Attached files
file | filename |
---|---|
EX-31.1 - EX-31.1 - FBEC Worldwide Inc. | d30397_ex31-1.htm |
EX-32.1 - EX-32.1 - FBEC Worldwide Inc. | d30397_ex32-1.htm |
EXCEL - IDEA: XBRL DOCUMENT - FBEC Worldwide Inc. | Financial_Report.xls |
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
x |
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended |
June 30, 2013 |
or
o
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from __________________ to
__________________
Commission File No. |
000-52297 |
FRONTIER BEVERAGE COMPANY, INC.
(Exact name of registrant as specified in its charter)
Nevada |
06-1678089 |
||||||
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
||||||
c/o Paul Law Group, LLP, 902 Broadway, New York, NY |
10010 |
||||||
(Address of principal executive offices) |
(Zip Code) |
||||||
(646) 278-9953 |
|||||||
(Registrants telephone number, including area code) |
Indicate by check mark whether
the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12
months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the
past 90 days. Yes x No o
Indicate by check mark whether
the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and
posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the
registrant was required to submit and post such files). Yes x No o
Indicate by check mark whether
the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of
large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange
Act.
Large accelerated filer o |
Accelerated filer o |
|
Non-accelerated filer o |
Smaller reporting company x |
Indicate by check mark whether
the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x
The number of shares outstanding
of the Registrants Common Stock as of August 12, 2013 was 18,781,000.
FRONTIER BEVERAGE COMPANY, INC.
INDEX
INDEX
Page |
|||||||||||
PART I FINANCIAL INFORMATION |
|||||||||||
Item. 1 |
Financial Statements |
||||||||||
Condensed Balance Sheets as of June 30, 2013 (Unaudited) and December 31, 2012 |
3 |
||||||||||
Condensed Statements of Operations for the Three and Six Months Ended June 30, 2013 and 2012 (Unaudited) |
4 |
||||||||||
Condensed Statements of Cash Flows for the Six Months Ended June 30, 2013 and 2012 (Unaudited) |
5 |
||||||||||
Notes to the Condensed Consolidated Financial Statements |
6 |
||||||||||
Item 2. |
Managements Discussion and Analysis of Financial Condition and Results of Operations |
9 |
|||||||||
Item 3. |
Quantitative and Qualitative Disclosures about Market Risks |
12 |
|||||||||
Item 4. |
Controls and Procedures |
12 |
|||||||||
Part II OTHER INFORMATION |
|||||||||||
Item 1. |
Legal Proceedings |
14 |
|||||||||
Item 1A. |
Risk Factors |
14 |
|||||||||
Item 2. |
Unregistered Sales of Equity Securities and Use of Proceeds |
14 |
|||||||||
Item 3. |
Defaults Upon Senior Securities |
14 |
|||||||||
Item 4. |
Mine Safety Disclosures |
14 |
|||||||||
Item 5. |
Other Information |
14 |
|||||||||
Item 6. |
Exhibits |
14 |
2
FRONTIER BEVERAGE COMPANY, INC.
CONDENSED BALANCE SHEETS
CONDENSED BALANCE SHEETS
June 30, 2013 (unaudited) |
December 31, 2012 |
|||||||||
ASSETS |
||||||||||
Current Assets: |
||||||||||
Cash |
$ | 367 | $ | | ||||||
Total assets |
$ | 367 | $ | | ||||||
LIABILITIES AND STOCKHOLDERS DEFICIT |
||||||||||
Current Liabilities: |
||||||||||
Notes and loans payable due to related party |
$ | 394,264 | $ | 394,264 | ||||||
Accounts payable |
81,888 | 64,257 | ||||||||
Accrued interest-related parties |
80,487 | 64,704 | ||||||||
Other current liabilities |
18,750 | | ||||||||
Total current liabilities |
575,389 | 523,225 | ||||||||
Commitments and Contingencies |
||||||||||
Stockholders Deficit: |
||||||||||
Preferred stock par value $0.001; 100,000,000 shares authorized; no shares issued and outstanding |
| | ||||||||
Common stock par value $0.001; 500,000,000 shares authorized; 18,781,000 shares issued and outstanding |
18,781 | 18,781 | ||||||||
Additional paid-in capital |
1,703,262 | 1,700,262 | ||||||||
Accumulated deficit |
(2,297,065 | ) | (2,242,268 | ) | ||||||
Total stockholders deficit |
(575,022 | ) | (523,225 | ) | ||||||
Total liabilities and stockholders deficit |
$ | 367 | $ | |
The accompanying footnotes are an integral part of these condensed financial statements.
