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EX-31 - EXHIBIT 31 - Regional Brands Inc.v439239_ex31.htm
EX-32 - EXHIBIT 32 - Regional Brands Inc.v439239_ex32.htm

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

  

 

 

Form 10-Q

 

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

 

For the quarterly period ended March 31, 2016.

 

or

 

¨TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT.

 

For the transition period from _________ to __________

 

Commission File No. — 33-131110-NY

 

Regional Brands, Inc.

 

(Exact Name of Small Business Issuer as Specified in its Charter)

 

DELAWARE   22-1895668
(State or other jurisdiction of   (I.R.S. Employer
incorporation or organization)   Identification Number)

 

c/o Ancora Advisors LLC 6060 Parkland Boulevard, Cleveland, Ohio 44124 

 

(Address of Principal Executive Office) (Zip Code)

 

(216) 825-4000

 

(Registrant's telephone number including area code)

 

4Net Software, Inc.

31248 Oak Crest Drive, Suite 110, Westlake Village, California 91361

 

(Former Name or Former Address, 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 past 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 (Section 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 smaller reporting company.

 

Large accelerated filer ¨   Accelerated filer                   ¨
     
Non-accelerated filer ¨   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

 

As of May 12, 2016, the issuer had 379,701,697 outstanding shares of common stock.

 

 

 

  

Regional Brands Inc.

 

TABLE OF CONTENTS

 

  Page No.
   
PART I - FINANCIAL INFORMATION 3
   
Item 1.  Financial Statements 3
   
Condensed Balance Sheets as of March 31, 2016 (Unaudited) and September 30, 2015 3
   
Condensed Statements of Operations for the Three and Six Months Ended March 31, 2016 and 2015 (unaudited) 4
   
Condensed Statements of Cash Flows for the Six Months Ended March 31, 2016 and 2015 (unaudited) 5
   
Notes to Unaudited Condensed Financial Statements 6
   
Item 2.  Management Discussion and Analysis of Financial Condition and Results of Operations 9
   
Item 4. Controls and Procedures 10
   
PART II - OTHER INFORMATION 11
   
Item 1.  Legal Proceedings 11
   
Item 5.  Other Information 11
   
Item 6.  Exhibits 11
   
SIGNATURES 11

 

2 

 

  

PART I - FINANCIAL INFORMATION

 

Item 1.            Financial Statements

 

REGIONAL BRANDS INC.

(Formerly 4net Software, Inc.)

CONDENSED BALANCE SHEETS

 

   March 31,   September 30, 
   2016   2015 
   (Unaudited)     
         
ASSETS          
           
CURRENT ASSETS          
Cash  $351   $1,495 
           
TOTAL ASSETS  $351    1,495 
           
LIABILITIES AND STOCKHOLDERS' DEFICIT          
           
CURRENT LIABILITIES          
Accounts payable and accrued expenses  $4,206   $3,206 
Related party note and interest payable   251,660    234,934 
           
TOTAL LIABILITIES   255,866    238,140 
           
COMMITMENTS AND CONTINGENCIES   --    -- 
           
STOCKHOLDERS' DEFICIT          
Preferred stock, $.01 par value; authorized - 5,000,000 shares - issued and outstanding - none   --    -- 
Common stock $.00001 par value; authorized - 100,000,000 shares - issued and outstanding - 9,261,017 on March 31, 2016 and on September 30, 2015   93    93 
Capital in excess of par value   3,198,255    3,198,255 
Accumulated deficit   (3,453,863)   (3,434,993)
           
TOTAL STOCKHOLDERS' DEFICIT   (255,515)   (236,645)
           
TOTAL LIABILITIES & STOCKHOLDERS'DEFICIT  $351   $1,495 

 

See accompanying notes to these unaudited condensed financial statements.

 

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REGIONAL BRANDS INC.

(Formerly 4net Software, Inc.)

