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EX-32 - SOX SECTION 906 CERTIFICATION OF THE CEO & CFO - OMEGA BRANDS INC.exhibit321.htm
EX-31 - SOX SECTION 302 CERTIFICATION OF THE CEO & CFO - OMEGA BRANDS INC.exhibit311.htm
EX-10 - CONVERTIBLE PROMISSORY NOTE DATED JUNE 12, 2015 - OMEGA BRANDS INC.exhibit103.htm

UNITED STATES

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

July 31, 2015

 

 

or

 

[  ]

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

 

For the transition period from

 

to

 

 

Commission File Number

000-55216

 

OMEGA BRANDS INC.

(Exact name of registrant as specified in its charter)

Nevada

 

33-1225672

(State or other jurisdiction of incorporation or organization)

 

(IRS Employer Identification No.)

3225 S. MacDill Avenue Suite 129-311 , Tampa, FL

33629

(Address of principal executive offices)

(Zip Code)

813-514-1839

(Registrant’s telephone number, including area code)

5005 Interbay Blvd, Tampa, FL 33611

(Former name, former address and former fiscal year, if changed since last report)

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.

[X]

YES

[  ]

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

[  ]

NO

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a small 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

[  ]

Accelerated filer

[  ]

Non-accelerated filer

[  ]

(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

[  ]

NO

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS

Check whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Exchange Act after the distribution of securities under a plan confirmed by a court.

 

[  ]

YES

[  ]

NO

APPLICABLE ONLY TO CORPORATE ISSUERS

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

29,650,000 common shares issued and outstanding as of September 9, 2015.

                                           

 
 

PART I – FINANCIAL INFORMATION

Item 1.           Financial Statements
   

The accompanying unaudited interim financial statements of our company have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission, and should be read in conjunction with the audited financial statements and notes thereto contained in our company's most recent annual financial statements filed with the Securities and Exchange Commission on Form 10-K.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3


 

OMEGA BRANDS INC.

 

BALANCE SHEETS

(Unaudited)

 

July 31,

2015

   

October 31,

2014

 

ASSETS

         
 

Current Assets

         
 

Cash and cash equivalents

$

3,907

 

$

40,997

 

Deposits and Prepaid Expenses

 

3,126

   

5,727

 

Total current assets

 

7,033

   

46,724

 

 

 

 

 

 

 

 

Fixed Assets, net

 

926

   

1,235

 

Total Assets

$

7,959

 

$

47,959

           

           
 

LIABILITIES & STOCKHOLDERS' EQUITY (DEFICIT)

         

Current Liabilities

         
 

Accounts payable

$

52,939

 

$

45,937

 

Accounts payable- related party

 

43,383

   

44,583

 

Accrued payroll

 

69,279

   

8,415

 

Convertible note and accrued interest, net of discount

 

3,141

 

 

-

 

Total current liabilities

 

168,742

   

98,935

           
 

Stockholders' Equity (Deficit):

         
 

         
 

Common stock, par value $0.001; 250,000,000 shares authorized;

29,650,000 and 29,650,000 shares issued and outstanding at

July 31, 2015 and October 31, 2014 respectively

 

 

 

29,650

   

 

 

29,650

 Additional Paid-in Capital

225,150  

200,150  

 

         
 

Accumulated deficit

 

(415,583)

   

(280,776)

 

Total stockholders' equity (deficit)

 

(160,783)

   

(50,976)

 

         
 

Total liabilities and stockholders' equity (deficit)

$

7,959

 

$

47,959

 
 
 
See Notes to unaudited Financial Statements.
 
 
4

 

OMEGA BRANDS INC.

 

STATEMENTS OF EXPENSES

(Unaudited)

 

 

Three Months

Ended

July 31,

2015

 

Three Months

Ended

July 31,

2014

 

Nine

Months

Ended

July 31,

2015

 

Nine Months

Ended

July 31,

2014

 

 

 

 

 

 

 

 

 

REVENUES

 

 

 

         

Services Rendered

$

-

$

-

$

-

$

-

 

 

 

 

 

 

 

 

 

 

 

 

 

         
 

 

 

 

         

OPERATING EXEPENSES

 

 

 

         

General and administrative

 

21,448

 

94,598

 

130,886

 

102,382

 

 

 

 

 

 

 

 

 

TOTAL OPERATING EXPENSES

 

21,448

 

94,598

 

130,886

 

102,382

 

 

 

 

         

INCOME (LOSS) FROM OPERATIONS

 

(21,448)

 

(94,598)

 

(130,886)

 

(102,382)

 

 

 

 

         

Interest expense

 

(3,567)

 

-

 

