Colorado | 20-8097439 |
(State or other jurisdiction of incorporation or organization) | (IRS Employer Identification No.) |
PART I – Financial Information | Page | |
Item 1. Financial statements | 3 | |
Consolidated financial statements (unaudited): | 3 | |
Consolidated balance sheets at June 30, 2014 and December 31, 2013 | 3 | |
Consolidated statements of operations for the six months and three months ended June 30, 2014 and June 30, 2013 | 4 | |
Consolidated statement of changes in deficit for the six months ended June 30, 2014 | 5 | |
Consolidated statements of cash flows for the six months ended June 30, 2014 and June 30, 2013 | 6 | |
Notes to consolidated financial statements | 7 | |
Item 2. Management's discussion and analysis of financial condition and results of operations | 24 | |
Item 3. Quantitative and qualitative disclosures about market risk | 27 | |
Item 4. Controls and procedures | 28 | |
PART II – Other Information | ||
Item 1. Legal proceedings | 28 | |
Item 1A. Risk factors | 28 | |
Item 2. Unregistered sales of equity securities and use of proceeds | 28 | |
Item 3. Defaults upon senior security | 31 | |
Item 4. Mine safety disclosures | 31 | |
Item 5. Other information | 31 | |
Item 6. Exhibits | 32 |
June 30, | December 31, | |||||||
2014 | 2013 | |||||||
(unaudited) | ||||||||
ASSETS | ||||||||
CURRENT ASSETS: | ||||||||
Cash | $ | 17,674 | $ | 2,882 | ||||
Accounts receivable, net | 4,085 | - | ||||||
Deposits | 39,984 | - | ||||||
Total current assets | 61,743 | 2,882 | ||||||
PROPERTY AND EQUIPMENT, NET | 1,342 | 2,149 | ||||||
TOTAL ASSETS | $ | 63,085 | $ | 5,031 | ||||
LIABILITIES AND DEFICIT | ||||||||
CURRENT LIABILITIES | ||||||||
Accounts payable | $ | 996,308 | $ | 972,139 | ||||
Accrued expenses | 640,683 | 528,627 | ||||||
Revolving credit facility | 416,436 | 416,436 | ||||||
Stock subscription deposit | 30,000 | 342,500 | ||||||
Mandatorily redeemable Series B preferred stock | 67,500 | 67,500 | ||||||
Notes payable - net of discounts of $138,036 in 2014 and $33,740 in 2013 | 352,852 | 130,149 | ||||||
Notes payable and other - related party | 216,623 | 180,440 | ||||||
TOTAL LIABILITIES (ALL CURRENT) | 2,720,402 | 2,637,791 | ||||||
COMMITMENTS AND CONTINGENCIES | ||||||||
DEFICIT | ||||||||
Preferred stock; $0.10 par value; authorized shares - 10,000,000 | ||||||||
Series A; 425,000 authorized shares, none | ||||||||
issued and outstanding | - | - | ||||||
Series C; 500,000 authorized shares, none | ||||||||
issued and outstanding | - | - | ||||||
Series D; 200,000 authorized shares, none | ||||||||
issued and outstanding | - | - | ||||||
Common stock; $0.001 par value; 500,000,000 authorized shares, | ||||||||
148,276,502 (2014) and 122,591,301 (2013) shares issued and outstanding, | - | |||||||
respectively | 148,277 | 122,592 | ||||||
Common stock to be issued | 315,078 | 315,078 | ||||||
Additional paid-in capital | 2,570,572 | 1,582,104 | ||||||
Accumulated deficit | (5,691,244 | ) | (4,652,534 | ) | ||||
Total deficit | (2,657,317 | ) | (2,632,760 | ) | ||||
TOTAL LIABILITIES AND DEFICIT | $ | 63,085 | $ | 5,031 |
Quarter Ended | Six Months Ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||
NET SALES | $ | 625 | $ | 152,131 | $ | 1,667 | $ | 317,975 | ||||||||
COST OF GOODS SOLD | 173 | 125,835 | 256 | 248,939 | ||||||||||||
GROSS PROFIT | 452 | 26,296 | 1,411 | 69,036 | ||||||||||||
OPERATING EXPENSES | ||||||||||||||||
Selling and marketing | 78,531 | 242,578 | 266,384 | 426,913 | ||||||||||||