CONDENSED STATEMENTS OF OPERATIONS

(Unaudited)

 

   Three Months Ended   Six Months Ended 
   March 31,   March 31, 
   2016   2015   2016   2015 
                 
REVENUES  $   $   $   $ 
                     
OPERATING EXPENSES                    
General and Administrative   4,105    6,950    10,410    10,900 
TOTAL OPERATING EXPENSES   (4,105)   (6,950)   (10,410)   (10,900)
                     
LOSS FROM OPERATIONS   (4,105)   (6,950)   (10,410)   (10,900)
Other income/(expense)             666      
Interest expense   (4,558)   (3,963)   (9,126)   (7,695)
                     
OTHER INCOME/(EXPENSE)  $(4,558)   (3,963)  $(8,460)   (7,695)
                     
NET LOSS  $(8,663)   (10,913)  $(18,870)   (18,595)
                     
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING-Basic and Dilutive   9,261,017    9,261,017    9,261,017    9,261,017 
                     
NET LOSS PER COMMON SHARE - Basic and Dilutive  $(.00)  $(.00)  $(.00)  $(.00)

 

See accompanying notes to these unaudited condensed financial statements.

 

4 

 

 

REGIONAL BRANDS INC.

(Formerly 4net Software, Inc.)

CONDENSED STATEMENTS OF CASH FLOWS

SIX MONTHS ENDED MARCH 31, 2016 AND 2015

(Unaudited)

 

   2016   2015 
         
OPERATING ACTIVITIES          
Net loss  $(18,870)  $(18,595)
Adjustments to reconcile net loss to net cash used in operating activities:          
Changes in assets and liabilities:          
Increase (decrease) in accounts payable And Accrued expenses   10,126    (1,804)
           
Net Cash Used in Operating Activities   (8,744)   (20,399)
           
FINANCING ACTIVITIES          
           
Proceeds from related party note payable   7,600    19,500 
           
Net Cash Provided by Financing Activities   7,600    19,500 
           
Net Decrease in Cash   (1,144)   (899)
CASH - BEGINNING OF PERIOD   1,495    1,489 
           
CASH - END OF PERIOD  $351   $590 
           
SUPPLEMENTAL INFORMATION FOR STATEEMENTS OF CASH FLOWS          
Cash paid for taxes  $-   $- 
           
Cash paid for interests  $-   $- 

 

See accompanying notes to these unaudited condensed financial statements.

 

5 

 

  

REGIONAL BRANDS, INC.

(Formerly 4net Software, Inc.)

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

 

NOTE 1 – DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

ORGANIZATION AND BUSINESS ACTIVITY – Regional Brands Inc. (Formerly 4net Software, Inc.), was incorporated under the laws of the State of Delaware in 1986. During the year ended September 30, 2015 and the six months ended March 31, 2016, the Company focused its efforts on pursuing a strategy of growth by acquiring businesses with established revenues and earnings, which the Company believes are undervalued. The Company utilized several criteria to evaluate prospective acquisitions including whether the business to be acquired (1) is an established business with viable services and/or products, (2) has an experienced management team, (3) has room for growth and/or expansion into other markets, (4) is accretive to earnings, (5) offers the opportunity to achieve and/or enhance profitability and (6) increases stockholder value.

 

On April 8, 2016, the Company entered into and closed a Securities Purchase Agreement (the “SPA”) among the Company and Merlin Partners LP, Ancora Catalyst Fund LP, and Steven N. Bronson (collectively the “Purchasers”), whereby the Company sold to the Purchasers the aggregate amount of 370,440,680 shares of common stock, par value $0.00001, for the aggregate purchase price of $5,000,000. The transactions contemplated by the SPA resulted in a change of control of the Company from Steven N. Bronson to Merlin Partners LP, which purchased 240,786,442 shares of Common Stock of the Company for the aggregate purchase price of $3,250,000.00, and Ancora Catalyst Fund LP, which purchased 92,610,170 shares of Common Stock of the Company for the aggregate purchase price of $1,250,000.00. As a result of Merlin Partners LP’s and Ancora Catalyst Fund LP’s purchase of Common Stock from the Company pursuant to the SPA, Merlin Partners LP and Ancora Catalyst Fund LP collectively beneficially own 87.8% of the total issued and outstanding shares of Common Stock of the Company.