(3,567)

 

-

Debt forgiveness

 

 

 

8,770

 

 

 

8,770

Other income (expense)

 

963

 

-

 

(354)

 

-

NET LOSS

$

(24,052)

$

(85,828)

$

(134,807)

$

(93,612)

 

 

 

 

 

 

 

 

 

 

 

 

 

         
 

 

 

 

         

NET LOSS PER SHARE: BASIC AND DILUTED

$

(0.00)

$

(0.00)

$

(0.00)

$

(0.00)

 

 

 

 

 

 

 

 

 

 

 

 

 

         

WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING:

BASIC AND DILUTED

 

29,650,000

 

29,427,174

 

29,650,000

 

50,683,883

 
 
 
 
 
 
 
 
 
See Notes to unaudited Financial Statements.
 
 
5
 

OMEGA BRANDS INC.

 

STATEMENTS OF CASH FLOWS

(Unaudited)

   

Nine Months

Ended

July 31,

2015

   

Nine Months

Ended

July 31,

2014

         

CASH FLOWS FROM OPERATING ACTIVITIES

         

Net loss

$

(134,807)

 

$

(93,612)

Adjustments to reconcile net loss to net cash used in

         

operating activities:

         

Debt forgiveness

 

 

 

 

(8,770)

Depreciation expense

 

309

   

-

Amortization of debt discount

 

3,141

 

 

 

Changes in operating assets and liabilities:

         

Decrease (increase) in prepaid/deposits

 

2,601

   

(5,726)

Increase in accounts payable

 

7,002

 

 

20,074

Increase (decrease) in accounts payable- related party

 

(1,200)

 

 

28,000

Increase in accrued expenses

 

60,864

 

 

30,977

NET CASH USED IN OPERATING ACTIVITIES

 

(62,090)

   

(29,057)

         

CASH FLOWS FROM INVESTING ACTIVITIES

         

Fixed assets purchased

 

-

   

(1,235)

NET CASH USED IN INVESTING ACTIVITIES

 

-

   

(1,235)

         

CASH FLOWS FROM FINANCING ACTIVITIES

         

Proceeds from sale of common stock

 

 

 

 

200,000

Proceeds from issuance of convertible note

 

25,000

 

 

 

Loan from director

 

-

 

 

2,000

NET CASH PROVIDED BY FINANCING ACTIVITIES

 

25,000

   

202,000

Net increase (decrease) in cash and cash equivalents

 

(37,090)

   

171,708

Cash, beginning of period

 

40,997

   

4,039

Cash, end of period

$

3,907

 

$

175,747

   

 

   

 

         

SUPPLEMENTAL CASH FLOW INFORMATION:

         

         

Cash paid during year for :

         

Interest paid

$

-

 

$

-

Income taxes paid

$

-

 

$

-

Non-cash financing activities

 

 

 

 

 

Cancellation of 33,000,000 common shares

$

-

 

$

33,000

Convertible note issued at discount

$

25,000

 

$

-

 
See Notes to unaudited Financial Statements.
 
 
6  

 

OMEGA BRANDS INC.

 

NOTES TO THE UNAUDITED FINANCIAL STATEMENTS

JULY 31, 2015

 

NOTE 1 – ORGANIZATION, NATURE OF BUSINESS, AND BASIS OF PRESENTATION

 

Omega Brands Inc. (the “Company”) was incorporated in the State of Nevada on August 28, 2012 under the name Translation Group Inc. The Company’s original business plan was to create an online job marketplace that connected people or companies in need of professional translation with translators around the world. Customers could post their work need to be translated at our web site and allow professional translators to submit bids for the completion of the work. The Company was not able to raise sufficient capital to fund its business development and consequently its management began considering alternative strategies, such as business combinations or acquisitions to create value for its shareholders.

The Company has new ownership which has decided to produce and distribute premium, Ready-to-Drink (“RTD”) flavored beverages. The Company’s beverages follow a proven business model: omega infused beverage for U.S. and Canadian consumption. The Company’s goal is to develop and distribute specialty beverages across North America and selected international markets.

On May 23, 2014, the Company’s board of directors and a majority of our stockholders approved a change of name of the Company from Translation Group Inc. to Omega Brands Inc., an increase of its authorized capital from 75,000,000 shares of common stock, par value $0.001 to 250,000,000 shares of common stock, par value $0.001 and a forward split of its issued and outstanding shares of common stock on a basis of 1 old share for 10 new shares. The effect of the forward split has been shown retrospectively for all references to issuances of common stock in the financial statements and these footnotes.

A Certificate of Amendment to effect the change of name and increase to authorized capital was filed with the Nevada Secretary of State and became effective on June 2, 2014.

