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EXCEL - IDEA: XBRL DOCUMENT - American Retail Group, Inc.Financial_Report.xls
EX-32.1 - CERTIFICATION - American Retail Group, Inc.f10q0314ex32i_americanretail.htm
EX-31.1 - CERTIFICATION - American Retail Group, Inc.f10q0314ex31i_americanretail.htm


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

x    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2014
or

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ___________ to ______________

Commission File Number: 333-146758

AMERICAN RETAIL GROUP, INC.
 (Exact name of registrant as specified in its charter)
 
Nevada
 
13-1869744
(State or other jurisdiction
of incorporation)
 
(IRS Employer
Identification Number)

c/o Primary Capital LLC
80 Wall Street, 5th Floor
New York, New York 10005
(Address of principal executive offices)

(212) 300-0070
(Registrant’s 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 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.  x Yes   o No
 
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was Required to submit and post such files).  x Yes  o No 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See 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  (Do not check if a smaller reporting company)
 
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). x Yes   o No
 
As of May 20, 2014, there were outstanding 22,930,000 shares of the registrant’s common stock, par value $.0001.
 


 
 

 
 
TABLE OF CONTENTS
 
 
Page
PART I  
Financial Information
 
     
Item 1.
Financial Statements.
F-1
     
 
Condensed Balance Sheets as of March 31, 2014 (Unaudited) and December 31, 2013
F-1
     
 
Condensed Statements of Operations for the three months ended March 31, 2014 and 2013 (Unaudited)
F-2
     
 
Condensed Statements of Cash Flows for the three months ended March 31, 2014 and 2013 (Unaudited)
F-3
     
 
Notes to Condensed Financial Statements (Unaudited)
F-4
     
Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations.
3
     
Item 4.
Controls and Procedures
4
     
PART II
Other Information
 
     
Item 6.
Exhibits.
6
     
 
Signatures
7
     
 
Exhibits/Certifications
 
 
 
2

 
 
PART I-FINANCIAL INFORMATION

ITEM 1.     FINANCIAL STATEMENTS
 
AMERICAN RETAIL GROUP, INC.
CONSOLIDATED BALANCE SHEETS
 
ASSETS
           
   
March 31,
   
December 31,
 
   
2014
   
2013
 
ASSETS:
           
Cash and cash equivalents
  $ -     $ -  
                 
TOTAL ASSETS
  $ -     $ -  
                 
LIABILITIES AND STOCKHOLDERS' DEFICIT
               
                 
CURRENT LIABILITIES:
               
Accounts payable and accrued expenses
  $ 19,874     $ 19,874  
Notes Payable - related party
    1,201,000       1,201,000  
Accrued interest - related party
    320,157       290,543  
Loan payable - related party
    74,519       74,519  
                 
Total current liabilities
    1,615,550       1,585,936  
                 
Total liabilities
    1,615,550       1,585,936  
                 
STOCKHOLDERS' DEFICIT
               
Preferred stock, $.0001 par value, 10,000,000 shares authorized; -0- shares issued and outstanding
    -       -  
Common stock, $.0001 par value, 200,000,000 shares authorized; 22,930,000 shares issued and outstanding at March 31, 2014 and December 31, 2013.
    2,293       2,293  
Additional paid-in capital
    283,694       283,694  
Accumulated Deficit
    (1,901,537 )     (1,871,923 )
                 
Total stockholders' deficit
    (1,615,550 )     (1,585,936 )
                 
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT
  $ 0     $ -  
 
The accompanying notes are an integral part of these consolidated financial statements.
 
 
F-1

 
 
AMERICAN RETAIL GROUP, INC
CONSOLIDATED STATEMENTS OF OPERATIONS
 
   
Three Months Ended March 31
 
   
2014
   
2013
 
             
OPERATING EXPENSES:
           
General and administrative expenses
    -       8,207  
                 
      Total operating expenses
    -       8,207  
                 
LOSS FROM  OPERATIONS
    -       (8,207 )
                 
OTHER EXPENSE
               
  Interest expense
    (29,614 )     (30,025 )
                 
TOTAL OTHER EXPENSE
    (29,614 )     (30,025 )
                 
NET LOSS APPLICABLE TO COMMON STOCKHOLDERS
    (29,614 )     (38,232 )
                 
BASIC LOSS PER COMMON SHARE
  $ (0.00 )   $ (0.00 )
                 
WEIGHTED AVERAGE SHARES OUTSTANDING
    22,930,000       22,930,000  
 
The accompanying notes are an integral part of these consolidated financial statements.
 
