UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period endedSeptember 30, 2013
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission file number000-54746
NOHO, INC.
(Exact name of registrant as specified in its charter)
Wyoming | | 27-2300669 |
(State or other jurisdiction of incorporation or organization) | | (I.R.S. Employer Identification No.) |
8340 E. Raintree Dr. Unit D, Scottsdale, AZ | | 85260 |
(Address of principal executive offices) | | (Zip Code) |
(480) 306-7319
(Registrant’s telephone number, including area code)
Indicate by check mark whether the issuer (1) 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 ☑ 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 ☑ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Ruble 12b-2 of the Exchange Act.
Large accelerated filer ☐ | Accelerated filer ☐ |
| |
Non-accelerated filer ☐ (Do not check if a smaller reporting company) | Smaller reporting company ☑ |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑
The number of shares of Common Stock, $0.001 par value, outstanding on November 11, 2013 was 16,422,424 shares.
NOHO, INC.
QUARTERLY REPORT
PERIOD ENDED SEPTEMBER 30, 2013
TABLE OF CONTENTS
| | | Page No. |
| | PART I - FINANCIAL INFORMATION | |
| | | |
Item 1. | | Financial Statements | 4 |
| | | |
Item 2. | | Management's Discussion and Analysis of Financial Condition and Results of Operations | 14 |
| | | |
Item 3. | | Quantitative and Qualitative Disclosures About Market Risk | 19 |
| | | |
Item 4T. | | Controls and Procedures | 19 |
| | | |
| | PART II - OTHER INFORMATION | |
| | | |
Item 1. | | Legal Proceedings | 20 |
| | | |
Item1A. | | Risk Factors | 20 |
| | | |
Item 2. | | Unregistered Sales of Equity Securities and Use of Proceeds | 20 |
| | | |
Item 3. | | Defaults Upon Senior Securities | 21 |
| | | |
Item 4. | | Mine Safety Disclosures | 21 |
| | | |
Item 5. | | Other Information | 21 |
| | | |
Item 6. | | Exhibits | 21 |
| | | |
| | Signatures | 22 |
Special Note Regarding Forward-Looking Statements
Information included in this Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (“Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (“Exchange Act”). This information may involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements ofNOHO Inc.(the “Company”), to be materially different from future results, performance or achievements expressed or implied by any forward-looking statements. Forward-looking statements, which involve assumptions and describe future plans, strategies and expectations of the Company, are generally identifiable by use of the words “may,” “will,” “should,” “expect,” “anticipate,” “estimate,” “believe,” “intend,” or “project” or the negative of these words or other variations on these words or comparable terminology. These forward-looking statements are based on assumptions that may be incorrect, and there can be no assurance that these projections included in these forward-looking statements will come to pass. Actual results of the Company could differ materially from those expressed or implied by the forward-looking statements as a result of various factors. Except as required by applicable laws, the Company has no obligation to update publicly any forward-looking statements for any reason, even if new information becomes available or other events occur in the future.
*Please note that throughout this Quarterly Report, and unless otherwise noted, the words "we," "our," "us," the "Company," or "DRNK" refers to NOHO Inc.
PART I - FINANCIAL INFORMATION
ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
INDEX | F-1 |
Unaudited Consolidated Balance Sheet as of September 30, 2013 and Audited Consolidated Balance Sheet as of December 31, 2012 | F-2 |
Unaudited Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2013 and 2012 | F-3 |
Unaudited Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2013 and 2012 | F-4 |
Notes to Unaudited Consolidated Financial Statements | F-5 |
NOHO, INC.
(formerly RealEstate Pathways, Inc.)
Consolidated Condensed Balance Sheets
(Unaudited)
| | September 30, | | December 31, |
| | 2013 | | 2012 |
ASSETS | | | | | | | | |
| | | | | | | | |
Current assets: | | | | | | | | |
Cash | | $ | 147,525 | | | $ | 83,907 | |
Accounts receivable | | | 49,449 | | | | 50,920 | |
Prepaid expense | | | 50,000 | | | | 50,000 | |
Prepaid stock compensation | | | 104,196 | | | | — | |
Inventory | | | 113,795 | | | | 158,611 | |
Total current assets | | | 464,965 | | | | 343,438 | |
| | | | | | | | |
Fixed assets, net of accumulated depreciation of | | | | | | | | |
$5,266 and $2,617, respectively | | | 10,390 | | | | 10,469 | |
Intangible assets, net of accumulated amortization of | | | | | | | | |
$39,976 and $28,174, respectively | | | 136,432 | | | | 148,235 | |
| | | | | | | | |
Total assets | | $ | 611,787 | | | $ | 502,142 | |
| | | | | | | | |
| | | | | | | | |
LIABILITIES AND STOCKHOLDERS' (DEFICIT) | | | | | | | | |
| | | | | | | | |
Current liabilities: | | | | | | | | |
Accounts payable | | $ | 253,839 | | | $ | 203,804 | |
Accounts payable - related party | | | — | | | | 5,667 | |
Accrued payroll | | | 689,052 | | | | 445,952 | |
Deferred revenue | | | — | | | | 75,000 | |
Notes payable | | | 125,000 | | | | 118,750 | |
Notes payable - related party | | | 315,489 | | | | — | |
Line of credit - related party | | | 345,500 | | | | 265,000 | |
Accrued interest payable | | | 11,342 | | | | 123 | |
Accrued interest payable - related party | | | 109,407 | | | | 48,181 | |
Total current liabilities | | | 1,849,629 | | | | 1,162,477 | |
| | | | | | | | |
Total liabilities | | | 1,849,629 | | | | 1,162,477 | |
| | | | | | | | |
Stockholders' (deficit): | | | | | | | | |
Common stock; $0.001 par value; 760,000,000 shares authorized; | | | | | | | | |
16,400,925 and 12,679,925 issued and outstanding as of | | | | | | | | |
September 30, 2013 and December 31, 2012, respectively | | | 16,401 | | | | 12,680 | |
Additional paid in capital | | | 3,433,332 | | | | 2,380,565 | |
Common stock payable | | | 131,335 | | | | — | |
Accumulated (deficit) | | | (4,818,910 | ) | | | (3,053,580 | ) |
Total stockholders' (deficit) | | | (1,237,842 | ) | | | (660,335 | ) |
| | | | | | | | |
Total liabilities and stockholders' (deficit) | | $ | 611,787 | | | $ | 502,142 | |
The accompanying notes are an integral part of these financial statements.
NOHO, INC.
