Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2015 | Nov. 23, 2015 | |
Document And Entity Information | ||
Entity Registrant Name | American Brewing Company, Inc. | |
Entity Central Index Key | 1,579,823 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2015 | |
Amendment Flag | true | |
Amendment Description | This amendment is being file to furnish the XBRL portion of the filing and to add an exhibit that was mistakenly left out. | |
Current Fiscal Year End Date | --12-31 | |
Is Entity a Well-known Seasoned Issuer? | No | |
Is Entity a Voluntary Filer? | No | |
Is Entity's Reporting Status Current? | Yes | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 12,280,454 | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2,015 |
CONSOLIDATED BALANCE SHEETS (Un
CONSOLIDATED BALANCE SHEETS (Unaudited) - USD ($) | Sep. 30, 2015 | Dec. 31, 2014 |
CURRENT ASSETS: | ||
Property and equipment, net of accumulated depreciation of $6,477 and $36,541, respectively | $ 70,400 | |
Common Class NP A [Member] | ||
STOCKHOLDERS' EQUITY: | ||
Common stock, no par value, 40,000,000 shares authorized;1,366,042 shares issued and outstanding | $ (35,000) | |
Series A Preferred Stock [Member] | ||
STOCKHOLDERS' EQUITY: | ||
Series A preferred stock, $0.001 par value: 250,000 shares authorized, 250,000 shares issued and outstanding | 250 | |
Series B Preferred Stock [Member] | ||
STOCKHOLDERS' EQUITY: | ||
Series B Preferred stock, $0.001 par value: 300,000 shares authorized, 254,807 shares issued and outstanding | 255 | |
Series A Preferred NP Stock [Member] | ||
STOCKHOLDERS' EQUITY: | ||
Series A Preferred stock, no par value: 8,000,000 shares authorized, 6,205,558 shares issued and outstanding | 4,327,628 | |
Successor [Member] | ||
CURRENT ASSETS: | ||
Cash | 58,391 | |
Accounts receivable, net of allowance for doubtful accounts of zero and $13,638, respectively. | 316,256 | |
Inventories | 270,368 | |
Prepaid expenses and other current assets | 39,861 | |
Current assets of discontinued operations | 159,668 | |
Total current assets | 844,544 | |
Property and equipment, net of accumulated depreciation of $6,477 and $36,541, respectively | 70,400 | |
Goodwill | 717,914 | |
Long-term assets of discontinued operations | 881,934 | |
Total assets | 2,514,792 | |
CURRENT LIABILITIES: | ||
Accounts payable | 452,540 | |
Current portion of notes payable and capital leases, net of unamortized discounts | $ 50,000 | |
Convertible notes payable to related parties | ||
Factoring payable | $ 170,229 | |
Accrued expenses and other current liabilities | $ 202,874 | |
Reserve for legal settlement | ||
Current liabilities of discontinued operations | $ 159,733 | |
Total current liabilities | 1,035,376 | |
Note payable and capital leases, less current portion, net of unamortized discounts | 71,809 | |
Related party debt, less current portion, net of unamortized discounts | 21,532 | |
Long-term liabilities of discontinued operations | 229,447 | |
Total liabilities | $ 1,358,164 | |
COMMITMENTS AND CONTINGENCIES | ||
STOCKHOLDERS' EQUITY: | ||
Common Stock, $0.001 par value; 40,000,000 shares authorized; 15,419,401 shares issued and outstanding | $ 15,419 | |
Common stock, no par value, 40,000,000 shares authorized;1,366,042 shares issued and outstanding | ||
Series A preferred stock, $0.001 par value: 250,000 shares authorized, 250,000 shares issued and outstanding | $ 250 | |
Series B Preferred stock, $0.001 par value: 300,000 shares authorized, 254,807 shares issued and outstanding | $ 255 | |
Series A Preferred stock, no par value: 8,000,000 shares authorized, 6,205,558 shares issued and outstanding | ||
Additional paid-in capital | $ 3,804,566 | |
Accumulated deficit | (2,663,862) | |
Total stockholders' (deficit) equity | 1,156,628 | |
Total liabilities and stockholders' (deficit) equity | $ 2,514,792 | |
Predecessor [Member] | ||
CURRENT ASSETS: | ||
Cash | 125,312 | |
Accounts receivable, net of allowance for doubtful accounts of zero and $13,638, respectively. | 254,705 | |
Inventories | 286,070 | |
Prepaid expenses and other current assets | $ 13,865 | |
Current assets of discontinued operations | ||
Total current assets | $ 679,952 | |
Property and equipment, net of accumulated depreciation of $6,477 and $36,541, respectively | $ 65,453 | |
Goodwill | ||
Long-term assets of discontinued operations | ||
Total assets | $ 745,405 | |
CURRENT LIABILITIES: | ||
Accounts payable | 616,719 | |
Current portion of notes payable and capital leases, net of unamortized discounts | 3,689 | |
Convertible notes payable to related parties | $ 120,000 | |
Factoring payable | ||
Accrued expenses and other current liabilities | $ 106,899 | |
Reserve for legal settlement | $ 342,924 | |
Current liabilities of discontinued operations | ||
Total current liabilities | $ 1,190,231 | |
Note payable and capital leases, less current portion, net of unamortized discounts | ||
Related party debt, less current portion, net of unamortized discounts | ||
Long-term liabilities of discontinued operations | ||
Total liabilities | $ 1,190,231 | |
COMMITMENTS AND CONTINGENCIES | ||
STOCKHOLDERS' EQUITY: | ||
Common Stock, $0.001 par value; 40,000,000 shares authorized; 15,419,401 shares issued and outstanding | ||
Common stock, no par value, 40,000,000 shares authorized;1,366,042 shares issued and outstanding | $ (35,000) | |
Series A preferred stock, $0.001 par value: 250,000 shares authorized, 250,000 shares issued and outstanding | ||
Series B Preferred stock, $0.001 par value: 300,000 shares authorized, 254,807 shares issued and outstanding | ||
Series A Preferred stock, no par value: 8,000,000 shares authorized, 6,205,558 shares issued and outstanding | $ 4,327,628 | |
Additional paid-in capital | 126,328 | |
Accumulated deficit | (4,863,782) | |
Total stockholders' (deficit) equity | (444,826) | |
Total liabilities and stockholders' (deficit) equity | $ 745,405 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Sep. 30, 2015 | Dec. 31, 2014 |
Common Class A [Member] | ||
Common Stock, par value | $ 0 | |
Common Stock, shares authorized | 40,000,000 | |
Common Stock, shares issued | 0 | |
Common Stock, shares outstanding | 0 | |
Common Class NP A [Member] | ||
Common Stock, par value | $ 0 | |
Common Stock, shares authorized | 40,000,000 | |
Common Stock, shares issued | 1,366,042 | |
Common Stock, shares outstanding | 1,366,042 | |
Series A Preferred Stock [Member] | ||
Series A Preferred Stock, par value | $ 0.001 | |
Series A Preferred Stock, shares authorized | 250,000 | |
Series A Preferred Stock, shares issued | 250,000 | |
Series A Preferred Stock, shares outstanding | 250,000 | |
Series B Preferred Stock [Member] | ||
Series B Preferred Stock, par value | $ 0.001 | |
Series B Preferred Stock, shares authorized | 300,000 | |
Series B Preferred Stock, shares issued | 254,807 | |
Series B Preferred Stock, shares outstanding | 254,807 | |
Successor [Member] | ||
Common Stock, par value | $ 0.001 | |
Common Stock, shares authorized | 50,000,000 | |
Common Stock, shares issued | 15,419,401 | |
Common Stock, shares outstanding | 15,419,401 | |
Common Stock No Par value, par value | $ 0 | |
Common Stock No Par value, shares authorized | 40,000,000 | |
Common Stock No Par value, shares issued | 0 | |
Common Stock No Par value, shares outstanding | 0 | |
Series A Preferred Stock, par value | $ 0.001 | |
Series A Preferred Stock, shares authorized | 250,000 | |
Series A Preferred Stock, shares issued | 250,000 | |
Series A Preferred Stock, shares outstanding | 250,000 | |
Series B Preferred Stock, par value | $ 0.001 | |
Series B Preferred Stock, shares authorized | 300,000 | |
Series B Preferred Stock, shares issued | 254,807 | |
Series B Preferred Stock, shares outstanding | 254,807 | |
Series A No Par value Preferred Stock, par value | $ 0 | |
Series A No Par value Preferred Stock, shares authorized | 0 | |
Series A No Par value Preferred Stock, shares issued | 0 | |
Series A No Par value Preferred Stock, shares outstanding | 0 | |
Predecessor [Member] | ||
Common Stock, par value | $ 0.001 | |
Common Stock, shares authorized | 50,000,000 | |
Common Stock, shares issued | 0 | |
Common Stock, shares outstanding | 0 | |
Common Stock No Par value, par value | $ 0 | |
Common Stock No Par value, shares authorized | 40,000,000 | |
Common Stock No Par value, shares issued | 1,366,042 | |
Common Stock No Par value, shares outstanding | 1,366,042 | |
Series A Preferred Stock, par value | $ 0 | |
Series A Preferred Stock, shares authorized | 0 | |
Series A Preferred Stock, shares issued | 0 | |
Series A Preferred Stock, shares outstanding | 0 | |
Series B Preferred Stock, par value | $ 0 | |
Series B Preferred Stock, shares authorized | 0 | |
Series B Preferred Stock, shares issued | 0 | |
Series B Preferred Stock, shares outstanding | 0 | |
Series A No Par value Preferred Stock, par value | $ 0 | |
Series A No Par value Preferred Stock, shares authorized | 4,327,628 | |
Series A No Par value Preferred Stock, shares issued | 6,205,558 | |