General and administrative | 466,484 | 252,859 | 606,523 | 695,643 | ||||||||||||
Total operating expenses | 545,015 | 495,437 | 872,907 | 1,122,556 | ||||||||||||
LOSS FROM OPERATIONS | (544,563 | ) | (469,141 | ) | (871,496 | ) | (1,053,520 | ) | ||||||||
OTHER EXPENSE | ||||||||||||||||
Interest expense | (44,440 | ) | (115,715 | ) | (167,214 | ) | (238,489 | ) | ||||||||
NET LOSS | $ | (589,003 | ) | $ | (584,856 | ) | $ | (1,038,710 | ) | $ | (1,292,009 | ) | ||||
BASIC AND DILUTED NET LOSS PER | ||||||||||||||||
COMMON SHARE | $ | * | $ | (0.01 | ) | $ | (0.01 | ) | $ | (0.01 | ) | |||||
Basic and diluted weighted average common | ||||||||||||||||
shares outstanding | 120,692,891 | 120,942,682 | 121,266,222 | 120,942,682 | ||||||||||||
Common Stock | Common Stock | Additional Paid-in | Accumulated | |||||||||||||||||||||
Shares | Amount | to be Issued | Capital | Deficit | Total | |||||||||||||||||||
Balances, January 1, 2014 | 122,591,301 | $ | 122,592 | $ | 315,078 | $ | 1,582,104 | $ | (4,652,534 | ) | $ | (2,632,760 | ) | |||||||||||
Common shares returned by founder | (26,013,736 | ) | (26,014 | ) | - | - | - | (26,014 | ) | |||||||||||||||
Common shares reissued to founder | 26,013,736 | 26,014 | - | - | - | 26,014 | ||||||||||||||||||
Common shares issued for stock subscription | 10,275,000 | 10,275 | - | 332,225 | - | 342,500 | ||||||||||||||||||
Common shares issued for conversion of | ||||||||||||||||||||||||
note payable | 6,000,000 | 6,000 | - | 41,000 | - | 47,000 | ||||||||||||||||||
Common shares issued for | ||||||||||||||||||||||||
consulting services | 4,910,201 | 4,910 | - | 181,498 | - | 186,408 | ||||||||||||||||||
Beneficial conversion feature | - | - | - | 143,245 | - | 143,245 | ||||||||||||||||||
Common shares issued for accrued expenses | 4,500,000 | 4,500 | 190,500 | 195,000 | ||||||||||||||||||||
Warrants issued for services | 100,000 | 100,000 | ||||||||||||||||||||||
Net loss | - | - | - | - | (1,038,710 | ) | (1,038,710 | ) | ||||||||||||||||
Balances, June 30, 2014 | 148,276,502 | $ | 148,277 | $ | 315,078 | $ | 2,570,572 | $ | (5,691,244 | ) | $ | (2,657,317 | ) |
Six Months Ended | ||||||||
June 30, | ||||||||
2014 | 2013 | |||||||
CASH FLOW FROM OPERATING ACTIVITIES: | ||||||||
Net loss | $ | (1,038,710 | ) | $ | (1,292,009 | ) | ||
Adjustments to reconcile net loss to net cash used in | ||||||||
operating activities: | ||||||||
Amortization of prepaid consulting paid for in stock | - | 278,618 | ||||||
Amortization of debt issuance costs | 79,629 | 213,338 | ||||||
Warrant issued for services | 100,000 | 11,574 | ||||||
Settlement costs to dissenting shareholder | - | 5,500 | ||||||
Depreciation expense | 807 | 533 | ||||||
Stock-based compensation | 186,408 | - | ||||||
Changes in operating assets and liabilities: | ||||||||
Accounts receivable | (4,085 | ) | (44,858 | ) | ||||
Deposits and prepaid expenses | (39,984 | ) | (10,537 | ) | ||||
Inventory | - | (32,538 | ) | |||||
Accounts payable | 24,169 | 262,584 | ||||||
Accrued expenses and other current liabilities | 307,056 | 97,096 | ||||||
Net cash used in operating activities | (384,710 | ) | (510,699 | ) | ||||
CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
Payment made to dissenting shareholder | - | (20,000 | ) | |||||
Borrowings under revolving credit facility | - | 481,263 | ||||||
Payments under revolving credit facility | - | (73,287 | ) | |||||