3
FRONTIER BEVERAGE COMPANY, INC.
CONDENSED STATEMENTS OF OPERATIONS
UNAUDITED
CONDENSED STATEMENTS OF OPERATIONS
UNAUDITED
Three Months Ended |
Six Months Ended |
||||||||||||||
June 30, 2013 |
June 30, 2012 |
June 30, 2013 |
June 30, 2012 |
||||||||||||
Revenues, net |
$ | | $ | 1,117 | $ | | $ | 71,252 | |||||||
Cost of goods sold |
| 831 | | 8,430 | |||||||||||
Gross profit |
| 286 | | 62,822 | |||||||||||
Selling, general and administrative |
13,432 | 64,573 | 39,014 | 131,295 | |||||||||||
Total operating expenses |
13,432 | 64,573 | 39,014 | 131,295 | |||||||||||
Loss from operations |
(13,432 | ) | (64,287 | ) | (39,014 | ) | (68,473 | ) | |||||||
Interest expense |
(8,019 | ) | (6,515 | ) | (15,783 | ) | (14,037 | ) | |||||||
Total other expense |
(8,019 | ) | (6,515 | ) | (15,783 | ) | (14,037 | ) | |||||||
Loss before taxes |
(21,451 | ) | (70,802 | ) | (54,797 | ) | (82,510 | ) | |||||||
Provision for income taxes |
| | | | |||||||||||
Net loss |
$ | (21,451 | ) | $ | (70,802 | ) | $ | (54,797 | ) | $ | (82,510 | ) | |||
Loss per share, basic and diluted |
$ | (0.00 | ) | $ | (0.00 | ) | $ | (0.00 | ) | $ | (0.00 | ) | |||
Weighted average number of shares outstanding, basic and diluted |
18,781,000 | 18,781,000 | 18,781,000 | 18,781,000 |
The accompanying footnotes are an integral part of these condensed financial statements.
4
FRONTIER BEVERAGE COMPANY, INC.
CONDENSED STATEMENTS OF CASH FLOWS
UNAUDITED
CONDENSED STATEMENTS OF CASH FLOWS
UNAUDITED
Six Months Ended |
|||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
June 30, 2013 |
June 30, 2012 |
||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES |
|||||||||||
Net loss |
$ | (54,797 | ) | $ | (82,510 | ) | |||||
Adjustments to reconcile net loss to net cash flows from operating activities: |
|||||||||||
Impairment of inventory |
| (2,621 | ) | ||||||||
Changes in assets and liabilities: |
|||||||||||
Accounts receivable |
| (377 | ) | ||||||||
Inventory |
| 7,140 | |||||||||
Prepaid expenses and other current assets |
| 3,614 | |||||||||
Accounts payable |
17,631 | (4,456 | ) | ||||||||
Accrued expenses and other current liabilities |
15,783 | 73,872 | |||||||||
Net cash flows used in operating activities |
(21,383 | ) | (5,338 | ) | |||||||
CASH FLOWS FROM INVESTING ACTIVITIES |
| | |||||||||
CASH FLOWS FROM FINANCING ACTIVITIES |
|||||||||||
Proceeds from advances |
18,750 | | |||||||||
Proceeds from related parties |
| 24,519 | |||||||||
Capital contribution |
3,000 | 9,000 | |||||||||
Repayment of related party debt |
| (27,995 | ) | ||||||||
Net cash flows provided by financing activities |
21,750 | 5,524 | |||||||||
Increase in cash |
367 | 186 | |||||||||
Cash, beginning of period |
| 255 | |||||||||
Cash, end of period |
$ | 367 | $ | 441 | |||||||
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: |
|||||||||||
Interest paid |
$ | | $ | | |||||||
Income taxes paid |
$ | | $ | |
The accompanying footnotes are an integral part of these condensed financial statements.
