Quarterly Report (10-q)

 

 

 

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 March 31, 2016

 

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: 333-59114

 

AMAIZE BEVERAGE CORPORATION

(Exact name of small business issuer as specified in charter)

 

Nevada		33-0730042
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification No.)

 

5042 Wilshire Blvd. #34708, Los Angeles, CA		90036
(Address of principal executive offices)		(Zip Code)

 

[phone]

(Issuer’s Telephone number, including area code)

 

 

(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. Yes [X] 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). Yes [X] No [  ]

 

Indicate by check mark whether the registrant is a larger accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “larger accelerated filer” and “smaller or a smaller reporting company” in Rule 12b-2 of the Exchange Act.

 

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) Yes [  ] No [X ]

 

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

 

The number of shares outstanding of the registrant’s only class of common stock, $0.001 par value per share, was 15,558,030 as of May 2, 2016. The registrant has no outstanding non-voting common equity.

 

 

 

 

 

AMAIZE BEVERAGE CORPORATION

(formerly SNACKHEALTHY, INC.)

QUARTERLY REPORT ON FORM 10-Q

FOR THE PERIOD ENDED MARCH 31, 2016

 

TABLE OF CONTENTS

 

		PAGE
PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements	3
	(a) Balance Sheets (unaudited)	3
	(b) Statements of Operations (unaudited)	4
	(c) Statements of Cash Flows (unaudited)	5
	(d) Statement of Stockholders’ Deficit (unaudited)	6
	(e) Notes to Financial Statements (unaudited)	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	10
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	14
Item 4.	Controls and Procedures	15
PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	16
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	17
Item 3.	Defaults On Senior Securities	17
Item 4.	Mine Safety Disclosures	17
Item 5.	Other Information	17
Item 6.	Exhibits	17
Signatures		18

 

2

 

PART I - FINANCIAL INFORMATION

 

ITEM 1 - FINANCIAL STATEMENTS

 

Amaize Beverage Corporation

(formerly SnackHealthy, Inc.)

Balance Sheets

(Unaudited)

 

		March 31, 2016				June 30, 2015
ASSETS
Current Assets
Cash		$	-			$	2,001
Total Current Assets			-				2,001
Property and Equipment
Office equipment (net of accumulated depreciation)			5,825				7,961
Total Fixed Assets			5,825				7,961
Total Assets		$	5,825			$	9,962
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current Liabilities
Accounts payable		$	128,949			$	123,496
Accounts payable related party			9,750				8,875
Accrued liabilities			6,545				6,545
Directors' fees			-				157,500
Liability for lawsuit judgement			200,761				200,761
Liability for lease judgement			181,968				181,968
Payroll taxes			3,592				3,592
Shareholder loans			43,533				23,027
Total Current Liabilities			575,098				705,764
Total Liabilities			575,098				705,764
Commitments and Contingencies
Stockholders' Deficit
Preferred stock, $0.001 Par value, 25,000,000 authorized: No shares issued			-				-
Common stock, $0.001 par value: 200,000,000 shares authorized 15,558,030 and 11,261,030 issued and outstanding at March 31, 2016 and June 30, 2015  respectively			15,558				11,261
Additional paid-in capital			52,478,532				50,744,846
Deficit accumulated			(53,063,363	)			(51,451,909	)
Total Stockholders' Deficit			(569,273	)			(695,802	)
Total Liabilities and Stockholders' Deficit		$	5,825			$	9,962

 

The accompanying notes are an integral part of these unaudited financial statements.

 

3

 

Amaize Beverage Corporation

(formerly SnackHealthy, Inc.)

Statements of Operations

(Unaudited)

 

		For the three months ended March 31, 2016				For the three months ended March 31, 2015				For the nine months ended March 31, 2016				For the nine months ended March 31, 2015
Revenues		$	-			$	-			$	-			$	-
Cost of revenues			-				-				-				-
Gross profit			-				-				-				-
General and administrative expenses			5,323				1,466,807				1,595,329				1,612,502
Loss on settlement of liabilities with equity- related party			-				1,462,179				16,125				1,462,179
Total			5,323				2,928,986				1,611,454				3,074,681
Operating loss			(5,323	)			(2,928,986	)			(1,611,454	)			(3,074,681	)
Provision for income taxes			-				-				-				-
Net loss		$	(5,323	)		$	(2,928,986	)		$	(1,611,454	)		$	(3,074,681	)
Net loss per share - basic and diluted		$	(0.00	)		$	(0.36	)		$	(0.12	)		$	(0.48	)
Weighted average number of common shares outstanding, basic and fully diluted			15,558,030				8,223,870				13,374,266				6,377,242

 

The accompanying notes are an integral part of these unaudited financial statements.