 
F-2

 
 
AMERICAN RETAIL GROUP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
 
   
Three Months Ended March 31
 
   
2014
   
2013
 
             
CASH FLOW FROM OPERATING ACTIVITIES
           
Net loss
  $ (29,614 )   $ (38,232 )
                 
Changes in operating assets and liabilities
               
    Accounts payable and accrued expenses
    -       7,192  
    Accrued interest
    29,614       30,025  
                 
Net cash used in operating activities
    -       (1,015 )
                 
CASH FLOWS FROM FINANCING ACTIVITIES:
               
    Loan from related party
    0       1,015  
                 
   Net cash provided by financing activities
    0       1,015  
                 
NET  DECREASE IN CASH AND CASH EQUIVALENTS
    0       (0 )
                 
CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD
    -       -  
                 
CASH AND CASH EQUIVALENTS - END OF  PERIOD
  $ 0     $ (0 )
 
The accompanying notes are an integral part of these consolidated financial statements.
 
 
F-3

 
 
AMERICAN RETAIL GROUP, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2014
(UNAUDITED)
 
Note 1 - Organization and Operations

American Retail Group, Inc., formerly known as Resource Acquisition Group, Inc. (the “Company”), is a Nevada corporation organized on January 27, 1934.  
 
At this time, the Company’s purpose is to seek, investigate, and if such investigation warrants, acquire an interest in business opportunities presented to it by persons or firms who or which desire to seek the perceived advantages of an Exchange Act registered corporation. The Company will not restrict its search to any specific business, industry, or geographical location and the Company may participate in a business venture of virtually any kind or nature.

Note 2 – Summary of Significant Accounting Policies

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the condensed financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Cash and Cash Equivalents

Cash and cash equivalents include cash on hand, cash in time deposits and all highly liquid investments with original maturities of three months or less.

Fair Value of Financial Instruments

The Company follows FASB ASC 825-10-50-10 “Financial Instruments-Overall-Disclosure” for its financial instruments. The fair value of a financial instrument is the amount at which the instrument could be exchanged in a current transaction between willing parties. The carrying amounts of financial assets and liabilities, such as cash and cash equivalents, accounts payable and accrued expenses and notes payable to a related party, approximate their fair values because of the short maturity of these instruments.

Income Taxes

The Company uses the asset and liability method of accounting for income taxes in accordance with ASC Topic 740, “Income Taxes.” Under this method, income tax expense is recognized for the amount of: (i) taxes payable or refundable for the current year and (ii) deferred tax consequences of temporary differences resulting from matters that have been recognized in an entity’s financial statements or tax returns. 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. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the results of operations in the period that includes the enactment date. A valuation allowance is provided to reduce the deferred tax assets reported if based on the weight of the available positive and negative evidence, it is more likely than not some portion or all of the deferred tax assets will not be realized.

ASC Topic 740.10.30 clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements and prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. ASC Topic 740.10.40 provides guidance on recognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. We have no material uncertain tax positions for any of the reporting periods presented.
 
 
F-4

 
 
Note 3 – Going Concern

The Company's financial statements are prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of obligations in the normal course of business. However, the Company has no cash, has losses and an accumulated deficit, and a working capital deficiency. The Company does not currently have any revenue generating operations. These conditions, among others, raise substantial doubt about the ability of the Company to continue as a going concern.

In view of these matters, continuation as a going concern is dependent upon continued operations of the Company, which in turn is dependent upon the Company's ability to, meets its financial requirements, raise additional capital, and the success of its future operations. The financial statements do not include any adjustments to the amount and classification of assets and liabilities that may be necessary should the Company not continue as a going concern.

Management believes they can raise the appropriate funds needed to support their business plan and acquire an operating company with positive cash flow. Management intends to seek new capital from owners and related parties to provide needed funds.

Note 4 – Related Party Transactions

Ms. Soledad Bayazit, the Company’s Chief Executive Officer and sole director, holds 10% secured convertible notes due January 12, 2012 in the aggregate principal amount of $1,201,000 which are currently in default. Interest expense on the Note payable – related party aggregated $29,614 and $30,025 for the three months ended March 31, 2014 and 2013, respectively.