Cash paid for debt issuance costs | - | (71,337 | ) | |||||
Net payments under inventory financing payable | (97,611 | ) | ||||||
Redemption of Series B Preferred Stock | - | (22,500 | ) | |||||
Deposit on stock subscription | 30,000 | 272,500 | ||||||
Advances received from related party | 29,000 | - | ||||||
Borrowings under convertible note payable | 340,502 | 100,000 | ||||||
Net cash provided by financing activities | 399,502 | 569,028 | ||||||
Net increase in cash | 14,792 | 58,329 | ||||||
Cash, beginning of period | 2,882 | 8,779 | ||||||
Cash, end of period | $ | 17,674 | $ | 67,108 | ||||
SUPPLEMENTAL CASH FLOW DISCLOSURES | ||||||||
Interest paid | $ | - | $ | 23,445 |
June 30, 2014 | December 31, 2013 | |||||||
JMJ Financial [A] | $ | 91,888 | $ | 138,889 | ||||
JSJ Investments Inc [B] | 125,000 | 25,000 | ||||||
Asher Enterprises, Inc. [C] | 109,500 | - | ||||||
LG Capital Funding, LLC [D] | 26,500 | - | ||||||
Adar Bays, LLC [E] | 26,500 | - | ||||||
KBM Worldwide, Inc. [F] | 61,500 | - | ||||||
Black Mountain Equities, Inc. [G] | 50,000 | - | ||||||
490,888 | 163,889 | |||||||
Less debt discounts | (138,036 | ) | (33,740 | ) | ||||
Convertible notes payable | $ | 352,852 | $ | 130,149 | ||||
June 30, | December 31, | |||||||
2014 | 2013 | |||||||
Accrued expenses | $ | 17,074 | $ | 58,941 | ||||
Deferred salaries | 337,057 | 208,714 | ||||||
Accrued consulting costs – to be paid for in common stock | 30,566 | 165,166 | ||||||
Minimum guaranteed royalty obligation | 150,405 | 75,000 | ||||||
Accrued interest | 105,581 | 20,806 | ||||||
$ | 640,683 | $ | 528,627 |
Larry the Cable Guy License Agreement
Royalty and Commission Agreements - Related Parties
Preferred stock
Options | Shares Under Option | Weighted Average Exercise Price | Weighted Average Remaining Contractual Life | Aggregate Intrinsic Value | ||||||||||||
Outstanding at January 1, 2014 | 2,266,190 | $ | 0.06 | $ | 1.88 | $ | -0- | |||||||||
Granted | - | - | ||||||||||||||
Exercised | - | - | ||||||||||||||
Forfeited / Cancelled | - | - | ||||||||||||||
Outstanding at June 30, 2014 | 2,266,190 | $ | 0.06 | $ | 1.88 | -0- | ||||||||||
Vested or expected to vest at June 30, 2014 | 1,500,000 | 0.08 | 2.45 | -0- | ||||||||||||
Exercisable at June 30, 2014 | 1,500,000 | $ | 0.08 | $ | 2.45 | -0- |
Number of Options | Weighted Average Grant Date Fair Value | |||||||
Non-vested options at January 1, 2014 | 766,190 | $ | 0.03 | |||||
Granted | - | - | ||||||
Vested | - | - | ||||||
Forfeited/cancelled | - | - | ||||||
Non-vested options at June 30, 2014 | 766,190 | 0.03 |
Warrants | Shares | Weighted Average Exercise Price | Weighted Average Remaining Contractual Life | Aggregate Intrinsic Value | ||||||||||||
Outstanding at January 1, 2014 | 3,324,764 | $ | 0.04 | - | ||||||||||||
Issued for Services | 5,000,000 | $ | 0.02 | 15.0 | ||||||||||||
Exercised | - | - | - | |||||||||||||
Forfeited/Cancelled | (3,064,764 | ) | $ | 0.03 | - | - | ||||||||||
Outstanding at June 30, 2014 | 5, 260,000 | $ | 0.02 | $ | 14.0 | $ | 133,500 | |||||||||
Vested or expected to vest at June 30, 2014 | 5,260,000 | $ | 0.02 | $ | 14.0 | $ | 133,500 | |||||||||
Exercisable at June 30, 2014 | 5.260,000 | $ | 0.02 | $ | 14.0 | $ | 133,500 | |||||||||
