Document_and_Entity_Informatio
Document and Entity Information | 9 Months Ended | |
Sep. 30, 2014 | Nov. 13, 2014 | |
Document And Entity Information | ' | ' |
Entity Registrant Name | 'MENDOCINO BREWING CO INC | ' |
Entity Central Index Key | '0000919134 | ' |
Document Type | '10-Q | ' |
Document Period End Date | 30-Sep-14 | ' |
Amendment Flag | 'false | ' |
Current Fiscal Year End Date | '--12-31 | ' |
Entity Filer Category | 'Smaller Reporting Company | ' |
Entity Common Stock, Shares Outstanding | ' | 12,611,133 |
Document Fiscal Period Focus | 'Q3 | ' |
Document Fiscal Year Focus | '2014 | ' |
Condensed_Consolidated_Balance
Condensed Consolidated Balance Sheets (USD $) | Sep. 30, 2014 | Dec. 31, 2013 |
Current Assets | ' | ' |
Cash | $47,200 | $324,800 |
Accounts receivable, net | 4,666,100 | 4,119,300 |
Inventories | 1,930,000 | 2,242,000 |
Prepaid expenses | 727,300 | 591,600 |
Total Current Assets | 7,370,600 | 7,277,700 |
Property and Equipment, net | 11,405,900 | 11,664,800 |
Deposits and other assets | 316,400 | 324,500 |
Total Assets | 19,092,900 | 19,267,000 |
Current Liabilities | ' | ' |
Secured lines of credit | 2,013,500 | 2,245,000 |
Accounts payable | 4,623,200 | 4,893,800 |
Accrued liabilities | 2,055,400 | 1,467,900 |
Note payable to related party | 1,026,700 | ' |
Current maturities of long-term debt, others | 4,047,000 | 4,448,000 |
Current maturities of long-term debt to related party | 540,700 | 552,500 |
Current maturities of obligations under capital leases | 5,300 | 5,300 |
Total Current Liabilities | 14,311,800 | 13,612,500 |
Long-Term Liabilities | ' | ' |
Subordinated convertible notes to related party | 3,566,000 | 3,497,900 |
Long term debt to related party, less current maturity | 675,800 | 1,104,900 |
Long term lease, less current maturities | 14,000 | 17,700 |
Total Long-Term Liabilities | 4,255,800 | 4,620,500 |
Total Liabilities | 18,567,600 | 18,233,000 |
Commitments and contingencies | ' | ' |
Stockholders' Equity | ' | ' |
Preferred stock, Series A, no par value, with liquidation preference of $1 per share; 10,000,000 shares authorized, 227,600 shares issued and outstanding | 227,600 | 227,600 |
Common stock, no par value 30,000,000 shares authorized, 12,611,133 shares issued and outstanding | 15,100,300 | 15,100,300 |
Accumulated comprehensive income | 427,800 | 413,700 |
Accumulated deficit | -15,230,400 | -14,707,600 |
Total Stockholders' Equity | 525,300 | 1,034,000 |
Total Liabilities and Stockholders' Equity | $19,092,900 | $19,267,000 |
Condensed_Consolidated_Balance1
Condensed Consolidated Balance Sheets (Parenthetical) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 |
Statement of Financial Position [Abstract] | ' | ' |
Preferred stock, Series A, liquidation preference per share | $1 | $1 |
Preferred stock, no par value | ' | ' |
Preferred stock, Series A, shares authorized | 10,000,000 | 10,000,000 |
Preferred stock, Series A, shares issued | 227,600 | 227,600 |
Preferred stock, Series A, shares outstanding | 227,600 | 227,600 |
Common stock, no par value | ' | ' |
Common stock, shares authorized | 30,000,000 | 30,000,000 |
Common stock, shares issued | 12,611,133 | 12,611,133 |
Common stock, shares outstanding | 12,611,133 | 12,611,133 |
Condensed_Consolidated_Stateme
Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) (Unaudited) (USD $) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | |
Income Statement [Abstract] | ' | ' | ' | ' |
Sales | $9,339,900 | $9,415,500 | $26,405,800 | $27,528,700 |
Excise taxes | 179,800 | 224,500 | 483,000 | 591,300 |
Net sales | 9,160,100 | 9,191,000 | 25,922,800 | 26,937,400 |
Cost of goods sold | 6,240,300 | 6,595,700 | 17,883,900 | 19,517,800 |
Gross Profit | 2,919,800 | 2,595,300 | 8,038,900 | 7,419,600 |
Operating Expenses | ' | ' | ' | ' |
Marketing | 1,479,300 | 1,409,400 | 4,614,500 | 4,060,700 |
General and administrative | 1,202,200 | 1,076,500 | 3,467,600 | 3,448,400 |
Total operating expenses | 2,681,500 | 2,485,900 | 8,082,100 | 7,509,100 |
Income (loss) from operations | 238,300 | 109,400 | -43,200 | -89,500 |
Other income (expense) | ' | ' | ' | ' |
Other income | 21,400 | 6,400 | 32,100 | 18,300 |
Profit on sale of asset | 600 | ' | 16,900 | ' |
Interest expense | -177,500 | -135,500 | -528,600 | -366,800 |
Total other expense | -155,500 | -129,100 | -479,600 | -348,500 |
Income (loss) before income taxes | 82,800 | -19,700 | -522,800 | -438,000 |
Provision for income taxes | ' | ' | ' | 5,000 |
Net income loss | 82,800 | -19,700 | -522,800 | -443,000 |
Foreign currency translation income (loss) | 54,400 | -118,900 | 14,100 | 29,500 |
Comprehensive income (loss) | $137,200 | ($138,600) | ($508,700) | ($413,500) |
Net income (loss) per common share - | ' | ' | ' | ' |
Basic and Diluted | $0.01 | $0 | ($0.04) | ($0.04) |
Weighted average common shares outstanding - | ' | ' | ' | ' |
Basic | 12,611,133 | 12,611,133 | 12,611,133 | 12,611,133 |
Diluted | 15,006,176 | 12,611,133 | 12,611,133 | 12,611,133 |
Condensed_Consolidated_Stateme1
Condensed Consolidated Statements of Cash Flows (Unaudited) (USD $) | 9 Months Ended | |
Sep. 30, 2014 | Sep. 30, 2013 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ' | ' |
Net Loss | ($522,800) | ($443,000) |
Adjustments to reconcile net loss to net cash used in operating activities: | ' | ' |
Depreciation and amortization | 845,000 | 797,700 |
Provision for doubtful accounts | -38,300 | -48,800 |
Interest accrued on related party debt | 94,800 | 68,000 |
Profit on sale of assets | -17,000 | ' |
Changes in operating assets and liabilities: | ' | ' |
Accounts receivable | -532,400 | 1,033,700 |
Inventories | 310,200 | -233,000 |
Prepaid expenses | -147,800 | -98,500 |
Deposits and other assets | -3,700 | -89,700 |
Accounts payable | -225,900 | -531,800 |
Accrued liabilities | 613,000 | -37,400 |
Net cash provided by operating activities | 375,100 | 417,200 |
CASH FLOWS FROM INVESTING ACTIVITIES: | ' | ' |
Purchases of property and equipment | -642,700 | -665,100 |
Proceeds from sale of fixed assets | 17,000 | ' |
Net cash used in investing activities | -625,700 | -665,100 |
CASH FLOWS FROM FINANCING ACTIVITIES: | ' | ' |
Net borrowing (repayment) on lines of credit | -216,200 | -56,200 |
Borrowing on long-term debt | ' | 539,700 |
Borrowing on note payable | 1,000,000 | ' |
Repayment on long-term debt | -818,300 | -390,500 |
Payments on obligations under long term leases | -3,700 | -3,100 |
Net cash (used in) provided by financing activities | -38,200 | 89,900 |
EFFECT OF EXCHANGE RATE CHANGES ON CASH | 11,200 | 200 |
NET CHANGE IN CASH | -277,600 | -157,800 |
CASH, beginning of period | 324,800 | 198,500 |
CASH, end of period | 47,200 | 40,700 |
Cash paid during the period for: | ' | ' |
Income taxes | ' | 5,000 |
Interest | 433,800 | 298,800 |
NON CASH INVESTING AND FINANCING ACTIVITIES | ' | ' |
Description_of_Operations_and_
Description of Operations and Summary of Significant Accounting Policies | 9 Months Ended | ||||||||||||||||
Sep. 30, 2014 | |||||||||||||||||
Accounting Policies [Abstract] | ' | ||||||||||||||||
Description of Operations and Summary of Significant Accounting Policies | ' | ||||||||||||||||
1. Description of Operations and Summary of Significant Accounting Policies | |||||||||||||||||
Description of Operations | |||||||||||||||||
Mendocino Brewing Company, Inc. (the “Company” or “MBC”), was formed in 1983 in California, and has two operating subsidiaries: Releta Brewing Company, LLC (“Releta”), and United Breweries International (UK) Limited (“UBIUK”). In the United States (the “US”), MBC and Releta each operate a brewery that produces beer for the specialty “craft” segment of the beer market. The breweries are located in Ukiah, California and Saratoga Springs, New York. The majority of sales for MBC in the US are in California. The Company brews several brands, of which Red Tail Ale is the flagship brand. In addition, the Company performs contract brewing for several other brands. Generally, product shipments are made directly from the breweries to the wholesalers or distributors in accordance with state and local laws. | |||||||||||||||||
MBC’s United Kingdom (“UK”) subsidiary, UBIUK, is a holding company for Kingfisher Beer Europe Limited (“KBEL”). KBEL is a distributor of alcoholic beverages, mainly Kingfisher Premium Lager Beer, in the UK and Europe. The offices of KBEL are located in Maidstone, Kent in the UK. In addition, during the period covered by this report, through UBIUK, the Company had production and distribution rights to Kingfisher Premium Lager in Canada and the United States. The Company has the right to use the Kingfisher mark and the name “Kingfisher Brewing Company” in connection with the brewing and distribution of Kingfisher Premium Lager Beer in the United States pursuant to an agreement with Kingfisher America, Inc. | |||||||||||||||||
All of our beers sold in Europe (except for beers sold in Germany) are procured under a contract with Heineken UK Limited (“HUK”). This contract expires in October 2018. KBEL is the distributor of Kingfisher Premium Lager to specialty restaurant trade distributors, liquor and convenience stores in the United Kingdom, Ireland, and continental Europe, but does not physically deliver products to customers. KBEL relies on HUK for delivery of the product in Europe in exchange for a fee paid to HUK, except for in Germany where beers are manufactured and distributed pursuant to a separate contract with a different entity. In addition, HUK has the exclusive right to sell Kingfisher Premium Lager, for a royalty fee, to certain large retail customers, including, but not limited to, Sainsbury’s, Asda, and Tesco. | |||||||||||||||||
Subsequent Events | |||||||||||||||||
We evaluate events that occur subsequent to the balance sheet date of periodic reports, but before financial statements are issued for periods ending on such balance sheet dates, for possible adjustment to such financial statements or other disclosure. This evaluation generally occurs through the date on which our financial statements are electronically prepared for filing with the Securities and Exchange Commission (“SEC”). | |||||||||||||||||
Principles of Consolidation | |||||||||||||||||
The consolidated financial statements present the accounts of MBC and its wholly-owned subsidiaries, Releta and UBIUK. All material intracompany and inter-company balances, profits and transactions have been eliminated. | |||||||||||||||||
Basis of Presentation and Organization | |||||||||||||||||
The accompanying unaudited condensed consolidated financial statements for the nine months ended September 30, 2014 and 2013 have been prepared in accordance with accounting principles generally accepted in the US. These condensed financial statements should be read in conjunction with the audited consolidated financial statements included in our most recent Annual Report on Form 10-K, as filed with the SEC, which contains additional financial and operating information and information concerning significant accounting policies followed by the Company. The financial statements and notes are representations of our management (“Management”) and board of directors (the “Board of Directors”), who are responsible for their integrity and objectivity. | |||||||||||||||||
Operating results from the nine months ended September 30, 2014 are not necessarily indicative of the results that may be expected for the year ending December 31, 2014 or any future period. | |||||||||||||||||
Reclassifications | |||||||||||||||||
Certain items in the financial statements for the prior year have been reclassified to conform to the current year presentation. These reclassifications had no effect on net income or equity. | |||||||||||||||||
SIGNIFICANT ACCOUNTING POLICIES | |||||||||||||||||
There have been no significant changes in our significant accounting policies during the nine months ended September 30, 2014 compared to what was previously disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2013. | |||||||||||||||||
Cash and Cash Equivalents, Short and Long-Term Investments | |||||||||||||||||
For purposes of cash flows, we consider all highly liquid investments purchased with a maturity of three months or less to be cash equivalents. | |||||||||||||||||
Revenue Recognition | |||||||||||||||||
We recognize revenue from the brewing and distribution operations in accordance with Accounting Standards Codification 605 of the Financial Accounting Standards Board. We recognize revenue from product sales, net of discounts. | |||||||||||||||||
We recognize revenue only when all of the following criteria have been met: | |||||||||||||||||
● | Persuasive evidence of an arrangement exists; | ||||||||||||||||
● | Delivery has occurred or services have been rendered; | ||||||||||||||||
● | The fee for the arrangement is fixed or determinable; and | ||||||||||||||||
● | Collectability is reasonably assured. | ||||||||||||||||
“Persuasive Evidence of an Arrangement” – We document all terms of an arrangement in a written contract or purchase order signed by the customer prior to recognizing revenue. | |||||||||||||||||