5
FRONTIER BEVERAGE COMPANY, INC.
NOTES TO FINANCIAL STATEMENTS
NOTES TO FINANCIAL STATEMENTS
NOTE 1 |
BASIS OF PRESENTATION AND RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS |
Interim Financial Reporting
While the information presented in the accompanying interim
financial statements is unaudited, it includes all adjustments, which are, in the opinion of management, necessary to present fairly the financial
position, results of operations and cash flows for the interim periods presented in accordance with generally accepted accounting principles in the
United States of America (GAAP). These interim financial statements follow the same accounting policies and methods of application as used
in the December 31, 2012 audited financial statements of Frontier Beverage Company, Inc. (the Company). All adjustments are of a normal,
recurring nature. Interim financial statements and the notes thereto do not contain all of the disclosures normally found in year-end audited financial
statements and these Notes to Financial Statements are abbreviated and contain only certain disclosures related to the six month periods ended June 30,
2013 and 2012. It is suggested that these interim financial statements be read in conjunction with our audited financial statements and related notes
for the year ended December 31, 2012 included in our Form 10-K filed with the Securities Exchange Commission on April 15, 2013. Operating results for
the three and six months ended June 30, 2013 are not necessarily indicative of the results that can be expected for the year ending December 31,
2013.
Basis of presentation and going concern
uncertainty
The accompanying financial statements have been prepared in
conformity with GAAP, which contemplates continuation of the Company as a going concern, which is dependent upon the Companys ability to
establish itself as a profitable business. At June 30, 2013, the Company has an accumulated deficit of $2,297,065, and for the six months ended June
30, 2013, incurred net losses of $54,797. The Companys ability to continue in business is dependent upon obtaining sufficient financing or
attaining profitable operations. However, there can be no assurance that management will be successful in obtaining additional funding or in attaining
profitable operations, and therefore, these matters raise substantial doubt about the Companys ability to continue as a going concern. These
financial statements do not include any adjustments that might result from the outcome of these uncertainties, nor do they include adjustments relating
to the recoverability and realization of assets and classification of liabilities that might be necessary should the Company be unable to continue in
operation.
Change of Control
On July 1, 2013, an unrelated third party acquired an aggregate
of 15,978,000 shares of Common Stock of the Company constituting approximately 85% of the Companys issued and outstanding Common Stock. See NOTE 5 SUBSEQUENT
EVENTS Change of Control for additional details.
Recent Accounting Pronouncements
The Company does not expect the adoption of recently issued
accounting pronouncements to have a significant impact on its results of operations, financial position or cash flow.
NOTE 2 CAPITAL STOCK
The Company is authorized to issue up to 500,000,000 shares
of common stock at $0.001 par value per share (Common Stock). See NOTE 5 SUBSEQUENT EVENTS Increase in the Companys
Authorized Capital Stock for additional details. As of June 30, 2013, the Company had 18,781,000 shares of Common Stock issued and outstanding.
Holders of Common Stock are entitled to one vote per share and are to receive dividends or other distributions when and if declared by the
Companys Board of Directors. None of our Common Stock is subject to outstanding options or rights to purchase, nor do we have any issued and
outstanding securities that are convertible into our Common Stock. We have not agreed to register any of our stock. We do not currently have in effect
an employee stock option plan.
6
FRONTIER BEVERAGE COMPANY, INC.