(formerly RealEstate Pathways, Inc.)
Condensed Consolidated Statements of Operations
(Unaudited)
| | For the three months ended | | For the nine months ended |
| | September 30, | | September 30, |
| | 2013 | | 2012 | | 2013 | | 2012 |
| | | | | | | | |
Revenue, net | | $ | 169,898 | | | $ | 146,438 | | | $ | 447,876 | | | $ | 1,123,766 | |
Cost of goods sold | | | 90,812 | | | | 91,841 | | | | 372,647 | | | | 540,104 | |
| | | | | | | | | | | | | | | | |
Gross profit | | | 79,086 | | | | 54,597 | | | | 75,229 | | | | 583,662 | |
| | | | | | | | | | | | | | | | |
Operating expenses: | | | | | | | | | | | | | | | | |
Executive compensation | | | 93,950 | | | | 81,450 | | | | 281,850 | | | | 244,350 | |
Contract labor | | | 328,569 | | | | 115,263 | | | | 617,570 | | | | 342,018 | |
Amortization and depreciation | | | 4,905 | | | | 4,353 | | | | 14,452 | | | | 12,986 | |
General and administrative | | | 306,248 | | | | 106,372 | | | | 792,112 | | | | 360,967 | |
Total operating expenses | | | 733,672 | | | | 307,438 | | | | 1,705,984 | | | | 960,321 | |
Loss from continuing operations | | | (654,586 | ) | | | (252,841 | ) | | | (1,630,755 | ) | | | (376,659 | ) |
| | | | | | | | | | | | | | | | |
Other income (expense): | | | | | | | | | | | | | | | | |
Interest income | | | 10 | | | | — | | | | 10 | | | | — | |
Interest expense - related party | | | (53,693 | ) | | | (25,234 | ) | | | (134,585 | ) | | | (57,233 | ) |
Total other income (expense) | | | (53,683 | ) | | | (25,234 | ) | | | (134,575 | ) | | | (57,233 | ) |
| | | | | | | | | | | | | | | | |
Net loss | | $ | (708,269 | ) | | $ | (278,075 | ) | | $ | (1,765,330 | ) | | $ | (433,892 | ) |
| | | | | | | | | | | | | | | | |
Net loss per share - basic | | $ | (0.04 | ) | | $ | (0.02 | ) | | $ | (0.12 | ) | | $ | (0.04 | ) |
| | | | | | | | | | | | | | | | |
Weighted average number of shares outstanding - basic | | | 16,209,827 | | | | 11,367,425 | | | | 14,921,517 | | | | 11,367,425 | |
The accompanying notes are an integral part of these financial statements.
NOHO, INC.
(formerly RealEstate Pathways, Inc.)
Condensed Consolidated Statements of Cash Flows
(Unaudited)
| | For the nine months ended |
| | September 30, |
| | 2013 | | 2012 |
CASH FLOWS FROM OPERATING ACTIVITIES | | | | | | | | |
Net loss | | $ | (1,765,330 | ) | | $ | (433,892 | ) |
Adjustments to reconcile net loss from operations to | | | | | | | | |
Net cash used in operating activities: | | | | | | | | |
Shares issued for stock-based compensation | | | 264,808 | | | | — | |
Amortization and depreciation | | | 14,452 | | | | 12,986 | |
Amortization of debt discount | | | 25,739 | | | | — | |
Changes in operating assets and liabilities: | | | | | | | | |
(Increase) in accounts receivable | | | 1,471 | | | | (60,162 | ) |
(Increase) in prepaid expenses | | | — | | | | 4,902 | |
(Increase) in inventory | | | 44,816 | | | | 69,763 | |
Increase in accounts payable | | | 123,187 | | | | 27,249 | |
Increase in accrued payroll | | | 243,100 | | | | 168,262 | |
Increase in deferred revenue | | | (75,000 | ) | | | (107,991 | ) |
Increase in accrued interest payable | | | 11,219 | | | | — | |
Increase in accrued interest payable - related party | | | 61,226 | | | | 28,534 | |
Net cash used by operating activities | | | (1,050,312 | ) | | | (290,349 | ) |
| | | | | | | | |
CASH FLOWS FROM INVESTING ACTIVITIES | | | | | | | | |
Purchase of fixed assets | | | (2,570 | ) | | | (1,787 | ) |
Net cash used by investing activities | | | (2,570 | ) | | | (1,787 | ) |
| | | | | | | | |
CASH FLOWS FROM FINANCING ACTIVITIES | | | | | | | | |
Proceeds from line of credit - related party | | | 207,500 | | | | 71,000 | |
Repayments from line of credit - related party | | | (27,000 | ) | | | — | |
Proceeds from notes payable - related party | | | 289,500 | | | | — | |
Repayments from notes payable - related party | | | (13,500 | ) | | | — | |
Proceeds from issuance of common stock | | | 660,000 | | | | — | |
Proceeds from capital contributions | | | — | | | | 558,513 | |
Payments for distribution | | | — | | | | (362,113 | ) |
Net cash provided by financing activities | | | 1,116,500 | | | | 267,400 | |
| | | | | | | | |
NET CHANGE IN CASH | | | 63,618 | | | | (24,736 | ) |
CASH AT BEGINNING OF YEAR | | | 83,907 | | | | 26,288 | |
| | | | | | | | |
CASH AT END OF YEAR | | $ | 147,525 | | | $ | 1,552 | |
| | | | | | | | |
SUPPLEMENTAL INFORMATION: | | | | | | | | |
Interest paid | | $ | 35,790 | | | $ | 24,799 | |
Income taxes paid | | $ | — | | | $ | — | |
| | | | | | | | |
Non-cash investing and financing activities: | | | | | | | | |
Shares issued for intangible asset | | $ | 109,397 | | | $ | — | |
Shares issued for conversion of debt | | $ | 100,000 | | | $ | — | |
| | | | | | | | |
The accompanying notes are an integral part of these financial statements.
NOHO, INC.
(formerly RealEstate Pathways, Inc.)
Notes to Condensed Consolidated Financial Statements
September 30, 2013
(Unaudited)
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization
The Company was originally incorporated on September 30, 2011 under the laws of the State of Wyoming as RealEstate Pathways, Inc. On January 2, 2013, the Company amended its articles of incorporation to change its name to NOHO, Inc.