“Delivery Has Occurred or Services Have Been Performed” – We deliver the products prior to recognizing revenue and we perform services as per contractual terms. Product is considered delivered upon delivery to a customer’s designated carrier, and services are considered performed upon completion of our contractual obligations. | |||||||||||||||||
“The Fee for the Arrangement is Fixed or Determinable” – Prior to recognizing revenue, an amount is either fixed or determinable under the terms of the written contract. The price is negotiated at the outset of the arrangement and is not subject to refund or adjustment during the initial term of the arrangement. | |||||||||||||||||
“Collectability is Reasonably Assured” – We determine that collectability is reasonably assured prior to recognizing revenue. Collectability is assessed on a customer-by-customer basis based on criteria outlined by Management. We do not enter into arrangements unless collectability is reasonably assured at the outset. Existing customers are subject to ongoing credit evaluations based on payment history and other factors. If it is determined during the arrangement that collectability is not reasonably assured, revenue is recognized on a cash basis. | |||||||||||||||||
We record certain consideration paid to customers for services or placement fees as a reduction in revenue rather than as an expense. We report these items on the income statement as a reduction in revenue and as a corresponding reduction in marketing and selling expenses. | |||||||||||||||||
Revenues from our brewpub and gift store are recognized when sales have been completed. | |||||||||||||||||
Allowance for Doubtful Accounts | |||||||||||||||||
We maintain allowances for doubtful accounts for estimated losses resulting from the inability of our customers to make required payments. Management considers the following factors when determining the collectability of specific customer accounts: customer credit-worthiness, past transaction history with the customer, current economic and industry trends and changes in customer payment terms. Balances over 90 days past due and other higher risk amounts are reviewed individually for collectability. If the financial condition of our customers were to deteriorate, adversely affecting their ability to make payments, additional allowances would be required. Based on Management’s assessment, we provide for estimated uncollectible amounts through a charge to earnings and a credit to a valuation allowance. Balances that remain outstanding after we have used reasonable collection efforts are written off through a charge to the valuation allowance and a credit to accounts receivable. | |||||||||||||||||
Inventories | |||||||||||||||||
Inventories are stated at the lower of average cost, which approximates the first-in, first-out method, or market (net realizable value). We regularly review our inventories for the presence of obsolete product attributed to age, seasonality and quality. Inventories that are considered obsolete are written off or adjusted to carrying value. | |||||||||||||||||
Deferred Financing Costs | |||||||||||||||||
Costs relating to obtaining financing are capitalized and amortized over the term of the related debt. When a loan is paid in full, any unamortized financing costs are removed from the related accounts and charged to operations. Deferred financing costs related to a borrowing made in June 2011 were $225,000. Amortization of deferred financing costs charged to operations was $33,800 for the nine months ended September 30, 2014 and 2013, and $11,300 for the three months ended September 30, 2014 and 2013. | |||||||||||||||||
Concentration of Credit Risks | |||||||||||||||||
Financial instruments that potentially subject us to significant concentration of credit risk consist primarily of cash and cash equivalents, and accounts receivable. Substantially all of our cash and cash equivalents are deposited with commercial banks in the US and the UK that have minimal credit risk. Accounts receivable are generally unsecured and customers are subject to an initial credit review and ongoing monitoring. Wholesale distributors account for substantially all accounts receivable; therefore, this risk concentration is limited due to the number of distributors and the laws regulating the financial affairs of distributors of alcoholic beverages. As of September 30, 2014, we have approximately $2,776,600 of accounts receivable due from UK customers. | |||||||||||||||||
Labor disputes, work stoppages or other disruptions in production could adversely affect us. As of September 30, 2014, union members represented approximately 18% of our US-based workforce. MBC has approximately fourteen employees at its Ukiah, California facility who are working under a collective bargaining agreement that expires on July 31, 2018. | |||||||||||||||||
Income Taxes | |||||||||||||||||
We account for income taxes in accordance with ASC 750 which requires an asset and liability approach for financial accounting and reporting for income taxes and allows recognition and measurement of deferred tax assets based upon the likelihood of realization of tax benefits in future years. Under the asset and liability approach, deferred taxes are provided for the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Deferred tax assets are recognized for deductible temporary differences and operating loss and tax credit carryforwards. We periodically assess uncertain tax positions that we have taken or expect to take on tax returns, including decisions whether to file returns in any particular jurisdiction. We have evaluated our tax positions and have determined that there were no uncertain tax benefits as of September 30, 2014 and December 31, 2013. | |||||||||||||||||
Basic and Diluted Earnings (Loss) per Share | |||||||||||||||||
The basic earnings (loss) per share is computed by dividing the earnings (loss) attributable to common stockholders by the weighted average number of common shares outstanding during the period. Basic net earnings (loss) per share exclude the dilutive effect of stock options or warrants and convertible notes. If the Company’s operations result in net loss for any period, diluted net loss per share would be the same as basic net loss per share, since the effect of any potentially dilutive securities would be anti-dilutive. Therefore, the conversion of the related party notes has been excluded from the Company’s calculation of net loss per share. The computations of basic and dilutive net loss per share are as follows: | |||||||||||||||||
Three months ended | Nine months ended | ||||||||||||||||
9/30/14 | 9/30/13 | 9/30/14 | 9/30/13 | ||||||||||||||
Net income (loss) | $ | 82,800 | (19,700 | ) | $ | (522,800 | ) | (443,000 | ) | ||||||||
Weighted average common shares outstanding | 12,611,133 | 12,611,133 | 12,611,133 | 12,611,133 | |||||||||||||
Basic net income (loss) per share | $ | 0.01 | (0.00 | ) | $ | (0.04 | ) | (0.04 | ) | ||||||||
Interest expense on convertible notes | $ | 22,900 | - | $ | - | - | |||||||||||
Income (loss) for computing diluted net income per share | $ | 105,700 | (19,700 | ) | $ | (522,800 | ) | (443,000 | ) | ||||||||
Incremental shares from assumed exercise of dilutive securities | 2,395,043 | - | - | - | |||||||||||||
Dilutive potential common shares | 15,006,176 | 12,611,133 | 12,611,133 | 12,611,133 | |||||||||||||
Diluted net earnings (loss) per share | $ | 0.01 | (0.00 | ) | $ | (0.04 | ) | (0.04 | ) | ||||||||
Foreign Currency Translation | |||||||||||||||||
The local currency in the UK, the UK Pound Sterling, is the functional currency for our UK subsidiaries. Financial statements of these subsidiaries are translated into US dollars using period-end exchange rates for assets and liabilities and average exchange rates during the period for revenues and expenses. Cumulative translation adjustments associated with net assets or liabilities are reported in non-owner changes in equity. Any exchange rate gains or losses related to foreign currency transactions are recognized in the income statement as incurred, in the same financial statement caption as the underlying transaction, and are not material for any year shown. Cash flows were translated at the average exchange rates for the nine months then ended. Changes in cash resulting from the translations are presented as a separate item in the statements of cash flows. | |||||||||||||||||
Use of Estimates | |||||||||||||||||
The preparation of financial statements in conformity with accounting principles generally accepted in the US includes having us make estimates and assumptions affecting the reported amounts of assets, liabilities, revenues and expenses, and disclosure of contingent assets and liabilities. The amounts estimated could differ from actual results. Significant estimates include the allowance for bad debts, depreciation and amortization periods, and the future utilization of deferred tax assets. | |||||||||||||||||
Comprehensive Income (Loss) | |||||||||||||||||
Comprehensive income (loss) is composed of our net income (loss) and changes in equity from non-stockholder sources. The accumulated balances of these non-stockholder sources are reflected as a separate item in the equity section of the balance sheet. | |||||||||||||||||
Reportable Segments | |||||||||||||||||
Our operations are managed through two business segments: (i) brewing operations and tasting room operations in the US, and distributor operations in Canada (the “North American Territory”); and (ii) distributor operations in Europe, including the UK (the “Foreign Territory”). We evaluate performance based on net operating profit. Where applicable, portions of our administrative expenses are allocated between the operating segments. The operating segments do not share manufacturing or distribution facilities. If any materials and/or services are provided to one operating segment by the other, the transaction is valued according to our transfer policy, which approximates market price. The costs of operating the manufacturing plants are captured discretely within each segment. The Company’s property, plant and equipment, inventory, and accounts receivable are captured and reported discretely within each operating segment. | |||||||||||||||||
Recent Accounting Pronouncements | |||||||||||||||||
In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No. 2014-09, “Revenue from Contracts with Customers (Topic 606)” (“ASU 2014-09”), which supersedes the revenue recognition requirements in Topic 605, Revenue Recognition, including most industry-specific requirements. ASU 2014-09 establishes a five-step revenue recognition process in which an entity will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. ASU 2014-09 also requires enhanced disclosures regarding the nature, amount, timing and uncertainty of revenues and cash flows from contracts with customers. ASU 2014-09 will be effective for the Company in the first quarter of 2017. Management is currently evaluating the impact the adoption of ASU 2014-09 will have on the Company’s condensed consolidated financial position, results of operations or cash flows and the method of retrospective application, either full or modified. | |||||||||||||||||
In August 2014, the FASB issued ASU 2014-15, Presentation of Financial Statements—Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern (“ASU 2014-15”), to provide guidance on management’s responsibility to perform interim and annual assessments of an entity’s ability to continue as a going concern and to provide related disclosure requirements. ASU 2014-15 applies to all entities and is effective for annual periods ending after December 15, 2016, and interim periods thereafter, with early adoption permitted. Management will adopt this standard if applicable from its effective period. |
Liquidity_and_Management_Plans
Liquidity and Management Plans | 9 Months Ended |
Sep. 30, 2014 | |
Liquidity And Management Plans | ' |
Liquidity and Management Plans | ' |
2. Liquidity and Management Plans | |
On June 23, 2011, MBC and Releta entered into a Credit and Security Agreement (the “Agreement”) with Cole Taylor Bank, an Illinois banking corporation (“Cole Taylor”). Cole Taylor merged into MB Financial Bank, an Illinois banking corporation (“MB Financial”) on August 18, 2014. As used in this Report, “Lender” shall refer to Cole Taylor prior to August 18, 2014 and to MB Financial, as successor in interest to Cole Taylor on or after August 18, 2014. The Agreement provides a credit facility with a maturity date of June 23, 2016 of up to $10,000,000 consisting of a $4,119,000 revolving facility, a $1,934,000 machinery and equipment term loan, a $2,947,000 real estate term loan and a $1,000,000 capital expenditure line of credit. Convertible promissory notes issued to United Breweries of America, Inc. (“UBA”), one of the Company’s principal shareholders, are subordinated to the Lender’s facility. | |