NOTES TO FINANCIAL STATEMENTS
NOTES TO FINANCIAL STATEMENTS
NOTE 3 INCOME TAXES
Deferred income tax assets and liabilities are determined
based upon differences between the financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws
that will be in effect when the differences are expected to reverse. The Company does not expect to pay any significant federal or state income tax for
2013 as a result of the losses incurred during the six months ended June 30 2013, the additional losses expected for the remainder of 2013, and from
net operating loss carry forwards from prior years. Accounting standards require the consideration of a valuation allowance for deferred tax assets if
it is more likely than not that some component or all of the benefits of deferred tax assets will not be realized. As of June 30, 2013 and
2012, the Company maintained a full valuation allowance for all deferred tax assets. Based on these requirements, no provision or benefit for income
taxes has been recorded. There were no recorded unrecognized tax benefits at the end of the reporting period.
NOTE 4 RELATED PARTIES
During the six months ended June 30, 2013, the Company
received no funds from HBB, LLC (HBB) and Baked World, LLC (Baked World), both Tennessee limited liability companies
beneficially owned and controlled by Terry Harris, the Companys President, Treasurer, and sole director and Timothy Barham, a former officer and
director of the Company (who resigned his positions effective November 15, 2011); however, during the period from January 2010 through December 2012,
HBB provided cash and made payments on the Companys behalf totaling $371,399. During the period from September 2011 through December 2012, Baked
World provided cash and made payments on the Companys behalf totaling $18,941. The Company agreed to pay interest on the loans at eight percent
(8%) per annum. The loans are due on demand and remain outstanding at June 30, 2013.
In October 2012, Mr. Harris advanced the Company $3,000.
The Company agreed to pay interest on the advance at six percent (6%) per annum. The $3,000 remained outstanding at June 30, 2013.
During the six months ended June 30, 2013 and 2012, the
Company was provided office space, the use of office equipment and accounting personnel by HBB. HBB charged the Company $500 per month during the
period in 2013 and $1,500 per month during the period in 2012 which amounts are included in operating expense and recorded as capital contribution on
the accompanying condensed financial statements.
NOTE 5 SUBSEQUENT EVENTS
Change of Control
On July 1, 2013, Ruben Yakubov, an unrelated third party,
entered into a stock purchase agreement with the Company and certain stockholders (the Selling Shareholders) of the Company, pursuant to
which, the Selling Shareholders sold an aggregate of 15,978,000 shares of Common Stock of the Company to Mr. Yakubov for an aggregate purchase price of
$197,500, constituting approximately 85% of the Companys issued and outstanding Common Stock.
Resignation of Terry Harris as Sole
Officer
On July 1, 2013, Terry Harris resigned as the
Companys President, Secretary and Treasurer. This resignation was effective on July 1, 2013.
7
FRONTIER BEVERAGE COMPANY, INC.
NOTES TO FINANCIAL STATEMENTS
NOTES TO FINANCIAL STATEMENTS
Appointment of Ruben Yakubov as Sole
Officer
On July 1, 2013, Ruben Yakubov was appointed President,
Secretary and Treasurer of the Company.
Director Change
On July 20, 2013, Terry Harris resigned as director of the
Company and was replaced with Ruben Yakubov. The change in directors took place ten days after the mailing to the Companys shareholders of record
of a Schedule 14f-1. The Schedule 14f-1 was filed with the Securities Exchange Commission on July 9, 2013 and the mailing to shareholders of record
took place on July 10, 2013.
Increase in the Companys Authorized Capital
Stock
On July 11, 2013, the Company filed a Certificate of
Amendment to the Articles of Incorporation with the State of Nevadas Secretary of State. The Certificate of Amendment increased the
Companys authorized common stock from 100 million to 500 million shares. In accordance with Rule 14c-2 of the Securities Exchange Act of 1934, as
amended, the Company will not undertake any action with respect to the increase in the authorized common stock until at least 20 days following the
mailing to the Companys shareholders of record. The mailing to the Companys shareholders of record took place on July 19,
2013.
8
ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
We urge you to read the following discussion in conjunction
with managements discussion and analysis contained in our Annual Report on Form 10-K for the year ended December 31, 2012, as well as with our
condensed financial statements and the notes thereto included elsewhere herein.