On April 1, 2013, we acquired 100% of the issued and outstanding common stock of Dolce Bevuto, Inc., a Nevada Corporation. Under the share exchange agreement, NOHO, Inc. issued 12,713,763 shares of its common stock to various individuals and entities in exchange for 100% of Dolce Bevuto, Inc. Additionally, under the share exchange agreement, the former officers and directors of NOHO, Inc. agreed to cancel 19,760,000 shares of common stock. For accounting purposes, the acquisition of the Dolce Bevuto, Inc. by NOHO, Inc. has been accounted for as a recapitalization, similar to a reverse acquisition except no goodwill is recorded, whereby the private company, Dolce Bevuto, Inc., in substance acquired a non-operational public company (NOHO, Inc.) with nominal assets and liabilities for the purpose of becoming a public company. Accordingly, Dolce Bevuto, Inc. is considered the acquirer for accounting purposes and thus, the historical financials are primarily that of Dolce Bevuto, Inc. As a result of this transaction, NOHO, Inc. changed its business direction and is now a beverage business. Dolce Bevuto, Inc. was incorporated on December 3, 2010 (Date of Inception) and accordingly, the accompanying financial statements are from the Date of Inception of Dolce Bevuto, Inc. through ending reporting periods reflected.
The financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America, and are expressed in U.S. dollars. The Company’s fiscal year end is December 31.
Nature of operations
Currently, the Company is focused on the production and sale of NOHO, a beverage for hangover defense. The Company purchases raw materials and outsources the manufacturing to a third party.
Use of estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ significantly from those estimates.
Fair value of financial instruments
Fair value estimates discussed herein are based upon certain market assumptions and pertinent information available to management as of September 30, 2013 and December 31, 2012. The respective carrying value of certain on-balance-sheet financial instruments approximated their fair values. These financial instruments include cash, prepaid expenses, accounts payable, accrued expense, and notes payable. Fair values were assumed to approximate carrying values for cash and payables because they are short term in nature and their carrying amounts approximate fair values or they are payable on demand.
Level 1:The preferred inputs to valuation efforts are “quoted prices in active markets for identical assets or liabilities,” with the caveat that the reporting entity must have access to that market. Information at this level is based on direct observations of transactions involving the same assets and liabilities, not assumptions, and thus offers superior reliability. However, relatively few items, especially physical assets, actually trade in active markets.
Level 2: FASB acknowledged that active markets for identical assets and liabilities are relatively uncommon and, even when they do exist, they may be too thin to provide reliable information. To deal with this shortage of direct data, the board provided a second level of inputs that can be applied in three situations.
Level 3: If inputs from levels 1 and 2 are not available, FASB acknowledges that fair value measures of many assets and liabilities are less precise. The board describes Level 3 inputs as “unobservable,” and limits their use by saying they “shall be used to measure fair value to the extent that observable inputs are not available.” This category allows “for situations in which there is little, if any, market activity for the asset or liability at the measurement date”. Earlier in the standard, FASB explains that “observable inputs” are gathered from sources other than the reporting company and that they are expected to reflect assumptions made by market participants.
Cash and cash equivalents
For the purpose of the statements of cash flows, all highly liquid investments with an original maturity of three months or less are considered to be cash equivalents. The carrying value of these investments approximates fair value. As of September 30, 2013 and December 31, 2012, there are no cash equivalents.
Accounts receivable
The Company uses the allowance method to account for uncollectible accounts receivable. The allowance for doubtful accounts represents the Company’s best estimate of the amount of probable credit losses in the Company’s existing accounts receivable. The Company determines the allowance based on specific customer information, historical write-off experience and current industry and economic data. Account balances are charged off against the allowance when the Company believes it is probable the receivable will not be recovered. Management believes that there are no concentrations of credit risk for which an allowance has not been established. Although management believes that the allowance is adequate, it is possible that the estimated amount of cash collections with respect to accounts receivable could change. Accounts receivable are presented net of an allowance for doubtful accounts. At September 30, 2013 and December 31, 2012, respectively, no allowance was recognized.
Inventory
Inventories are stated at the lower of cost (first-in, first-out basis) or market (net realizable value).
Fixed assets
The Company records all property and equipment at cost less accumulated depreciation. Improvements are capitalized while repairs and maintenance costs are expensed as incurred. Depreciation is calculated using the straight-line method over the estimated useful life of the assets or the lease term, whichever is shorter. Leasehold improvements include the cost of the Company’s internal development and construction department. Depreciation periods are as follows:
Computer equipment 3 years
Furniture and fixtures 7 years
Intangible assets
ASC 350 requires that goodwill and intangible assets with indefinite useful lives no longer be amortized, but instead tested for impairment at least annually in accordance with the provisions of ASC 350. This standard also requires that intangible assets with definite useful lives be amortized over their respective estimated useful lives to their estimated residual values, and reviewed for impairment. As of September 30, 2013 and December 31, 2012, the Company has not record an impairment of its intangible assets.
The Company's intangible assets consist of the costs of filing and acquiring various patents and trademarks. The trademarks are recorded at cost. The Company determined that the trademarks have an estimated useful life of approximately 11 years and will be reviewed annually for impairment. Amortization will be recorded over the estimated useful life of the assets using the straight-line method for financial statement purposes. The Company commenced amortization during March 2011.
Stock-based compensation
The Company records stock-based compensation in accordance with the guidance in ASC Topic 505 and 718 which requires the Company to recognize expenses related to the fair value of its employee stock option awards. This eliminates accounting for share-based compensation transactions using the intrinsic value and requires instead that such transactions be accounted for using a fair-value-based method. The Company recognizes the cost of all share-based awards on a graded vesting basis over the vesting period of the award.
The Company accounts for equity instruments issued in exchange for the receipt of goods or services from other than employees in accordance with FASB ASC 718-10 and the conclusions reached by the FASB ASC 505-50. Costs are measured at the estimated fair market value of the consideration received or the estimated fair value of the equity instruments issued, whichever is more reliably measurable. The value of equity instruments issued for consideration other than employee services is determined on the earliest of a performance commitment or completion of performance by the provider of goods or services as defined by FASB ASC 505-50.
Revenue recognition
The Company recognizes revenues from sale of products when the items have shipped and title has transferred to the purchaser.
As of September 30, 2013, the Company had deferred revenue of $0. The Company received deposits of $75,000 during 2012 on orders for products and shipped the products out during the three months ended September 30, 2013 and the revenue was earned during the three and nine months ended September 30, 2013.
Advertising costs
Advertising costs are anticipated to be expensed as incurred. Advertising costs included in general and administrative expenses totaled $46,185 and $28,364 for the nine months ended September 30, 2013 and 2012, respectively.