The Agreement requires MBC and Releta to maintain certain minimum fixed charge coverage ratios for trailing twelve month periods and minimum tangible net worth. The minimum tangible net worth MBC and Releta are required to maintain is subject to increase based on the net income of MBC and Releta. On March 29, 2013, MBC, Releta, and Lender entered into a First Amendment (the “Amendment”) to the Agreement to clarify the method by which the fixed charge coverage ratio is calculated, with retrospective application. | |
The required fixed charge coverage ratio for the trailing twelve month periods ended March 31, 2013 onwards fell short of the required ratio. The tangible net worth fell short of the required amount for the period beginning June 1, 2013 onwards. | |
On September 18, 2013, MBC and Releta received a notice (the “Default Notice”) from Lender regarding its intention to exercise certain rights with respect to events of default of the Company pursuant to the Agreement. | |
The Agreement provides that the failure of MBC and Releta to observe any covenant will constitute an event of default under the Agreement. Under the Agreement, upon the occurrence of an event of default, all of MBC’s and Releta’s obligations under the Agreement may, at the option of the Lender, be declared, and immediately shall become, due and payable, without notice of any kind. The event of default shall be deemed continuing until waived in writing by the Lender. The Default Notice states that Lender has elected, effective September 1, 2013, to charge a default interest rate equal to two percent (2%) per annum in excess of the interest rate otherwise payable under the Agreement. The Company estimates that the increased rate currently results in approximately $120,000 additional annual interest expense. | |
On April 18, 2014, MBC and Releta received a second notice (the “Second Default Notice”) from Lender regarding its intention to exercise certain rights with respect to events of default of the Company pursuant to the Agreement. As stated in the Second Default Notice, the Company has continued to be in default on the fixed charge coverage ratio for each measurement period beginning March 31, 2013 through February 29, 2014. The required fixed charge coverage ratio was initially required to be at least 1.05 to 1.00, but as of July 31, 2013, the required fixed charge coverage ratio increased to 1.10 to 1.00 pursuant to the terms of the Agreement. The Company calculated that the fixed charge coverage ratio as of September 30, 2014 was -0.78 to 1. | |
The Second Default Notice also stated that the tangible net worth of MBC and Releta continued to fall short of the required amount as measured through February 28, 2014. The Company calculated that the required tangible net worth of MBC and Releta was $6,181,400 as of September 30, 2014 and the actual tangible net worth on such date was $4,932,900. The Company does not anticipate that it will regain compliance with the required fixed charge coverage ratio or the minimum tangible net worth in the immediate future. | |
The Second Default Notice required MBC and Releta to engage a consultant to perform a viability analysis and prepare a revised projection for 2014, to be delivered to Lender on or before April 30, 2014. MBC and Releta engaged a consultant and delivered a revised projection on April 30, 2014. | |
Effective August 20, 2014, pursuant to a notice to MBC and Releta dated August 18, 2014 (the “Third Default Notice”) which referred to MBC’s and Releta’s continued failure to meet the required fixed charge coverage ratio and the tangible net worth requirement, Lender notified MBC and Releta that it would reduce the advance rate for (i) eligible finished goods and raw material inventory and (ii) eligible work-in progress inventory by 2% each month. The advance rates are used in the calculation of the borrowing base of each of MBC and Releta, which is used in the determination of the amount available to each of MBC and Releta pursuant the revolving facility. Under the terms of the Agreement, if such availability is less than $0, or if certain components of the borrowing base of each of MBC and Releta fall below certain limits in relation to outstanding revolving loans, such difference shall be immediately due and payable. Lender has not waived the events of default described in the Default Notice, the Second Default Notice or the Third Default Notice and has reserved the right to all other available rights and remedies under the Agreement, certain other related documents and applicable law. Lender could declare the full amount owed under the Agreement due and payable at any time for any reason or no reason. The Company has not received any notice or other communication from Lender that it intends to exercise any other remedies available to it under the Agreement in connection with the events of default. Lender continues to charge a default interest rate equal to two percent (2%) per annum in excess of the interest rate otherwise payable under the Agreement. The exercise of additional remedies by Lender may have a material adverse effect on the Company’s financial condition and the Company’s ability to continue to operate. If it becomes necessary for MBC and Releta to seek additional financing, there is no guarantee that MBC and Releta will be able to obtain such financing on terms favorable to the Company or on any terms. | |
We have several loans, lines of credit, other credit facilities and lease agreements which are currently outstanding (collectively, “Indebtedness”). We currently make timely payments of principal and interest relating to the Indebtedness as they fall due and anticipate that we will continue to make such timely payments in the immediate future. However, if we fail to maintain any of the financial covenants under the various agreements governing Indebtedness (such as the default under the Agreement described above), fail to make timely payments of amounts due under the Indebtedness, or commit any other breach resulting in an event of default under the agreements governing Indebtedness, such events of default (including cross-defaults) could have a material adverse effect on our financial condition. If our existing debt were accelerated and terminated, we would need to obtain replacement financing, the lack of which would have a material adverse effect on our financial condition and ability to continue operations. In addition, actions taken by secured parties against the Company’s assets which have been pledged as collateral could have a material adverse effect on our financial condition and operations. | |
At September 30, 2014, the Company had cash and cash equivalents of $47,200, an accumulated deficit of $15,230,400, and a working capital deficit of $6,941,200 due to losses incurred and reclassification of debts owing to Lender as a result of the default under the Agreement described above. | |
On November 8, 2013, United Breweries Holding Limited (“UBHL”), Company’s indirect majority shareholder issued a letter of financial support on behalf of MBC (the “Letter of Support”) to MBC’s accountants to confirm that UBHL had agreed to provide funding on an as needed basis to ensure that MBC is able to meet its financial obligations when they fall due. The Letter of Support does not specify either the terms of UBHL’s support, or a maximum dollar limit. UBHL’s financial support is contingent upon compliance with any applicable exchange control requirements and other applicable laws and regulations relating to the transfer of funds from India. The MBC Letter of Support was issued for a period through December 31, 2014, but, if necessary, management intends to seek UBHL’s consent to extend the stated support. UBHL controls the Company’s two largest shareholders, UBA and Inversiones Mirabel S.A. (“Inversiones”), and as such, UBHL is the Company’s indirect majority shareholder. The Chairman of the Company’s Board of Directors, Dr. Vijay Mallya, is also the chairman of the board of directors of UBHL. | |
The Company received a letter dated November 11, 2013 from UBHL expressing its willingness to commit to invest $2,000,000 in the Company in four installments to be paid every six months over a two year period. The letter did not state definitive terms for the proposed investment. In the letter, UBHL stated that it would consider additional investment based on a business plan to be provided by the Company. The Company has not provided a business plan and there has been no further communication with UBHL regarding any additional investment. | |
On January 22, 2014, Catamaran Services, Inc., (“Catamaran”), a related party provided a note loan of $500,000 repayable upon receipt of an equity investment by the Company’s majority shareholder. On April 24, 2014, another note loan of $500,000 was received from Catamaran on terms similar to the previous note. (Please see - Note 5. Note payable to Related Party – below for details). On each date on which Catamaran provided a note loan, the Company received a letter from Lender permitting the Company to obtain loans subject to certain conditions, including that no portion of such loans would be payable until either (a) certain obligations of the Company to Lender pursuant to the Agreement were satisfied in full, or (b) such payment was a Permitted Payment. A “Permitted Payment” is a payment made from the portion of an equity investment by the Company’s majority shareholder that is over $500,000. | |
Management has taken several actions to enable the Company to meet its working capital needs through September 30, 2015, including reducing discretionary expenditures, expanding business in new territories, introducing new products, reducing manpower and securing additional brewing contracts in an effort to utilize a portion of excess production capacity. We have changed the packaging designs to revitalize the brands. We may also seek additional capital infusions to support our operations. | |
If it becomes necessary to seek UBHL’s financial assistance under the Letter of Support and UBHL does not fulfill its commitment to MBC, it may result in a material adverse effect on MBC’s financial position and on its ability to continue operations. In addition, our lenders may seek to satisfy any outstanding obligations through recourse against the applicable pledged collateral which include our real property and fixed and current assets. The loss of any material pledged asset would likely have a material adverse effect on MBC’s financial position and results of operations. |
Inventories
Inventories | 9 Months Ended | ||||||||
Sep. 30, 2014 | |||||||||
Inventory Disclosure [Abstract] | ' | ||||||||
Inventories | ' | ||||||||
3. Inventories | |||||||||
Inventory is stated at the lower of cost or market using the average-cost method. Cost includes the acquisition cost of raw materials and components, direct labor, and manufacturing overhead. | |||||||||
Inventories consist of the following: | |||||||||
September 30, 2014 | December 31, 2013 | ||||||||
Raw Materials | $ | 795,800 | $ | 813,000 | |||||
Beer-in-process | 295,900 | 357,700 | |||||||
Finished Goods | 753,700 | 967,600 | |||||||
Merchandise | 84,600 | 103,700 | |||||||
TOTAL | $ | 1,930,000 | $ | 2,242,000 |
Secured_Lines_of_Credit
Secured Lines of Credit | 9 Months Ended |
Sep. 30, 2014 | |
Line of Credit Facility [Abstract] | ' |
Secured Lines of Credit | ' |
4. Secured Lines of Credit | |
In June 2011, Lender provided a revolving line of credit maturing in June 2016, from which borrowing can be made based on eligible receivables and inventory. The borrowings are collateralized, with recourse, by MBC’s and Releta’s trade receivables and inventory located in the US. This facility carries interest (including default interest) at a rate of prime plus 3% and is secured by substantially all of the assets of Releta and MBC. The amount outstanding on this line of credit as of September 30, 2014 was $1,311,300. We have included as accounts receivable on our September 30, 2014 balance sheet, $1,889,500 of accounts receivables and $1,862,200 of inventory collateralized to Lender under this facility. | |
On April 26, 2005, Royal Bank of Scotland Commercial Services Limited (“RBS”) provided an invoice discounting facility to KBEL for a maximum amount of £1,750,000 based on 80% prepayment against qualified accounts receivable related to KBEL’s UK customers. The initial term of the facility was one year, after which time the facility could be terminated by either party upon six months’ notice. The facility carries an interest rate of 1.38% above the RBS base rate and a service charge of 0.10% of each invoice discounted. The amount outstanding on this line of credit as of September 30, 2014 was $702,200. Account balances totaling $2,776,600 of accounts receivables collateralized to RBS under this facility are included in our balance sheet as accounts receivable at September 30, 2014. |
Notes_Payable_to_Related_Parti
Notes Payable to Related Parties | 9 Months Ended |
Sep. 30, 2014 | |
Debt Disclosure [Abstract] | ' |
Notes Payable to Related Parties | ' |
5. Notes Payable to Related Party | |