 

The accompanying condensed interim financial statements of Regional Brands Inc. (the "Company") are unaudited. In the opinion of management, the interim data includes all normally recurring adjustments, necessary for a fair presentation of the results for the interim period. The results of operations for the three months and six months ended March 31, 2016 are not necessarily indicative of the operating results for the entire year.

 

The unaudited condensed interim financial statements included herein are prepared pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosure normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America has been condensed or omitted pursuant to such rules and regulations. In the opinion of management, the disclosures made are adequate to make the information not misleading. These unaudited condensed interim financial statements should be read in conjunction with the financial statements and notes included in the Company's Form 10-K for the year ended September 30, 2015.

 

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 disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

 

CASH – The Company has cash balance of $351 and $1,495 as of March 31, 2016 and September 30, 2015. At March 31, 2016, the Company had no cash equivalents.

 

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REGIONAL BRANDS INC.

NOTES TO CONDENSED INTERIM FINANCIAL STATEMENTS

 

NOTE 2 - CONTROL

 

As of March 31, 2016 Mr. Bronson beneficially owned 5,800,210 shares of the Company's common stock. Mr. Bronson's beneficial ownership represented approximately 62.65% of the Company's issued and outstanding shares of common stock. Accordingly, Mr. Bronson has effective control of the Company. In the election of directors, stockholders are not entitled to cumulate their votes for nominees. Accordingly, as a practical matter, Mr. Bronson may be able to elect all of the Company's directors and otherwise direct the affairs of the Company. Effective April 7, 2016, the Company changed its name from 4Net Software, Inc. to Regional Brands Inc. Effective as of April 8, 2016, there was a change of control of the Company from Steven N. Bronson to Merlin Partners LP and Ancora Catalyst Fund LP, as more fully described in Note 5 below.

 

NOTE 3 - DUE TO RELATED PARTY

 

Since February 3, 2009, the Company's president and principal executive officer has loaned the Company money to fund working capital needs to pay operating expenses. The loans are repayable upon demand and accrue interest at the rate of 10% per annum. As of March 31, 2016, the aggregate principal loan balance amounted to $186,196 and such loans have accrued interest of $65,464 through March 31, 2016. On April 8, 2016, the Company issued to Mr. Bronson 18,522,034 shares of the Company’s Common Stock in full satisfaction for Mr. Bronson’s loans to the Company.

 

Note 4 - New Accounting Standards

 

In August 2014, the FASB issued ASU No. 2014-15 ("ASU 2014-15"), Presentation of Financial Statements-Going Concern (Subtopic 205-40) – Disclosure of Uncertainties about an Entity's Ability to Continue as a Going Concern. ASU 2014-15 requires a Company's management to evaluate, at each reporting period, whether there are conditions or events that raise substantial doubt about the entity's ability to continue as a going concern within one year after the date the financial statements are issued and provide related disclosures. ASU 2014-15 is effective for the annual period ending after December 15, 2016, and for annual periods and interim periods thereafter. The Company is currently evaluating the impact of the adoption of ASU 2014-15 on its consolidated financial statements.