Income taxes
The Company is treated as a partnership for federal income tax purposes and does not incur income taxes for the period from inception (December 3, 2010) to February 8, 2013, when the Company was domiciled from a California limited liability company to a Nevada corporation. During the period from inception (December 3, 2010) to February 8, 2013, its earnings and losses are allocated to and reported on the individual returns of the shareholder’s tax returns. Accordingly, no provision for income tax is included in the financial statements as of December 31, 2012 and 2011. The Company has no income tax provision for the period from February 8, 2013 to September 30, 2013 due to recurring net losses.
Loss per common share
Net loss per share is provided in accordance with ASC Subtopic 260-10. We present basic loss per share (“EPS”) and diluted EPS on the face of the statements of operations. Basic EPS is computed by dividing reported losses by the weighted average shares outstanding. Loss per common share has been computed using the weighted average number of common shares outstanding during the year.
Recent pronouncements
The Company has evaluated the recent accounting pronouncements through November 2013 and believes that none of them will have a material effect on the Company’s financial statements.
NOTE 2 – GOING CONCERN
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the recoverability of assets and the satisfaction of liabilities in the normal course of business. Since its inception, the Company has been engaged substantially in financing activities and developing its business plan and marketing. As a result, the Company incurred accumulated net losses from inception (December 3, 2010) through the period ended September 30, 2013 of $4,818,910. In addition, the Company’s development activities since inception have been financially sustained through capital contributions from a shareholder.
The ability of the Company to continue as a going concern is dependent upon its ability to raise additional capital from the sale of common stock or through debt financing and, ultimately, the achievement of significant operating revenues. These financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts, or amounts and classification of liabilities that might result from this uncertainty.
NOTE 3 – INVENTORY
Inventories consist of the following:
| | September 30, | | December 31, |
| | 2013 | | 2012 |
Raw materials | | $ | 69,450 | | | $ | 84,193 | |
Finished goods | | | 44,345 | | | | 74,418 | |
| | $ | 113,795 | | | $ | 158,611 | |
NOTE 4 – FIXED ASSETS
Fixed assets consisted of the following:
| | September 30, | | December 31, |
| | 2013 | | 2012 |
Computer equipment | | $ | 9,270 | | | $ | 7,807 | |
Furniture and fixtures | | | 6,386 | | | | 5,279 | |
Fixed assets, total | | | 15,656 | | | | 13,086 | |
Less: accumulated depreciation | | | (5,266 | ) | | | (2,617 | ) |
Fixed assets, net | | $ | 10,390 | | | $ | 10,469 | |
Depreciation expense for the nine months ended September 30, 2013 and 2012 was $2,649 and $1,183, respectively.
Repairs and maintenance expense for the nine months ended September 30, 2013 and 2012 was $3,506 and $4,440, respectively.
NOTE 5 – ASSET PURCHASE AGREEMENT
In March 2011, the Company purchased assets from Dajomi Brands, LLC. The assets acquired included vehicles, inventory and intangible assets. The Company made a deposit of $29,800 on the asset purchase agreement in 2010. During the year ended December 31, 2011, the Company issued a total of 10,939,698 shares of common stock valued at $109,397 and cash totaling $37,211 to settle the purchase of the asset.
Amortization expense for the nine months ended September 30, 2013 and 2012 was $11,803 and $11,803, respectively.As of September 30, 2013, and no impairment was recognized by the Company.
NOTE 6 – LINE OF CREDIT – RELATED PARTY
On November 15, 2011, the Company executed a revolving credit line with a related party for up to $150,000. The related party was an entity that is owned and controlled by an officer of the Company. The unsecured line of credit bears interest at 30% per annum with principal due on December 31, 2012 and monthly interest only payments.
On November 15, 2012, the lender agreed to increase the credit line up to $200,000 from $150,000, original line of credit executed on November 15, 2011, extend the maturity date to March 31, 2013 and to decrease the interest rate to 15% per annum.
On April 1, 2013, the lender agreed to increase the credit line up to $300,000 from $200,000 and extend the maturity date to December 31, 2013.
As of September 30, 2013, the Company has received a total of $345,500 from the revolving credit line and incurred a total of $22,769 interest expense for the nine months ended September 30, 2013, of which the Company paid $17,290.
NOTE 7 – NOTES PAYABLE – RELATED PARTY
Notes payable consisted of the following as of
| | September 30, 2013 | | December 31, 2012 |
Debenture to an entity, unsecured, 0% interest, default interest at 18%, due December 2013 | | $ | — | | | $ | 100,000 | |
Debenture to an individual, unsecured, 12% interest, default interest at 24%, due April 2013 | | | 125,000 | | | | — | |
Debenture to an individual, unsecured, 12% interest, default interest at 24% due July 2013 | | | 75,000 | | | | — | |
Debenture to an individual, unsecured, 24% interest, default interest at 24% due October 2013 | | | 110,000 | | | | — | |
Debenture to an individual, unsecured, 12% interest, default interest at 24% due September 2013 | | | 100,000 | | | | — | |
Debenture to an individual, unsecured, 0% interest, default interest at 0% due on demand | | | 4,500 | | | | — | |
Debenture to an individual, unsecured, 0% interest, interest due in 5,000 shares of common stock valued at $10,000, default interest at 0% due October 2013 | | | 26,500 | | | | — | |
| | | | | | | | |
Debt discount | | | (511 | ) | | | — | |
| | | | | | | | |
Total notes payable – related party, net of discount | | $ | 440,489 | | | $ | 100,000 | |
NOTE 8 – CONVERTIBLE NOTE PAYABLE – RELATED PARTY
During the nine months ended September 30, 2013, the Company issued a convertible note payable of $26,500 to a related party. Interest on this note is 5,000 common stocks of the Company payable with principle. The Company fair valued these common stocks at $10,000 and discounted the convertible note payable by this amount. The convertible note is also convertible at $2.00 per common stock, the Company fair valued these shares at $2.00 per common stock resulting in $0 beneficial conversion feature.
NOTE 9 – STOCKHOLDERS’ (DEFICIT)
The Company is authorized to issue up to 760,000,000 shares of $0.001 par value, common stock as a result of the Company’s 15.2 to 1 forward split effective as of January 16, 2013. All equity has been retroactively restated for the effects of the forward split.
On January 1, 2013, the Company issued a total of 33,387 shares of common stock for compensation valued at $16,519. The shares were valued using the fair value of the common stock.