On July 2, 2014, JSJ Investments Inc. converted their entire $25,000 (including $1,000 of interest) promissory note dated December, 2013 for 4,230,652 shares. On July 9, 2014, JMJ Financial converted $18,478 of their promissory note dated June, 2013 for 2,500,000 shares. On August 12, 2014, JMJ Financial converted $16,500 of their promissory note dated June, 2013 for 1,500,000 shares. On July 16, 2014, Asher Enterprises Inc. converted $20,000 of their promissory note dated January, 2014 for 854,701 shares. On July 25, 2014, Asher Enterprises Inc. converted $20,000 of their promissory note dated January, 2014 for 793,651 shares. On July 28, 2014, Asher Enterprises Inc. converted $15,000 of their promissory note dated January, 2014 for 881,057 shares. On August 1, 2014, Asher Enterprises Inc. converted $15,000 of their promissory note dated January, 2014 for 1,282,051 shares. On August 6, 2014, Asher Enterprises Inc. converted $17,500 (and $2,320 of interest) of their promissory note dated January, 2014 for 1,818,349 shares. On August 13, 2014, GEL Properties LLC converted $1,000 (on a tentative basis, to be redetermined according to the agreed-upon discount when the shares are actually sold) for 3,500,000 shares. On August 13, 2014, Union Capital LLC converted $1,000 (on a tentative basis, to be redetermined according to the agreed-upon discount when the shares are actually sold) for 3,000,000 shares.
Matthew A. Veal
Exhibit No. | Title | ||
2.1 | Agreement and Plan of Merger and Reorganization dated July 25, 2012 by and among Accredited Members Holding Corporation, AMHC Merger Corp., and Hangover Joe’s Inc., Incorporated by reference from Form 10-Q for the quarter ended September 30, 2012 and filed on November 14, 2012. | ||
2.2 | Purchase and Indemnification Agreement dated July 27, 2012 by and among Accredited Members Holding Corporation, Hangover Joe’s Inc., Accredited Members, Inc., AMHC Managed Services, Inc. and World Wide Premium Packers, Inc., Incorporated by reference from Form 10-Q for the quarter ended September 30, 2012 and filed on November 14, 2012. | ||
3.1.1 | Articles of Incorporation. Incorporated by reference from Form SB-2 Registration Statement filed on January 29, 2007. | ||
3.1.2 | Amendment to Articles of Incorporation. Incorporated by reference from Form 10-Q for the quarter ended March 31, 2010 and filed on May 17, 2010. | ||
3.1.3 | Amendment to the Articles of Incorporation. Incorporated by reference from Form 8-K dated December 15, 2010, and filed on December 20, 2010. | ||
3.1.4 | Amendment to the Articles of Incorporation. Incorporated by reference from Form 10-Q for the quarter ended June 30, 2012 and filed on August 14, 2012 | ||
3.1.5 | Amendment to the Articles of Incorporation. Incorporated by reference from Form 10-Q for the quarter ended June 30, 2012 and filed on August 14, 2012 | ||
3.1.6 | Certificate of Designation of the Preferences, rights, limitations, qualifications, and restrictions of the Series B Preferred Stock of Hangover Joe’s Holding Corporation. Incorporated by reference from Form 10-K for the year ended December 31, 2012 and filed on April 15, 2013. | ||
3.1.7 | Certificate of Designation of the Preferences, rights, limitations, qualifications, and restrictions of the Series C Preferred Stock of Hangover Joe’s Holding Corporation. Incorporated by reference from Form 10-K for the year ended December 31, 2012 and filed on April 15, 2013. | ||
3.2 | Bylaws. Incorporated by reference from Form 8-K dated October 19, 2010, and filed on October 25, 2010. | ||
4.1 | Securities Purchase Agreement by and among the Company and the Asher Enterprises, Inc., dated January 14, 2014. Incorporated by reference from Form 8-K filed on January 21, 2014. | ||