The name change and forward split was reviewed by the Financial Industry Regulatory Authority (FINRA) and approved for filing with an effective date of June 10, 2014.

The name change became effective with the Over-the-Counter Bulletin Board at the opening of trading on June 10, 2014 under the symbol under the symbol “OMGB”.

The Company is an Emerging Growth Company as defined in the Jumpstart Our Business Startups (JOBS) Act.

  

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Basis of Presentation

 

The accompanying unaudited interim financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission, and should be read in conjunction with the audited financial statements and notes thereto contained in the Company’s most recent Annual Financial Statements filed with the SEC on Form 10-K on January 29, 2015. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim period presented have been reflected herein. The results of operations for the interim period are not necessarily indicative of the results to be expected for the full year. Notes to the financial statements which would substantially duplicate the disclosures contained in the audited financial statements for the most recent fiscal period, as reported in the Form 10K, have been omitted.

On March 20, 2015, our company finalized an agreement to acquire the Omega InfusionTM  line of beverages, which will change the focus of our operations towards the production and distribution of omega-3 infused beverages for the U.S. and Canadian markets. As at the date of this report, the purchase and sale agreement has closed as our company has accepted the financial statements of MCT Beverage Company LLC, a wholly owned subsidiary of Mycell Technologies LLC.

 

7


 

Cash and Cash Equivalents

 

The Company considers all highly liquid investments with the original maturities of three months or less to be cash equivalents. The Company had $3,907 of cash as of July 31, 2015 compared to $40,997 of cash as of October 31, 2014.

Income Taxes

 

The Company accounts for income taxes under the asset/liability method. Deferred tax assets and liabilities are determined based on differences between the financial reporting and tax bases of assets and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. The charge for taxation is based on the results for the year as adjusted for items, which are non-assessable or disallowed. It is calculated using tax rates that have been enacted or substantively enacted by the balance sheet date.

In July, 2006, the FASB issued ASC 740, “Accounting for Uncertainty in Income Taxes”, which clarifies the accounting for uncertainty in tax positions taken or expected to be taken in a return. ASC 740 provides guidance on the measurement, recognition, classification and disclosure of tax positions, along with accounting for the related interest and penalties. Under this pronouncement, the Company recognizes the financial statement benefit of a tax position only after determining that a position would more likely than not be sustained based upon its technical merit if challenged by the relevant taxing authority and taken by management to the court of the last resort. For tax positions meeting the more-likely-than-not threshold, the amount recognized in the financial statements is the largest benefit that has a greater than 50% likelihood of being realized upon settlement with the relevant tax authority. ASC 740 became effective for the Company as of July 1, 2008 and had no material impact on the Company’s financial statements.

The Company’s policy is to recognize both interest and penalties related to unrecognized tax benefits in income tax expense. Interest and penalties on unrecognized tax benefits expected to result in payment of cash within one year are classified as accrued liabilities, while those expected beyond one year are classified as other liabilities. The Company has not recorded any interest and penalties since its inception.

The Company files income tax returns in the U.S. federal tax jurisdiction and various state tax jurisdictions. The tax years for 2014, 2013, 2012 and 2011 remain open for federal and/or state tax jurisdictions. The Company is currently not under examination by any other tax jurisdictions for any tax years.

 Use of Estimates

 

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

 

Revenue Recognition

 

The Company recognizes revenue when products are fully delivered or services have been provided and collection is reasonably assured.

 

Basic Income (Loss) Per Share

 

Basic income (loss) per share is calculated by dividing the Company’s net loss applicable to common shareholders by the weighted average number of common shares during the period. Diluted earnings per share is calculated by dividing the Company’s net income available to common shareholders by the diluted weighted average number of shares outstanding during the year. The diluted weighted average number of shares outstanding is the basic weighted number of shares adjusted for any potentially dilutive debt or equity. There are no dilutive or potentially dilutive instruments outstanding as of July 31, 2014, however, as of July 31, 2015, the Company has outstanding convertible note that may be converted, in whole or in part, into common shares of the Company at the conversion price of $0.01 per share (See Note 4).

 

 

8


 

Property, Plant and Equipment

 

Property, plant and equipment are stated at cost less accumulated depreciation. Depreciation is allocated between cost of sales and selling, general and administration expenses and is determined using the straight-line method over the estimated useful lives of the assets as follows:

 

     

Machinery and equipment

 

7 to 15 years

Furniture and fixtures

 

3 to 10 years

Plates, films and molds

 

1 to 10 years

Transportation equipment

 

3 to 15 years

IT Systems

 

3 to 7 years

 

Leasehold improvements are amortized using the straight-line method over the remaining life of the lease or useful life, whichever is shorter. Maintenance and repairs are charged to operating expense when incurred.