On May 23, 2013, the Company agreed to issue 5,000 shares of common stock to a lender as interest on the short term notes payable.
Office space and services are provided without charge by a shareholder of the Company. Such costs are immaterial to the financial statements and, accordingly, have not been reflected therein.
During the six months ended June 30, 2013, the Company received a total of $199,000 for 99,500 shares of common stock for cash. Additionally, the Company received $50,000 for 25,000 shares. The shares were issued during August 2013 and reduced the amount recorded in common stock payable.
During the three months ended September 30, 2013, the Company received a total of $585,000 for 320,986 shares of common stock for cash.
During the three months ended September 30, 2013, the Company issued a total of 90,000 shares of common stock for services totaling $148,250. Additionally, the Company agreed to issue 71,500 shares of common stock for services totaling $131,335. The 71,500 shares have not been issued and are recorded in common stock payable.
During the three months ended September 30, 2013, the Company issued 50,000 shares of common stock in exchange for debt totaling $100,000.
NOTE 10 – RELATED PARTY TRANSACTIONS
Employment agreement with John Grdina
On December 20, 2010, the Company executed a five year employment agreement with John Grdina, Chief Executive Officer, and effective January 1, 2011 through December 31, 2015. The annual base salary is as follows:
Years Ended December 31, | | Annual Base Salary |
2011 | | $ 250,000 |
2012 | | 300,000 |
2013 | | 350,000 |
2014 | | 450,000 |
2015 | | 550,000 |
Total | | $ 1,900,000 |
In addition, Mr. Grdina has an automobile allowance of $18,000 per year, a fuel allowance of $3,600 per year and a health insurance allowance of $4,200 per year.
Mr. Grdina can elect to extend his employment agreement for additional one year terms with an annual increase in base salary of 20% per year.
The employment agreement also has bonuses based on performance of the Company and the amounts are as follows:
Gross Sales Per Year | | Bonus Amount |
$1.0M - $2.5M | | $ 50,000 |
$2.5M - $5.0M | | 200,000 |
$5.0M - $7.5M | | 350,000 |
$7.5M - $10.0M | | 500,000 |
$10.0M - $15.0M | | 700,000 |
$15.0M - $25.0M | | 900,000 |
More than $25.0M | | 4% of Gross Sales |
The bonus payments are due no later than 75 days after the end of the Company’s fiscal year.
In the event, the Company does not make timely payments of salary; the interest on the unpaid amount will be 1% per month.
During the nine months ended September 30, 2013, the Company recorded executive compensation totaling $281,850 and interest expense totaling $41,736. As of September 30, 2013, the Company had accrued interest payable of $86,704.
Consulting agreement with Sean Stephenson
On June 1, 2011, the Company executed a consulting agreement with Sean Stephenson, Chief Operation Officer, and effective June 1, 2011 through December 31, 2015. The annual base salary is $100,000 with a bonus program that is yet to be determined. Additionally, Mr. Stephenson received 3,214,366 shares of common stock, valued at $32,144. In the event, the consulting agreement is terminated during the term of the agreement; Mr. Stephenson will forfeit 50% of the shares and return them to the Company.
On January 1, 2012, the Company issued 5,911,634 shares of common stock as a bonus to Mr. Stephenson as part of his employment agreement. The fair value of the shares was $59,116.
NOTE 11 – COMMITMENTS AND CONTINGENCIES
On May 2, 2012, the Company executed a lease agreement for a period of 39 months with a monthly base rent of $750 plus estimated common area maintenance and HVAC charges of $1,230. The Company was required to pay a security deposit of $2,186.
The future minimum lease payments are as follows:
Years Ended December 31, | | |
2012 | | $ 15,840 |
2013 | | 23,760 |
2014 | | 23,760 |
2015 | | 13,860 |
Total | | $ 77,220 |
NOTE 12 – SUBSEQUENT EVENTS
On October 10, 2013, the Company sold 8,000 shares of common stock to one investor pursuant to a Private Placement Subscription Agreement, at $1.50 per share or total proceeds of $12,000.
In November the Company sold 44,000 shares of common stock to six investors pursuant to Private Placement Subscription Agreements, at $1.25 per share or total proceeds of $55,000.
END OF NOTES TO FINANCIAL STATEMENTS
ITEM 2. | MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION OR PLAN OF OPERATION |
FORWARD-LOOKING STATEMENTS
This Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) contains forward-looking statements that involve known and unknown risks, significant uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed, or implied, by those forward-looking statements. You can identify forward-looking statements by the use of the words may, will, should, could, expects, plans, anticipates, believes, estimates, predicts, intends, potential, proposed, or continue or the negative of those terms. These statements are only predictions. In evaluating these statements, you should consider various factors which may cause our actual results to differ materially from any forward-looking statements. Although we believe that the exceptions reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Therefore, actual results may differ materially and adversely from those expressed in any forward-looking statements. We undertake no obligation to revise or update publicly any forward-looking statements for any reason.
Corporate History
The Company was incorporated in the State of Wyoming on September 30, 2011 under the name RealEstate Pathways, Inc. On March 9, 2012 our registration statement filed on Form S-1 was deemed effective, registering 3,000,000 common stock shares at a fixed price of $0.04 per share.
On December 31, 2012, the Company effectuated a 15.2 to 1 forward split of the Company’s common stock issued and unissued common stock as of January 16, 2013, the record date. Immediately after the forward split, the number of shares issued and outstanding increased to 22,861,676. The number of authorized shares increased from 50,000,000 to 760,000,000 common shares.
On January 4, 2013, the Company entered into a Distributor Agreement (the “Agreement”) with Dolce Bevuto, Inc., a Nevada corporation (formerly Dolce Bevuto, LLC, a California limited liability company). Pursuant to the Agreement, the Company obtained the non-exclusive right to distribute a product named “NOHO®” – The Hangover Defense®. The term of the Agreement is for one year and allows the Company to use the NOHO® trademarks solely in connection advertising, distribution, marketing, and sale of the product throughout certain territories.
On January 9, 2013, the Company changed its name from RealEstate Pathways, Inc. to NOHO, Inc. The amendment occurred as a result of our stockholders approving the amendment at the 2012 Annual Meeting of Stockholders and a subsequent vote by the Board of Directors.
On January 31, 2013, the trading symbol for the Company’s common stock, which is quoted on the OTC:QB, was changed from REPW to HANG. Subsequently, on February 21, 2013, the trading symbol for the Company’s common stock was changed from HANG to DRNK.