Series A No Par value Preferred Stock, shares outstanding | 6,205,558 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) - USD ($) | 3 Months Ended | 6 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Mar. 31, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
REVENUES | $ 611,014 | ||||
Less: Cost of Good Sold | 458,873 | ||||
GROSS PROFIT | 152,141 | ||||
Successor [Member] | |||||
REVENUES | 611,014 | $ 886,197 | $ 1,302,999 | ||
Less: Cost of Good Sold | 458,873 | 584,569 | 981,336 | ||
GROSS PROFIT | 152,141 | 301,628 | 321,663 | ||
OPERATING EXPENSES: | |||||
Advertising, promotion and selling | 126,420 | 212,943 | 214,701 | ||
General and administrative | $ 277,567 | $ 178,692 | 835,471 | ||
Gain on forgiveness of accrued payroll | (500,000) | ||||
Legal and professional | $ 63,520 | $ 60,873 | 171,494 | ||
Total operating expenses | 467,507 | 452,508 | 721,666 | ||
LOSS FROM OPERATIONS | (315,366) | (150,880) | (400,003) | ||
OTHER INCOME (EXPENSE): | |||||
Interest expense | (34,767) | $ (25,196) | (107,960) | ||
Other income | $ 10,853 | $ 10,853 | |||
Interest income | $ 4 | ||||
Total other income (expense) | $ (23,914) | (25,192) | $ (97,107) | ||
LOSS FROM CONTINUING OPERATIONS | (339,280) | $ (176,072) | (497,110) | ||
INCOME FROM DISCONTINUED OPERATIONS | 50,642 | 133,814 | |||
NET LOSS | $ (288,638) | $ (176,072) | $ (363,296) | ||
NET LOSS PER SHARE - BASIC AND DILUTED: | |||||
Continuing operations | $ (0.02) | $ (0.03) | |||
Discontinued operations | 0.01 | ||||
NET LOSS PER SHARE - BASIC AND DILUTED: | $ (0.02) | $ (0.02) | |||
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING - BASIC AND DILUTED | 15,403,925 | 14,318,764 | |||
Predecessor [Member] | |||||
REVENUES | $ 576,863 | $ 2,233,690 | |||
Less: Cost of Good Sold | 413,582 | 1,470,769 | |||
GROSS PROFIT | 163,281 | 762,921 | |||
OPERATING EXPENSES: | |||||
Advertising, promotion and selling | 51,516 | 488,216 | |||
General and administrative | $ 134,124 | $ 490,826 | |||
Gain on forgiveness of accrued payroll | |||||
Legal and professional | $ 47,369 | $ 493,743 | |||
Total operating expenses | 233,009 | 1,472,785 | |||
LOSS FROM OPERATIONS | (69,728) | (709,864) | |||
OTHER INCOME (EXPENSE): | |||||
Interest expense | $ (2,294) | $ (26,080) | |||
Other income | |||||
Interest income | $ 91 | ||||
Total other income (expense) | $ (2,294) | (25,989) | |||
LOSS FROM CONTINUING OPERATIONS | $ (72,022) | $ (735,853) | |||
INCOME FROM DISCONTINUED OPERATIONS | |||||
NET LOSS | $ (72,022) | $ (735,853) |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) | 3 Months Ended | 6 Months Ended | 9 Months Ended |
Mar. 31, 2015 | Sep. 30, 2015 | Sep. 30, 2014 | |
Successor [Member] | |||
CASH FLOWS FROM OPERATING ACTIVITIES: | |||
Net loss | $ (363,296) | ||
Adjustments to reconcile net loss to net cash (used in) provided by operating activities: | |||
Depreciation | 6,477 | ||
Depreciation from discontinued operations | 115,441 | ||
Amortization of debt discounts | $ 59,207 | ||
Bad debt expense | |||
Gain on forgiveness of accrued payroll | $ (500,000) | ||
Common stock issued for services | 304,580 | ||
Changes in operating assets and liabilities: | |||
Accounts receivable | (328,812) | ||
Inventories | (52,629) | ||
Prepaid expenses and other current assets | 44,675 | ||
Accounts payable | 261,002 | ||
Accrued expenses and other current liabilities | $ 69,317 | ||
Reserve for legal settlement | |||
Net cash (used in) provided by operating activities | $ (384,038) | ||
CASH FLOWS FROM INVESTING ACTIVITIES: | |||
Purchases of property and equipment | (23,277) | ||
Purchases of property and equipment in discontinued operations | (1,050) | ||
Repayment of note issued for acqusition of assets of B&R Liquid Adventure | (140,000) | ||
Acqusition of assets of B&R Liquid Adventure | (260,000) | ||
Net cash used in investment activities | $ (424,327) | ||
CASH FLOWS FROM FINANCING ACTIVITIES: | |||
Borrowings on convertible notes payble to related parties | |||
Proceeds from notes payable | $ 288,320 | ||
Bank indebtedness | 51,002 | ||
Net factoring advances | 170,228 | ||
Issuance of stock for cash | 61,200 | ||
Issuance of Series B Preferred stock for cash | $ 25,000 | ||
Payments on convertible notes payable to related parties | |||
Repayment of notes payable to related party | $ (50,750) | ||
Repayment of notes payable and capital lease obligations | (136,379) | ||
Net cash provided by (used in) financing activities | 408,621 | ||
NET CHANGE IN CASH | (399,744) | ||
CASH AT BEGINNING OF PERIOD | 458,135 | ||
CASH AT END OF PERIOD | $ 458,135 | $ 58,391 | |
SUPPLEMENTAL INFORMATION: | |||
Cash paid during the period for: Interest | |||
Cash paid during the period for: Income taxes | |||
NONCASH INVESTING AND FINANCING ACTIVITIES: | |||
Debt issued for acquisition of B&R Liquid Adventure | $ 140,000 | ||
Common stock issued for acquisition of B&R Liquid Adventure | $ 500,000 | ||
Preferred stock issued for settlement of accounts payable | |||
Debt discount from BCF | |||
Predecessor [Member] | |||
CASH FLOWS FROM OPERATING ACTIVITIES: | |||
Net loss | (72,022) | $ (735,853) | |
Adjustments to reconcile net loss to net cash (used in) provided by operating activities: | |||
Depreciation | $ 5,100 | $ 14,944 | |
Depreciation from discontinued operations | |||
Amortization of debt discounts | $ 24,270 | ||
Bad debt expense | $ 13,637 | ||
Gain on forgiveness of accrued payroll | |||
Common stock issued for services | |||
Changes in operating assets and liabilities: | |||
Accounts receivable | $ (23,277) | $ 75,023 | |
Inventories | 105,419 | (264,779) | |
Prepaid expenses and other current assets | 5,695 | (1,798) | |
Accounts payable | (5,158) | 319,691 | |
Accrued expenses and other current liabilities | 3,473 | 48,090 | |
Reserve for legal settlement | 5,100 | 185,845 | |
Net cash (used in) provided by operating activities | 24,330 | (320,930) | |
CASH FLOWS FROM INVESTING ACTIVITIES: | |||
Purchases of property and equipment | $ (11,688) | $ (4,929) | |
Purchases of property and equipment in discontinued operations | |||
Repayment of note issued for acqusition of assets of B&R Liquid Adventure | |||
Acqusition of assets of B&R Liquid Adventure | |||
Net cash used in investment activities | $ (11,688) | $ (4,929) | |
CASH FLOWS FROM FINANCING ACTIVITIES: | |||
Borrowings on convertible notes payble to related parties | $ 120,000 | ||
Proceeds from notes payable | |||
Bank indebtedness | |||
Net factoring advances | |||
Issuance of stock for cash | |||
Issuance of Series B Preferred stock for cash | |||
Payments on convertible notes payable to related parties | $ (69,000) | ||
Repayment of notes payable to related party | |||
Repayment of notes payable and capital lease obligations | $ (1,874) | $ (5,623) | |
Net cash provided by (used in) financing activities | (70,874) | 114,377 | |
NET CHANGE IN CASH | (58,232) | (211,482) | |
CASH AT BEGINNING OF PERIOD | 125,312 | $ 67,080 | 286,258 |
CASH AT END OF PERIOD | 67,080 | 74,776 | |
SUPPLEMENTAL INFORMATION: | |||
Cash paid during the period for: Interest | $ 1,861 | $ 1,317 | |
Cash paid during the period for: Income taxes | |||
NONCASH INVESTING AND FINANCING ACTIVITIES: | |||
Debt issued for acquisition of B&R Liquid Adventure | |||
Common stock issued for acquisition of B&R Liquid Adventure | |||
Preferred stock issued for settlement of accounts payable | $ 16,532 | ||
Debt discount from BCF | $ 120,000 |
NOTE 1 - NATURE OF OPERATIONS,
NOTE 1 - NATURE OF OPERATIONS, BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES | 9 Months Ended |
Sep. 30, 2015 | |
Accounting Policies [Abstract] | |
NATURE OF OPERATIONS, BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES | NOTE 1 - NATURE OF OPERATIONS, BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES American Brewing Company, Inc. (the "Company") was formed under the laws of the State of Washington on April 26, 2010. The Company is a micro-brewing company based out of Edmonds, Washington. The Company also manufactures and sells búcha Live ucha, a gluten free, organic certified, sparkling kombucha tea. The Company acquired the búcha Live Kombucha brand and the assets related to the production and sale of it pursuant to an agreement dated April 1, 2015 (see Note 4). The búcha Live Kombucha brand is distributed in major health and grocery chains throughout North America. On October 1, 2015 (the "Closing Date"), the Company entered into an Asset Purchase Agreement (the "APA") whereby the Company sold its assets and various liabilities related to its brewery and micro-brewing operations to AMBREW, LLC, a Washington limited liability company ("AMBREW"). On the closing date, the parties executed all documents related to the transaction. Under the terms of the APA, the assets consisted of inventory, fixed assets and intellectual property. The liabilities consisted of brewing-related contracts held by the Company, liabilities related to inventory as well as lease obligations. The Company recognized the sale of its brewery and micro-brewing operations as a discontinued operation, in accordance with ASU 2014-08, "Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity." The Company is continuing to operate its búcha Live Kombucha division, which produces a gluten-free, organic certified sparkling kombucha tea. Basis of Presentation The accompanying unaudited interim consolidated financial statements as of September 30, 2015 of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP") and the rules of the Securities and Exchange Commission ("SEC"), and should be read in conjunction with the audited financial statements and notes thereto contained in the Company's Form 10-K filed with the SEC on April 15, 2015. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim periods presented have been reflected herein. The results of operations for interim periods are not necessarily indicative of the results to be expected for future quarters or for the full year. Notes to the financial statements which substantially duplicate the disclosure contained in the audited financial statements for fiscal 2014 as reported in the Form 10-K have been omitted. The ve been presented on a comparative basis. For periods after the acquisition of the (see Note 4), the Company is referred to as the Successor and its results of operations combines the brewery operations and the kombuch tea operations. For periods prior to the acquisition of the the Company is referred to as the Predecessor and its results of operations includes only the . A black line separates the Predecessor and Successor financial statements to highlight the lack of comparability between these two periods. As discussed in Note 3, the Company recognizes the sale of its s a discontinued operation, in accordance with ASU 2014-08 Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity. Concentrations Receivables arising from sales of the Company's products are not collateralized. As of September 30, 2015, two customers represented approximately 69.5% (45.7% and 23.8%) of accounts receivable and as of December 31, 2014, four customers represented approximately 75.1% (25.4%, 24.1%, 13.5% and 12.1%) of accounts receivable. For the six months ended September 30, 2015 (Successor), three customers represented approximately 80.1% (39.3%, 25.0% and 15.8%) of revenue. For the three months ended March 31, 2015 (Predecessor), three customers represented approximately 85.6% (30.2%, 29.4% and 26.0%) of revenue. For the nine months ended September 30, 2014 (Predecessor), four customers represented approximately 85.8% (33.8%, 19.4%, 16.8% and 15.8%) of revenue. For the three months ended September 30, 2014 (Predecessor), four customers represented approximately 84.1% (39.2%, 17.3%, 14.3% and 13.3%) of revenue. Accounts Receivable Factoring Arrangement with Recourse On April 2, 2015, the Company entered into a factoring agreement to sell, with recourse, certain receivables to an unrelated third-party financial institution. Under the terms of the factoring agreement, the Company receives an advance of 80% of qualified receivables and maximum amount of outstanding advances at any one time will not exceed $500,000. During the six months ended September 30, 2015, the Company received net advances from the factoring of accounts receivable of $170,228 and recognized a loss on factoring of $13,203. The Company pays factoring fees associated with the sale of receivables at the rate of 0.67% of the gross face value of the receivable for every ten-day period or fraction thereof from the date of the advance until the receivable is paid in full. The outstanding factoring payable as of September 30, 2015 was $170,229. Goodwill Goodwill represents the excess of the purchase price of acquired businesses over the estimated fair value of the identifiable net assets acquired. Goodwill is not amortized but is tested for impairment at least annually at the reporting unit level or more frequently if events or changes in circumstances indicate that the asset might be impaired. The goodwill impairment test is applied by performing a qualitative assessment before calculating the fair value of the reporting unit. If, on the basis of qualitative factors, it is considered not more likely than not that the fair value of the reporting unit is less than the carrying amount, further testing of goodwill for impairment would not be required. Otherwise, goodwill impairment is tested using a two-step approach. The first step involves comparing the fair value of a company's reporting units to their carrying amount. If the fair value of the reporting unit is determined to be greater than its carrying amount, there is no impairment. If the reporting unit's carrying amount is determined to be greater than the fair value, the second step must be completed to measure the amount of impairment, if any. The second step involves calculating the implied fair value of goodwill by deducting the fair value of all tangible and intangible assets, excluding goodwill, of the reporting unit from the fair value of the reporting unit as determined in step one. The implied fair value of the goodwill in this step is compared to the carrying value of goodwill. If the implied fair value of the goodwill is less than the carrying value of the goodwill, an impairment loss equivalent to the difference is recorded. There was no impairment of goodwill recognized during 2015. |
NOTE 2 - GOING CONCERN AND MANA
NOTE 2 - GOING CONCERN AND MANAGEMENT'S LIQUIDITY PLANS | 9 Months Ended |
Sep. 30, 2015 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
GOING CONCERN AND MANAGEMENT'S LIQUIDITY PLANS | NOTE 2 GOING CONCERN AND MANAGEMENT'S LIQUIDITY PLANS The accompanying unaudited interim consolidated financial statements have been prepared assuming the Company will continue as a going concern, which contemplates, among other things, the realization of assets and satisfaction of liabilities in the normal course of business. Since inception, the Company has financed its operations primarily through equity and debt financings. As of September 30, 2015, the Company had a working capital deficit of $190,832 and the Company used cash in operating activities of $359,708 during the nine months ended September 30, 2015. These matters, among others, raise substantial doubt about the Company's ability to continue as a going concern. The Company recognizes it will need to raise additional capital in order to fund operations and execute its business plan. There is no assurance that additional financing will be available when needed or that management will be able to obtain financing on terms acceptable to the Company and whether the Company will become profitable and generate positive operating cash flow. While the Company believes in the viability of its strategy to generate additional revenues and in its ability to raise additional funds, there can be no assurances to that effect. If the Company is unable to raise sufficient additional funds on favorable terms, it will have to develop and implement a plan to raise capital through the issuance of debt or equity on less favorable terms until sufficient additional capital is raised to support further operations. There can be no assurance that such a plan will be successful. If the Company is unable to obtain financing on a timely basis, the Company could be forced scale back its business and/or pursue other strategic avenues to develop its business. These unaudited interim consolidated financial statements do not include any adjustments relating to the recoverability and classification of assets or the amounts and classifications of liabilities that may result should the Company be unable to continue as a going concern. |
NOTE 3 DISCONTINUED OPERATIONS
NOTE 3 DISCONTINUED OPERATIONS BREWERY AND MICRO BREWING OPERATIONS | 9 Months Ended |
Sep. 30, 2015 | |
Discontinued Operations and Disposal Groups [Abstract] | |