CAUTION REGARDING FORWARD-LOOKING
STATEMENTS
Our prospects are subject to uncertainties and risks. In
this Quarterly Report on Form 10-Q, we make forward-looking statements in this Item 2 and elsewhere that also involve substantial uncertainties and
risks. These forward-looking statements are based upon our current expectations, estimates and projections about our business and our industry, and
reflect our beliefs and assumptions based upon information available to us at the date of this report. In some cases, you can identify these statements
by words such as if, may, might, will, should, expects, plans,
anticipates, believes, estimates, predicts, potential, continue, and other
similar terms. These forward-looking statements include, among other things, projections of our future financial performance and our anticipated
growth, descriptions of our strategies, our product and market development plans, and other objectives, expectations and intentions, the trends we
anticipate in our business and the markets in which we operate, and the competitive nature and anticipated growth of those markets.
We caution readers that forward-looking statements are
predictions based on our current expectations about future events. These forward-looking statements are not guarantees of future performance and are
subject to risks, uncertainties and assumptions that are difficult to predict. Our actual results, performance or achievements could differ materially
from those expressed or implied by the forward-looking statements as a result of a number of factors, including but not limited to the risks and
uncertainties discussed in our other filings with the SEC or our sales results or changes in costs associated with ingredients for our products,
manufacture of our products, distribution and sales. We undertake no obligation to revise or update any forward-looking statement for any
reason.
Overview
Though we have suspended operation in light of our
inability to maintain adequate working capital, our current focus remains the development, marketing, sale and distribution of alternative beverage and
snack products. We launched our first proprietary beverage in early 2010 and our first proprietary snack food in early 2011. Depending upon our ability
to obtain future financing for such operations, we intend to continue to develop, purchase or license additional proprietary beverages and snack
products in various categories to provide consumers with a variety of fresh products in the New Age/Alternative Beverage and snack foods
categories.
The Companys Common Stock is quoted on the OTC Market
Groups, Inc. OTCQB (the OTCQB) under the symbol FBEC.
Basis of presentation and going concern
uncertainty
The accompanying financial statements have been prepared in
conformity with generally accepted accounting principles in the United States of America (GAAP), which contemplates continuation of the
Company as a going concern, which is dependent upon the Companys ability to establish itself as a profitable business. At June 30, 2013, the
Company has an accumulated deficit of $2,297,065, and for the six months ended June 30, 2013, incurred net losses of $54,797. The Companys
ability to continue in business is dependent upon obtaining sufficient financing or attaining profitable operations; however, there can be no assurance
that management will be successful in obtaining additional funding or in attaining profitable operations, therefore these matters raise substantial
doubt about the Companys ability to continue as a going concern. These financial statements do not include any adjustments that might result from
the outcome of these uncertainties,
9
nor do they include adjustments relating to the recoverability and realization of assets and classification of liabilities that might be necessary should the Company be unable to continue in operation.
Critical Accounting Policies
There have been no changes from the Critical Accounting
Policies described in the Annual Report on Form 10-K filed with the Securities and Exchange Commission on April 15, 2013.
Recent Events
Change of Control
On July 1, 2013, Ruben Yakubov, an unrelated third party,
entered into a stock purchase agreement with the Company and certain stockholders (the Selling Shareholders) of the Company, pursuant to
which, the Selling Shareholders sold an aggregate of 15,978,000 shares of Common Stock of the Company to Mr. Yakubov for an aggregate purchase price of
$197,500, constituting approximately 85% of the Companys issued and outstanding Common Stock.
Resignation of Terry Harris as Sole
Officer
On July 1, 2013, Terry Harris resigned as the
Companys President, Secretary and Treasurer. This resignation was effective on July 1, 2013.
Appointment of Ruben Yakubov as Sole
Officer
On July 1, 2013, Ruben Yakubov was appointed President,
Secretary and Treasurer of the Company.
