements, the circumstances under which we should recognize events or transactions occurring after the balance sheet date in our financial statements and the required disclosures for such events. We have evaluated all subsequent events through the date these financial statements were issued and no subsequent events occurred that required disclosure.
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