Notes payable to related party includes notes payable to Catamaran dated January 22, 2014 and April 24, 2014 for a total value of $1,026,700 including interest of $26,700 at US prime rate plus 1.5% per year, but not to exceed 10%. Catamaran Holdings, Ltd., the sole shareholder of Catamaran (“Holdings”), has directors in common with Inversiones, one of the major shareholders of MBC. The indirect beneficial owner of Inversiones is UBHL. Dr. Vijay Mallya, the Chairman of the Board of Directors of the Company is also the Chairman of the Board of Directors of UBHL. The Company has asked Catamaran whether any relationships exist between the shareholders of Holdings and any affiliates of the Company, and has not received a response to such inquiries. | |
The notes are payable within six months following the date of the notes, subject to the receipt by the Company of an equity investment by the Company’s majority shareholder in an amount sufficient either (a) to pay the notes through Permitted Payments, as defined below, or (b) to pay the notes and certain existing obligations of the Company to Lender. “Permitted Payments” on the notes are payments made from the portion of equity investment by the Company’s majority shareholder that is in excess of $500,000. If the Company is not able to satisfy its obligations on the notes within the six month period following the date of the notes, the notes shall be automatically extended for additional six month terms until they are paid. |
LongTerm_Debt
Long-Term Debt | 9 Months Ended | ||||||||
Sep. 30, 2014 | |||||||||
Long-term Debt, Unclassified [Abstract] | ' | ||||||||
Long-Term Debt | ' | ||||||||
6. Long-Term Debt | |||||||||
Maturities of long-term debt for succeeding years are as follows: | |||||||||
30-Sep-14 | 31-Dec-13 | ||||||||
Loan from Lender, payable in monthly installments of $12,300, plus interest at prime plus 4% with a balloon payment of approximately $2,202,500 in June 2016; secured by substantially all assets of Releta and MBC. | $ | 2,460,400 | $ | 2,570,900 | |||||
Loans from Lender, payable in monthly installments of $32,300 plus interest at prime plus 3.5% with a balloon payment of approximately $908,700 in June 2016; secured by substantially all assets of Releta and MBC. | 1,586,600 | 1,877,100 | |||||||
4,047,000 | 4,448,000 | ||||||||
Less current maturities | 4,047,000 | 4,448,000 | |||||||
$ | - | $ | - |
LongTerm_Debt_Related_Party
Long-Term Debt - Related Party | 9 Months Ended | ||||||||
Sep. 30, 2014 | |||||||||
Long-term Debt - Related Party | ' | ||||||||
Long-Term Debt - Related Party | ' | ||||||||
7. Long-Term Debt – Related Party | |||||||||
30-Sep-14 | 31-Dec-13 | ||||||||
Loan from HUK, payable in quarterly installments of $135,200, plus interest at UK prime plus 5% maturing on October 9, 2016, secured by licensing rights pursuant to the Sub-Licence Agreement. | $ | 1,216,500 | $ | 1,657,400 | |||||
1,216,500 | 1,657,400 | ||||||||
Less current maturities | 540,700 | 552,500 | |||||||
$ | 675,800 | $ | 1,104,900 | ||||||
Maturities of debt for succeeding years are as follows: | |||||||||
Three months ended December 31, 2014 | $ | 135,200 | |||||||
Year ended December 31, 2015 | $ | 540,700 | |||||||
Year ended December 31, 2016 | $ | 540,600 | |||||||
On April 18, 2013, KBEL entered into a Loan Agreement (the “Loan Agreement”) with HUK pursuant to which HUK provided KBEL with a secured term loan of £1,000,000 on October 9, 2013 to be repaid in twelve quarterly installment of £83,333.33 each, commencing from January 9, 2014 along with interest at the rate of 5% above the Bank of England base rate. Prepayment is permitted. Upon an Event of Default, as defined in the Loan Agreement, if HUK and KBEL fail to agree on a payment plan acceptable to HUK, HUK may, among other remedies, declare the loan immediately due and repayable or exercise its right to an exclusive license pursuant to the Sub-Licence Agreement as described and defined in the Loan Agreement. |
Capital_Lease_Obligations
Capital Lease Obligations | 9 Months Ended | ||||
Sep. 30, 2014 | |||||
Capital Lease Obligations [Abstract] | ' | ||||
Capital Lease Obligations | ' | ||||
8. Capital Lease Obligations | |||||
The Company leases certain brewing equipment under an agreement that is classified as a capital lease. The future minimum lease payments required under the capital lease and the present value of the net minimum lease payments as of June 30, 2014, are as follows: | |||||
Three months Ending December 31, 2014 | $ | 1,600 | |||
Year Ending December 31, 2015 | 6,400 | ||||
Year Ending December 31, 2016 | 6,400 | ||||
Year Ending December 31, 2017 | 6,400 | ||||
20,800 | |||||
Less amounts representing interest | (1,500 | ) | |||
Present value of minimum lease payments | 19,300 | ||||
Less current maturities | 5,300 | ||||
Non-current leases payable | $ | 14,000 |
Subordinated_Convertible_Notes
Subordinated Convertible Notes Payable, Related Party | 9 Months Ended |
Sep. 30, 2014 | |
Subordinated Convertible Notes Payable Related Party | ' |
Subordinated Convertible Notes Payable, Related Party | ' |
9. Subordinated Convertible Notes Payable, Related Party | |
Subordinated convertible notes included notes payable to UBA (the “UBA Notes”) for a total value of $3,566,000 as of September 30, 2014, including interest at the prime rate plus 1.5% per year, but not to exceed 10%. Thirteen of the UBA Notes are convertible into common stock at a rate of $1.50 per share and one UBA Note is convertible at a rate of $1.44 per share. The UBA Notes have been extended until June 2015 but have automatic renewals after such maturity date for successive one year terms, provided that either the Company or UBA may elect not to extend the term upon written notice given to the other party no more than 60 days and no fewer than 30 days prior to the expiration of the applicable term. Under the terms of the UBA Notes, UBA may demand payment within 60 days following the end of the extension period but UBA has agreed to subordinate the UBA Notes to the Company’s long-term debt agreements with Lender, which mature in June 2016. Therefore, the Company will not require the use of working capital to repay any of the UBA Notes until the Lender facilities are repaid. The UBA Notes include $1,650,600 and $1,582,500 of accrued interest at September 30, 2014 and December 31, 2013, respectively. |
Commitments_and_Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2014 | |
Commitments and Contingencies Disclosure [Abstract] | ' |
Commitments and Contingencies | ' |
10. Commitments and Contingencies | |
Purchase of raw materials | |
Production of the Company’s beverages requires quantities of various processed agricultural products, including malt and hops for beer. The Company fulfills its commodities requirements through purchases from various sources, some through contractual arrangements and others on the open market. | |
Legal | |
The Company is periodically involved in legal actions and claims that arise as a result of events that occur in the normal course of operations. Management and the Company’s legal counsel assess such contingent liabilities, and such assessment inherently involves the exercise of judgment. | |
On September 26, 2014, The New Buffalo Brewing Co., Inc. (“NBB”) initiated an action against Releta in the Supreme Court of the State of New York for the County of Erie to recover damages for alleged breaches of a Brewing Production Agreement between NBB and Releta dated September 6, 2013 (the “Brewing Production Agreement”), as well as for a declaration rescinding and nullifying the Brewing Production Agreement, and, in case of Releta’s failure to answer or appear, damages resulting from the alleged breaches, rescission of the Brewing Production Agreement, attorneys’ fees and any other relief deemed proper by the court. In a demand letter to Releta dated October 16, 2014, NBB demanded payment of the sum of $500,000. The Company has engaged a law firm in New York to respond. | |
The Company is not currently aware of any legal proceedings or claims that the Company believes will have, individually or in the aggregate, a material adverse effect on the Company’s financial position or results of operations. | |
Operating Leases | |
The Company leases some of its operating and office facilities for various terms under long-term, non-cancelable operating lease agreements. The leases expire at various dates between 2015 and 2019 and provide for renewal options ranging from month-to-month to five years. In the normal course of business, it is expected that these leases will be renewed or replaced by leases on similar properties. The leases provide for increases in future minimum annual rental payments based on defined increases which are generally meant to correlate with the Consumer Price Index, subject to certain minimum increases. Also, the agreements generally require the Company to pay certain costs, including real estate taxes, insurance and repairs. | |
MBC and its subsidiaries have various lease agreements for the brewpub and gift store in Ukiah, California, the brewery at Releta’s Saratoga Springs, New York facility, a building in the UK, and certain equipment. The New York lease includes a renewal option for three additional five-year periods, which Releta intends to exercise, and some leases are adjusted annually for changes in the Consumer Price Index. |
RelatedParty_Transactions
Related-Party Transactions | 9 Months Ended | ||||||||
Sep. 30, 2014 | |||||||||
Related Party Transactions [Abstract] | ' | ||||||||
Related-Party Transactions | ' | ||||||||
11. Related-Party Transactions | |||||||||
The Company conducts business with United Breweries of America, Inc. (“UBA”), which owns approximately 25% of the Company’s common stock. Until October 2013, KBEL had significant transactions with Shepherd Neame, Ltd., which is a related party with respect to a former Board member. KBEL also had significant transactions with HUK beginning in October 2013. HUK is a related party with respect to one of MBC’s Board members. | |||||||||
The following tables reflect the value of transactions with Shepherd Neame and UBA during the nine months ended September 30, 2014 and 2013 and the balances outstanding as of September 30, 2014 and December 31, 2013. | |||||||||
TRANSACTIONS | September 30, 2014 | September 30, 2013 | |||||||
Sales to Shepherd Neame | $ | - | $ | 2,286,700 | |||||
Purchases from Shepherd Neame | $ | - | $ | 10,827,700 | |||||
Expense reimbursement to Shepherd Neame | $ | - | $ | 788,000 | |||||
Purchase from HUK | $ | 9,886,800 | $ | - | |||||
Expense reimbursement to HUK | $ | 774,600 | $ | - | |||||
Interest on HUK debt | $ | 79,000 | $ | - | |||||
Borrowing from Catamaran | $ | 1,000,000 | $ | - | |||||
Interest on Catamaran notes | $ | 26,700 | $ | - | |||||
Interest expense related to UBA convertible notes | $ | 68,100 | $ | 68,000 | |||||
ACCOUNT BALANCES | 30-Sep-14 | 31-Dec-13 | |||||||
Accounts payable and accrued liability to Shepherd Neame | $ | - | $ | 70,400 | |||||
Accounts receivable and prepayments - Shepherd Neame | $ | - | $ | 5,000 | |||||
Accounts payable and accrued liability to HUK | $ | 1,723,900 | $ | 1,746,800 |
Segment_Information
Segment Information | 9 Months Ended | ||||||||||||
Sep. 30, 2014 | |||||||||||||
Segment Reporting [Abstract] | ' | ||||||||||||
Segment Information | ' | ||||||||||||
12. Segment Information | |||||||||||||
Our business presently consists of two segments – the North American Territory and the Foreign Territory. The Company’s operations in the North American Territory consist primarily of brewing and marketing proprietary craft beers. For distribution in the North American Territory, we brew our brands in our own facilities, which are located in Ukiah, California and Saratoga Springs, New York. Our operations in the Foreign Territory, which are conducted through UBIUK and KBEL, consist primarily of the marketing and distribution of Kingfisher Premium Lager Beer in the Foreign Territory. | |||||||||||||
A summary of each segment is as follows: | |||||||||||||
Nine months ended September 30, 2014 | |||||||||||||
North | Foreign | Total | |||||||||||
American | Territory | ||||||||||||
Territory | |||||||||||||
Net Sales | $ | 9,564,000 | $ | 16,358,800 | $ | 25,922,800 | |||||||
Operating Income (loss) | $ | (781,500 | ) | $ | 738,300 | $ | (43,200 | ) | |||||
Identifiable Assets | $ | 14,409,100 | $ | 4,683,800 | $ | 19,092,900 | |||||||
Depreciation & Amortization | $ | 509,500 | $ | 335,500 | $ | 845,000 | |||||||
Capital Expenditures | $ | 105,300 | $ | 537,400 | $ | 642,700 | |||||||
Nine months ended September 30, 2013 | |||||||||||||
North | Foreign | Total | |||||||||||
American | Territory | ||||||||||||
Territory | |||||||||||||
Net Sales | $ | 11,057,400 | $ | 15,880,000 | $ | 26,937,400 | |||||||
Operating Income (loss) | $ | (321,100 | ) | $ | 231,600 | $ | (89,500 | ) | |||||
Identifiable Assets | $ | 15,585,300 | $ | 3,764,000 | $ | 19,349,300 | |||||||
Depreciation & Amortization | $ | 488,500 | $ | 309,200 | $ | 797,700 | |||||||
Capital Expenditures | $ | 333,400 | $ | 331,700 | $ | 665,100 |
Unrestricted_Net_Assets