 

Foreign Currency Transaction Gain (Loss)

 

Transaction gains and losses are a result of the effect of exchange rate charges on transactions denominated in currencies other than the functional currency. Gain or losses resulting from foreign currency transactions are included in other income (expense).

 

Recent Accounting Pronouncements

 

The Company does not expect the adoption of recently issued accounting pronouncements to have a significant impact on the Company’s results of operations, financial position or cash flow.

 

In the quarter ended July 31, 2014, the Company elected to early adopt Accounting Standards Update No. 2014-10, Development Stage Entities (Topic 915); Elimination of Certain Financial Reporting Requirements. The adoption of this ASU allows the Company to remove the inception to date information and all references to development stage.

 

NOTE 3 – GOING CONCERN

 

The accompanying financial statements have been prepared in conformity with generally accepted accounting principle, which contemplate continuation of the Company as a going concern. The Company currently has limited working capital, and has not completed its efforts to establish a stabilized source of revenues sufficient to cover operating costs over an extended period of time. These factors raise substantial doubt about the company’s ability to continue as a going concern.

Management anticipates that the Company will be dependent, for the near future, on additional investment capital to fund operating expenses. The Company intends to position itself so that it can be able to raise additional funds through the capital markets. In light of management’s efforts, there are no assurances that the Company will be successful in this or any of its endeavors or become financially viable and continue as a going concern.

NOTE 4 – CONVERTIBLE DEBT

 

The Company borrowed $25,000 to help fund our operations. The Note is due and payable on May 15, 2016. The Principal Amount of this Note shall incur interest beginning on the Maturity Date at the rate of two percent (2%), per annum, calculated daily, in arrears, based on a 365 day year, which shall be payable in cash upon demand. At the option of the Holder, at any time after the issuance date of the Note until the Note is no longer outstanding, the Principal Amount, together with all accrued and unpaid interest, in whole or in part, may be convertible into common shares of the Company at the conversion price of $0.01 per share. The note was determined to have a Beneficial Conversion Feature of $25,000, which will be amortized over the life of the note.

 

9


 

NOTE 5 – RELATED PARTY TRANSACTION

 

The Company utilized the services of two companies, Momentum Sales LLC owned by a shareholder and Progressive owned by a shareholder. The Company owes these companies $43,383.The Company rented office space from a company controlled by one of its former directors at 5005 Interbay Blvd, Tampa, FL 22611 on a month to month basis for $1,200 a month. As of July 31, 2015, the Company owes the company in the amount of $4,800.

 

 

NOTE 6 – SUBSEQUENT EVENTS

 

In accordance with ASC 855-10 the Company has analyzed its operations subsequent to July 31, 2015 to the date these financial statements were available to be issued, and has determined that it does not have any material subsequent events to disclose in these financial statements

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

10


 

Item 2.           Management’s Discussion and Analysis of Financial Condition and Results of Operations

FORWARD-LOOKING STATEMENTS

This quarterly report contains forward-looking statements. These statements relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as “may”, “should”, “expects”, “plans”, “anticipates”, “believes”, “estimates”, “predicts”, “potential” or “continue” or the negative of these terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties and other factors, including the risks in the section entitled “Risk Factors,” that may cause our or our industry’s actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements.

Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results.

The forward-looking statements are not guarantees of future performance or events and, by their nature, are based on certain estimates and assumptions regarding interest and foreign exchange rates, expected growth, results of operations, performance, business prospects and opportunities and effective income tax rates, which are subject to inherent risks and uncertainties. Material factors or assumptions that were applied in drawing a conclusion or making an estimate set out in forward-looking statements may include, but are not limited to, assumptions regarding management’s current plans and estimates, our ability to remain a low cost supplier, and effective management of commodity costs. Although we believe the assumptions underlying these forward-looking statements are reasonable, any of these assumptions could prove to be inaccurate and, as a result, the forward-looking statements based on those assumptions could prove to be incorrect. Our operations involve risks and uncertainties, many of which are outside of our control, and any one or any combination of these risks and uncertainties could also affect whether the forward-looking statements ultimately prove to be correct. These risks and uncertainties include, but are not limited to, those described in Part I, Item 1A. “Risk Factors” and elsewhere in this Annual Report on Form 10-K and those described from time to time in our future reports filed with the Securities and Exchange Commission (“SEC”) and Canadian securities regulatory authorities.