During the fiscal year ended December 31, 2011, to finance our operations our chief executive officer has extended loans to us in the total amount of $217,219, of which $205,300 was repaid by us through the issuance of 20,530,000 shares of common stock on September 1, 2011. During the fiscal years ended December 31, 2012 and 2013, to finance our operations our chief executive officer has extended loans to us in the total amount of $53,310 and $9,920, respectively. The remaining balance at March 31, 2014 of $74,519 is presented as Loan payable – related party in the accompanying consolidated balance sheet, such loan is non-interest bearing and due on demand.

Note 5 – Income Taxes

In assessing the realization of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment. Based on the assessment, management has established a full valuation allowance against all of the deferred tax assets for every period because it is more likely than not that all of the deferred tax assets will not be realized.

Note 6 – Subsequent Events

The Company has evaluated all subsequent events that occurred up to the time of the Company's issuance of its financial statements.
 
 
F-5

 
 
ITEM 2.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION
 
FORWARD-LOOKING STATEMENTS
 
CERTAIN STATEMENTS IN THIS REPORT, INCLUDING STATEMENTS IN THE FOLLOWING DISCUSSION, ARE WHAT ARE KNOWN AS "FORWARD-LOOKING STATEMENTS", WHICH ARE BASICALLY STATEMENTS ABOUT THE FUTURE. FOR THAT REASON, THESE STATEMENTS INVOLVE RISK AND UNCERTAINTY SINCE NO ONE CAN ACCURATELY PREDICT THE FUTURE. WORDS SUCH AS "PLANS", "INTENDS", "WILL", "HOPES", "SEEKS", "ANTICIPATES", "EXPECTS "AND THE LIKE OFTEN IDENTIFY SUCH FORWARD-LOOKING STATEMENTS, BUT ARE NOT THE ONLY INDICATION THAT A STATEMENT IS A FORWARD-LOOKING STATEMENT. SUCH FORWARD-LOOKING STATEMENTS INCLUDE STATEMENTS CONCERNING OUR PLANS AND OBJECTIVES WITH RESPECT TO THE PRESENT AND FUTURE OPERATIONS OF THE COMPANY, AND STATEMENTS WHICH EXPRESS OR IMPLY THAT SUCH PRESENT AND FUTURE OPERATIONS WILL OR MAY PRODUCE REVENUES, INCOME OR PROFITS. NUMEROUS FACTORS AND FUTURE EVENTS COULD CAUSE THE COMPANY TO CHANGE SUCH PLANS AND OBJECTIVES OR FAIL TO SUCCESSFULLY IMPLEMENT SUCH PLANS OR ACHIEVE SUCH OBJECTIVES, OR CAUSE SUCH PRESENT AND FUTURE OPERATIONS TO FAIL TO PRODUCE REVENUES, INCOME OR PROFITS. THEREFORE, THE READER IS ADVISED THAT THE FOLLOWING DISCUSSION SHOULD BE CONSIDERED IN LIGHT OF THE DISCUSSION OF RISKS AND OTHER FACTORS CONTAINED IN THIS REPORT AND IN THE COMPANY'S OTHER FILINGS WITH THE SECURITIES AND EXCHANGE COMMISSION. NO STATEMENTS CONTAINED IN THE FOLLOWING DISCUSSION SHOULD BE CONSTRUED AS A GUARANTEE OR ASSURANCE OF FUTURE PERFORMANCE OR FUTURE RESULTS.
  
American Retail Group, Inc., formerly known as Resource Acquisition Group, Inc. (the “Company”), is a Nevada corporation organized on January 27, 1934.  
  
Plan of Operations

At this time, the Company’s purpose is to seek, investigate, and if such investigation warrants, acquire an interest in business opportunities presented to it by persons or firms who or which desire to seek the perceived advantages of an Exchange Act registered corporation. The Company will not restrict its search to any specific business, industry, or geographical location and the Company may participate in a business venture of virtually any kind or nature.  This discussion of the proposed business is purposefully general and is not meant to be restrictive of the Company’s virtually unlimited discretion to search for and enter into potential business opportunities. Management anticipates that it may be able to participate in only one potential business venture because the Company has nominal assets and limited financial resources. This lack of diversification should be considered a substantial risk to shareholders of the Company because it will not permit the Company to offset potential losses from one venture against gains from another.