 

4

 

Amaize Beverage Corporation

(formerly SnackHealthy, Inc.)

Statements of Cash Flows

(Unaudited)

 

		For the Nine Months ended March 31, 2016				For the Nine Months ended March 31, 2015
Cash Flows from Operating Activities
Net loss		$	(1,611,454	)		$	(3,074,681	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation			2,136				2,136
Amortization of websites and drink license			-				1,250
Shares issued for accounts payable - related party			8,875				-
Loss on settlement of liabilities for equity - related party			16,125				1,462,179
Shares issued for services			112,500				44,250
Shares issued for Directors' fees			162,000				-
Shares issued for services - related parties			1,438,483				1,250,000
Changes in operating assets and liabilities
Settlement of lease			-				17,694
Increase (decrease) in accrued liabilities			-				5,942
Increase in liability for lawsuit judgement			-				200,761
Increase  in accounts payable			5,453				36,944
Decrease in Directors' fees			(157,500	)
Increase  in account payable - related party			875				-
Net Cash Used in Operations			(22,507	)			(53,525	)
Cash Flows from Investing Activities			-				-
Net Cash Provided by (Used In) Financing Activities			-				-
Cash Flows from Financing  Activities
Shareholder loans advanced			20,506				53,525
Net Cash Provided by Financing Activities			20,506				53,525
Net  Increse (Decrease) in Cash			(2,001	)			-
Cash - Beginning of Period			2,001				1,815
Cash - Ending of Period		$	-			$	1,815
Supplemental Disclosure:
Income taxes paid		$	-			$	-
Interest paid		$	-			$	-
Supplemental Disclosure of Non-Cash Investing and Financing Activities:
Shares issued for services		$	112,500
Shares issued for services - related parties		$	1,438,483			$	1,250,000
Settlement of Directors' fees for shares		$	162,000			$	-
Settlement of accounts payable for shares - related party		$	8,875			$	127,146
Loss on settlement of liabilities with equity - related party		$	16,125			$	-

 

The accompanying notes are an integral part of these unaudited financial statements.

 

5

 

Amaize Beverage Corporation

(formerly SnackHealthy, Inc.)

Statements of Stockholders' Equity (Deficit)

(Unaudited)

 

		Common   Shares								Additional
						Par Value				Paid-In				Deficit				Accumulated
		Shares				$0.001				Capital				accumulated				Deficit
Balance June 30, 2014			5,467,380			$	5,467			$	47,712,065			$	(48,083,324	)		$	(365,792	)
Common shares issued for services			115,000				45				199,205								199,250
Common shares issued for services - related parties			2,500,000				2,570				1,247,430								1,250,000
Common shares issued for settlement of liabilities - related parties			3,178,650				3,179				1,586,146								1,589,325
Net loss															(3,368,585	)			(3,368,585	)
Balance June 30, 2015			11,261,030			$	11,261			$	50,744,846			$	(51,451,909	)		$	(695,802	)
Common shares issued for services			112,500				112				112,388								112,500
Common shares issued for services - related parties			3,683,039				3,683				1,434,800								1,438,483
Common shares issued for Directors' fees			476,461				477				161,523								162,000
Common shares issued for settlement of liabilities - related parties			25,000				25				24,975								25,000
Net loss															(1,611,454	)			(1,611,454	)
Balance March 31, 2016 (Unaudited)			15,558,030			$	15,558			$	52,478,532			$	(53,063,363	)		$	(569,273	)

 

The accompanying notes are an integral part of these unaudited financial statements.

 

6

 

AMAIZE BEVERAGE CORPORATION

(formerly SnackHealthy, Inc.)

FOOTNOTES TO UNAUDITED FINANCIAL STATEMENTS

for the Nine Month Periods Ended March 31, 2016 and 2015

 

Note 1. The Company

 

On October 4, 2013, Healthient, Inc. (“the Company”) changed its name to SnackHealthy, Inc. and dissolved its sole wholly-owned subsidiary SnackHealthy, Inc., a Nevada corporation. As of June 26, 2015, a majority of the shareholders of the Company representing not less than 9,327,859 shares of common stock (82.83%) consented in writing to change the Company’s name to Amaize Beverage Corporation. Such approval and consent constitute the approval and consent of a majority of the total number of shares of outstanding common stock and are sufficient under the Nevada General Corporation Law and the Company’s Bylaws to approve the above action. On August 13, 2015, Amaize Beverage Corporation, previously known as SnackHealthy, Inc., a Nevada corporation filed an amendment to its articles of incorporation (the “Amendment”) with the Secretary of State of the state of Nevada. The Amendment provided for the change of the Company’s name from SnackHealthy, Inc., to Amaize Beverage Corporation. The name change and the change of the Company’s trading symbol were subsequently declared effective by the Financial Industry Regulatory Authority as of August 19, 2015.