On March 18, 2013, the Company entered into an Acquisition Agreement and Plan of Merger by and among, Dolce Sub Co, a Nevada corporation and wholly owned subsidiary of Company, (“Sub Co”) and Dolce Bevuto, Inc., a Nevada corporation (“DB”); DB and Sub Co being the constituent entities in the Merger. The Company issued 12,713,763 shares of its Rule 144 restricted common stock in exchange for 100% of DB’s issued and outstanding stock. Pursuant to the terms of the Merger, Sub co merged with DB and Sub Co ceased to exist; DB become a wholly owned-subsidiary of the Company. The Merger, which closed on April 1, 2013, provided the Company with the ownership of 100% of DB, as reported on Form 8-K filed with the Commission on April 2, 2013.
The Business of the Company
Pursuant to the Distributor Agreement executed on January 4, 2013 with DB, the Company has the non-exclusive right to distribute “NOHO®” – The Hangover Defense® for one year. The Company intends to begin generating revenues by marketing and selling the product in certain territories. However, the Company can make no guarantees of such.
Upon Closing of the Merger, we changed our business focus to distributing the NOHO product. NOHO develops, markets, sells and distributes a functional lifestyle beverage category product named “NOHO®” – The Hangover Defense®.Additionally, we recently launched NOHO® Gold an 8.4 oz premium lifestyle beverage for distribution throughout the United States and the world.
Our flagship product “NOHO®” – The Hangover Defense® (“NOHO”) is a dietary supplement, taken before or during the consumption of alcohol that may help to prevent the symptoms associated with a hangover. NOHO was formulated by a Doctor of Pharmacy and comes in a 2 ounce “shot” that can be consumed on a stand-alone basis or as a mixer available in an 8.4 ounce that can be consumed by itself or mixed with an alcoholic drink. It is recommended that the 2 ounce shot be taken as the first and last shot of the night, while the mixer can be consumed alone or mixed with subsequent drinks. NOHO has a refreshing flavor, containing no caffeine or stimulants. Although the method by which NOHO works has not been confirmed through clinical testing, field tests conducted throughout the country have demonstrated NOHO’s effectiveness. NOHO is intended to help minimize the adverse effects of alcohol consumption.
NOHO Hangover Defense is a functional lifestyle beverage. “Functional lifestyle” beverages are beverages that have a specific function. Functions include relaxation, health, weight management, digestion aid, alertness, detoxification, and joint health. The functional lifestyle beverage category includes relaxation drinks, and ready-to-drink (RTD) teas and coffees. Functional beverages play an important role in our everyday lives. They help keep us hydrated, prevent and help address health conditions, or simply contribute to our overall nutritional well-being. These beverages include functional ingredients such as nutrients (vitamins, minerals, amino acids, nutraceuticals, etc.), zero-calories sweeteners and stabilizers. The functional beverage market has steadily increased over the past decade and is predicted to continue to increase in growth.
The NOHO Gold Premium Lifestyle Beverage is currently being developed and marketed as a refreshingly healthy beverage that can be enjoyed both day and night. NOHO Gold is currently offered to and sold in some of the most exclusive “On Premise” bar and club venues in the United States including the Fontainebleau Hotel, LIV nightclub, Story Nightclub, Day Light, Light, Fluxx, Heist, The Mid, Greenhouse, The Opium Group properties, and many others. NOHO Gold is a healthy alternative mixer to be consumed in the vast social day and night lives of America and around the world.
We believe that our products will change the way we think about alcoholic beverage consumption. Our NOHO Gold Premium Lifestyle Beverage fills a unique niche in the market and, coupled with our relationships with major bar and club venues in the United States, has the potential to revolutionize the industry. We are in the early stages of expanding our customer base and maximizing the breadth of our distribution. We believe there is a significant opportunity to further enhance the value we deliver to clients and users. Key elements of our strategy are based on developing a high quality product and attaining high volume distribution through an aggressive marketing campaign. By raising funds we plan to enhance the reach of our current offerings, branch out into the public sector, and form strategic alliances to grow our Company and enhance our market share.
RESULTS OF OPERATIONS
Revenues
Comparison of the three month period ended September 30, 2013 and 2012.
Total net revenue during the three months ended September 30, 2013 was $169,898 as compared to $146,438 for the three months ended September 30, 2012. Gross profit for the three months ended September 30, 2013 and 2012 was $79,086 and $54,597, respectively, for a total increase in gross profits of $24,489. The increase in total net revenue for the three months ended September 30, 2013, as compared to three months ended September 30, 2012, was due to the fact that the Company’s date of inception was December 3, 2010 and it had not yet generated many revenues, comparatively. Additionally, during the three months ended September 30, 2013, the cost of goods sold was $90,812 as compared to $91,841 for the three months ended September 30, 2012.
Comparison of the nine month period ended September 30, 2013 and 2012.
Total net revenue during the nine months ended September 30, 2013 was $447,876 as compared to $1,123,766 for the nine months ended September 30, 2012. Gross profit for the nine months ended September 30, 2013 and 2012 was $75,229 and $583,662, respectively, for a total decrease in gross profits of $508,433 or 87.1%. The decrease in total net revenue for the nine months ended September 30, 2013, as compared to the nine months ended September 30, 2012, was due to the fact that the Company ceased selling in its foreign operations during the current period. Additionally, during the nine months ended September 30, 2013, the cost of goods sold was $372,647 as compared to $540,104 for the nine months ended September 30, 2012.
Operating Expenses
Comparison of the three month period ended September 30, 2013 and 2012.
Operating expenses during the three months endedSeptember 30, 2013 were $733,672, of which $93,950 was for executive compensation, $328,569 was for contract labor, $4,905 was for amortization and depreciation, and the remaining $306,248was related to general and administrative costs. In comparison, operating expenses for the three months endedSeptember 30, 2012 were $307,438, of which $81,450 was for executive compensation, $115,263 was for contract labor, $4,353 was for amortization and depreciation, and the remaining $106,372 was related to general and administrative costs. The increase in professional fees is due to increased legal and accounting work.
Comparison of the nine month period ended September 30, 2013 to the same period in 2012.
Operating expenses for the nine months endedSeptember 30, 2013 were $1,705,984 of which $281,850 was for executive compensation, $617,570 was for contract labor, $14,452 was for amortization and depreciation, and the remaining $792,112 was related to general and administrative costs. In comparison, operating expenses for the nine months endedSeptember 30, 2012 were $960,321, of which $244,350 was for executive compensation, $342,018 was for contract labor, $12,986 was for amortization and depreciation, and the remaining $360,967 was related to general and administrative costs.