DISCONTINUED OPERATIONS BREWERY AND MICRO-BREWING OPERATIONS | NOTE 3 DISCONTINUED OPERATIONS BREWERY AND MICRO-BREWING OPERATIONS On October 1, 2015 (the "Closing Date"), the Company entered into an APA whereby it sold its assets and various liabilities related to its brewery and micro-brewing operations to AMBREW (the "Sale".) On the Closing Date, the parties executed all documents related to the Sale. Under the terms of the APA, the assets consisted of inventory, fixed assets and intellectual property. The liabilities consisted of brewing-related contracts held by the Company, liabilities related to inventory as well as lease obligations. The purchase price was $750,000, which consisted of cash and assumed debt owed to a third party related to three equipment financing agreements. The Sale is subject to customary closing conditions, namely that the Washington State Liquor and Cannabis Board ("WSLCB") shall have approved AMBREW's assumption of the Company's WSLCB license and issued a corresponding license in AMBREW's name to operate the assets of the business from and after the Closing Date (the "WSLCB Condition"). The parties intend, to the maximum extent possible, provided that the conditions to Sale have occurred, including specifically the WSLCB Condition, that the benefits and obligations of ownership and operation of the assets of the business shall accrue to AMBREW beginning as of the Closing Date. As of November 23, 2015, the WSLCB has not issued a license to AMBREW. The Company recognized the sale of its brewery and micro-brewing operations as a discontinued operation, in accordance with ASU 2014-08, "Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity." Assets and Liabilities of Discontinued Operations The following table provides the details of the assets and liabilities of our discontinued brewery and micro-brewing operations as of September 30, 2015 and 2014: September 30, 2015 December 31, 2014 Successor Predecessor Assets of discontinued operations: Current: Accounts receivable $ 62,588 $ - Inventories 85,492 - Prepaid expenses and other current assets 11,588 - Noncurrent: Property and equipment 869,118 - Other assets 12,816 Total assets held for disposal $ 1,041,602 $ - Liabilities of discontinued operations: Current: Accounts payable $ 18,907 $ - Accrued expenses and other current liabilities 46,874 - Current portion of notes payable and capital leases 93,952 Noncurrent: Noncurrent portion of notes payable and capital leases 229,447 Total liabilities held for disposal $ 389,180 $ - Income and Expense of Discontinued Operations The following table provides income and expense of discontinued operations for the three months ended September 30, 2015 and 2014: Three months Three months ended ended September 30, 2015 September 30, 2014 Successor Predecessor Revenue $ 262,194 $ - Less: Cost of Goods Sold 203,887 - Gross Profit 58,307 - Interest expense 7,665 - Income from discontinued operations in consolidated statements of operations $ 50,642 $ - The following table provides income and expense of discontinued operations for the nine months ended September 30, 2015 and 2014: Six months Three months Nine months ended ended ended September 30, 2015 March 31, 2015 September 30, 2014 Successor Predecessor Predecessor Revenue $ 510,216 $ - $ - Less: Cost of Goods Sold 366,852 - - Gross Profit 143,364 - - Interest expense 9,550 - - Income from discontinued operations in consolidated statements of operations $ 133,814 $ - $ - |
NOTE 4 - ACQUISITION OF ASSETS
NOTE 4 - ACQUISITION OF ASSETS OF B&R LIQUID ADVENTURE, LLC | 9 Months Ended |
Sep. 30, 2015 | |
Business Combinations [Abstract] | |
ACQUISITION OF ASSETS OF B&R LIQUID ADVENTURE, LLC | NOTE 4 ACQUISITION OF ASSETS OF B&R LIQUID ADVENTURE, LLC On April 1, 2015, the Company acquired substantially all of the operating assets of B&R Liquid Adventure, LLC, a California Limited Liability Company ("B&R") (the "Acquisition"). B&R is engaged in the manufacture of búcha Live Kombucha, a gluten free, organic certified, sparkling kombucha tea. On April 1, 2015, the parties executed all documents related to the Acquisition. Upon the closing of the Acquisition, the Company received substantially all of the operating assets of B&R, consisting of inventory, fixed assets and intellectual property. Kombucha, a fermented, probiotic tea beverage, offers a myriad of health benefits. Sales of kombucha have been steadily growing as it projects to reach $500 million for 2015 according to WholeFoods Magazine. With the acquisition of the búcha Live Kombucha brand, which features eight flavors, the Company plans to leverage its beer-making expertise to expand distribution in major health and grocery chains throughout North America. The Company believes its búcha Live Kombucha brand differentiates itself from other kombucha producers through its proprietary extraction process which reduces the sour taste and may appeal to a larger audience. Pursuant to the Acquisition, the purchase price of the operating assets of B&R was a cash payment of $260,000, a secured promissory note in an amount of $140,000 and the issuance 1,479,290 shares of common stock valued at $500,000. In addition, the Company assumed $121,416 of scheduled liabilities. The 1,479,290 shares of common stock were issued with "Price Protection" for a period of 18 months, meaning that on the date that is 18 months from the date of the Acquisition, if the market value of the common stock issued pursuant to the Acquisition is less than $500,000, the Company shall issue additional shares so the aggregate amount of shares held by B&R is equal to a market value of $500,000 based on the average closing bid price of the common stock for the five days prior thereto. The Company determined the fair value of the 1,479,290 shares issued as of September 30, 2015 to be higher than $500,000, and thus no additional shares were due as of September 30, 2015. The Company accounted for its acquisition of the operating assets of B&R using the acquisition method of accounting. B&R's inventory, fixed assets and identifiable intangible assets acquired and liabilities assumed were recorded based upon their estimated fair values as of the closing date of the Acquisition. The excess of purchase price over the value of the net assets acquired was recorded as goodwill. The Company's purchase price allocation is preliminary. The fair values of acquired assets and liabilities may be further adjusted as additional information becomes available during the measurement period. Additional information that may become available subsequently and may result in changes in the values allocated to various assets and liabilities includes, but is not limited to any changes in the values allocated to tangible and identified intangible assets acquired and liabilities assumed during the measurement period and may result in material adjustments to goodwill. The following table summarizes the preliminary acquisition accounting and the tangible and intangible assets acquired as of the date of acquisition: Total Purchase Consideration Cash $ 260,000 Notes payable 140,000 Common stock issued 500,000 $ 900,000 The following table summarizes the estimated fair values of the assets acquired: Net assets acquired: Inventory $ 249,902 Property and equipment, net 53,600 Intangible assets acquired - Assumption of scheduled liabilities (121,416 ) 182,086 Goodwill 717,914 $ 900,000 Goodwill is the excess of the purchase price over the preliminary fair value of the underlying net tangible and identifiable intangible assets. In accordance with applicable accounting standards, goodwill is not amortized but instead is tested for impairment at least annually or more frequently if certain indicators are present. |
NOTE 5 - INVENTORIES
NOTE 5 - INVENTORIES | 9 Months Ended |
Sep. 30, 2015 | |
Inventory Disclosure [Abstract] | |
INVENTORIES | NOTE 5 INVENTORIES Inventories consist of hops, sugar, brewing materials, tea ingredients, bulk packaging and finished goods. The cost elements of work in process and finished goods inventory consist of raw materials and direct labor. Provisions for excess inventory are included in cost of goods sold and have historically been immaterial but adequate to provide for losses on its raw materials. The Company has yearly contracts with vendors to supply essential hop varieties on-hand in order to limit the risk of an unexpected reduction in supply or price fluctuations. Inventories are stated at the lower of cost, determined on the first-in, first-out basis, or market. Inventories consisted of the following as of: September 30, 2015 December 31, 2014 Successor Predecessor Raw materials $ 87,105 $ 83,892 Work-in-process 7,317 - Finished goods 175,946 202,178 $ 270,368 $ 286,070 |
NOTE 6 - PROPERTY AND EQUIPMENT
NOTE 6 - PROPERTY AND EQUIPMENT | 9 Months Ended |
Sep. 30, 2015 | |
Property, Plant and Equipment [Abstract] | |
NOTE 5 - PROPERTY AND EQUIPMENT | NOTE 6 PROPERTY AND EQUIPMENT Property and equipment consisted of the following as of: September 30, 2015 December 31, 2014 Successor Predecessor Property and equipment $ 76,877 $ 101,994 Less: accumulated depreciation (6,477 ) (36,541 ) $ 70,400 $ 65,453 Depreciation expense is computed on the basis of three to five year useful lives for all property and equipment. Depreciation expense from continuing operations was $6,477, $5,100 and $14,944 for the six months ended September 30, 2015 (Successor), the three months ended March 31, 2015 (Predecessor), and the nine months ended September 30, 2014 (Predecessor), respectively. Depreciation expense from discontinued operations was $115,441 for the six months ended September 30, 2015 (Successor). |
NOTE 7 - NOTES PAYABLE AND CAPI
NOTE 7 - NOTES PAYABLE AND CAPITAL LEASES | 9 Months Ended |
Sep. 30, 2015 | |
Notes to Financial Statements | |