4.2 | Convertible Promissory Note issued to Asher Enterprises, Inc. Incorporated by reference from Form 8-K filed on January 21, 2014. | ||
4.3 | Securities Purchase Agreement by and among the Company and the Asher Enterprises, Inc., dated March 13, 2014. Incorporated by reference from Form 10-K for the fiscal year ended December 31, 2013 and filed on April 21, 2014. | ||
4.4 | Convertible Promissory Note issued to Asher Enterprises, Inc. dated March 13, 2014 Incorporated by reference from Form 10-K for the fiscal year ended December 31, 2013 and filed on April 21, 2014. | ||
4.5 | 12% Convertible Note issued to JSJ Investments Inc dated March 20, 2014. Incorporated by reference from Form 10-K for the fiscal year ended December 31, 2013 and filed on April 21, 2014. | ||
4.6 | Securities Purchase Agreement by and among the Company and Adar Bays LLC dated March 24, 2014. Incorporated by reference from Form 10-K for the fiscal year ended December 31, 2013 and filed on April 21, 2014. | ||
4.7 | 8% Convertible Redeemable Note issued to Adar Bays LLC. Incorporated by reference from Form 10-K for the fiscal year ended December 31, 2013 and filed on April 21, 2014. | ||
4.8 | Securities Purchase Agreement by and among the Company and LG Capital Funding, LLC dated March 19, 2014. Incorporated by reference from Form 10-K for the fiscal year ended December 31, 2013 and filed on April 21, 2014. | ||
4.9 | 8% Convertible Redeemable Note issued to LG Capital Funding, LLC. Incorporated by reference from Form 10-K for the fiscal year ended December 31, 2013 and filed on April 21, 2014. | ||
4.10 | Convertible Promissory Note issued to KBM Worldwide, Inc. dated May 9, 2014. Filed Herewith. | ||
4.11 | Securities Purchase Agreement with KBM Worldwide, Inc. dated May 9, 2014. Filed Herewith. | ||
4.12 | Securities Purchase Agreement by and among the Company and the KBM Worldwide, Inc., dated May 29, 2014 Incorporated by reference and Filed on June 23, 2014. | ||
4.13 | Convertible Promissory Note issued to KBM Worldwide, Inc. dated May 29, 2014 Incorporated by reference and Filed on June 23, 2014. | ||
4.14 | 12% Convertible Note issued to JSJ Investments Inc dated May 21, 2014 Incorporated by reference and Filed on June 23, 2014 | ||
4.15 | Convertible Note issued to Black Mountain Equities, Inc. Incorporated by reference and Filed on June 23, 2014 | ||
4.16 | Securities Purchase Agreement by and among the Company and LG Capital Funding, LLC dated July 3, 2014 Incorporated by reference and Filed on July 16, 2014 | ||
4.17 | 8% Convertible Redeemable Note issued to LG Capital Funding, LLC dated July 3, 2014 Incorporated by reference and Filed on July 16, 2014 | ||
4.18 | 8% Convertible Redeemable Back End Note issued to LG Capital Funding, LLC dated July 3, 2014 Incorporated by reference and Filed on July 16, 2014 | ||
4.19 | 8% Collateralized Secured Back End Note issued to Hangover Joe's Holding Corporation dated July 3, 2014 Incorporated by reference and Filed on July 16, 2014 | ||
4.20 | Securities Purchase Agreement by and among the Company and Auctus Private Equity Fund, LLC, dated July 25, 2014. Filed herewith. | ||
4.21 | Convertible Promissory Note issued to Auctus Private Equity Fund, LLC, dated July 25, 2014. Filed Herewith. | ||
4.22 | Securities Purchase Agreement by and among the Company and KBM Worldwide, Inc., dated August 12, 2014. Filed herewith. | ||
