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EXCEL - IDEA: XBRL DOCUMENT - American Retail Group, Inc.Financial_Report.xls
EX-31.1 - CERTIFICATION - American Retail Group, Inc.f10q0914ex31i_americanretail.htm
EX-32.1 - CERTIFICATION - American Retail Group, Inc.f10q0914ex32i_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 September 30, 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

90 Broad Street, 9th Floor

New York, NY 10004

(Address of principal executive offices)

 

(212) 464-8777

(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   ☒

 

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 November 14, 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 F-1
     
Item 1. Financial Statements. F-1
     
  Condensed Balance Sheets as of September 30, 2014 (Unaudited) and December 31, 2013 F-1
     
  Condensed Statements of Operations for the nine and three months ended September 30, 2014 and 2013 (Unaudited) F-2
     
  Condensed Statements of Cash Flows for the nine months ended September 30, 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 5
     
Item 6. Exhibits. 5
     
  Signatures 6
     
  Exhibits/Certifications  

 

 
 

  

PART I-FINANCIAL INFORMATION

 

ITEM 1.     FINANCIAL STATEMENTS

AMERICAN RETAIL GROUP, INC.

CONSOLIDATED BALANCE SHEETS

UNAUDITED

 

ASSETS
   September 30,   December 31, 
   2014   2013 
ASSETS:        
Cash and cash equivalents  $ -   $ - 
         
TOTAL ASSETS  $ -   $ - 
         
         
LIABILITIES AND STOCKHOLDERS' (DEFICIT)
           
CURRENT LIABILITIES:          
Accounts payable and accrued expenses  $49,760   $19,874 
Notes Payable - related party   1,201,000    1,201,000 
Accrued interest - related party   380,618    290,543 
Loan payable - related party   81,163    74,519 
           
           
Total current liabilities   1,712,542    1,585,936 
           
           
Total liabilities   1,712,542    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          
  September 30, 2014 and December 31, 2013   2,293    2,293 
Additional paid-in capital   283,694    283,694 
Accumulated Deficit   (1,998,529)   (1,871,923)
           
Total stockholders' (deficit)   (1,712,542)   (1,585,936)
           
TOTAL LIABILITIES AND STOCKHOLDERS' (DEFICIT)  $-   $- 

  

 

The accompanying notes are an integral part of these condensed financial statements

F-1
 

AMERICAN RETAIL GROUP, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

UNAUDITED

  

   Nine Months Ended
September 30
   Three Months Ended
September 30
 
   2014   2013   2014   2013 
                 
OPERATING EXPENSES:                    
General and administrative expenses   36,531    19,554    17,991    5,169 
                     
      Total operating expenses   36,531    19,554    17,991    5,169 
                     
LOSS FROM  OPERATIONS   (36,531)   (19,554)   (17,991)   (5,169)
                     
OTHER EXPENSE                    
  Interest expense   (90,075)   (90,075)   (30,025)   (30,025)
                     
TOTAL OTHER EXPENSE   (90,075)   (90,075)   (30,025)   (30,025)
                     
NET LOSS APPLICABLE TO COMMON STOCKHOLDERS   (126,606)   (109,629)   (48,016)   (35,194)
                     
                     
BASIC LOSS PER COMMON SHARE  $(0.01)  $(0.00)  $(0.00)  $(0.00)
                     
WEIGHTED AVERAGE SHARES OUTSTANDING   22,930,000    22,930,000    22,930,000    22,930,000 

  

The accompanying notes are an integral part of these condensed financial statements

 

F-2
 

  

AMERICAN RETAIL GROUP, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

UNAUDITED

 

   Nine Months Ended
September 30
 
   2014   2013 
         
CASH FLOW FROM OPERATING ACTIVITIES          
Net loss  $(126,606)  $(109,629)
           
           
Changes in operating assets and liabilities          
    Accounts payable and accrued expenses   29,886    2,120 
    Accrued interest   90,075    90,075 
           
Net cash used in operating activities   (6,644)   (17,434)
           
CASH FLOWS FROM INVESTING ACTIVITIES:          
   Acquisition of subsidiary   -    - 
           
   Net cash used in investing activities   -    - 
           
CASH FLOWS FROM FINANCING ACTIVITIES:          
    Proceeds from loan and note payable   -    - 
    Loan from related party   6,644    17,819 
           
   Net cash provided by financing activities   6,644    17,819 
           
NET  DECREASE IN CASH          
AND CASH EQUIVALENTS   -    385 
           
CASH AND CASH EQUIVALENTS -          
BEGINNING OF PERIOD   -    - 
           
CASH AND CASH EQUIVALENTS -          
END OF  PERIOD  $-   $385 

 

The accompanying notes are an integral part of these condensed financial statements

 

F-3
 

 

AMERICAN RETAIL GROUP, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

SEPTEMBER 30, 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 $30,025 and $30,025 for the three months ended September 30, 2014 and 2013, respectively.

 

To finance our operations our chief executive officer has extended loans to us in the total amount of $286,463, of which $205,300 was repaid by us through the issuance of 20,530,000 shares of common stock on September 1, 2011. The remaining balance at September 30, 2014 of $81,163 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 and nine month periods ended September 30, 2014 and 2013.

 

We incurred operating expenses of $17,991 and $5,169 for the three month periods ended September 30, 2014 and 2013, respectively. The Company incurred interest expense in the amount of $30,025 and $30,250 for the three month periods ended September 30, 2014 and 2013, respectively. The Company realized a net loss of $48,016 and $35,194 for the three month periods ended September 30, 2014 and 2013, respectively.

 

We incurred operating expenses of $36,531 and $19,554 for the nine month periods ended September 30, 2014 and 2013, respectively. The Company incurred interest expense in the amount of $90,075 and $90,075 for the nine month periods ended September 30, 2014 and 2013, respectively. The Company realized a net loss of $126,606 and $109,629 for the nine month periods ended September 30, 2014 and 2013, respectively.

 

3
 

 

Liquidity and Capital Resources

 

As of September 30, 2014 we had $0 in cash. To finance our operations our chief executive officer has extended loans to us in the total amount of $81,163. 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.

   

Contractual Obligations

 

At September 30, 2014, our significant contractual obligations were the 10% bridge convertible notes in the aggregate principal amount of $1,201,000 which were 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.

 

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.

 

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.

 

4
 

 

 

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

 

 

5
 

 

 

 

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:  November 14, 2014 By: /s/ Soledad Bayazit
   

Chief Executive Officer,

Chief Financial Officer and Director

(Principal Executive Officer,

Principal Financial Officer and

Principal Accounting Officer)

 

 

6