Unrestricted Net Assets | 9 Months Ended | ||||||||||||||||
Sep. 30, 2014 | |||||||||||||||||
Unrestricted Net Assets | ' | ||||||||||||||||
Unrestricted Net Assets | ' | ||||||||||||||||
13. Unrestricted Net Assets | |||||||||||||||||
Our wholly-owned subsidiary, UBIUK, has undistributed losses of $1,023,900 as of September 30, 2014. Under KBEL’s line of credit agreement with RBS, distributions and other payments to MBC from KBEL are not permitted if retained earnings drop below $1,622,000. Condensed financial information of MBC together with its other subsidiary, Releta, and exclusive of UBIUK, is as follows: | |||||||||||||||||
Balance Sheets | September 30, 2014 | December 31, 2013 | |||||||||||||||
(unaudited) | |||||||||||||||||
Assets | |||||||||||||||||
Cash and cash equivalents | $ | 45,200 | $ | 113,700 | |||||||||||||
Accounts receivable, net | 1,889,500 | 1,512,300 | |||||||||||||||
Inventories | 1,862,200 | 2,217,300 | |||||||||||||||
Other current assets | 207,300 | 165,500 | |||||||||||||||
Total current assets | 4,004,200 | 4,008,800 | |||||||||||||||
Investment in subsidiary | 1,225,000 | 1,225,000 | |||||||||||||||
Property and equipment | 10,088,500 | 10,519,200 | |||||||||||||||
Intercompany receivable | 551,100 | 716,700 | |||||||||||||||
Other assets | 316,400 | 324,500 | |||||||||||||||
Total assets | $ | 16,185,200 | $ | 16,794,200 | |||||||||||||
Liabilities | |||||||||||||||||
Line of credit | $ | 1,311,300 | $ | 1,517,200 | |||||||||||||
Accounts payable | 2,509,900 | 2,524,500 | |||||||||||||||
Accrued liabilities | 1,065,000 | 1,001,700 | |||||||||||||||
Note payable related party | 1,026,700 | - | |||||||||||||||
Current maturities of debt and capital leases | 4,052,300 | 4,453,300 | |||||||||||||||
Total current liabilities | 9,965,200 | 9,496,700 | |||||||||||||||
Long-term capital leases | 14,000 | 17,700 | |||||||||||||||
Subordinated convertible notes payable | 3,566,000 | 3,497,900 | |||||||||||||||
Total liabilities | 13,545,200 | 13,012,300 | |||||||||||||||
Stockholders’ equity | |||||||||||||||||
Preferred stock | 227,600 | 227,600 | |||||||||||||||
Common stock | 15,100,300 | 15,100,300 | |||||||||||||||
Accumulated deficit | (12,687,900 | ) | (11,546,000 | ) | |||||||||||||
Total stockholders’ equity | 2,640,000 | 3,781,900 | |||||||||||||||
Total liabilities and stockholders’ equity | $ | 16,185,200 | $ | 16,794,200 | |||||||||||||
Statements of Operations | Three months ended | Nine months ended | |||||||||||||||
30-Sep | 30-Sep | ||||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||||
(unaudited) | (unaudited) | (unaudited) | (unaudited) | ||||||||||||||
Net sales | $ | 3,584,500 | $ | 3,682,700 | $ | 9,564,000 | $ | 11,057,400 | |||||||||
Cost of goods sold | (2,879,200 | ) | (2,849,800 | ) | (7,937,500 | ) | (8,694,200 | ) | |||||||||
Sales, marketing, and retail expenses | (365,500 | ) | (464,100 | ) | (1,071,900 | ) | (1,278,700 | ) | |||||||||
General and administrative expenses | (412,900 | ) | (477,500 | ) | (1,341,100 | ) | (1,501,600 | ) | |||||||||
Loss from operations | (73,100 | ) | (108,700 | ) | (786,500 | ) | (417,100 | ) | |||||||||
Other income | 22,100 | 37,700 | 32,800 | 112,100 | |||||||||||||
Interest expense | (131,600 | ) | (114,900 | ) | (388,200 | ) | (315,300 | ) | |||||||||
Provision for taxes | -- | -- | -- | (5,000 | ) | ||||||||||||
Net loss | $ | (182,600 | ) | $ | (185,900 | ) | $ | (1,141,900 | ) | $ | (625,300 | ) | |||||
Nine months ended September 30 | |||||||||||||||||
2014 | 2013 | ||||||||||||||||
(unaudited) | (unaudited) | ||||||||||||||||
Statements of Cash Flows | |||||||||||||||||
Cash flows from operating activities | $ | (518,900 | ) | $ | 405,500 | ||||||||||||
Purchase of property and equipment | (105,300 | ) | (333,400 | ) | |||||||||||||
Proceed from sale of assets | 700 | - | |||||||||||||||
Net borrowing (repayment) on line of credit | (205,900 | ) | (116,500 | ) | |||||||||||||
Borrowing on long term debt | - | 539,700 | |||||||||||||||
Borrowing on note payable | 1,000,000 | - | |||||||||||||||
Repayment on long term debt | (401,000 | ) | (390,500 | ) | |||||||||||||
Payment on obligation under capital lease | (3,700 | ) | (3,100 | ) | |||||||||||||
Net change in payable to UBI | 165,600 | (184,500 | ) | ||||||||||||||
Decrease in cash | (68,500 | ) | (82,800 | ) | |||||||||||||
Cash, beginning of period | 113,700 | 123,200 | |||||||||||||||
Cash, end of period | $ | 45,200 | $ | 40,400 |
Income_Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2014 | |
Income Tax Disclosure [Abstract] | ' |
Income Taxes | ' |
14. Income Taxes | |
In the nine months ended September 30, 2014 we did not record tax expenses due to net loss and for the nine months ended September 30, 2013, we recorded income tax expenses related to state franchise taxes only. We also have deferred tax assets available to offset any taxable income in the US (at the federal and state level to the extent applicable) and the UK. We have established a full valuation allowance against our deferred tax assets based on an assessment that the criteria that deferred tax assets will more likely than not be realized has not yet been met. During the nine months ended September 30, 2014 and 2013, our effective tax rates were de minimis. The difference between our effective tax rates and the US and UK statutory rates resulted primarily from changes in the deferred tax asset valuation allowance. | |
Our major tax jurisdictions are (i) US (federal), (ii) California (state), (iii) New York (state) and (iv) UK. Tax returns remain open to examination by the applicable governmental authorities for tax years 2010 through 2013. The federal and state taxing authorities may choose to audit tax returns for prior years due to significant tax attribute carryforwards for those prior years. However, such audits will be limited to adjustments to such carryforward tax attributes. The Company is not currently being audited in any tax jurisdiction. |
Description_of_Operations_and_1
Description of Operations and Summary of Significant Accounting Policies (Policies) | 9 Months Ended | ||||||||||||||||
Sep. 30, 2014 | |||||||||||||||||
Accounting Policies [Abstract] | ' | ||||||||||||||||
Description of Operations | ' | ||||||||||||||||
Description of Operations | |||||||||||||||||
Mendocino Brewing Company, Inc. (the “Company” or “MBC”), was formed in 1983 in California, and has two operating subsidiaries: Releta Brewing Company, LLC (“Releta”), and United Breweries International (UK) Limited (“UBIUK”). In the United States (the “US”), MBC and Releta each operate a brewery that produces beer for the specialty “craft” segment of the beer market. The breweries are located in Ukiah, California and Saratoga Springs, New York. The majority of sales for MBC in the US are in California. The Company brews several brands, of which Red Tail Ale is the flagship brand. In addition, the Company performs contract brewing for several other brands. Generally, product shipments are made directly from the breweries to the wholesalers or distributors in accordance with state and local laws. | |||||||||||||||||
MBC’s United Kingdom (“UK”) subsidiary, UBIUK, is a holding company for Kingfisher Beer Europe Limited (“KBEL”). KBEL is a distributor of alcoholic beverages, mainly Kingfisher Premium Lager Beer, in the UK and Europe. The offices of KBEL are located in Maidstone, Kent in the UK. In addition, during the period covered by this report, through UBIUK, the Company had production and distribution rights to Kingfisher Premium Lager in Canada and the United States. The Company has the right to use the Kingfisher mark and the name “Kingfisher Brewing Company” in connection with the brewing and distribution of Kingfisher Premium Lager Beer in the United States pursuant to an agreement with Kingfisher America, Inc. | |||||||||||||||||
All of our beers sold in Europe (except for beers sold in Germany) are procured under a contract with Heineken UK Limited (“HUK”). This contract expires in October 2018. KBEL is the distributor of Kingfisher Premium Lager to specialty restaurant trade distributors, liquor and convenience stores in the United Kingdom, Ireland, and continental Europe, but does not physically deliver products to customers. KBEL relies on HUK for delivery of the product in Europe in exchange for a fee paid to HUK, except for in Germany where beers are manufactured and distributed pursuant to a separate contract with a different entity. In addition, HUK has the exclusive right to sell Kingfisher Premium Lager, for a royalty fee, to certain large retail customers, including, but not limited to, Sainsbury’s, Asda, and Tesco. | |||||||||||||||||
Subsequent Events | ' | ||||||||||||||||
Subsequent Events | |||||||||||||||||
We evaluate events that occur subsequent to the balance sheet date of periodic reports, but before financial statements are issued for periods ending on such balance sheet dates, for possible adjustment to such financial statements or other disclosure. This evaluation generally occurs through the date on which our financial statements are electronically prepared for filing with the Securities and Exchange Commission (“SEC”). | |||||||||||||||||
Principles of Consolidation | ' | ||||||||||||||||
Principles of Consolidation | |||||||||||||||||
The consolidated financial statements present the accounts of MBC and its wholly-owned subsidiaries, Releta and UBIUK. All material intracompany and inter-company balances, profits and transactions have been eliminated. | |||||||||||||||||
Basis of Presentation and Organization | ' | ||||||||||||||||
Basis of Presentation and Organization | |||||||||||||||||
The accompanying unaudited condensed consolidated financial statements for the nine months ended September 30, 2014 and 2013 have been prepared in accordance with accounting principles generally accepted in the US. These condensed financial statements should be read in conjunction with the audited consolidated financial statements included in our most recent Annual Report on Form 10-K, as filed with the SEC, which contains additional financial and operating information and information concerning significant accounting policies followed by the Company. The financial statements and notes are representations of our management (“Management”) and board of directors (the “Board of Directors”), who are responsible for their integrity and objectivity. | |||||||||||||||||
Operating results from the nine months ended September 30, 2014 are not necessarily indicative of the results that may be expected for the year ending December 31, 2014 or any future period. | |||||||||||||||||
Reclassifications | ' | ||||||||||||||||
Reclassifications | |||||||||||||||||
Certain items in the financial statements for the prior year have been reclassified to conform to the current year presentation. These reclassifications had no effect on net income or equity. | |||||||||||||||||
Cash and Cash Equivalents, Short and Long-Term Investments | ' | ||||||||||||||||
Cash and Cash Equivalents, Short and Long-Term Investments | |||||||||||||||||
For purposes of cash flows, we consider all highly liquid investments purchased with a maturity of three months or less to be cash equivalents. | |||||||||||||||||
Revenue Recognition | ' | ||||||||||||||||
Revenue Recognition | |||||||||||||||||
We recognize revenue from the brewing and distribution operations in accordance with Accounting Standards Codification 605 of the Financial Accounting Standards Board. We recognize revenue from product sales, net of discounts. | |||||||||||||||||
We recognize revenue only when all of the following criteria have been met: | |||||||||||||||||
● | Persuasive evidence of an arrangement exists; | ||||||||||||||||
● | Delivery has occurred or services have been rendered; | ||||||||||||||||
● | The fee for the arrangement is fixed or determinable; and | ||||||||||||||||
● | Collectability is reasonably assured. | ||||||||||||||||
“Persuasive Evidence of an Arrangement” – We document all terms of an arrangement in a written contract or purchase order signed by the customer prior to recognizing revenue. | |||||||||||||||||
“Delivery Has Occurred or Services Have Been Performed” – We deliver the products prior to recognizing revenue and we perform services as per contractual terms. Product is considered delivered upon delivery to a customer’s designated carrier, and services are considered performed upon completion of our contractual obligations. | |||||||||||||||||
“The Fee for the Arrangement is Fixed or Determinable” – Prior to recognizing revenue, an amount is either fixed or determinable under the terms of the written contract. The price is negotiated at the outset of the arrangement and is not subject to refund or adjustment during the initial term of the arrangement. | |||||||||||||||||
“Collectability is Reasonably Assured” – We determine that collectability is reasonably assured prior to recognizing revenue. Collectability is assessed on a customer-by-customer basis based on criteria outlined by Management. We do not enter into arrangements unless collectability is reasonably assured at the outset. Existing customers are subject to ongoing credit evaluations based on payment history and other factors. If it is determined during the arrangement that collectability is not reasonably assured, revenue is recognized on a cash basis. | |||||||||||||||||