 

The Company has developed a healthy beverage product line containing a unique strain of purple corn which is high in antioxidant value. The beverages are all natural, low calorie, gluten free, and non-GMO. The Company plans to distribute and sell the beverages through large retailers and club stores in the United States.

 

Note 2. Significant Accounting Policies

 

Basis of Presentation

 

The accompanying financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States of America for interim financial information. Therefore, the financial statements do not include all of the information and footnotes required by generally accepted accounting principles in the United States for fiscal yearend financial statements. However, the Company has recorded all transactions and adjustments necessary to fairly present the financial statements included in this Form 10-Q. The adjustments made are normal and recurring. The following notes describe only the material changes in accounting policies, account details or financial statement notes during the nine month period ended March 31, 2016. Therefore, please read these financial statements and notes to the financial statements together with the audited financial statements and notes thereto in our Annual Report on Form 10-K for the year ended June 30, 2015. The income statement for the three and nine months ended March 31, 2016 cannot necessarily be used to project results for the full year.

 

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

 

Basic and Diluted Net Loss per Common Share

 

Net loss per common share is computed pursuant to FASB Accounting Standards Codification No. 260, Earnings per Share . Basic net loss per share is computed by dividing net loss by the weighted average number of shares of common stock outstanding during the period. Diluted net loss per share is computed in the same way as for basic net loss.

 

Reclassifications

 

Certain amounts previously presented for prior period have been reclassified. The reclassifications had no effect on net loss, total assets, or stockholders’ deficit.

 

Recent Accounting Pronouncements

 

The Company has reviewed all recently issued, but not yet effective, accounting pronouncements and does not believe the future adoption of any such pronouncements may be expected to cause a material impact on its financial condition or the results of its operations.

 

7

 

Note 3. Going Concern

 

The financial statements have been prepared assuming that the Company will continue as a going concern which assumes the Company will be able to realize its assets and discharge its liabilities in the normal course of business for the foreseeable future. The Company incurred a net loss of $1,611,454 for the nine months ended March 31, 2016 and accumulated losses of $53,063,363 since inception to March 31, 2016. Net cash used in operations for the nine months ended March 31, 2016 was $22,507 and as of March 31, 2016, we had a working capital deficit of $575,098. This raises substantial doubt about its ability to continue as a going concern. The ability of the Company to continue as a going concern is dependent on the Company’s ability to raise additional capital and implement its business plan.

 

Management believes that the actions presently being taken and the success of future operations will be sufficient to enable the Company to continue as a going concern, however, there can be no assurance that the raising of equity will be successful or that the Company will be able to achieve profitability. Failure to achieve the needed equity funding or establish profitable operations would have a material adverse effect on the Company’s ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 

Note 4. Commitments and Contingencies

 

On November 11, 2015 the Company’s Board of Directors approved an amendment to the terms of the non-cash compensation for Ms. West. The amendment provides for cancellation of the previous restricted stock grant of 500,000 shares of the Company’s stock vesting over five years and replaces it with a restricted stock grant of 3,500,000 shares of the Company’s stock vesting over a period of five years. On November 11, 2015, the Company authorized the issuance of 3,170,539 shares valued at $1,077,983 to Panacea Holdings, Inc., a company owned and controlled by Ms. West as part of the compensation. The Company has not yet finalized the employment agreements with the Company’s Chief Executive Officer, Richard Damion and A. R. Grandsaert, the Company’s President.

 

Lease Commitments

 

The Company gave up its leased office space in Jupiter, Florida in January 2014, and acquired a new office in Newport Beach, California. The Florida leaseholder obtained a judgment in the amount of $181,968 for the remainder of the monthly lease payments through June 2016 pursuant to the terms of the lease agreement plus legal fees of $1,487. The Company has recorded the full amount of the judgment, however it believes that when the facility is re-leased it may not have to pay the full amount. Upon the leaseholder’s execution of a new lease with a new tenant, the Company plans to file for the release of the amount of the judgment over and above the actual loss incurred by the leaseholder. There is no guarantee the property will be re-leased or that such a filing will be successful and that the Company will be able to mitigate its loss in this way.