Director Change
On July 20, 2013, Terry Harris resigned as director of the
Company and was replaced with Ruben Yakubov. The change in directors took place ten days after the mailing to the Companys shareholders of record
of a Schedule 14f-1. The Schedule 14f-1 was filed with the Securities Exchange Commission on July 9, 2013 and the mailing to shareholders of record
took place on July 10, 2013.
Increase in the Companys Authorized Capital
Stock
On July 11, 2013, the Company filed a Certificate of
Amendment to the Articles of Incorporation with the State of Nevadas Secretary of State. The Certificate of Amendment increased the
Companys authorized common stock from 100 million to 500 million shares. In accordance with Rule 14c-2 of the Securities Exchange Act of 1934, as
amended, the Company will not undertake any action with respect to the increase in the authorized common stock until at least 20 days following the
mailing to the Companys shareholders of record. The mailing to the Companys shareholders of record took place on July 19,
2013.
Liquidity and Capital Resources
We began current operations in November 2009 and have yet
to attain a level of operations which allows us to meet our current overhead requirements. We do not contemplate attaining profitable operations prior
to 2014 and there is no assurance that such an operating level will ever be achieved. We will be dependent upon obtaining additional financing in order
to adequately fund working capital, infrastructure, production expenses and significant marketing related expenditures to gain market recognition, so
that we can achieve a level of revenue adequate to support our cost structure, none of which can be assured. These factors raise substantial doubt
about our ability to continue as a going concern and the accompanying financial statements do not include any adjustments related to the recoverability
or classification of asset carrying amounts or the amounts and
10
classification of liabilities that may result should we be unable to continue as a going concern.
As of June 30, 2013, the Companys cash balance was
$367. Outstanding debt as of June 30, 2013 totaled $575,389, of which $474,751 is attributable to loans and accrued interest from related parties. The
Companys working capital deficit as of June 30, 2013 was $575,022.
Since we began our current operations, we have obtained
financing through loans to the Company from the following sources:
Loan Amount |
Amount Repaid |
Balance Due June 30, 2013 |
||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
HBB, LLC |
$ | 557,278 | $ | 185,880 | $ | 371,398 | ||||||||
Baked World, LLC |
$ | 24,801 | $ | 5,860 | $ | 18,941 | ||||||||
Terry Harris |
$ | 179,479 | $ | 176,479 | $ | 3,000 | ||||||||
Timothy Barham |
$ | 120,000 | $ | 119,075 | $ | 925 |
The Company will need to raise additional capital to expand
operations to the point at which the Company can achieve profitability. The terms of financing that may be raised may not be on terms acceptable by the
Company. If adequate funds cannot be raised outside of the Company, the Companys current stockholders may need to contribute funds to sustain
operations. The Company does not have any agreements with any of its stockholders to provide any capital and there can be no assurance that any
stockholder would be able or willing to fund the Companys continued operations.
Results of Operations
Comparison of Three Months Ended June 30, 2013 and
2012
For the three month periods ended June 30, 2013 and 2012,
the Companys revenue totaled $0 and $1,117, respectively, for which its respective cost of revenues totaled $0 and $831. A breakdown of the
Companys revenue and cost of sales follows:
Three Months Ended |
|||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
REVENUE |
June 30, 2013 |
June 30, 2012 |
Change |
||||||||||||
Beverage Products |
$ | 0 | $ | 0 | $ | 0 | |||||||||
Snack Products |
0 | 1,117 | (1,117 | ) | |||||||||||
Total Revenue |
$ | 0 | $ | 1,117 | $ | (1,117 | ) | ||||||||
Six Months Ended |
|||||||||||||||
COST OF SALES |
June 30, 2013 |
June 30, 2012 |
Change |
||||||||||||
Beverage Products |
$ | 0 | $ | 0 | $ | 0 | |||||||||
Snack Products |
0 | 831 | (831 | ) | |||||||||||
Total Cost of Sales |
$ | 0 | $ | 831 | $ | (831 | ) |
During the three months ended June 30, 2013, the Company
reported no sales of its snack or beverage products. During the three months ended June 30, 2012, the Company sold snack products at its wholesale
prices and recorded cost of sales accordingly.