We record certain consideration paid to customers for services or placement fees as a reduction in revenue rather than as an expense. We report these items on the income statement as a reduction in revenue and as a corresponding reduction in marketing and selling expenses. | |||||||||||||||||
Revenues from our brewpub and gift store are recognized when sales have been completed. | |||||||||||||||||
Allowance for Doubtful Accounts | ' | ||||||||||||||||
Allowance for Doubtful Accounts | |||||||||||||||||
We maintain allowances for doubtful accounts for estimated losses resulting from the inability of our customers to make required payments. Management considers the following factors when determining the collectability of specific customer accounts: customer credit-worthiness, past transaction history with the customer, current economic and industry trends and changes in customer payment terms. Balances over 90 days past due and other higher risk amounts are reviewed individually for collectability. If the financial condition of our customers were to deteriorate, adversely affecting their ability to make payments, additional allowances would be required. Based on Management’s assessment, we provide for estimated uncollectible amounts through a charge to earnings and a credit to a valuation allowance. Balances that remain outstanding after we have used reasonable collection efforts are written off through a charge to the valuation allowance and a credit to accounts receivable. | |||||||||||||||||
Inventories | ' | ||||||||||||||||
Inventories | |||||||||||||||||
Inventories are stated at the lower of average cost, which approximates the first-in, first-out method, or market (net realizable value). We regularly review our inventories for the presence of obsolete product attributed to age, seasonality and quality. Inventories that are considered obsolete are written off or adjusted to carrying value. | |||||||||||||||||
Deferred Financing Costs | ' | ||||||||||||||||
Deferred Financing Costs | |||||||||||||||||
Costs relating to obtaining financing are capitalized and amortized over the term of the related debt. When a loan is paid in full, any unamortized financing costs are removed from the related accounts and charged to operations. Deferred financing costs related to a borrowing made in June 2011 were $225,000. Amortization of deferred financing costs charged to operations was $33,800 for the nine months ended September 30, 2014 and 2013, and $11,300 for the three months ended September 30, 2014 and 2013. | |||||||||||||||||
Concentration of Credit Risks | ' | ||||||||||||||||
Concentration of Credit Risks | |||||||||||||||||
Financial instruments that potentially subject us to significant concentration of credit risk consist primarily of cash and cash equivalents, and accounts receivable. Substantially all of our cash and cash equivalents are deposited with commercial banks in the US and the UK that have minimal credit risk. Accounts receivable are generally unsecured and customers are subject to an initial credit review and ongoing monitoring. Wholesale distributors account for substantially all accounts receivable; therefore, this risk concentration is limited due to the number of distributors and the laws regulating the financial affairs of distributors of alcoholic beverages. As of September 30, 2014, we have approximately $2,776,600 of accounts receivable due from UK customers. | |||||||||||||||||
Labor disputes, work stoppages or other disruptions in production could adversely affect us. As of September 30, 2014, union members represented approximately 18% of our US-based workforce. MBC has approximately fourteen employees at its Ukiah, California facility who are working under a collective bargaining agreement that expires on July 31, 2018. | |||||||||||||||||
Income Taxes | ' | ||||||||||||||||
Income Taxes | |||||||||||||||||
We account for income taxes in accordance with ASC 750 which requires an asset and liability approach for financial accounting and reporting for income taxes and allows recognition and measurement of deferred tax assets based upon the likelihood of realization of tax benefits in future years. Under the asset and liability approach, deferred taxes are provided for the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Deferred tax assets are recognized for deductible temporary differences and operating loss and tax credit carryforwards. We periodically assess uncertain tax positions that we have taken or expect to take on tax returns, including decisions whether to file returns in any particular jurisdiction. We have evaluated our tax positions and have determined that there were no uncertain tax benefits as of September 30, 2014 and December 31, 2013. | |||||||||||||||||
Basic and Diluted Earnings (Loss) per Share | ' | ||||||||||||||||
Basic and Diluted Earnings (Loss) per Share | |||||||||||||||||
The basic earnings (loss) per share is computed by dividing the earnings (loss) attributable to common stockholders by the weighted average number of common shares outstanding during the period. Basic net earnings (loss) per share exclude the dilutive effect of stock options or warrants and convertible notes. If the Company’s operations result in net loss for any period, diluted net loss per share would be the same as basic net loss per share, since the effect of any potentially dilutive securities would be anti-dilutive. Therefore, the conversion of the related party notes has been excluded from the Company’s calculation of net loss per share. The computations of basic and dilutive net loss per share are as follows: | |||||||||||||||||
Three months ended | Nine months ended | ||||||||||||||||
9/30/14 | 9/30/13 | 9/30/14 | 9/30/13 | ||||||||||||||
Net income (loss) | $ | 82,800 | (19,700 | ) | $ | (522,800 | ) | (443,000 | ) | ||||||||
Weighted average common shares outstanding | 12,611,133 | 12,611,133 | 12,611,133 | 12,611,133 | |||||||||||||
Basic net income (loss) per share | $ | 0.01 | (0.00 | ) | $ | (0.04 | ) | (0.04 | ) | ||||||||
Interest expense on convertible notes | $ | 22,900 | - | $ | - | - | |||||||||||
Income (loss) for computing diluted net income per share | $ | 105,700 | (19,700 | ) | $ | (522,800 | ) | (443,000 | ) | ||||||||
Incremental shares from assumed exercise of dilutive securities | 2,395,043 | - | - | - | |||||||||||||
Dilutive potential common shares | 15,006,176 | 12,611,133 | 12,611,133 | 12,611,133 | |||||||||||||
Diluted net earnings (loss) per share | $ | 0.01 | (0.00 | ) | $ | (0.04 | ) | (0.04 | ) | ||||||||
Foreign Currency Translation | ' | ||||||||||||||||
Foreign Currency Translation | |||||||||||||||||
The local currency in the UK, the UK Pound Sterling, is the functional currency for our UK subsidiaries. Financial statements of these subsidiaries are translated into US dollars using period-end exchange rates for assets and liabilities and average exchange rates during the period for revenues and expenses. Cumulative translation adjustments associated with net assets or liabilities are reported in non-owner changes in equity. Any exchange rate gains or losses related to foreign currency transactions are recognized in the income statement as incurred, in the same financial statement caption as the underlying transaction, and are not material for any year shown. Cash flows were translated at the average exchange rates for the nine months then ended. Changes in cash resulting from the translations are presented as a separate item in the statements of cash flows. | |||||||||||||||||
Use of Estimates | ' | ||||||||||||||||
Use of Estimates | |||||||||||||||||
The preparation of financial statements in conformity with accounting principles generally accepted in the US includes having us make estimates and assumptions affecting the reported amounts of assets, liabilities, revenues and expenses, and disclosure of contingent assets and liabilities. The amounts estimated could differ from actual results. Significant estimates include the allowance for bad debts, depreciation and amortization periods, and the future utilization of deferred tax assets. | |||||||||||||||||
Comprehensive Income (Loss) | ' | ||||||||||||||||
Comprehensive Income (Loss) | |||||||||||||||||
Comprehensive income (loss) is composed of our net income (loss) and changes in equity from non-stockholder sources. The accumulated balances of these non-stockholder sources are reflected as a separate item in the equity section of the balance sheet. | |||||||||||||||||
Reportable Segments | ' | ||||||||||||||||
Reportable Segments | |||||||||||||||||
Our operations are managed through two business segments: (i) brewing operations and tasting room operations in the US, and distributor operations in Canada (the “North American Territory”); and (ii) distributor operations in Europe, including the UK (the “Foreign Territory”). We evaluate performance based on net operating profit. Where applicable, portions of our administrative expenses are allocated between the operating segments. The operating segments do not share manufacturing or distribution facilities. If any materials and/or services are provided to one operating segment by the other, the transaction is valued according to our transfer policy, which approximates market price. The costs of operating the manufacturing plants are captured discretely within each segment. The Company’s property, plant and equipment, inventory, and accounts receivable are captured and reported discretely within each operating segment. | |||||||||||||||||
Recent Accounting Pronouncements | ' | ||||||||||||||||
Recent Accounting Pronouncements | |||||||||||||||||
In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No. 2014-09, “Revenue from Contracts with Customers (Topic 606)” (“ASU 2014-09”), which supersedes the revenue recognition requirements in Topic 605, Revenue Recognition, including most industry-specific requirements. ASU 2014-09 establishes a five-step revenue recognition process in which an entity will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. ASU 2014-09 also requires enhanced disclosures regarding the nature, amount, timing and uncertainty of revenues and cash flows from contracts with customers. ASU 2014-09 will be effective for the Company in the first quarter of 2017. Management is currently evaluating the impact the adoption of ASU 2014-09 will have on the Company’s condensed consolidated financial position, results of operations or cash flows and the method of retrospective application, either full or modified. | |||||||||||||||||
In August 2014, the FASB issued ASU 2014-15, Presentation of Financial Statements—Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern (“ASU 2014-15”), to provide guidance on management’s responsibility to perform interim and annual assessments of an entity’s ability to continue as a going concern and to provide related disclosure requirements. ASU 2014-15 applies to all entities and is effective for annual periods ending after December 15, 2016, and interim periods thereafter, with early adoption permitted. Management will adopt this standard if applicable from its effective period. |
Description_of_Operations_and_2
Description of Operations and Summary of Significant Accounting Policies (Tables) | 9 Months Ended | ||||||||||||||||
Sep. 30, 2014 | |||||||||||||||||
Accounting Policies [Abstract] | ' | ||||||||||||||||
Schedule of Basic and Dilutive Net Loss Per Share | ' | ||||||||||||||||
The computations of basic and dilutive net loss per share are as follows: | |||||||||||||||||
Three months ended | Nine months ended | ||||||||||||||||
9/30/14 | 9/30/13 | 9/30/14 | 9/30/13 | ||||||||||||||
Net income (loss) | $ | 82,800 | (19,700 | ) | $ | (522,800 | ) | (443,000 | ) | ||||||||
Weighted average common shares outstanding | 12,611,133 | 12,611,133 | 12,611,133 | 12,611,133 | |||||||||||||
Basic net income (loss) per share | $ | 0.01 | (0.00 | ) | $ | (0.04 | ) | (0.04 | ) | ||||||||
Interest expense on convertible notes | $ | 22,900 | - | $ | - | - | |||||||||||
Income (loss) for computing diluted net income per share | $ | 105,700 | (19,700 | ) | $ | (522,800 | ) | (443,000 | ) | ||||||||
Incremental shares from assumed exercise of dilutive securities | 2,395,043 | - | - | - | |||||||||||||
Dilutive potential common shares | 15,006,176 | 12,611,133 | 12,611,133 | 12,611,133 | |||||||||||||
Diluted net earnings (loss) per share | $ | 0.01 | (0.00 | ) | $ | (0.04 | ) | (0.04 | ) |
Inventories_Tables
Inventories (Tables) | 9 Months Ended | ||||||||
Sep. 30, 2014 | |||||||||
Inventory Disclosure [Abstract] | ' | ||||||||
Schedule of Inventories | ' | ||||||||
Inventories consist of the following: | |||||||||
September 30, 2014 | December 31, 2013 | ||||||||
Raw Materials | $ | 795,800 | $ | 813,000 | |||||
Beer-in-process | 295,900 | 357,700 | |||||||