Net Loss
As a result of the foregoing, we reported a net loss attributable to common shareholders for the three months ended September 30, 2013 and 2012 of $(708,269) and $(278,075), respectively.
As a result of the foregoing, we reported a net loss attributable to common shareholders for the nine months ended September 30, 2013 and 2012 of $(1,765,330) and $(433,892) respectively.
Plan of Operations
We intend to use our cash reserves to fund further marketing, manufacture, distribution and product development activities. We expect to receive a certain amount of additional funds, either through the sale of equity, obtaining debt financing or through sales of our products, but this is not assured and, otherwise, we do not currently have any alternative source of revenues.
In the event that additional financing is delayed or the Company does not generate enough revenues to meet its needs, the Company will scale down its operations. However, in that case, the marketing, development, manufacture and distribution of its products would be diminished, delayed, or even halted. In the event of an ongoing lack of financing, we may be obliged to discontinue operations, which will adversely affect the value of our common stock.
Liquidity and Capital Resources
The following table summarizes total current assets and total current liabilities atSeptember 30, 2013 compared to December 31, 2012.
| Period Ended September 30, 2013 | Period Ended December 31, 2012 | Difference $ | |
Total Current Assets | $ 464,965 | $ 343,438 | $ 121,527 | |
Total Liabilities | $ 1,849,629 | $1,162,477 | $ 687,152 | |
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| | | | | | | |
For the period endedSeptember 30, 2013, the Company had total current assets of $464,965 which consists of cash of $147,525, accounts receivable of $49,449, non-cash prepaid expenses of $50,000, prepaid stock compensation of $104,196 and inventory of $113,795. For the period ending September 30, 2013, the Company had total current liabilities of $1,849,629 which consists of accounts payable of $253,839 accrued payroll of $689,052 , notes payable of $125,000, notes payable to related parties of $315,489, line of credit related party of $345,500 , accrued interest payable of $11,342 and accrued interest payable to related parties of $109,407. This represents a working capital deficit. Nevertheless, as of the date of filing this Report, the Company’s cash reserves are only adequate to fund operations for a limited period of time.
In comparison, for the year endedDecember 31, 2012, the Company had total current assets of $343,438, which consists of cash of $83,907, accounts receivable of $50,920, non-cash prepaid expenses of $50,000 and inventory of $158,611. During the same period, the Company had total current liabilities of $1,162,477, which consists of accounts payable of $203,804, accrued payroll of $445,952, deferred revenue of $75,000, notes payable to related parties of $265,000, and accrued interest payable to related parties of $48,181.
Growth of our operations will be based on our ability to internally finance from cash flow, raise equity and/or debt to increase sales and production. Our primary sources of liquidity are: (i) cash from sales of our products; and (ii) financing activities.
Cash Flows
| Nine Months Ended September 30, 2013 | Nine Months Ended September 30,2012 |
Cash Flows from (used in) Operating Activities | $ (1,050,312) | $ (290,349) |
Cash Flows from (used in) Investing Activities | $ (2,570) | $ (1,787) |
Cash Flows from (used in) Financing Activities | $ 1,116,500 | $ 267,400 |
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Operating Activities
Net cash used by operating activities was $(1,050,312) for the nine months endedSeptember 30, 2013, as compared to $(290,349) used in operating activities for the nine months ended September 30, 2012. The increase in net cash used in operating activities was primarily due to an increase in contract labor and increases in professional fees, as a result of increased legal work and accounting work.
Investing activities
Net cash used in investing activities was $(2,570) for the nine months endedSeptember 30, 2013 as compared to $(1,787) used in investing activities for the nine months ended September 30, 2012.
Financing activities and future financings
Net cash provided by financing activities for the nine months endedSeptember 30, 2013 was $1,116,500, as compared to $267,400 for the nine months ended September 30, 2012. The increase of net cash provided by financing activities was mainly attributable to capital provided through private placements of the Company’s common stock and proceeds from notes payable of related party loans.
We will continue to rely on revenues generated from sales of products and equity sales of our common shares in order to continue to fund our expanding business operations. Issuances of additional shares will result in dilution to existing stockholders. There is no assurance that we will achieve any additional sales of the equity securities or arrange for debt or other financing to fund our operations and other activities.
Cash Requirements
Our cash on hand as ofSeptember 30, 2013 was $147,525. The Company has incurred a net loss of $(1,765,330) for the nine months period endedSeptember 30, 2013 as compared to $(433,892) atSeptember 30, 2012. While the Company has recognized revenues from operations, the revenues generated are not sufficient to sustain operations. The Company does have sufficient funds to acquire new business assets and maintain its existing operations at this time.
Future Financings
We will continue to rely on equity sales of our common shares in order to continue to fund our business operations. Issuances of additional shares will result in dilution to existing stockholders. There is no assurance that we will achieve any additional sales of the equity securities or arrange for debt or other financing to fund planned acquisitions and exploration activities.
Off-Balance Sheet Arrangements
We did not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.
Contractual Obligations
We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.
Critical Accounting Policies
Our financial statements and accompanying notes have been prepared in accordance with United States generally accepted accounting principles applied on a consistent basis. 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, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods.
We regularly evaluate the accounting policies and estimates that we use to prepare our financial statements. A complete summary of these policies is included in note 1 of the notes to our financial statements contained herein. In general, management's estimates are based on historical experience, information from third party professionals, and various other assumptions that are believed to be reasonable under the facts and circumstances. Actual results could differ from those estimates made by management.
Recently Issued Accounting Pronouncements
The Company has implemented all new accounting pronouncements that are in effect and that may impact its financial statements and does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.
ITEM 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.
ITEM 4. | Controls and Procedures |
Evaluation of Disclosure Controls and Procedures
Disclosure controls and procedures are controls and procedures that are designed to ensure that information required to be disclosed in our reports filed under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by our company in the reports that it files or submits under the Exchange Act is accumulated and communicated to our management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. Our management carried out an evaluation under the supervision and with the participation of our Principal Executive Officer and Principal Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 ("Exchange Act").
Based upon that evaluation, our Principal Executive Officer and Principal Financial Officer have concluded that our disclosure controls and procedures were not effective as ofSeptember 30, 2013, due to the material weaknesses resulting from the Board of Directors not currently having any independent members and no director qualifies as an audit committee financial expert as defined in Item 407(d)(5)(ii) of Regulation S-K, and controls were not designed and in place to ensure that all disclosures required were originally addressed in our financial statements.