In this quarterly report, unless otherwise specified, all dollar amounts are expressed in United States dollars. All references to “US$” refer to United States dollars and all references to “common stock” refer to the common shares in our capital stock.

As used in this quarterly report, the terms “we”, “us”, “our” and “our company” mean Omega Brands Inc., unless otherwise indicated.

General Overview

We were incorporated in the State of Nevada as a for-profit company on May 5, 2011 and established a then fiscal year end of October 31.  We were incorporated in the state of Nevada on August 28, 2012  

We are a producer and distributor of premium, Ready-to-Drink flavored beverages. Our goal is to develop and distribute specialty beverages across North America and selected international markets.

On March 20, 2015, our company finalized an agreement to acquire the Omega InfusionTM  line of beverages, which will change the focus of our operations towards the production and distribution of omega-3 infused beverages for the U.S. and Canadian markets. As at the date of this report, the purchase and sale agreement has closed as our company has accepted the financial statements of MCT Beverage Company LLC, a wholly owned subsidiary of Mycell Technologies LLC.

 

11


 

Our principal executive office is located at 3225 S. MacDill Avenue, Suite 129-311, Tampa, Florida 33629. The telephone number at our principal executive office is (813) 514-1839. Our CUSIP number is 68206P 103.

We are an Emerging Growth Company as defined in the Jumpstart Our Business Startups (JOBS) Act.

Our Business

We currently have no significant business operations. We successfully completed our planned acquisition pursuant to the definitive purchase and sale agreement dated October 8 2014 with Mycell Technologies LLC and MCT Beverage Company LLC). We intend to operate as a producer and distributor of premium, ready-to-drink flavored beverages with a focus on the sale of omega-3 infused beverages for the U.S. and Canadian markets. Our goal is to develop the market for the Omega InfusionTM  branded beverages in North America and selected international territories. We also wish to acquire a portfolio of branded offerings through the development or acquisition of new products. The Omega Infusion™ product line will focus specifically on omega-3s utilizing our planned supplier Ocean’s Omega unique omega-3 emulsion technology. Future plans include expanding the Omega Infusion product line by adding more nutrients and other healthful ingredients.

 

Results of Operations

The following discussion and analysis provides information that we believe is relevant to an assessment and understanding of our results of operation and financial condition for the three months ended July 31, 2015. Unless otherwise stated, all figures herein are expressed in U.S. dollars.

Results of Operations for Three and Nine Months Ended July 31, 2015 and 2014.

The following discussion of our results of operations should be read in conjunction with our unaudited consolidated financial statements for the three and nine month periods ended July 31, 2015 which are included herein.

Our operating results for the three and nine month periods ended July 31, 2015 and 2014 are summarized as follows:

 

 

Three Months Ended

July 31,

 

 

Nine Months Ended

July 31,

 

 

2015

 

 

 

2014

 

 

 

2015

 

 

 

2014

 

Revenue

$

Nil

 

 

$

Nil

 

 

$

Nil

 

 

$

Nil

 

Operating Expenses

 

21,448

 

 

 

94,598

 

 

 

130,886

 

 

 

102,382

 

Debt Forgiveness

 

-

 

 

 

(8,770)

 

 

 

-

 

 

 

(8,770)

 

Interest Expense

 

3,567

 

 

 

-

 

 

 

3,567

 

 

 

-

 

Other Expense (Gain)

 

(963)

 

 

 

­-

 

 

 

354

 

 

 

-

 

Net Loss

$

24,052

 

 

$

85,828

 

 

$

134,807

 

 

$

93,612

 

Revenues

We have not earned any income for either the three month period July 31, 2015 (3rd Quarter 2015) or nine month period ended July 31, 2015 (“fiscal 2015”) or the three month period ended July 31, 2014 (2nd Quarter 2014) or nine month period ended July 31, 2014 (“fiscal 2014”).

Expenses

During 3rd Quarter 2015 total operating expenses were $21,448 due to the normal expenses of operating a public shell company with the intention of implementing our new beverage business model as compared to $94,598 in 3rd Quarter 2014.  During fiscal 2015, our company reported total operating expenses of $130,886  for general and administrative expenses compared with $102,382 during fiscal 2014 as our company was attempting to implement our new beverage business model.

 

12


 

Other Income (Expense)

During 2nd Quarter 2015, our company also incurred foreign currency transaction gain from payables of $963. Our company also incurred $3,567 of interest expense mainly related to the issuance of a $25,000 convertible note. During fiscal 2015, our company incurred foreign currency transaction loss from payables of $354 and interest expense of $3,567.

Debt Forgiveness

 

During the three month period ended July 31, 2014, the former majority shareholder forgave the total loan payable of $8,770. On the date the loan was forgiven the loan was no longer considered related party under ASC 850, as such $8,770 is recorded as gain on forgiveness of debt.