Finished Goods | 753,700 | 967,600 | |||||||
Merchandise | 84,600 | 103,700 | |||||||
TOTAL | $ | 1,930,000 | $ | 2,242,000 |
LongTerm_Debt_Tables
Long-Term Debt (Tables) | 9 Months Ended | ||||||||
Sep. 30, 2014 | |||||||||
Long-term Debt, Unclassified [Abstract] | ' | ||||||||
Summary of Long-term Debt | ' | ||||||||
Maturities of long-term debt for succeeding years are as follows: | |||||||||
30-Sep-14 | 31-Dec-13 | ||||||||
Loan from Lender, payable in monthly installments of $12,300, plus interest at prime plus 4% with a balloon payment of approximately $2,202,500 in June 2016; secured by substantially all assets of Releta and MBC. | $ | 2,460,400 | $ | 2,570,900 | |||||
Loans from Lender, payable in monthly installments of $32,300 plus interest at prime plus 3.5% with a balloon payment of approximately $908,700 in June 2016; secured by substantially all assets of Releta and MBC. | 1,586,600 | 1,877,100 | |||||||
4,047,000 | 4,448,000 | ||||||||
Less current maturities | 4,047,000 | 4,448,000 | |||||||
$ | - | $ | - |
LongTerm_Debt_Related_Party_Ta
Long-Term Debt - Related Party (Tables) | 9 Months Ended | ||||||||
Sep. 30, 2014 | |||||||||
Long-term Debt - Related Party | ' | ||||||||
Schedule of Related Party Debt | ' | ||||||||
30-Sep-14 | 31-Dec-13 | ||||||||
Loan from HUK, payable in quarterly installments of $135,200, plus interest at UK prime plus 5% maturing on October 9, 2016, secured by licensing rights pursuant to the Sub-Licence Agreement. | $ | 1,216,500 | $ | 1,657,400 | |||||
1,216,500 | 1,657,400 | ||||||||
Less current maturities | 540,700 | 552,500 | |||||||
$ | 675,800 | $ | 1,104,900 | ||||||
Schedule of Maturities of Long Term Debt | ' | ||||||||
Three months ended December 31, 2014 | $ | 135,200 | |||||||
Year ended December 31, 2015 | $ | 540,700 | |||||||
Year ended December 31, 2016 | $ | 540,600 |
Capital_Lease_Obligations_Tabl
Capital Lease Obligations (Tables) | 9 Months Ended | ||||
Sep. 30, 2014 | |||||
Capital Lease Obligations [Abstract] | ' | ||||
Schedule of Future Minimum Lease Payments for Capital Lease Payments | ' | ||||
The future minimum lease payments required under the capital lease and the present value of the net minimum lease payments as of June 30, 2014, are as follows: | |||||
Three months Ending December 31, 2014 | $ | 1,600 | |||
Year Ending December 31, 2015 | 6,400 | ||||
Year Ending December 31, 2016 | 6,400 | ||||
Year Ending December 31, 2017 | 6,400 | ||||
20,800 | |||||
Less amounts representing interest | (1,500 | ) | |||
Present value of minimum lease payments | 19,300 | ||||
Less current maturities | 5,300 | ||||
Non-current leases payable | $ | 14,000 |
RelatedParty_Transactions_Tabl
Related-Party Transactions (Tables) | 9 Months Ended | ||||||||
Sep. 30, 2014 | |||||||||
Related Party Transactions [Abstract] | ' | ||||||||
Schedule of Related-Party Transactions | ' | ||||||||
The following tables reflect the value of transactions with Shepherd Neame and UBA during the nine months ended September 30, 2014 and 2013 and the balances outstanding as of September 30, 2014 and December 31, 2013. | |||||||||
TRANSACTIONS | September 30, 2014 | September 30, 2013 | |||||||
Sales to Shepherd Neame | $ | - | $ | 2,286,700 | |||||
Purchases from Shepherd Neame | $ | - | $ | 10,827,700 | |||||
Expense reimbursement to Shepherd Neame | $ | - | $ | 788,000 | |||||
Purchase from HUK | $ | 9,886,800 | $ | - | |||||
Expense reimbursement to HUK | $ | 774,600 | $ | - | |||||
Interest on HUK debt | $ | 79,000 | $ | - | |||||
Borrowing from Catamaran | $ | 1,000,000 | $ | - | |||||
Interest on Catamaran notes | $ | 26,700 | $ | - | |||||
Interest expense related to UBA convertible notes | $ | 68,100 | $ | 68,000 | |||||
ACCOUNT BALANCES | 30-Sep-14 | 31-Dec-13 | |||||||
Accounts payable and accrued liability to Shepherd Neame | $ | - | $ | 70,400 | |||||
Accounts receivable and prepayments - Shepherd Neame | $ | - | $ | 5,000 | |||||
Accounts payable and accrued liability to HUK | $ | 1,723,900 | $ | 1,746,800 |
Segment_Information_Tables
Segment Information (Tables) | 9 Months Ended | ||||||||||||
Sep. 30, 2014 | |||||||||||||
Segment Reporting [Abstract] | ' | ||||||||||||
Schedule of Segment Information | ' | ||||||||||||
A summary of each segment is as follows: | |||||||||||||
Nine months ended September 30, 2014 | |||||||||||||
North | Foreign | Total | |||||||||||
American | Territory | ||||||||||||
Territory | |||||||||||||
Net Sales | $ | 9,564,000 | $ | 16,358,800 | $ | 25,922,800 | |||||||
Operating Income (loss) | $ | (781,500 | ) | $ | 738,300 | $ | (43,200 | ) | |||||
Identifiable Assets | $ | 14,409,100 | $ | 4,683,800 | $ | 19,092,900 | |||||||
Depreciation & Amortization | $ | 509,500 | $ | 335,500 | $ | 845,000 | |||||||
Capital Expenditures | $ | 105,300 | $ | 537,400 | $ | 642,700 | |||||||
Nine months ended September 30, 2013 | |||||||||||||
North | Foreign | Total | |||||||||||
American | Territory | ||||||||||||
Territory | |||||||||||||
Net Sales | $ | 11,057,400 | $ | 15,880,000 | $ | 26,937,400 | |||||||
Operating Income (loss) | $ | (321,100 | ) | $ | 231,600 | $ | (89,500 | ) | |||||
Identifiable Assets | $ | 15,585,300 | $ | 3,764,000 | $ | 19,349,300 | |||||||
Depreciation & Amortization | $ | 488,500 | $ | 309,200 | $ | 797,700 | |||||||
Capital Expenditures | $ | 333,400 | $ | 331,700 | $ | 665,100 |
Unrestricted_Net_Assets_Tables
Unrestricted Net Assets (Tables) | 9 Months Ended | ||||||||||||||||
Sep. 30, 2014 | |||||||||||||||||
Unrestricted Net Assets | ' | ||||||||||||||||
Condensed Balance Sheets | ' | ||||||||||||||||
Balance Sheets | September 30, 2014 | December 31, 2013 | |||||||||||||||
(unaudited) | |||||||||||||||||
Assets | |||||||||||||||||
Cash and cash equivalents | $ | 45,200 | $ | 113,700 | |||||||||||||
Accounts receivable, net | 1,889,500 | 1,512,300 | |||||||||||||||
Inventories | 1,862,200 | 2,217,300 | |||||||||||||||
Other current assets | 207,300 | 165,500 | |||||||||||||||
Total current assets | 4,004,200 | 4,008,800 | |||||||||||||||
Investment in subsidiary | 1,225,000 | 1,225,000 | |||||||||||||||
Property and equipment | 10,088,500 | 10,519,200 | |||||||||||||||
Intercompany receivable | 551,100 | 716,700 | |||||||||||||||
Other assets | 316,400 | 324,500 | |||||||||||||||
Total assets | $ | 16,185,200 | $ | 16,794,200 | |||||||||||||
Liabilities | |||||||||||||||||
Line of credit | $ | 1,311,300 | $ | 1,517,200 | |||||||||||||
Accounts payable | 2,509,900 | 2,524,500 | |||||||||||||||
Accrued liabilities | 1,065,000 | 1,001,700 | |||||||||||||||
Note payable related party | 1,026,700 | - | |||||||||||||||
Current maturities of debt and capital leases | 4,052,300 | 4,453,300 | |||||||||||||||
Total current liabilities | 9,965,200 | 9,496,700 | |||||||||||||||
Long-term capital leases | 14,000 | 17,700 | |||||||||||||||
Subordinated convertible notes payable | 3,566,000 | 3,497,900 | |||||||||||||||
Total liabilities | 13,545,200 | 13,012,300 | |||||||||||||||
Stockholders’ equity | |||||||||||||||||
Preferred stock | 227,600 | 227,600 | |||||||||||||||
Common stock | 15,100,300 | 15,100,300 | |||||||||||||||
Accumulated deficit | (12,687,900 | ) | (11,546,000 | ) | |||||||||||||
Total stockholders’ equity | 2,640,000 | 3,781,900 | |||||||||||||||
Total liabilities and stockholders’ equity | $ | 16,185,200 | $ | 16,794,200 | |||||||||||||
Condensed Statement of Operations | ' | ||||||||||||||||
Statements of Operations | Three months ended | Nine months ended | |||||||||||||||
30-Sep | 30-Sep | ||||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||||
(unaudited) | (unaudited) | (unaudited) | (unaudited) | ||||||||||||||
Net sales | $ | 3,584,500 | $ | 3,682,700 | $ | 9,564,000 | $ | 11,057,400 | |||||||||
Cost of goods sold | (2,879,200 | ) | (2,849,800 | ) | (7,937,500 | ) | (8,694,200 | ) | |||||||||
Sales, marketing, and retail expenses | (365,500 | ) | (464,100 | ) | (1,071,900 | ) | (1,278,700 | ) | |||||||||
General and administrative expenses | (412,900 | ) | (477,500 | ) | (1,341,100 | ) | (1,501,600 | ) | |||||||||
Loss from operations | (73,100 | ) | (108,700 | ) | (786,500 | ) | (417,100 | ) | |||||||||
Other income | 22,100 | 37,700 | 32,800 | 112,100 | |||||||||||||
Interest expense | (131,600 | ) | (114,900 | ) | (388,200 | ) | (315,300 | ) | |||||||||
Provision for taxes | -- | -- | -- | (5,000 | ) | ||||||||||||
Net loss | $ | (182,600 | ) | $ | (185,900 | ) | $ | (1,141,900 | ) | $ | (625,300 | ) | |||||
Condensed Statement of Cash Flows | ' | ||||||||||||||||
Nine months ended September 30 | |||||||||||||||||
2014 | 2013 | ||||||||||||||||
(unaudited) | (unaudited) | ||||||||||||||||
Statements of Cash Flows | |||||||||||||||||
Cash flows from operating activities | $ | (518,900 | ) | $ | 405,500 | ||||||||||||
Purchase of property and equipment | (105,300 | ) | (333,400 | ) | |||||||||||||
Proceed from sale of assets | 700 | - | |||||||||||||||
Net borrowing (repayment) on line of credit | (205,900 | ) | (116,500 | ) | |||||||||||||
Borrowing on long term debt | - | 539,700 | |||||||||||||||
Borrowing on note payable | 1,000,000 | - | |||||||||||||||
Repayment on long term debt | (401,000 | ) | (390,500 | ) | |||||||||||||
Payment on obligation under capital lease | (3,700 | ) | (3,100 | ) | |||||||||||||
Net change in payable to UBI | 165,600 | (184,500 | ) | ||||||||||||||
Decrease in cash | (68,500 | ) | (82,800 | ) | |||||||||||||
Cash, beginning of period | 113,700 | 123,200 | |||||||||||||||
Cash, end of period | $ | 45,200 | $ | 40,400 |
Description_of_Operations_and_3
Description of Operations and Summary of Significant Accounting Policies (Details Narrative) (USD $) | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | Dec. 31, 2013 | Jun. 30, 2011 | |
Deferred financing costs on borrowings | ' | ' | ' | ' | ' | $225,000 |
Amortization of deferred financing costs charged to operations | 11,300 | 11,300 | 33,800 | 33,800 | ' | ' |
Accounts receivable due from customers | 4,666,100 | ' | 4,666,100 | ' | 4,119,300 | ' |
UK [Member] | ' | ' | ' | ' | ' | ' |
Accounts receivable due from customers | $2,776,600 | ' | $2,776,600 | ' | ' | ' |
Description_of_Operations_and_4
Description of Operations and Summary of Significant Accounting Policies - Schedule of Basic and Dilutive Net Loss Per Share (Details) (USD $) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | |
Accounting Policies [Abstract] | ' | ' | ' | ' |
Net income (loss) | $82,800 | ($19,700) | ($522,800) | ($443,000) |
Weighted average common shares outstanding | 12,611,133 | 12,611,133 | 12,611,133 | 12,611,133 |
Basic net income (loss) per share | $0.01 | $0 | ($0.04) | ($0.04) |
Interest expense on convertible notes | 22,900 | ' | ' | ' |
Income (loss) for computing diluted net income per share | $105,700 | ($19,700) | ($522,800) | ($443,000) |
Incremental shares from assumed exercise of dilutive securities | 2,395,043 | ' | ' | ' |
Dilutive potential common shares | 15,006,176 | 12,611,133 | 12,611,133 | 12,611,133 |
Diluted net earnings (loss) per share | $0.01 | $0 | ($0.04) | ($0.04) |
Liquidity_and_Management_Plans1
Liquidity and Management Plans (Details Narrative) (USD $) | 0 Months Ended | 0 Months Ended | ||||||||||||
Aug. 20, 2014 | Sep. 01, 2013 | Jun. 23, 2011 | Sep. 30, 2014 | Dec. 31, 2013 | Sep. 30, 2013 | Dec. 31, 2012 | Nov. 11, 2013 | Apr. 24, 2014 | Jan. 22, 2014 | Jun. 23, 2011 | Jun. 23, 2011 | Jun. 23, 2011 | Jun. 23, 2011 | |
Number | United Breweries Holding Limited [Member] | Catamaran Services, Inc. [Member] | Catamaran Services, Inc. [Member] | Revolving Credit Facility [Member] | Machinery And Equipment Term Loan [Member] | Real Estate Term Loan [Member] | Capital Expenditure Line Of Credit [Member] | |||||||
Credit facility, maturity date | ' | ' | 23-Jun-16 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Credit facility, agreement amount | ' | ' | $10,000,000 | ' | ' | ' | ' | ' | ' | ' | $4,119,000 | $1,934,000 | $2,947,000 | $1,000,000 |
Default interest per year | ' | 120,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Default interest rate in excess of regular rate | ' | 2.00% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Reduction in advance rate against inventory each month | 2.00% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Fixed charge coverage ratio - Required | ' | ' | ' | 1.1 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Fixed charge coverage ratio - Actual | ' | ' | ' | -0.78 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Tangible net worth Required MBC and Releta | ' | ' | ' | 6,181,400 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Actual tangible net worth | ' | ' | ' | 4,932,900 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Cash and cash equivalents | ' | ' | ' | 47,200 | 324,800 | 40,700 | 198,500 | ' | ' | ' | ' | ' | ' | ' |
Accumulated deficit | ' | ' | ' | 15,230,400 | 14,707,600 | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Working capital deficit | ' | ' | ' | 6,941,200 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Investments commitment by UBHL | ' | ' | ' | ' | ' | ' | ' | 2,000,000 | ' | ' | ' | ' | ' | ' |