Changes in Internal Control Over Financial Reporting
Our management has also evaluated our internal control over financial reporting, and there have been no significant changes in our internal controls or in other factors that could significantly affect those controls subsequent to the date of our last evaluation.
The Company is not required by current SEC rules to include, and does not include, an auditor's attestation report. The Company's registered public accounting firm has not attested to Management's reports on the Company's internal control over financial reporting.
Limitations on Effectiveness of Controls and Procedures
In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply its judgment in evaluating the benefits of possible controls and procedures relative to their costs.
PART II—OTHER INFORMATION
On April 17, 2013, the United States District Court for the Eastern District of North Carolina entered an Order Entering Default Judgment against Dolce Bevuto, LLC, a wholly owned subsidiary of the Company (“DB”), in favor of The Pantry, Inc. (the “Plaintiff”) in the matter ofThe Pantry, Inc. v. Dolce Bevuto, LLC, Civil Action No, 5:12-CV-00764. Plaintiff alleged that DB owed Plaintiff a total of $92,325 for accounts to be paid under a funding agreement entered into by and between DB and the Plaintiff. The Company intends to pursue all available remedies, at law and in equity, to appropriately respond to the Court’s order.
On May 29, 2013, the Company filed a Complaint against the Perigon Companies, LLC, et al. in the Superior Court of California in San Diego County with regard to certain agreements entered into by and between the parties. The Company sought monetary damages and injunctive relief. On August 1, 2013, the Parties reached a settlement and the Company has dismissed this lawsuit without prejudice.
On June 11, 2013, Envision Growth Partners LLC (“Envision”) filed a Complaint against NOHO, Inc., et al. in the Arizona Superior Court of Maricopa County, Arizona with regard to certain agreements entered into by and between the parties. Envision sought monetary damages and injunctive relief. On August 1, 2013, the Parties reached a settlement and Envision has dismissed this lawsuit without prejudice.
Other than stated herein, we know of no material, existing or pending legal proceedings against our company, nor are we involved as a plaintiff in any material proceeding or pending litigation. There are no proceedings in which our director, officer or any affiliates, or any registered or beneficial shareholder, is an adverse party or has a material interest adverse to our interest.
We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information required under this item.
ITEM 2. | Unregistered Sales of Equity Securities and Use of Proceeds. |
Quarterly Issuances:
On August 9, 2013, the Company issued 25,000 shares of Restricted Common Stock pursuant to a Subscription and Purchase Agreement, at a cost basis of $2.00 per share.
On August 14, 2013, the Company issued 50,000 shares pursuant to the conversion of two promissory notes dated December 20, 2012 and December 19, 2012.
On August 23, 2013, the Company issued 25,000 shares of Restricted Common Stock pursuant to a Subscription and Purchase Agreement at a cost basis of $2.00 per share. These shares were paid for during the quarter ending June 30, 2013, but issued subsequent to the quarter.
On September 12, 2013, the Company issued 255,000 shares of Restricted Common Stock pursuant to multiple Subscription Agreements at an average cost basis of $1.98 per share.
Subsequent Issuances:
On October 3, 2013, the Company issued 40,986 shares of Restricted Common Stock pursuant to several Private Placement Subscription Agreement’s, at a cost basis of $1.34 per share.
On October 3, 2013, the Company issued 90,000 shares of Restricted Common Stock pursuant to several Consulting Agreement’s dated between June and September of 2013, at a cost basis of NIL per share.
On October 8, 2013, the Company issued 21,500 shares of Restricted Common Stock pursuant to a Promotion and Consulting Agreement dated June 18, 2013, at a cost basis of NIL per share.
On October 10, 2013, the Company sold 8,000 shares of Restricted Common Stock to one investor pursuant to a Private Placement Subscription Agreement, at a cost basis of $1.50 per share.
In November the Company sold 44,000 shares of Restricted Common Stock to six investors pursuant to Private Placement Subscription Agreements, at a cost basis of $1.25 per shares. These shares have yet to be issued.
ITEM 3. | Defaults Upon Senior Securities |
None.
ITEM 4. | MINE SAFETY DISCLOSURES |
Not applicable.
On October 21, 2013, the Company’s Board of Directors appointed Steven Staehr as Chief Financial Officer of the Company to serve an initial term of ninety days, as reported on Form 8-K filed with the Commission on October 25, 2013, incorporated by reference herein.
Exhibit Number | Description | Filed |
3.1 | Articles of Incorporation filed with the Wyoming Secretary of State on September 30, 2011. | Incorporated by reference as an Exhibit to the Form S-1 filed on December 15, 2011 |
3.1(a) | Amendment to Articles of Incorporation filed with the Wyoming Secretary of State on January 9, 2013. | Incorporated by reference as an Exhibit to the Form 8-K filed on March 28, 2013. |
3.1 (b) | Amendment to Articles of Incorporation filed with the Wyoming Secretary of State on January 9, 2013. | Incorporated by reference as an Exhibit to the Form 8-K filed on January 17, 2013. |
3.1(c) | Amendment to Articles of Incorporation filed with the Wyoming Secretary of State on December 31, 2012 | Incorporated by reference as an Exhibit to the Form 8-K filed on January 8, 2013. |
3.2 | Bylaws. | Incorporated by reference as an Exhibit to the Form S-1 filed on December 15, 2011 |
31.1 | Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | Filed herewith. |
31.2 | Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | Filed herewith. |
32.1 | Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | Filed herewith. |
32.2 | Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | Filed herewith. |
95.1 | Mine Safety Disclosures. | Filed herewith. |
101.INS* | XBRL Instance Document. | Filed herewith. |
101.SCH* | XBRL Taxonomy Extension Schema Document. | Filed herewith. |
101.CAL* | XBRL Taxonomy Extension Calculation Linkbase Document. | Filed herewith. |
101.DEF* | XBRL Taxonomy Extension Definition Linkbase Document. | Filed herewith. |
101.LAB* | XBRL Taxonomy Extension Label Linkbase Document. | Filed herewith. |
101.PRE* | XBRL Taxonomy Extension Presentation Linkbase Document. | Filed herewith. |
*XBRL (Extensible Business Reporting Language) information is furnished and not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections. |
SIGNATURE
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| | NOHO, INC. |
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Date: November 19, 2013 | | By: | /S/ John Grdina |
| | | John Grdina |
| | | Its: President |
| | | (Principal Executive Officer and duly authorized signatory) |