The Company may seek a business opportunity with entities which have recently commenced operations, or which wish to utilize the public marketplace in order to raise additional capital in order to expand into new products or markets, to develop a new product or service, or for other corporate purposes. The Company may acquire assets and establish wholly-owned subsidiaries in various businesses or acquire existing businesses as subsidiaries

Results of Operations
 
We did not have any revenues during the three month periods ended March 31, 2014 and 2013.

We incurred operating expenses of $0 and $8,207 for the three month periods ended March 31, 2014 and 2013, respectively. The Company incurred interest expense in the amount of $29,614 and $30,025 for the three month periods ended March 31, 2014 and 2013, respectively. The Company realized a net loss of $29,614 and $30,025 for the three month periods ended March 31, 2014 and 2013, respectively.
 
Liquidity and Capital Resources
 
As of March 31, 2014 we had $0 in cash. To finance our operations our chief executive officer has extended loans to us in the total amount of $74,519. This loan remains outstanding and payable on demand without interest.

We believe we cannot satisfy our cash requirements for the next twelve months with our current cash and need to obtain additional financing. We cannot assure investors that adequate financing will be available. In the absence of such financing, we may be unable to proceed with our plan of operations.
 
 
3

 
 
Contractual Obligations

At March 31, 2014, our significant contractual obligations were the 10% bridge convertible notes in the aggregate principal amount of $1,201,000 due on January 12, 2012. All the notes are in default. In August 2011, all the notes were purchased from the investors by the Company’s Chief Executive Officer and sole director.
 
Off-Balance Sheet Arrangements

We do not maintain any off-balance sheet arrangements, transactions, obligations or other relationships with unconsolidated entities that would be expected to have a material current or future effect upon our financial condition or results of operations.
 
Critical Accounting Policies and Estimates
 
Going concern

As shown in the accompanying financial statements, the Company had limited cash, a deficit working capital, an accumulated deficit, a total deficit, and a net loss through March 31, 2014, which raise substantial doubt about the Company’s ability to continue as a going concern.

The Company’s future success is dependent upon, among other things, its ability to raise additional capital or to secure a future business combination.  There is no guarantee that the Company will be able to raise enough capital or generate revenues to sustain its operations.  Management believes they can raise the appropriate funds needed to support their business plan and acquire an operating company with positive cash flow.

The financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the amount and classification of liabilities that might be necessary in the event the Company cannot continue in existence. Management intends to seek new capital from owners and related parties to provide needed funds.
 
ITEM 4.   CONTROLS AND PROCEDURES.

Disclosure Controls and Procedures

The Securities and Exchange Commission defines the term “disclosure controls and procedures” to mean controls and other procedures of an issuer that are designed to ensure that information required to be disclosed in the reports that it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Securities Exchange Act of 1934 is accumulated and communicated to the issuer’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.  The Company maintains such a system of controls and procedures in an effort to ensure that all information which it is required to disclose in the reports it files under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified under the SEC's rules and forms and that information required to be disclosed is accumulated and communicated to principal executive and principal financial officers to allow timely decisions regarding disclosure.
 
 
4

 
 
As of the end of the period covered by this report, we carried out an evaluation, under the supervision and with the participation of our chief executive officer and chief financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures.  Based on this evaluation, our chief executive officer and chief financial officer concluded that our disclosure controls and procedures were not effective as of the end of the period covered by this report.
  
Changes in Internal Controls over Financial Reporting

No change in our system of internal control over financial reporting occurred during the period covered by this report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
 
 
5

 
 
PART II-OTHER INFORMATION

ITEM 6.   EXHIBITS.

(a) The following exhibits are filed herewith:
 
31.1
Certifications by the Chief Executive Officer and Chief Financial Officer pursuant to Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
   
32.1
Certifications by the Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
   
101.INS
XBRL Instance Document.
   
101.SCH
XBRL Schema Document
   
101.CAL
XBRL Calculation Linkbase Document
   
101.DEF
XBRL Definition Linkbase Document
   
101.LAB
XBRL Label Linkbase Document
   
101.PRE
XBRL Presentation Linkbase Document
 
 
6

 
 
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.

 
AMERICAN RETAIL GROUP, INC.
 
       
Date:  May 21, 2014
By:
/s/ Soledad Bayazit
 
   
Chief Executive Officer, Chief Financial Officer and Director
(Principal Executive Officer, Principal Financial Officer and
Principal Accounting Officer)
 
 
7