 

7 

 

  

Note 5 – Subsequent Event

 

On April 8, 2016, the Company entered into and closed a Securities Purchase Agreement (the “SPA”) among the Company and Merlin Partners LP, Ancora Catalyst Fund LP, and Steven N. Bronson (collectively the “Purchasers”), whereby the Company sold to the Purchasers the aggregate amount of 370,440,680 shares of common stock, par value $0.00001 (the “Shares” or the “Common Stock”), for the aggregate purchase price of $5,000,000 (including the cancellation of all indebtedness that had been loaned to the Company by Steven N. Bronson to fund operating expenses). In connection with the SPA, the Company changed its name from 4Net Software, Inc. to Regional Brands Inc. The transactions contemplated by the SPA also resulted in a change of control of the Company from Steven N. Bronson to Merlin Partners LP, which purchased 240,786,442 shares of Common Stock of the Company for the aggregate purchase price of $3,250,000.00, and Ancora Catalyst Fund LP, which purchased 92,610,170 shares of Common Stock of the Company for the aggregate purchase price of $1,250,000.00. As a result of Merlin Partners LP’s and Ancora Catalyst Fund LP’s purchase of Common Stock from the Company pursuant to the SPA, Merlin Partners LP and Ancora Catalyst Fund LP collectively beneficially own 87.8% of the total issued and outstanding shares of Common Stock of the Company.

 

Effective May 12, 2016, the Company relocated its principal offices to c/o Ancora Advisors LLC, 6060 Parkland Boulevard, Cleveland, OH 44124. The Company pays no rent for the use of the offices.

 

Prior to May 12, 2016, the Company occupied a portion of the offices occupied by BKF Capital Group, Inc. 31248 Oak Crest Drive, Suite 110, Westlake Village, California 91361 on a month to month basis for a monthly fee of $50 per month paid to BKF Capital Group, Inc. Steven N. Bronson, the Company's former Chairman and CEO, is also the Chairman, CEO and controlling shareholder of BKF Capital Group, Inc.

 

8 

 

  

Item 2. Management's Discussion and Analysis or Plan of Operation.

 

Forward Looking Statements Disclosure

  

This report on Form 10-Q contains, in addition to historical information, Forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 (the "Exchange Act"). You can identify these forward-looking statements when you see words such as "expect," "anticipate", "estimate," "may," "plans," "believe," and other similar expressions. These statements are not guarantees of future performance and are subject to certain risks, uncertainties and assumptions that are difficult to predict. Actual results could differ materially from those projected in the forward-looking statements. Factors that could cause such a difference include, but are not limited to, those discussed in the section entitled "Factors Affecting Operating Results and Market Price of Stock," contained in the Company's Annual Report on Form 10-K for the year ended September 30, 2015. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. We undertake no obligation to update any forward -looking statements.

 

The following discussion and analysis provides information which management of Regional Brands Inc. (the "Company") believes to be relevant to an assessment and understanding of the Company's results of operations and financial condition. This discussion should be read together with the Company's financial statements and the notes to financial statements, which are included in this report as well as the Company's Annual Report on Form 10-K for the year ended September 30, 2015 which is incorporated herein by reference.

 

Regional Brands’ Business Strategy

 

The Company is pursuing a business strategy whereby the Company is seeking to engage in investment, acquisition, merger or other business combination transactions (each, a "Transaction") with undervalued businesses (a "Target Company") with a history of operating revenues in markets that provide opportunities for growth. The Company is currently engaged in identifying, investigating and, if investigation warrants, entering into a Transaction with one or more Target Companies that will enhance the Company's revenues and increase shareholder value. The Company utilizes several criteria to evaluate Target Companies including whether the Target Company: (1) is an established business with viable services or products, (2) has an experienced and qualified management team, (3) has opportunities for growth and/or expansion into other markets, (4) is accretive to earnings, (5) offers the opportunity to achieve and/or enhance profitability, and (6) increases shareholder value.

 

In some cases, management of the Company will have the authority to effect Transactions without submitting the proposal to the stockholders for their consideration. In some instances, however, a proposed Transaction may be submitted to the stockholders for their consideration, either voluntarily by the Board of Directors to seek the stockholders' advice and consent, or because of a requirement of applicable law to do so.

 

Management believes that the successful implementation of the Company's business strategy will allow the Company to increase revenues and earnings and achieve profitability. There can be no assurances, however, that the Company will successfully complete any additional acquisitions or investments or that the Company will achieve profitability.