NOTES PAYABLE AND CAPITAL LEASES | NOTE 7 NOTES PAYABLE AND CAPITAL LEASES Notes payable and capital leases consisted of the following as of: September 30, 2015 December 31, 2014 Successor Predecessor Notes payable, net of unamortized discounts of $128,191 $ 121,809 $ - Capital lease obligations - 3,689 121,809 3,689 Less: current portion (50,000 ) (3,689 ) Long-term portion, net of unamortized discounts of $128,191 $ 71,809 $ - In March 2015, the Company borrowed $200,000 used for the Acquisition (see Note 4). The note bears interest at 10% per annum and is due and payable beginning September 30, 2015 maturing on March 31, 2020. Payments of interest are required quarterly. Should the Company be successful in raising $2,000,000 or more in funding the entire balance of the note will be due immediately. The note was issued in conjunction with an equity payment totaling 176,734 shares of Series B preferred stock that was issued with the debt. The Company has allocated the loan proceeds among the debt and the stock based upon relative fair value. The relative fair value of the stock was determined to be $142,434 and was recorded as a debt discount. As of September 30, 2015, no payment has been made on this note and the remaining balance of this note is $71,809, net of the unamortized discount. On April 1, 2015, a promissory note in an amount of $140,000 was issued pursuant to the Acquisition (see Note 4). The note bears interest at 10% per annum and it matures on June 30, 2015. The note was fully paid off, and the balance as of September 30, 2015 is zero. In April 2015, the Company borrowed $50,000 under a 90-day promissory note. The note bears interest at 3% per month and was due on July 21, 2015. As of September 30, 2015, the remaining balance of this note is $50,000. The note was paid in full in October 2015. Aggregate amortization of debt discounts on third party and related party debt was $59,207 during the six months ended September 30, 2015. Notes payable and capitalized leases of discontinued operations As discussed in Note 3, the Company sold its assets related to its brewery and micro-brewing operations. The purchase price was $750,000, which consisted of cash and assumed debt owed to Pinnacle Capital Partners related to three equipment financing agreements and various capital lease agreements, as discussed below: · an Equipment Financing Agreement dated January 2015 for $124,322. The note requires 48 monthly payments of $3,218 each of which include $628 in interest. The note cannot be prepaid. As of September 30, 2015, the remaining balance of this note is $100,383. The note is secured by the underlying assets. · an Equipment Financing Agreement dated June 2015 for $125,000. The note requires 48 monthly payments of $3,236 each of which include $632 in interest. The note cannot be prepaid. As of September 30, 2015, the remaining balance of this note is $113,952. The note is secured by the underlying assets. · an Equipment Financing Agreement dated June 2015 for $113,320. The note requires 48 monthly payments of $2,934 each of which include $573 in interest. The note cannot be prepaid. As of September 30, 2015, the remaining balance of this note is $103,305. The note is secured by the underlying assets. · various capital lease agreements ranging from two to three years with interest rates ranging from 5% to 6%. As of September 30, 2015, the remaining balance of these capital lease agreements is $5,758. These leases are secured by the underlying leased property and equipment |
NOTE 8 - RELATED PARTY DEBT
NOTE 8 - RELATED PARTY DEBT | 9 Months Ended |
Sep. 30, 2015 | |
Related Party Transactions [Abstract] | |
NOTE 7 - RELATED PARTY DEBT | NOTE 8 RELATED PARTY DEBT Related party debt consisted of the following as of: September 30, 2015 December 31, 2014 Successor Predecessor Convertible notes payable to related parties $ - $ 120,000 Related party debt, net of unamortized discounts of $38,468 21,532 - 21,532 120,000 Less: current portion - (120,000 ) $ 21,532 $ - In March 2015, the Company entered into a 60 day-promissory note for cash proceeds of $50,000 with a member of management. The note has a 1.5% loan fee and bears an interest rate of 8% per annum. The loan fee resulted in a discount to the note of $750. The note also included an equity payment of 200,000 shares of common stock that were issued with the debt. The Company has allocated the loan proceed among the debt and the stock based upon relative fair value. The relative fair value of the stock was determined to be $29,420 and it was recorded as a debt discount. The note was fully paid off during the six months ended September 30, 2015. In March 2015, the Company borrowed $60,000 from a member of management used for the Acquisition (see Note 4). The note bears interest at 10% per annum and is due and payable beginning June 30, 2015 maturing on March 31, 2020. Payments of interest are required quarterly. Should the Company be successful in raising $2,000,000 or more in funding the entire balance of the note will be due immediately. The note was issued in conjunction with an equity payment totaling 53,073 shares of Series B preferred stock that was issued with the debt. The Company has allocated the loan proceeds among the debt and the stock based upon relative fair value. The relative fair value of the stock was determined to be $42,742 and was recorded as a debt discount. As of September 30, 2015, no payment has been made on this note and the remaining balance of this note is $21,532, net of the unamortized discount. The discount will be amortized over the life of the loans to interest expense. Accrued Officer Compensation and Gain on Forgiveness of Accrued Payroll In April 2015, the Company and two officers agreed to forgive $500,000 of the $600,000 in accrued officer compensation. This resulted in the Company recognizing a gain of $500,000 on forgiveness of accrued payroll during the six months ended September 30, 2015. No payments have been made on the remaining balance of $100,000, which is recorded as an accrued liability on the accompanying unaudited interim consolidated balance sheet as of September 30, 2015. As of September 30, 2015, the Company recorded an expense of approximately $10,800 related to company-related expenses incurred on an officer's personal credit card. This amount was paid in full on October 5, 2015 from the proceeds from the sale of the brewery and micro-brewing operations. The Company had previously been making monthly installment payments of $1,000 on the credit card. |
NOTE 9 - COMMITMENTS AND CONTIN
NOTE 9 - COMMITMENTS AND CONTINGENCIES | 9 Months Ended |
Sep. 30, 2015 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | NOTE 9 COMMITMENTS AND CONTINGENCIES Hops Purchase Commitments The Company entered into contracts for the supply of a portion of its hops requirements. These purchase contracts extend through crop year 2021 and specify both the quantities and prices to which the Company is committed. As of September 30, 2015, hops purchase commitments outstanding was approximately $877,000. As of September 30, 2015, projected cash outflows under hops purchase commitments for each of the remaining years under the contracts are as follows: Remaining 2015 $ 38,400 2016 232,650 2017 231,950 2018 273,200 2019 38,200 2020 31,650 2021 30,950 $ 877,000 These commitments are not accrued in the accompanying unaudited interim consolidated balance sheet as of September 30, 2015. In addition, the Company has elected not to recognize the purchase contracts as cash flow hedges in accordance with ASC Topic 815, Derivatives and Hedges Operating Lease Commitments In December 2013, the Company entered into a 25-month facilities lease with a third party for its brewery operations. The monthly base rent of $4,709 increases annually based on the Consumer Price Index All Urban Consumers U.S. City Average. Monthly rent payments include common area maintenance charges, taxes, and other charges. In December 2014, the Company amended this lease to add an additional 2,016 square feet of warehouse space. As of September 30, 2015, the minimum monthly lease payment was $5,510. Effective April 1, 2015, the Company assumed a facilities lease with a third party for the manufacture of its búcha Live Kombucha tea. This lease was executed in August 31, 2013 with a lease term of 31 months, expiring February 29, 2016. The monthly base rent is $2,673 for first 12 months, $2,748 for next 12 months, and $2,836 for the balance of the term. Monthly rent payments also include common area maintenance charges, taxes, and other charges. Future minimum lease payments under operating leases are approximately as follows: Remaining 2015 $ 24,891 2016 5,672 $ 30,563 Rent expense for both facilities was approximately $25,185 for the three months ended September 30, 2015. Legal In the normal course of business, the Company may be involved in legal proceedings, claims and assessments arising in the ordinary course of business. Such matters are subject to many uncertainties, and outcomes are not predictable with assurance. There are no such matters that are deemed material to the consolidated unaudited interim consolidated financial statements as of September 30, 2015. |
NOTE 10 - STOCKHOLDERS' EQUITY
NOTE 10 - STOCKHOLDERS' EQUITY | 9 Months Ended |
Sep. 30, 2015 | |
Equity [Abstract] | |