11
For the three month periods ended June 30, 2013 and 2012,
the Company had operating expenses totaling $13,432 compared to $64,573, respectively; a decrease of $51,141. This decrease is a direct result of the
temporary suspension of operations, including a net reduction in operating expense of approximately $21,223 and the discontinuation of accrued officer
compensation resulting in a reduction of approximately $29,918.
Comparison of Six Months Ended June 30, 2013 and
2012
For the six month periods ended June 30, 2013 and 2012, the
Companys revenue totaled $0 and $71,252, respectively, for which its respective cost of revenues totaled $0 and $8,430. A breakdown of the
Companys revenue and cost of sales follows:
Six Months Ended |
|||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
REVENUE |
June 30, 2013 |
June 30, 2012 |
Change |
||||||||||||
Beverage Products |
$ | 0 | $ | 63,205 | $ | (63,205 | ) | ||||||||
Snack Products |
0 | 8,047 | (8,047 | ) | |||||||||||
Total Revenue |
$ | 0 | $ | 71,252 | $ | (71,252 | ) | ||||||||
Six Months Ended |
|||||||||||||||
COST OF SALES |
June 30, 2013 |
June 30, 2012 |
Change |
||||||||||||
Beverage Products |
$ | 0 | $ | 0 | $ | 0 | |||||||||
Snack Products |
0 | 8,430 | (8,430 | ) | |||||||||||
Total Cost of Sales |
$ | 0 | $ | 8,430 | $ | (8,430 | ) |
During the six months ended June 30, 2013, the Company
reported no sales of its snack or beverage products. During the six months ended June 30, 2012, the Company sold snack products at its wholesale prices
and recorded cost of sales accordingly.
For the six month periods ended June 30, 2013 and 2012, the
Company had operating expenses totaling $39,014 compared to $131,295, respectively; a decrease of $92,281. This decrease is a direct result of the
temporary suspension of operations, including a net reduction in operating expense of approximately $32,445 and the discontinuation of accrued officer
compensation resulting in a reduction of approximately $59,836.
Off Balance Sheet Arrangements
We do not have any off balance sheet
arrangements.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK
Our Company is a smaller reporting company as
defined by Rule 12b-2 of the Exchange Act, and as such, is not required to provide the information required under this Item.
ITEM 4. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and
Procedures
Pursuant to Rule 13a-15(b) under the Securities Exchange
Act of 1934 (Exchange Act), Ruben Yakubov, the Companys President and Principal Executive Officer (CEO) and Treasurer and
Principal Accounting Officer (CFO) (the Companys principal financial and accounting officer), initially evaluated the effectiveness
of the
12
Companys disclosure controls and procedures (as defined under Rule 13a-15(e) under the Exchange Act) as of the end of the period covered by this report. Mr. Yakubovs evaluation is being made as of the date of the filing of this report, but the evaluation period relates to a period prior to Mr. Yakubovs appointment as the CEO and CFO.
Based upon that initial evaluation, Mr. Yakubov concluded,
upon consultation with prior management, that the Companys disclosure controls and procedures were not effective as of June 30, 2013 to ensure
that information required to be disclosed by the Company in the reports that the Company files or submits under the Exchange Act, is recorded,
processed, summarized and reported, within the time periods specified in the SECs rules and forms, and that such information is accumulated and
communicated to the Companys management, including the Companys CEO/CFO, as appropriate, to allow timely decisions regarding required
disclosure, due to the material weaknesses described below.
A material weakness is a deficiency, or a combination of
deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the
Companys annual or interim financial statements will not be prevented or detected on a timely basis.
The Company believes its weaknesses in internal controls
and procedures is due to the Companys lack of sufficient personnel with expertise in the area of SEC, GAAP and tax accounting procedures. In
addition, the Company lacks the personnel structure, size and complexity to segregate duties sufficiently for proper controls.