Net loss

Our company had net loss of $24,052 for 3rd Quarter 2015 compared to a net loss of $85,828 for 3rd Quarter 2014.  

Our company had a net loss of $134,807 for fiscal year 2015 compared to a net loss of $93,612 for fiscal year 2014.

Plan of Operation  

You should read the following discussion of our financial condition and results of operations together with our unaudited financial statements and the notes to those unaudited financial statements included elsewhere in this filing prepared in accordance with accounting principles generally accepted in the United States. This discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those anticipated in these forward-looking statements.

Anticipated Cash Requirements  

We will require additional funds to fund our budgeted expenses over the next 12 months. These funds may be raised through equity financing, debt financing, or other sources, which may result in further dilution in the equity ownership of our shares. There is still no assurance that we will be able to maintain operations at a level sufficient for an investor to obtain a return on his investment in our common stock. Further, we may continue to be unprofitable. We need to raise additional funds in the immediate future in order to proceed with our budgeted expenses.

Specifically, we estimate our operating expenses and working capital requirements for the next 12 months once we have all management in place to be as follows:

 

Estimated Expenses For the Twelve Month Period ending July 31, 2016

Management compensation and benefits

$ 516,000

Professional fees

89,000

General, administrative and marketing

541,000

 

 

Total

$ 1,146,000

We intend to meet our cash requirements for the next 12 months through a combination of equity financing by way of private placements. We currently do not have any arrangements in place to complete any additional private placement financings and there is no assurance that we will be successful in completing any such financings on terms that will be acceptable to us.

 

13


 

Liquidity and Capital Resources  

Management currently believes that our company may not have sufficient working capital needed to meet our current fiscal obligations. In order to continue to meet its fiscal obligations beyond the next twelve months, management has plans to pursue various financing alternatives including, but not limited to, merger and acquisition activity, raising capital through the equity markets and debt financing.

The primary source for capital for our company is the equity and debt markets. Management plans to continue its canvassing efforts of investors and financial institutions to invest capital in our company through private placement offerings of common shares or units consisting of common shares and warrants. The terms and pricing of any such financing would be determined in the context of the markets. Our company has not entered into an agency agreement or arrangement with any financial institution to raise capital at this time.

Should our company not be successful at raising capital through the issuance of capital stock, our company may consider raising capital by the issuance of debt. However, unless the appropriate features, such as convertible options, are attached to the debt instruments, this form of financing is less desirable until such time as our company may be in a position to reasonably foresee the generation of cash flow to service and repay debt. Our company does not currently have plans to issue debt.

Working Capital

 

 

As of

July 31,

2015

 

 

 

As of

October 31,

2014

 

Current Assets

$

7,033

 

 

$

46,724

 

Current Liabilities

 

168,742

 

 

 

98,935

 

Working Capital (Deficit)

 

(161,709)

 

 

 

(52,211

)

   
Cash Flows

 

 

Nine Month Period Ended

July 31,

2015

 

 

 

Nine Month
Period Ended

July 31,

2014

 

Net Cash used in Operating Activities

$

(62,090)

 

 

$

(29,057

)

Net Cash used in Investing Activities

 

-

 

 

 

(1,235)

 

Net Cash provided by Financing Activities

 

25,000

 

 

 

202,000

 

Net Increase (Decrease) in Cash

 

(37,090)

 

 

 

171,708

 

As of July 31, 2015, the unaudited balance sheet reflects that our company had total current assets of $7,033, as compared to total current assets of $46,724 at October 31, 2014, a decrease of $39,691. The decrease in current assets was primarily due to decreased operations of our company.

As of July 31, 2015, the unaudited balance sheet reflects that our company had total current liabilities of $168,742, compared to total current liabilities of $98,935 at October 31, 2014. The current liabilities as of July 31, 2015 reflect $69,279 of accrued expenses for services incurred by employees in which payment has been deferred.

Cash Flow

During fiscal year 2015, cash was primarily used to fund operations. Our company reported a net decrease in cash during fiscal year 2015.

 

14


 

Cash Used for Operating Activities

During fiscal year 2015, net cash used in operating activities was $62,090 compared with $29,057 used in operating activities during fiscal year 2014. The $33,033 increase in cash used in operating activities in the current period is due to an increase in net loss and an increase in accrued expenses.  

Cash Used for Investing Activities

No cash was used for investing activities in fiscal year 2015. $1,235 was used to purchase fixed assets in fiscal year 2014.  