Stockholders' Equity | NOTE 10 STOCKHOLDERS' EQUITY Preferred Stock The Company is authorized to issue 1,000,000 shares of preferred stock, each having a par value of $0.001, with voting, distribution, dividend and redemption rights, and liquidation preferences and conversions as designated by the board of directors. The board of directors has designated 250,000 shares as Series A Preferred stock, par value $.001 per share ("Series A Preferred"). Each share of Series A Preferred shall have 500 votes for any election or other vote placed before the shareholders of the Company. As of September 30, 2015, 250,000 shares of Series A Preferred are issued and outstanding. The board of directors has designated 300,000 shares as Series B Preferred stock, par value $.001 per shares ("Series B Preferred"). The Series B Preferred is non-voting, not eligible for dividends and ranks equal to common stock and below Series A preferred stock. Each share of Series B Preferred has a conversion rate into eight shares of common stock. During the nine months ended September 30, 2015, the Company issued 229,807 shares of Series B Preferred in conjunction with two promissory notes (see Notes 7 and 8). In June 2015, the Company sold 25,000 shares of Series B Preferred for $25,000 cash. As of September 30, 2015, 254,807 shares of Series B Preferred are issued and outstanding. Common Stock The Company is authorized to issue 50,000,000 shares of common stock, $0.001 par value. During the six months ended September 30, 2015, new issuances of shares of common stock were as follows: · 1,479,290 shares of common stock were issued pursuant to the Acquisition (see Note 4). The Company estimated the fair market value to be $0.338 per share at the time of issuance. These shares were issued with "Price Protection" for a period of 18 months. If the market value of the common stock issued pursuant to the Acquisition is less than $500,000, the Company shall issue additional shares so the aggregate amount of shares issued in the Acquisition is equal to a market value of $500,000 based on the average closing bid price of the common stock for the five days prior thereto. · 204,000 shares of common stock were sold to three investors for cash proceeds of $61,200, or $.30 per share, under a private placement offering (the "Offering"). The Offering provided for the issuance warrants to purchase 50% of the number of shares subscribed for, at a price of $.50 per share, expiring one year from the investment. A total of 102,000 warrants were issued and expire between April 13 and June 10, 2016 (see Note 11). · 52,000 shares of common stock were issued to employees for services rendered. The Company estimated the fair market value to be $0.44 per share at the time of issuance and recorded an expense of $22,880 during the six months ended September 30, 2015. · 85,714 shares of common stock were issued to employee pursuant to an employment contract whereby the employee would be granted shares of common stock valued at $30,000. The Company estimated the fair market value to be $0.35 per share at the time of issuance and recorded a corresponding expense during the six months ended September 30, 2015. · 48,177 shares of common stock were issued to employee pursuant to an employment contract whereby the employee would be granted shares of common stock equal to $6,500 at the end of each quarter effective with the three months ending March 31, 2015. The Company estimated the fair market value to be $0.35 per share as of March 31, 2015, $0.46 per share as of June 30, 2015 and $0.42 per shares as of September 30, 2015. Accordingly, the employee received 18,571, 14,130 and 15,476 shares of common stock, respectively, and the Company recorded an expense of $19,500 during the six months ended September 30, 2015. · 5,000 shares of common stock were issued to Stonefield Fund for services rendered. The Company estimated the fair market value to be $0.44 per share at the time of issuance and recorded an expense of $2,200 during the six months ended September 30, 2015. · 500,000 shares of common stock were issued to LP Funding, LLC for services rendered. The Company estimated the fair market value to be $0.46 per share at the time of issuance and recorded an expense of $230,000 during the six months ended September 30, 2015. As of September 30, 2015, 15,419,401 shares of common stock are issued and outstanding. |
NOTE 11 - COMMON STOCK WARRANTS
NOTE 11 - COMMON STOCK WARRANTS | 9 Months Ended |
Sep. 30, 2015 | |
Notes to Financial Statements | |
COMMON STOCK WARRANTS | NOTE 11 COMMON STOCK WARRANTS As of September 30, 2015, the Company had warrants to purchase 1,127,000 shares of common stock outstanding, with exercise prices between $0.50 and $1.00 and expiration dates between September 2016 and October 2019. A summary of common stock warrants activity for the six months ended September 30, 2015 is as follows: Weighted Average Number Exercise Price Warrants outstanding March 31, 2015 1,025,000 $ 0.99 Granted 102,000 $ 0.50 Exercised - $ - Forfeited - $ - Warrants outstanding September 30, 2015 1,127,000 $ 0.94 Warrants exercisable as of September 30, 2015 1,127,000 $ 0.94 |
NOTE 12 - SEGMENT INFORMATION
NOTE 12 - SEGMENT INFORMATION | 9 Months Ended |
Sep. 30, 2015 | |
Segment Reporting [Abstract] | |
Segment Information | NOTE 12 SEGMENT INFORMATION As discussed in Note 3, on October 1, 2015, the Company sold its assets and various liabilities related to its brewery and micro-brewing operations. The Company recognized the sale of its brewery and micro-brewing operations as a discontinued operation in the accompanying financial statements. The operating segment information provided below is in accordance with FASB ASC Topic 280, Segment Reporting The Company's brewery operations are classified into two operating segments; "retail," to retail customers through the Company's tasting room located in the greater Seattle, Washington area, and "wholesale," to distributors under various distributor agreements. Although both segments are involved in the sale and distribution of Company products, they serve different customers and are managed separately, requiring specialized expertise. The Company also manufactures and sells búcha Live Kombucha, a gluten free, organic certified, sparkling kombucha tea. The kombucha tea brand serves different customers and is managed separately, requiring specialized expertise. The Company reports it kombucha tea business as an operating segment in accordance with FASB ASC Topic 280, Segment Reporting Effective October 1, 2015, with the sale of the Company's brewery and micro-brewing operations, the Company will operate in one segment, that of búcha Live Kombucha tea business. The following segment information is presented on a comparative basis to the accompanying unaudited interim consolidated statement of operations. For periods after the acquisition of the (since April 1, 2015), the Company is referred to as the Successor and its results of operations combines the brewery operations and the kombuch tea operations. For periods prior to the acquisition of the the Company is referred to as the Predecessor and its results of operations includes only the . Segment operating results are as follows: Three months ended September 30, 2015 (Successor) Brewery Retail (1) Brewery Wholesale (1) búcha tea Wholesale Total Sales $ - $ - $ 611,014 $ 611,014 Cost of goods sold - - 458,873 458,873 Gross profit $ - $ - $ 152,141 $ 152,141 Six months ended September 30, 2015 (Successor) Brewery Retail (1) Brewery Wholesale (1) búcha tea Wholesale Total Sales $ - $ - $ 1,302,999 $ 1,302,999 Cost of goods sold - - 981,336 981,336 Gross profit $ - $ - $ 321,663 $ 321,663 September 30, 2015 (Successor) Brewery Retail (1) Brewery Wholesale (1) búcha tea Wholesale Total Accounts receivable $ - $ - $ 316,256 $ 316,256 Property and equipment, net $ - $ - $ 70,400 $ 70,400 (1) Discontinued Operations, see Note 3. For periods prior to the acquisition of the búcha Live Kombucha brand , the Company is referred to as the Predecessor and its results of operations includes only the operations of the búcha Live Kombucha operations . Therefore, the following segment information is only for the búcha tea wholesale operation. Three months ended March 31, 2015 Nine months ended September 30, 2014 Three months ended September 30, 2014 Predecessor Predecessor Predecessor Sales $ 576,863 $ 2,233,690 $ 886,197 Cost of goods sold 413,582 1,479,856 584,569 Gross profit $ 163,281 $ 753,834 $ 301,628 |
3 DISCONTINUED OPERATIONS _ BRE
3 DISCONTINUED OPERATIONS – BREWERY AND MICRO-BREWING OPERATIONS (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Details of the assets and liabilities of our discontinued operations | September 30, 2015 December 31, 2014 Successor Predecessor Assets of discontinued operations: Current: Accounts receivable $ 62,588 $ - Inventories 85,492 - Prepaid expenses and other current assets 11,588 - Noncurrent: Property and equipment 869,118 - Other assets 12,816 Total assets held for disposal $ 1,041,602 $ - Liabilities of discontinued operations: Current: Accounts payable $ 18,907 $ - Accrued expenses and other current liabilities 46,874 - Current portion of notes payable and capital leases 93,952 Noncurrent: Noncurrent portion of notes payable and capital leases 229,447 Total liabilities held for disposal $ 389,180 $ - |