4.23 | Convertible Promissory Note issued to KBM Worldwide, Inc, Inc. dated August 12, 2014. Filed Herewith. | ||
4.24 | Securities Purchase Agreement by and among the Company and Eastmore Capital, LLC, dated August 12, 2014. Filed herewith. | ||
4.25 | Convertible Promissory Note issued to Eastmore Capital, LLC dated August 12, 2014. Filed Herewith. | ||
4.26 | Settlement Agreement between the Company and TCA Global Master Credit Fund, L.P. dated August 12, 2014. Filed Herewith. | ||
4.27 | Assignment and Assumption Agreement between TCA Global Master Credit Fund, L.P., the Company and Union Capital, LLC dated August 12, 2014. Filed Herewith. | ||
4.28 | Assignment and Assumption Agreement between TCA Global Master Credit Fund, L.P., the Company and GEL Properties, LLC dated August 12, 2014. Filed Herewith. | ||
4.29 | Replacement Convertible Promissory Note issued to Union Capital, LLC dated August 12, 2014. Filed Herewith. | ||
4.30 | Replacement Convertible Promissory Note issued to GEL Properties LLC dated August 12, 2014. Filed Herewith. | ||
10.1 | Credit Agreement between Hangover Joe’s Holding Corporation and Hangover Joe’s Inc, collectively as borrowers and TCA Global Credit Master Fund LP, as Lender effective January 10, 2013. Incorporated by reference from Form 10-K for the year ended December 31, 2012 and filed on April 15, 2013. | ||
10.2 | First Amendment to Credit Agreement between Hangover Joe’s Holding Corporation and Hangover Joe’s Inc, collectively as borrowers and TCA Global Credit Master Fund LP, as Lender dated February , 2013. Incorporated by reference from Form 10-K for the year ended December 31, 2012 and filed on April 15, 2013 | ||
10.3 | Promissory note with JMJ Financial dated June 18, 2013, Incorporated by reference from Form 10-Q for the quarter ended June 30, 2013 and filed on August 19, 2013. | ||
10.4 | License Agreement between the Company and Warner Brothers Japan dated December 16, 2013. Incorporated by reference from Form 10-Q for the quarter ended September 30, 2013 and filed on December 19, 2013. | ||
10.5 | Employment agreement between company and Michael Jaynes, Chairman. Incorporated by reference from Form 8-K filed on January 21, 2014. | ||
10.6 | Employment agreement between company and Matthew Veal, CFO and CEO. Incorporated by reference from Form 10-Q for the quarter ended September 30, 2013 and filed on December 19, 2013. | ||
10.7 | Employment agreement between company and Shawn Adamson, Chief Sales and Marketing Officer. Incorporated by reference from Form 10-Q for the quarter ended September 30, 2013 and filed on December 19, 2013. | ||
31.1 | Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (Matthew A. Veal, Chief Executive and Financial Officer). Filed herewith. | ||
32.1 | Certification Pursuant to 18 U.S.C. §1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Matthew A. Veal, Chief Executive and Financial Officer). Filed herewith. | ||
101.INS | XBRL Instance Document. Filed herewith. | ||
101.SCH | XBRL Schema Document. Filed herewith. | ||
101.CAL | XBRL Calculation Linkbase Document. Filed herewith. | ||
101.DEF | XBRL Definition Linkbase Document. Filed herewith. | ||
101.LAB | XBRL Labels Linkbase Document. Filed herewith. | ||
101.PRE | XBRL Presentation Linkbase Document. Filed herewith. |
HANGOVER JOE'S HOLDING CORPORATION | |||
Date: August 19, 2014 | By: | /s/ Matthew Veal | |
Chief Executive Officer (Principal Executive, Financial and Accounting Officer) | |||