Cash Provided by Financing Activities

Our company issued a convertible note for $25,000 to help fund our operations. The Note is due and payable on May 15, 2016. The Principal Amount of this Note shall incur interest beginning on the Maturity Date at the rate of two percent (2%), per annum, calculated daily, in arrears, based on a 365 day year, which shall be payable in cash upon demand. At the option of the Holder, at any time after the issuance date of the Note until the Note is no longer outstanding, the Principal Amount, together with all accrued and unpaid interest, in whole or in part, may be convertible into common shares of the company at the conversion price of $0.01 per share.

We generated $202,000 from financing activities during fiscal year 2014.  

Going Concern

Our interim unaudited financial statements have been prepared on the going concern basis which assumes that adequate sources of financing will be obtained as required and that our company’s assets will be realized and liabilities settled in the ordinary course of business. Accordingly, the interim unaudited financial statements do not include any adjustments related to the recoverability of assets and classification of assets and liabilities that might be necessary should our company not be unable to continue as a going concern.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to stockholders.

Critical Accounting Policies

Basis of Presentation

The accompanying unaudited interim financial statements of our company have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission, and should be read in conjunction with the audited financial statements and notes thereto contained in our company’s most recent Annual Financial Statements filed with the SEC on Form 10K on January 29, 2015. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim period presented have been reflected herein. The results of operations for the interim period are not necessarily indicative of the results to be expected for the full year. Notes to the financial statements which would substantially duplicate the disclosures contained in the audited financial statements for the most recent fiscal period, as reported in the Form 10K, have been omitted.

 

15


 

Cash and Cash Equivalents

Our company considers all highly liquid investments with the original maturities of three months or less to be cash equivalents. Our company had $3,907 of cash as of July 31, 2015 compared to $40,997 of cash as of October 31, 2014.

Income Taxes

Our company accounts for income taxes under the asset/liability method. Deferred tax assets and liabilities are determined based on differences between the financial reporting and tax bases of assets and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. The charge for taxation is based on the results for the year as adjusted for items, which are non-assessable or disallowed. It is calculated using tax rates that have been enacted or substantively enacted by the balance sheet date.

In July, 2006, the FASB issued ASC 740, “Accounting for Uncertainty in Income Taxes”, which clarifies the accounting for uncertainty in tax positions taken or expected to be taken in a return. ASC 740 provides guidance on the measurement, recognition, classification and disclosure of tax positions, along with accounting for the related interest and penalties. Under this pronouncement, our company recognizes the financial statement benefit of a tax position only after determining that a position would more likely than not be sustained based upon its technical merit if challenged by the relevant taxing authority and taken by management to the court of the last resort. For tax positions meeting the more-likely-than-not threshold, the amount recognized in the financial statements is the largest benefit that has a greater than 50% likelihood of being realized upon settlement with the relevant tax authority. ASC 740 became effective for our company as of July 1, 2008 and had no material impact on our company’s financial statements.

Our company’s policy is to recognize both interest and penalties related to unrecognized tax benefits in income tax expense. Interest and penalties on unrecognized tax benefits expected to result in payment of cash within one year are classified as accrued liabilities, while those expected beyond one year are classified as other liabilities. Our company has not recorded any interest and penalties since its inception.

Our company files income tax returns in the U.S. federal tax jurisdiction and various state tax jurisdictions. The tax years for 2014, 2013, 2012 and 2011 remain open for federal and/or state tax jurisdictions. Our company is currently not under examination by any other tax jurisdictions for any tax years.

Use of Estimates

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

Revenue Recognition

Our company recognizes revenue when products are fully delivered or services have been provided and collection is reasonably assured.

Basic Income (Loss) Per Share

Basic income (loss) per share is calculated by dividing our company’s net loss applicable to common shareholders by the weighted average number of common shares during the period. Diluted earnings per share is calculated by dividing our company’s net income available to common shareholders by the diluted weighted average number of shares outstanding during the year. The diluted weighted average number of shares outstanding is the basic weighted

 

16


 

number of shares adjusted for any potentially dilutive debt or equity. There are no dilutive or potentially dilutive instruments outstanding as of July 31, 2015 and 2014.

Property, Plant and Equipment

Property, plant and equipment are stated at cost less accumulated depreciation. Depreciation is allocated between cost of sales and selling, general and administration expenses and is determined using the straight-line method over the estimated useful lives of the assets as follows:

     

Machinery and equipment

 

7 to 15 years

Furniture and fixtures

 

3 to 10 years

Plates, films and molds

 

1 to 10 years

Transportation equipment

 

3 to 15 years

IT Systems

 

3 to 7 years

Leasehold improvements are amortized using the straight-line method over the remaining life of the lease or useful life, whichever is shorter. Maintenance and repairs are charged to operating expense when incurred.