Income and expense of discontinued operations | Three months Three months ended ended September 30, 2015 September 30, 2014 Successor Predecessor Revenue $ 262,194 $ - Less: Cost of Goods Sold 203,887 - Gross Profit 58,307 - Interest expense 7,665 - Income from discontinued operations in consolidated statements of operations $ 50,642 $ - |
Iincome and expense of discontinued operations for the nine months ended September 30, 2015 and 2014 | Six months Three months Nine months ended ended ended September 30, 2015 March 31, 2015 September 30, 2014 Successor Predecessor Predecessor Revenue $ 510,216 $ - $ - Less: Cost of Goods Sold 366,852 - - Gross Profit 143,364 - - Interest expense 9,550 - - Income from discontinued operations in consolidated statements of operations $ 133,814 $ - $ - |
NOTE 4 - ACQUISITION OF ASSET19
NOTE 4 - ACQUISITION OF ASSETS OF B&R LIQUID ADVENTURE, LLC (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Business Combinations [Abstract] | |
Summary of the acquisition, tangible and intangible assets acquired at date of acquisition | Total Purchase Consideration Cash $ 260,000 Notes payable 140,000 Common stock issued 500,000 $ 900,000 |
Summary of the estimated fair value of assets acquired | Net assets acquired: Inventory $ 249,902 Property and equipment, net 53,600 Intangible assets acquired - Assumption of scheduled liabilities (121,416 ) 182,086 Goodwill 717,914 $ 900,000 |
NOTE 5 - INVENTORIES (Tables)
NOTE 5 - INVENTORIES (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Inventory Disclosure [Abstract] | |
INVENTORIES | September 30, 2015 December 31, 2014 Successor Predecessor Raw materials $ 87,105 $ 83,892 Work-in-process 7,317 - Finished goods 175,946 202,178 $ 270,368 $ 286,070 |
NOTE 6 - PROPERTY AND EQUIPME21
NOTE 6 - PROPERTY AND EQUIPMENT (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Property, Plant and Equipment [Abstract] | |
Property and equipment | September 30, 2015 December 31, 2014 Successor Predecessor Property and equipment $ 76,877 $ 101,994 Less: accumulated depreciation (6,477 ) (36,541 ) $ 70,400 $ 65,453 |
NOTE 7 - Notes Payable and Ca22
NOTE 7 - Notes Payable and Capital Leases (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Notes to Financial Statements | |
Notes Payable and Capital Leases | September 30, 2015 December 31, 2014 Successor Predecessor Notes payable, net of unamortized discounts of $128,191 $ 121,809 $ - Capital lease obligations - 3,689 121,809 3,689 Less: current portion (50,000 ) (3,689 ) Long-term portion, net of unamortized discounts of $128,191 $ 71,809 $ - |
NOTE 8 - RELATED PARTY DEBT (Ta
NOTE 8 - RELATED PARTY DEBT (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Related Party Transactions [Abstract] | |
Related Party debt | September 30, 2015 December 31, 2014 Successor Predecessor Convertible notes payable to related parties $ - $ 120,000 Related party debt, net of unamortized discounts of $38,468 21,532 - 21,532 120,000 Less: current portion - (120,000 ) $ 21,532 $ - |
NOTE 9 - COMMITMENTS AND CONT24
NOTE 9 - COMMITMENTS AND CONTINGENCIES (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Commitments and Contingencies Disclosure [Abstract] | |
Purchase Commitments for each year | Remaining 2015 $ 38,400 2016 232,650 2017 231,950 2018 273,200 2019 38,200 2020 31,650 2021 30,950 $ 877,000 |
Minimum Annual Rental Payment | Remaining 2015 $ 24,891 2016 5,672 $ 30,563 |
NOTE 11 - COMMON STOCK WARRAN25
NOTE 11 - COMMON STOCK WARRANTS (Tables) | 3 Months Ended |
Jun. 30, 2015 | |
Notes to Financial Statements | |
A summary of common stock warrants activity | Weighted Average Number Exercise Price Warrants outstanding March 31, 2015 1,025,000 $ 0.99 Granted 102,000 $ 0.50 Exercised - $ - Forfeited - $ - Warrants outstanding September 30, 2015 1,127,000 $ 0.94 Warrants exercisable as of September 30, 2015 1,127,000 $ 0.94 |
Disclosure - NOTE 12 - SEGMENT
Disclosure - NOTE 12 - SEGMENT INFORMATION (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Segment Reporting [Abstract] | |
Operating Segment | Segment operating results are as follows: Three months ended September 30, 2015 (Successor) Brewery Retail (1) Brewery Wholesale (1) búcha tea Wholesale Total Sales $ - $ - $ 611,014 $ 611,014 Cost of goods sold - - 458,873 458,873 Gross profit $ - $ - $ 152,141 $ 152,141 Six months ended September 30, 2015 (Successor) Brewery Retail (1) Brewery Wholesale (1) búcha tea Wholesale Total Sales $ - $ - $ 1,302,999 $ 1,302,999 Cost of goods sold - - 981,336 981,336 Gross profit $ - $ - $ 321,663 $ 321,663 September 30, 2015 (Successor) Brewery Retail (1) Brewery Wholesale (1) búcha tea Wholesale Total Accounts receivable $ - $ - $ 316,256 $ 316,256 Property and equipment, net $ - $ - $ 70,400 $ 70,400 (1) Discontinued Operations, see Note 3. Segment operating results are as follows: Three months ended September 30, 2015 (Successor) Brewery Retail (1) Brewery Wholesale (1) búcha tea Wholesale Total Sales $ - $ - $ 611,014 $ 611,014 Cost of goods sold - - 458,873 458,873 Gross profit $ - $ - $ 152,141 $ 152,141 Six months ended September 30, 2015 (Successor) Brewery Retail (1) Brewery Wholesale (1) búcha tea Wholesale Total Sales $ - $ - $ 1,302,999 $ 1,302,999 Cost of goods sold - - 981,336 981,336 Gross profit $ - $ - $ 321,663 $ 321,663 |
Operating Segment bucha Live Kombucha brand | Three months ended March 31, 2015 Nine months ended September 30, 2014 Three months ended September 30, 2014 Predecessor Predecessor Predecessor Sales $ 576,863 $ 2,233,690 $ 886,197 Cost of goods sold 413,582 1,479,856 584,569 Gross profit $ 163,281 $ 753,834 $ 301,628 |
NOTE 5 - INVENTORIES (Details)
NOTE 5 - INVENTORIES (Details) - USD ($) | Sep. 30, 2015 | Dec. 31, 2014 |
Successor [Member] | ||
Raw materials | $ 87,105 | |
Work in progress | 7,317 | |
Finished goods | 175,946 | |
Total | $ 270,368 | |
Predecessor [Member] | ||
Raw materials | $ 83,892 | |
Work in progress | ||
Finished goods | $ 202,178 | |
Total | $ 286,070 |
NOTE 6 - PROPERTY AND EQUIPME28
NOTE 6 - PROPERTY AND EQUIPMENT - Property and equipment (Details) - USD ($) | Sep. 30, 2015 | Dec. 31, 2014 |
Value after accumulated depreciation | $ 70,400 | |
Successor [Member] | ||
Property and equipment | 76,877 | |
Less: accumulated depreciation | (6,477) | |
Value after accumulated depreciation | $ 70,400 | |
Predecessor [Member] | ||
Property and equipment | $ 101,994 | |
Less: accumulated depreciation | (36,541) | |
Value after accumulated depreciation | $ 65,453 |
NOTE 7 - NOTES PAYABLE AND CA29
NOTE 7 - NOTES PAYABLE AND CAPITAL LEASES (Details) - Predecessor [Member] - USD ($) | Sep. 30, 2015 | Dec. 31, 2014 |
Notes payable, net of unamortized discounts of $128,191 | $ 121,809 | |
Capital lease obligations | $ 3,689 | |
Subtotal | $ 121,809 | 3,689 |
Less current portion, net of unamortized discounts of $40,690 and $0, respectively | (50,000) | $ (3,689) |
Long-term portion, net of unamortized discounts of $185,176 and $0, respectively | $ 71,809 |
NOTE 8 - RELATED PARTY DEBT - R
NOTE 8 - RELATED PARTY DEBT - Related Party debt (Details) - USD ($) | Sep. 30, 2015 | Dec. 31, 2014 |
Successor [Member] | ||
Convertible Notes payable to related parties | ||
Related party debt, net of unamortized discounts of $38,468 | $ 21,532 | |
Less: current portion | ||
Total convertible notes payable to related parties | $ 21,532 | |
Predecessor [Member] | ||
Convertible Notes payable to related parties | $ 120,000 | |
Related party debt, net of unamortized discounts of $38,468 | ||
Less: current portion | $ (120,000) | |
Total convertible notes payable to related parties |
Disclosure - NOTE 9 - COMMITMEN
Disclosure - NOTE 9 - COMMITMENTS AND CONTINGENCIES (Details) | Sep. 30, 2015USD ($) |
Purchase commitments [Abstract] | |
Remaining 2,015 | $ 38,400 |
2,016 | 232,650 |
2,017 | 231,950 |
2,018 | 273,200 |
2,019 | 38,200 |
2,020 | 31,650 |
2,021 | 30,950 |
Total | $ 877,000 |
NOTE 12 - SEGMENT INFORMATION (
NOTE 12 - SEGMENT INFORMATION (Details) - USD ($) | 3 Months Ended | 6 Months Ended | 9 Months Ended | |||
Sep. 30, 2015 | Sep. 30, 2014 | Mar. 31, 2014 | Sep. 30, 2015 | Sep. 30, 2015 | Sep. 30, 2014 | |
Sales | $ 611,014 | |||||
Cost of goods sold | 458,873 | |||||
Gross profit | 152,141 | |||||
Accounts receivable | 316,256 | $ 316,256 | $ 316,256 | |||
Property and equipment, net of accumulated depreciation | $ 70,400 | $ 70,400 | $ 70,400 | |||
Brewery Retail Sale [Member] | ||||||
Sales | ||||||
Cost of goods sold | ||||||
Gross profit | ||||||
Accounts receivable | ||||||
Property and equipment, net of accumulated depreciation | ||||||
Brewery WholeSale [Member] | ||||||
Sales | ||||||
Cost of goods sold | ||||||
Gross profit | ||||||
Accounts receivable | ||||||
Property and equipment, net of accumulated depreciation | ||||||