 

9 

 

  

Results of Operations

 

For the three months ended March 31, 2016 and 2015, the Company had no revenue. Operating expenses for the three months ended March 31, 2016 and 2015 were $4,105 and $6,950, respectively. Interest expense increased to $4,558 from $3,963 due to the increase in the outstanding loan balance.

 

For the six months ended March 31, 2016 and 2015, the Company had no revenue. Operating expenses for the six months ended March 31, 2016 and 2015 were $10,410 and $10,900, respectively. Interest expense increased to $9,126 from $7,695 due to the increase in the outstanding loan balance.

 

Liquidity and Capital Resources

 

During the six months ended March 31, 2016, the Company satisfied its working capital needs from cash on hand and the loans extended by the Company's former president and principal executive officer to enable the Company to pay its expenses. As of March 31, 2016, the Company had cash balance of $351. The Company will need additional funds in order to satisfy its financial obligations and to finance any transaction or acquisition by the Company. There can be no assurances that the Company will be able to obtain additional funds if and when needed.

 

Item 4. Controls and Procedures

 

Disclosure controls and procedures are controls and other procedures that are designed to provide reasonable assurances that information required to be disclosed by the Company in its periodic reports filed or submitted by the Company under the Exchange Act 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 provide reasonable assurances that information required to be disclosed by the Company in its periodic reports that are filed under the Exchange Act is accumulated and communicated to our Principal Executive Officer, as appropriate to allow timely decisions regarding required disclosure.

 

Evaluation of disclosure and controls and procedures.

 

As of the end of the period covered by this report, the Company carried out an evaluation, under the supervision and with the participation of management including our Principal Executive Officer and Principal Financial Officer, of the effectiveness of the design and operation of the Company's disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act). Based on the evaluation, the Company's Principal Executive Officer and Principal Financial Officers have concluded that the Company's disclosure controls and procedures are effective at the reasonable assurance level.

 

Changes in internal controls over financial reporting.

 

There were no changes in the Company's internal controls over financial reporting that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.

 

10 

 

  

PART II - OTHER INFORMATION

 

Item 1. Legal Proceedings.

 

During the quarter ended March 31, 2016, the Company was not a party to any material legal proceedings.

 

Item 6. Exhibits.

 

a. Exhibits

 

The following exhibits are hereby filed as part of this Quarterly Report on Form 10-Q or incorporated herein by reference.

 

Exhibit    
Number   Description of Document
     
31*   President's Written Certification Of Financial Statements Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
     
32*   President's Written Certification Of Financial Statements Pursuant to 18 U.S.C. Statute 1350.
     
101.INS*   XBRL Instance Document
101.SCH*   XBRL Taxonomy Extension Schema
101.CAL*   XBRL Taxonomy Extension Calculation Linkbase
101.DEF*   XBRL Taxonomy Extension Definition Linkbase
101.LAB*   XBRL Taxonomy Extension Label Linkbase
101.PRE*   XBRL Taxonomy Extension Presentation Linkbase

  

 

* Filed herewith.

 

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.

 

Dated: May 13, 2016

  Regional Brands Inc.
     
  By: /s/ BRIAN HOPKINS
    Brian Hopkins, President
    Principal Executive Officer
    as Registrant's duly authorized officer

 

11 

 

  

EXHIBIT INDEX

 

The following Exhibits are filed herewith:

 

Exhibit    
Number   Description of Document
     
31   President's Statement Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
     
32   President's Written Certification Of Financial Statements Pursuant to 18 U.S.C. Statute 1350.
     
101.INS   XBRL Instance Document
101.SCH   XBRL Taxonomy Extension Schema
101.CAL   XBRL Taxonomy Extension Calculation Linkbase
101.DEF   XBRL Taxonomy Extension Definition Linkbase
101.LAB   XBRL Taxonomy Extension Label Linkbase
101.PRE   XBRL Taxonomy Extension Presentation Linkbase

 

12