The Company is currently without sufficient funds to hire
additional personnel with expertise in these areas and to segregate duties for proper controls and until such time as additional personnel are hired,
the Company believes that it will continue to recognize a weakness in its internal controls and procedures. The Company currently engages outside
consultants to assist in the areas of tax accounting procedures.
The Company plans to hire additional personnel to properly
implement a control structure when and if the appropriate funds become available. In the meantime, the Chief Executive Officer/Financial Officer will
continue to perform or supervise the performance of additional accounting and financial analyses and other post-closing procedures including detailed
validation work with regard to balance sheet account balances, additional analysis on income statement amounts and managerial review of all significant
account balances and disclosures, to ensure that the Companys Annual Report and the financial statements forming part thereof are in accordance
with GAAP.
Changes in Internal Control Over Financial
Reporting
During the three and six months ended June 30, 2013, there
were no changes in our internal control over financial reporting that occurred during the 2013 that have materially affected, or are reasonably likely
to materially affect, our internal control over financial reporting.
Limitations on the Effectiveness of
Controls
Our disclosure controls and procedures provide our
principal executive and financial officer with reasonable assurances that our disclosure controls and procedures will achieve their objectives.
However, our management does not expect that our disclosure controls and procedures or our internal control over financial reporting can or will
prevent all human error. A control system, no matter how well designed and implemented, can provide only reasonable, not absolute, assurance that the
objectives of the control system are met. Furthermore, the design of a control system must reflect the fact that there are internal resource
constraints, and the benefit of controls must be weighed relative to their corresponding costs. Because of the limitations in all control systems, no
evaluation of controls can provide complete assurance that all control issues and instances of error, if any, within our company are detected. These
inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur due to human error or
mistake. Additionally, controls, no matter how well designed, could be circumvented by the individual acts of specific persons within the organization.
The design
13
of any system of controls is also based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated objectives under all potential future conditions.
Management is aware that there is a lack of segregation of
duties at the Company due to the fact that the Company has only one director and executive officer dealing with general administrative and financial
matters. This constitutes a significant deficiency in the internal controls. Management has decided that considering the officer/director involved, the
control procedures in place, and the outsourcing of certain financial functions, the risks associated with such lack of segregation were low and the
potential benefits of adding additional employees to clearly segregate duties did not justify the expenses associated with such increases. Management
plans to re-evaluate this situation periodically. In light of the Companys current cash flow situation, the Company does not intend to increase
staffing to mitigate the current lack of segregation of duties within the general administrative and financial functions.
PART II OTHER INFORMATION
ITEM 1. LEGAL PROCEDINGS
There are no material pending legal or governmental
proceedings relating to our Company or its properties to which we are a party, and to our knowledge, there are no material proceedings to which any of
our directors, executive officers, affiliates or shareholders are a party adverse to us or have a material interest adverse to us.
ITEM 1A. RISK FACTORS
Our Company is a smaller reporting company as
defined by Rule 12b-2 of the Exchange Act, and as such, is not required to provide the information required under this Item.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF
PROCEEEDS
There are no unreported sales of unregistered securities
during the six months ended June 30, 2013.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS
The following exhibits are filed with this Quarterly Report
on Form 10-Q or are incorporated by reference as described below.
Exhibit |
Description |
|||||
---|---|---|---|---|---|---|
31.1 |
Certification of Principal Executive Officer and Principal Financial Officer pursuant to Rule 13a-14a/Rule
14d-14(a)* |
|||||
32.1 |
Certification of Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S.C. Section
1350* |
|||||
101.1 |
Interactive data files pursuant to Rule 405 of Regulation S-T* |
* |
Filed herewith. |
14
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
August 12, 2013 |
FRONTIER
BEVERAGE COMPANY, INC. |
||||||||||
By: |
/s/ Ruben Yakubov |
||||||||||
President and Treasurer (Principal Executive Officer, Principal Financial and Accounting Officer and Authorized Signatory) |
15