Bucha tea Wholesale [Member] | ||||||
Sales | $ 611,014 | |||||
Cost of goods sold | 458,873 | |||||
Gross profit | 152,141 | |||||
Accounts receivable | 316,256 | $ 316,256 | $ 316,256 | |||
Property and equipment, net of accumulated depreciation | 70,400 | 70,400 | 70,400 | |||
Predessor Bucha tea Wholesale [Member] | ||||||
Sales | 576,863 | $ 886,197 | 2,233,690 | |||
Cost of goods sold | 413,582 | 584,569 | 1,479,856 | |||
Gross profit | $ 163,281 | $ 301,628 | $ 753,834 | |||
Bucha Tea Wholesale Succecessor [Member] | ||||||
Sales | 1,302,999 | |||||
Cost of goods sold | 981,336 | |||||
Gross profit | 321,663 | |||||
Succecessor Total [Member] | ||||||
Sales | 1,302,999 | |||||
Cost of goods sold | 981,336 | |||||
Gross profit | $ 321,663 | |||||
Predessor Bucha tea Wholesale | ||||||
Sales | $ 576,863 | $ 2,233,690 | ||||
Cost of goods sold | 413,582 | 1,479,856 | ||||
Gross profit | $ 163,281 | $ 753,834 |
NOTE 4 - ACQUISITION OF ASSET33
NOTE 4 - ACQUISITION OF ASSETS OF B&R LIQUID ADVENTURE, LLC (Details Narrative) | 9 Months Ended |
Sep. 30, 2015USD ($)shares | |
Business Combinations [Abstract] | |
Cash payment required for purchase of B&R | $ 260,000 |
Secured promissory note required | $ 140,000 |
Number of shares required to be issued for acquisition | shares | 1,479,290 |
Value of shares issued | $ 500,000 |
Amount of of scheduled liabilities assumed for acquisition | $ 121,416 |
Price protection description | 18 |
NOTE 4 - ACQUISITION OF ASSET34
NOTE 4 - ACQUISITION OF ASSETS OF B&R LIQUID ADVENTURE, LLC (Details Narrative2) | Sep. 30, 2015USD ($) |
Net assets acquired: | |
Inventory | $ 249,902 |
Property and equipment, net | $ 53,600 |
Intangible assets acquired | |
Assumption of scheduled liabilities | $ (121,416) |
Subtotal | 182,086 |
Goodwill | 717,914 |
Total | $ 900,000 |
NOTE 6 - PROPERTY AND EQUIPME35
NOTE 6 - PROPERTY AND EQUIPMENT (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | 9 Months Ended |
Mar. 31, 2015 | Sep. 30, 2015 | Sep. 30, 2014 | |
Successor [Member] | |||
Depreciation expense | $ 6,477 | ||
Depreciation expense from discontinued operations | $ 115,441 | ||
Predecessor [Member] | |||
Depreciation expense | $ 5,100 | $ 14,944 | |
Depreciation expense from discontinued operations |
NOTE 8 - RELATED PARTY DEBT (De
NOTE 8 - RELATED PARTY DEBT (Details Narrative) | 9 Months Ended |
Sep. 30, 2015USD ($)shares | |
Related Party Transactions [Abstract] | |
Promissory Note for cash amount | $ 50,000 |
Loan fee percentage | 1.50% |
Discount resulting from loan fee | $ 750 |
Number os ahres included as equity payment | shares | 200,000 |
The relative fair value of the stock | $ 29,420 |
Amount borrowed for acquisition | 60,000 |
Interest rate per annum | 10 |
Amount to be raised that will mae the note due immediately | $ 2,000,000 |
Shares of Series B preferred stock equity payment issued with debt | shares | 53,073 |
The relative fair value of the Series B preferred stock issued recorded as a debt discount | shares | 42,742 |
Remaining balance of this note t be amortized to interest expense over the life of the loan | $ 19,395 |
Disclosure - NOTE 9 - COMMITM37
Disclosure - NOTE 9 - COMMITMENTS AND CONTINGENCIES (Details Narrative) | Sep. 30, 2015USD ($) |
Disclosure - Note 9 - Commitments And Contingencies Details | |
Remaining 2,015 | $ 24,891 |
2,016 | 5,672 |
Total | $ 30,563 |
Disclosure - NOTE 9 - COMMITM38
Disclosure - NOTE 9 - COMMITMENTS AND CONTINGENCIES (Details Narrative2) | 3 Months Ended |
Sep. 30, 2015USD ($) | |
Disclosure - Note 9 - Commitments And Contingencies Details | |
Monthly base rent | $ 5,510 |
Rent Expense | $ 25,185 |
Disclosure - NOTE 10 - STOCKHOL
Disclosure - NOTE 10 - STOCKHOLDERS' EQUITY (Details Narrative) | 9 Months Ended |
Sep. 30, 2015$ / sharesshares | |
Preferred stock terms of conversion | Preferred Stock The Company is authorized to issue 1,000,000 shares of preferred stock, each having a par value of $0.001, with voting, distribution, dividend and redemption rights, and liquidation preferences and conversions as designated by the board of directors. The board of directors has designated 250,000 shares as Series A Preferred stock, par value $.001 per share ("Series A Preferred"). Each share of Series A Preferred shall have 500 votes for any election or other vote placed before the shareholders of the Company. As of September 30, 2015, 250,000 shares of Series A Preferred are issued and outstanding. The board of directors has designated 300,000 shares as Series B Preferred stock, par value $.001 per shares ("Series B Preferred"). The Series B Preferred is non-voting, not eligible for dividends and ranks equal to common stock and below Series A preferred stock. Each share of Series B Preferred has a conversion rate into eight shares of common stock. During the nine months ended September 30, 2015, the Company issued 229,807 shares of Series B Preferred in conjunction with two promissory notes (see Notes 7 and 8). In June 2015, the Company sold 25,000 shares of Series B Preferred for $25,000 cash. As of September 30, 2015, 254,807 shares of Series B Preferred are issued and outstanding. |
Common stock issuance and terms of conversion | Common Stock The Company is authorized to issue 50,000,000 shares of common stock, $0.001 par value. During the six months ended September 30, 2015, new issuances of shares of common stock were as follows: · 1,479,290 shares of common stock were issued pursuant to the Acquisition (see Note 4). The Company estimated the fair market value to be $0.338 per share at the time of issuance. These shares were issued with "Price Protection" for a period of 18 months. If the market value of the common stock issued pursuant to the Acquisition is less than $500,000, the Company shall issue additional shares so the aggregate amount of shares issued in the Acquisition is equal to a market value of $500,000 based on the average closing bid price of the common stock for the five days prior thereto. · 204,000 shares of common stock were sold to three investors for cash proceeds of $61,200, or $.30 per share, under a private placement offering (the "Offering"). The Offering provided for the issuance warrants to purchase 50% of the number of shares subscribed for, at a price of $.50 per share, expiring one year from the investment. A total of 102,000 warrants were issued and expire between April 13 and June 10, 2016 (see Note 11). · 52,000 shares of common stock were issued to employees for services rendered. The Company estimated the fair market value to be $0.44 per share at the time of issuance and recorded an expense of $22,880 during the six months ended September 30, 2015. · 85,714 shares of common stock were issued to employee pursuant to an employment contract whereby the employee would be granted shares of common stock valued at $30,000. The Company estimated the fair market value to be $0.35 per share at the time of issuance and recorded a corresponding expense during the six months ended September 30, 2015. · 48,177 shares of common stock were issued to employee pursuant to an employment contract whereby the employee would be granted shares of common stock equal to $6,500 at the end of each quarter effective with the three months ending March 31, 2015. The Company estimated the fair market value to be $0.35 per share as of March 31, 2015, $0.46 per share as of June 30, 2015 and $0.42 per shares as of September 30, 2015. Accordingly, the employee received 18,571, 14,130 and 15,476 shares of common stock, respectively, and the Company recorded an expense of $19,500 during the six months ended September 30, 2015. · 5,000 shares of common stock were issued to Stonefield Fund for services rendered. The Company estimated the fair market value to be $0.44 per share at the time of issuance and recorded an expense of $2,200 during the six months ended September 30, 2015. · 500,000 shares of common stock were issued to LP Funding, LLC for services rendered. The Company estimated the fair market value to be $0.46 per share at the time of issuance and recorded an expense of $230,000 during the six months ended September 30, 2015. As of September 30, 2015, 15,419,401 shares of common stock are issued and outstanding. |
Number of common shares authorized to issue | 50,000,000 |
Series A Preferred Stock [Member] | |
Preferred Shares authorized to be Issued | 250,000 |
Par Value | $ / shares | $ 0.001 |
NOTE 11 - COMMON STOCK WARRAN40
NOTE 11 - COMMON STOCK WARRANTS (Details Narrative) - $ / shares | 9 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2015 | |
Shares | ||
Warrants outstanding March 31, 2015 | 1,025,000 | |
Granted | 102,000 | |
Exercised | ||
Expired/Cancelled | ||
Warrants outstanding September 30, 2015 | 1,127,000 | |
Warrants exercisable as of September 30, 2015 | 1,127,000 | |
Weighted Average Exercise Price | ||
Outstanding, Beginning Balance | $ .99 | |
Granted | .50 | |
Warrants outstanding September 30, 2015 | $ .99 | $ .94 |
Warrants exercisable as of September 30, 2015 | $ 0.94 |