Foreign Currency Transaction Gain (Loss)

Transaction gains and losses are a result of the effect of exchange rate charges on transactions denominated in currencies other than the functional currency. Gain or losses resulting from foreign currency transactions are included in other income (expense).

Recent Accounting Pronouncements

Our company does not expect the adoption of recently issued accounting pronouncements to have a significant impact on our company’s results of operations, financial position or cash flow.

In the quarter ended July 31, 2014, our company elected to early adopt Accounting Standards Update No. 2014-10, Development Stage Entities (Topic 915); Elimination of Certain Financial Reporting Requirements. The adoption of this ASU allows our company to remove the inception to date information and all references to development stage.

Item 3.           Quantitative and Qualitative Disclosures About Market Risk
   

As a “smaller reporting company”, we are not required to provide the information required by this Item.

Item 4.           Controls and Procedures
     

Management’s Report on Disclosure Controls and Procedures

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports filed under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms, and that such information is accumulated and communicated to our management, including our president (our principal executive officer) and our chief financial officer (our principal financial officer and principal accounting officer) to allow for timely decisions regarding required disclosure.

As the end of the quarter covered by this report, we carried out an evaluation, under the supervision and with the participation of our president (our principal executive officer) and our chief financial officer (our principal financial officer and principal accounting officer), of the effectiveness of the design and operation of our disclosure controls and procedures. Based on the foregoing, our president (our principal executive officer) and our chief financial

 

17


 

officer (our principal financial officer and principal accounting officer) concluded that our disclosure controls and procedures were not effective in providing reasonable assurance in the reliability of our reports as of the end of the period covered by this quarterly report.

Changes in Internal Control over Financial Reporting

During the period covered by this report there were no changes in our internal control over financial reporting that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II – OTHER INFORMATION

Item 1.           Legal Proceedings
   

We know of no material, active or pending legal proceedings against our company, nor are we involved as a plaintiff in any material proceeding or pending litigation. There are no proceedings in which any of our directors, officers or affiliates, or any registered or beneficial shareholder, is an adverse party or has a material interest adverse to our interest.

Item 1A.        Risk Factors
   

As a “smaller reporting company”, we are not required to provide the information required by this Item.

Item 2.           Unregistered Sales of Equity Securities and Use of Proceeds
   

None.

Item 3.           Defaults Upon Senior Securities
   

None.

Item 4.           Mining Safety Disclosures
   

Not applicable.

Item 5.           Other Information

None.

 

 

 

 

18


 

Item 6.           Exhibits

   

Exhibit Number

Description

(3)

Articles of Incorporation; Bylaws

3.1

Articles of Incorporation (incorporated by reference to our Registration Statement on Form S-1 filed on December 20, 2012)

3.2

Bylaws (incorporated by reference to our Registration Statement on Form S-1 filed on December 20, 2012)

3.3

Certificate of Amendment (incorporated by reference to our Current Report on Form 8-K filed on June 10, 2014)

(10)

Material Contracts

10.1

Purchase and Sale Agreement dated October 8, 2014 between our company, Mycell Technologies LLC and MCT Beverage Company, LLC (incorporated by reference to our Current Report on Form 8-K filed on October 9, 2014)

10.2

Emulsion Supply and formulation Services Agreement dated October 8, 2014 between our company and Oceans Omega LLC (incorporated by reference to our Current Report on Form 8-K filed on October 9, 2014)

10.3*

Convertible Promissory Note dated June 12, 2015

(31)

Rule 13a-14(a) / 15d-14(a) Certifications

31.1*

Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 of the Principal Executive Officer, Principal Financial Officer and Principal Accounting Officer

(32)

Section 1350 Certifications

32.1*

Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 of the Principal Executive Officer, Principal Financial Officer and Principal Accounting Officer

 

 

101

Interactive Data Files

101.INS

XBRL Instance Document

101.SCH

XBRL Taxonomy Extension Schema Document

101.CAL

XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF

XBRL Taxonomy Extension Definition Linkbase Document

101.LAB

XBRL Taxonomy Extension Label Linkbase Document

101.PRE

XBRL Taxonomy Extension Presentation Linkbase Document

 

*

Filed herewith.

 

 

 

 

 

 

 

 

19


 

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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.

 

OMEGA BRANDS INC.

 

Date: September 10, 2015

/s/ Richard D. Russell

 

Richard D. Russell

 

Chief Executive Officer, Chief Financial Officer, Treasurer, Secretary

 

(Principal Executive Officer, Chief Financial Officer and Principal Accounting Officer

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

20