Proceeds from related party note loan | ' | ' | ' | ' | ' | ' | ' | ' | $500,000 | $500,000 | ' | ' | ' | ' |
Inventories_Schedule_of_Invent
Inventories - Schedule of Inventories (Details) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 |
Inventory Disclosure [Abstract] | ' | ' |
Raw Materials | $795,800 | $813,000 |
Beer-in-process | 295,900 | 357,700 |
Finished Goods | 753,700 | 967,600 |
Merchandise | 84,600 | 103,700 |
Inventories, Total | $1,930,000 | $2,242,000 |
Secured_Lines_of_Credit_Detail
Secured Lines of Credit (Details Narrative) | Sep. 30, 2014 | Dec. 31, 2013 | Jun. 23, 2011 | Jun. 30, 2011 | Sep. 30, 2014 | Apr. 26, 2005 | Sep. 30, 2014 | Apr. 26, 2005 |
USD ($) | USD ($) | USD ($) | Lender [Member] | Lender [Member] | RBS [Member] | RBS [Member] | RBS [Member] | |
USD ($) | USD ($) | GBP [Member] | ||||||
GBP (£) | ||||||||
Facility maturity date | ' | ' | ' | 30-Jun-16 | ' | ' | ' | ' |
Facility interest rate above LIBOR rate | ' | ' | ' | ' | ' | 1.38% | ' | ' |
Facility interest rate above prime lending rate | ' | ' | ' | 3.00% | ' | ' | ' | ' |
Line of credit, outstanding amount | ' | ' | ' | ' | $1,311,300 | ' | $702,200 | ' |
Account receivables | ' | ' | ' | ' | 1,889,500 | ' | 2,776,600 | ' |
Maximum amount of facility | ' | ' | 10,000,000 | ' | ' | ' | ' | 1,750,000 |
Inventory | $1,930,000 | $2,242,000 | ' | ' | $1,862,200 | ' | ' | ' |
Initial term of facility | ' | ' | ' | ' | ' | '1 year | ' | ' |
Percentage of prepayment against qualified accounts receivable | ' | ' | ' | ' | ' | 80.00% | ' | ' |
Percentage of service charge on each invoice discounted | ' | ' | ' | ' | ' | 0.10% | ' | ' |
Notes_Payable_to_Related_Parti1
Notes Payable to Related Parties (Details Narrative) (USD $) | Sep. 30, 2014 | Apr. 24, 2014 | Jan. 22, 2014 |
Catamaran Services, Inc. [Member] | Catamaran Services, Inc. [Member] | ||
Notes payable to related party | $1,026,700 | ' | ' |
Percentage of convertible notes interest above prime rate | ' | 1.50% | 1.50% |
Percentage of convertible notes interest rate, maximum | ' | 10.00% | 10.00% |
Interest payable | 26,700 | ' | ' |
Proceeds from related party note loan | ' | $500,000 | $500,000 |
LongTerm_Debt_Summary_of_LongT
Long-Term Debt - Summary of Long-Term Debt (Details) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 |
Long term debt, total | $4,047,000 | $4,448,000 |
Less current maturities | 4,047,000 | 4,448,000 |
Long-term debt non-current | ' | ' |
Lender Notes With 4% Prime Plus Interest Rate [Member] | ' | ' |
Long term debt, total | 2,460,400 | 2,570,900 |
Lender Notes With 3.5% Prime Plus Interest Rate [Member] | ' | ' |
Long term debt, total | $1,586,600 | $1,877,100 |
LongTerm_Debt_Summary_of_LongT1
Long-Term Debt - Summary of Long-Term Debt (Details) (Parenthetical) (USD $) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2014 | Dec. 31, 2013 | |
Lender Notes With 4% Prime Plus Interest Rate [Member] | ' | ' |
Loans payable in monthly installments | $12,300 | $12,300 |
Loans payable, interest rate above prime rate | 4.00% | 4.00% |
Balloon payment of loans | 2,202,500 | 2,202,500 |
Debt instrument maturity date | 30-Jun-16 | 30-Jun-16 |
Lender Notes With 3.5% Prime Plus Interest Rate [Member] | ' | ' |
Loans payable in monthly installments | 32,300 | 32,300 |
Loans payable, interest rate above prime rate | 3.50% | 3.50% |
Balloon payment of loans | $908,700 | $908,700 |
Debt instrument maturity date | 30-Jun-16 | 30-Jun-16 |
LongTerm_Debt_Related_Party_De
Long-Term Debt - Related Party (Details Narrative) (HUK [Member], GBP [Member], GBP £) | 0 Months Ended |
Oct. 09, 2013 | |
HUK [Member] | GBP [Member] | ' |
Secured debt | £ 1,000,000 |
Repayment of secured loan by twelve equal quarterly installments | £ 83,333 |
Interest rate above Prime Rate | 5.00% |
LongTerm_Debt_Related_Party_Sc
Long-Term Debt - Related Party - Schedule of Related Party Debt (Details) (Loan from Heineken UK Limited Notes With 5% Prime Plus Interest Rate [Member], USD $) | Sep. 30, 2014 | Dec. 31, 2013 |
Loan from Heineken UK Limited Notes With 5% Prime Plus Interest Rate [Member] | ' | ' |
Long term debt, total | $1,216,500 | $1,657,400 |
Less current maturities | 540,700 | 552,500 |
Long-term debt non-current | $675,800 | $1,104,900 |
LongTerm_Debt_Related_Party_Sc1
Long-Term Debt - Related Party - Schedule of Related Party Debt (Details) (Parenthetical) (Loan from Heineken UK Limited Notes With 5% Prime Plus Interest Rate [Member], USD $) | 9 Months Ended |
Sep. 30, 2014 | |
Loan from Heineken UK Limited Notes With 5% Prime Plus Interest Rate [Member] | ' |
Loans payable in quarterly installments | $135,200 |
Interest rate above Prime Rate | 5.00% |
Debt instrument maturity date | 9-Oct-16 |
LongTerm_Debt_Related_Party_Su
Long-Term Debt - Related Party - Summary of Maturities of Long-Term Debt for Succeeding Years (Details) (Loan from Heineken UK Limited Notes With 5% Prime Plus Interest Rate [Member], USD $) | Sep. 30, 2014 |
Loan from Heineken UK Limited Notes With 5% Prime Plus Interest Rate [Member] | ' |
Three months ended December 31, 2014 | $135,200 |
Year ended December 31, 2015 | 540,700 |
Year ended December 31, 2016 | $540,600 |
Capital_Lease_Obligations_Sche
Capital Lease Obligations - Schedule of Future Minimum Lease Payments for Capital Lease Payments (Details) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 |
Capital Lease Obligations [Abstract] | ' | ' |
Three months Ending December 31, 2014 | $1,600 | ' |
Year Ending December 31, 2015 | 6,400 | ' |
Year Ending December 31, 2016 | 6,400 | ' |
Year Ending December 31, 2017 | 6,400 | ' |
Capital lease future minimum payment due, total | 20,800 | ' |
Less amounts representing interest | -1,500 | ' |
Present value of minimum lease payments | 19,300 | ' |
Less current maturities | 5,300 | 5,300 |
Non-current leases payable | $14,000 | $17,700 |
Subordinated_Convertible_Notes1
Subordinated Convertible Notes Payable, Related Party (Details Narrative) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 |
Thirteen UBA Notes [Member] | One UBA Note [Member] | Subordinated Convertible Notes Payable [Member] | |||
Unsecured convertible notes | ' | ' | ' | ' | $3,566,000 |
Percentage of convertible notes interest, prime rate plus | ' | ' | ' | ' | 1.50% |
Percentage of convertible notes interest rate, maximum | ' | ' | ' | ' | 10.00% |
Debt instruments conversion price per share | ' | ' | $1.50 | $1.44 | ' |
Convertible notes payable maturity date, description | ' | ' | ' | ' | ' |
The UBA Notes have been extended until June 2015 but have automatic renewals after such maturity date for successive one year terms, provided that either the Company or UBA may elect not to extend the term upon written notice given to the other party no more than 60 days and no fewer than 30 days prior to the expiration of the applicable term. Under the terms of the UBA Notes, UBA may demand payment within 60 days following the end of the extension period but UBA has agreed to subordinate the UBA Notes to the Company’s long-term debt agreements with Cole Taylor, which mature in June 2016. | |||||
Accrued interest | $1,650,600 | $1,582,500 | ' | ' | ' |
Commitments_and_Contingencies_
Commitments and Contingencies (Details Narrative) (USD $) | 9 Months Ended |
Sep. 30, 2014 | |
Commitments and Contingencies Disclosure [Abstract] | ' |
Company leases expiration | ' |
The leases expire at various dates between 2015 and 2019 and provide for renewal options ranging from month-to-month to five years. | |
Demanded payment in legal dispute | $500,000 |
RelatedParty_Transactions_Deta
Related-Party Transactions (Details Narrative) | Sep. 30, 2014 |
Related Party Transactions [Abstract] | ' |
Percentage ownership of UBA | 25.00% |
RelatedParty_Transactions_Sche
Related-Party Transactions - Schedule of Related-Party Transactions (Details) (USD $) | 9 Months Ended | ||
Sep. 30, 2014 | Sep. 30, 2013 | Dec. 31, 2013 | |
Shepherd Neame Ltd [Member] | ' | ' | ' |
Gross sales to related parties | ' | $2,286,700 | ' |
Purchases from related parties | ' | 10,827,700 | ' |
Expenses reimbursement to related parties | ' | 788,000 | ' |
Accounts payable and accrued liabilities to related parties | ' | ' | 70,400 |
Accounts receivable and prepayments to related parties | ' | ' | 5,000 |
HUK [Member] | ' | ' | ' |
Purchases from related parties | 9,886,800 | ' | ' |
Expenses reimbursement to related parties | 774,600 | ' | ' |
Interest paid to related parties | 79,000 | ' | ' |
Accounts payable and accrued liabilities to related parties | 1,723,900 | ' | 1,746,800 |
Catamaran [Member] | ' | ' | ' |
Borrowing from related parties | 1,000,000 | ' | ' |
Interest on notes | 26,700 | ' | ' |
United Breweries of America [Member] | ' | ' | ' |
Interest expenses related to UBA convertible notes | $68,100 | $68,000 | ' |
Segment_Information_Schedule_o
Segment Information - Schedule of Segment Information (Details) (USD $) | 9 Months Ended | |
Sep. 30, 2014 | Sep. 30, 2013 | |
Net Sales | $25,922,800 | $26,937,400 |
Operating Income (loss) | -43,200 | -89,500 |
Identifiable Assets | 19,092,900 | 19,349,300 |
Depreciation & Amortization | 845,000 | 797,700 |
Capital Expenditures | 642,700 | 665,100 |
North American Territory [Member] | ' | ' |
Net Sales | 9,564,000 | 11,057,400 |
Operating Income (loss) | -781,500 | -321,100 |
Identifiable Assets | 14,409,100 | 15,585,300 |
Depreciation & Amortization | 509,500 | 488,500 |
Capital Expenditures | 105,300 | 333,400 |
Foreign Territory [Member] | ' | ' |
Net Sales | 16,358,800 | 15,880,000 |
Operating Income (loss) | 738,300 | 231,600 |
Identifiable Assets | 4,683,800 | 3,764,000 |
Depreciation & Amortization | 335,500 | 309,200 |
Capital Expenditures | $537,400 | $331,700 |
Unrestricted_Net_Assets_Detail
Unrestricted Net Assets (Details Narrative) (UBIUK [Member], USD $) | Sep. 30, 2014 |
UBIUK [Member] | ' |
Undistributed losses of UBIUK | $1,023,900 |
Minimum Retained Earning required for distributions and other payments to MBC from KBEL | $1,622,000 |
Unrestricted_Net_Assets_Conden
Unrestricted Net Assets - Condensed Balance Sheets of US Operations (Details) (Mendocino, MBC And Releta Company [Member], USD $) | Sep. 30, 2014 | Dec. 31, 2013 |
Mendocino, MBC And Releta Company [Member] | ' | ' |
Cash and cash equivalents | $45,200 | $113,700 |
Accounts receivable, net | 1,889,500 | 1,512,300 |
Inventories | 1,862,200 | 2,217,300 |
Other current assets | 207,300 | 165,500 |
Total current assets | 4,004,200 | 4,008,800 |
Investment in subsidiary | 1,225,000 | 1,225,000 |
Property and equipment | 10,088,500 | 10,519,200 |
Intercompany receivable | 551,100 | 716,700 |
Other assets | 316,400 | 324,500 |
Total assets | 16,185,200 | 16,794,200 |
Line of credit | 1,311,300 | 1,517,200 |
Accounts payable | 2,509,900 | 2,524,500 |
Accrued liabilities | 1,065,000 | 1,001,700 |
Note payable related party | 1,026,700 | ' |
Current maturities of debt and capital leases | 4,052,300 | 4,453,300 |
Total current liabilities | 9,965,200 | 9,496,700 |
Long-term capital leases | 14,000 | 17,700 |
Subordinated convertible notes payable | 3,566,000 | 3,497,900 |
Total liabilities | 13,545,200 | 13,012,300 |
Common stock | 227,600 | 227,600 |
Preferred stock | 15,100,300 | 15,100,300 |
Accumulated deficit | -12,687,900 | -11,546,000 |
Total stockholders' equity | 2,640,000 | 3,781,900 |
Total liabilities and stockholders' equity | $16,185,200 | $16,794,200 |
Unrestricted_Net_Assets_Conden1
Unrestricted Net Assets - Condensed Statement of Operations of US Operations (Details) (Mendocino, MBC And Releta Company [Member], USD $) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | |
Mendocino, MBC And Releta Company [Member] | ' | ' | ' | ' |
Net sales | $3,584,500 | $3,682,700 | $9,564,000 | $11,057,400 |
Cost of goods sold | -2,879,200 | -2,849,800 | -7,937,500 | -8,694,200 |
Sales, marketing, and retail expenses | -365,500 | -464,100 | -1,071,900 | -1,278,700 |
General and administrative expenses | -412,900 | -477,500 | -1,341,100 | -1,501,600 |
Loss from operations | -73,100 | -108,700 | -786,500 | -417,100 |
Other income | 22,100 | 37,700 | 32,800 | 112,100 |
Interest expense | -131,600 | -114,900 | -388,200 | -315,300 |
Provision for taxes | ' | ' | ' | -5,000 |
Net loss | ($182,600) | ($185,900) | ($1,141,900) | ($625,300) |
Unrestricted_Net_Assets_Conden2
Unrestricted Net Assets - Condensed Statement of Cash Flows of US Operations (Details) (Mendocino, MBC And Releta Company [Member], USD $) | 9 Months Ended | |
Sep. 30, 2014 | Sep. 30, 2013 | |
Mendocino, MBC And Releta Company [Member] | ' | ' |
Cash flows from operating activities | ($518,900) | $405,500 |
Purchase of property and equipment | -105,300 | -333,400 |
Proceeds from sale of assets | 700 | ' |
Net borrowing (repayment) on line of credit | -205,900 | -116,500 |
Borrowing on note payable | ' | 539,700 |
Borrowing on long term debt | 1,000,000 | ' |
Repayment on long term debt | -401,000 | -390,500 |
Payment on obligation under capital lease | -3,700 | -3,100 |
Net change in payable to UBI | 165,600 | -184,500 |
Decrease in cash | -68,500 | -82,800 |
Cash, beginning of period | 113,700 | 123,200 |
Cash, end of period | $45,200 | $40,400 |