 

In January 2014, the Company entered into a lease at the rate of $1,439 per month which ended December 2014. In January 2015, the Company was equipped to operate in a virtual environment. We believe that our existing arrangement which provides for virtual pbx telephone, à la carte conference space, address services, mail forwarding and hosting facilities to be highly cost effective and adequate to meet our current needs. The Company plans to seek suitable additional space when needed.

 

The Company has not invested in any real property at this time, nor does the Company intend to do so. The Company has no formal policy with respect to investments in real estate or investments with persons primarily engaged in real estate activities.

 

Legal

 

In June of 2013, a former officer of the Company filed a lawsuit against the Company and its President and directors alleging several counts, including a breach of contract and fiduciary duty, and seeking damages in the amount of $122,300 and other unspecified damages. On March 20, 2015 the court entered a final judgment in the amount of $200,761 comprised of the principal amount of $122,344 plus prejudgment interest from September 15, 2012 through the date of judgment in the amount of $54,421, costs in the amount of $773, and attorney’s fees of $23,222. The court dismissed the case against any party not listed in the final order and the case is now closed as to all parties. As of March 31, 2015 the Company had accrued in full for this liability of $200,761 in its financial statements and signed a settlement agreement.

 

8

 

Note 5. Stockholders’ Deficit

 

The Company has authorized 200,000,000 shares of common stock with a par value of $0.001 and 25,000,000 shares of preferred stock with a par value of $0.001.

 

During the year ended June 30, 2015, the Company issued 115,000 shares of common stock for services valued at $199,250 and 2,500,000 shares of common stock for services to a related party valued at $1,250,000. Shareholder loans from a related party in the amount of $127,146 were settled by the issuance of 3,178,650 shares of common stock resulting in a non-cash loss on settlement of liabilities of $1,462,179.

 

During the nine months ended March 31, 2016 the Company issued 3,683,039 shares of common stock valued at $1,438,483 for services rendered by related parties, 112,500 shares of common for services valued at $112,500, 476,461 shares of common stock in payment of Directors’ fees valued at $162,000 and 25,000 shares of common stock in payment of an account payable to a related party valued at $25,000 resulting in a non-cash loss on settlement of liabilities of $16,125.

 

Non-Employee Stock Options and Warrants

 

The Company accounts for non-employee stock options and warrants under ASC 718, whereby option and warrant costs are recorded based on the fair value of the consideration received or the fair value of the equity instruments issued, whichever is more reliably measurable. Unless otherwise provided for, the Company covers option and warrant exercises by issuing new shares.

 

There are no warrants or stock options issued or outstanding.

 

Note 6. Loans from Directors and Shareholders

 

During the nine months ended March 31, 2016 a shareholder advanced the Company $20,506.

 

During the year ended June 30, 2015, the Company issued 3,178,650 shares of common stock valued at $1,589,325 in settlement of shareholder loans of $127,146 resulting in a non-cash loss of $1,462,179 on settlement of liabilities with equity. As of March 31, 2016 the balance of the loan outstanding was $43,533. The loan is non-interest bearing and due on demand.

 

Share valuations are determined by the closing quoted share price of the stock on the date the issuance is authorized by the Board of Directors.

 

Note 7. Income Taxes

 

The components of the deferred tax asset are as follows:

		March 31, 2016				June 30, 2015
Deferred Tax Assets
Net operating loss carry-forwards and other nominal temporary differences		$	10,186,000			$	9,860,000
Valuation allowance			(10,186,000	)			(9,860,000	)
Net Deferred Tax Assets		$	-			$	-

 

The Company had available approximately $50,930,000 at March 31, 2016 and $49,300,000 at June 30, 2015 of unused federal and Florida net operating loss carry-forwards that may be applied against future taxable income. These net operating loss carry-forwards expire through 2033. There is no assurance that the Company will realize the benefit of the net operating loss carry-forwards. ASC No. 740 requires a valuation allowance to be recorded when it is more likely than not that some or all of the deferred tax assets will not be realized. The change in the valuation allowance was $326,000 for the nine month period ended March 31, 2016.

 

Reconciliation of the differences between the statutory tax rate and the effective income tax rate is as follows at March 31, 2016 and June 30, 2015 respectively:

 

Statutory rate			15	%
State taxes, net of federal tax benefit			5	%
Effective tax rate			20	%

 

Note 8. Subsequent Events

 

The Company has evaluated subsequent events from March 31, 2016 through the date the financial statements were available to be issued and has determined that, other than as disclosed above, there have been no subsequent events after March 31, 2016 for which disclosure is required.

 

9

 

ITEM 2 - MANAGEMENT’S DISCUSSION OF FINANCIAL CONDITION AND RESULTS OF OPERATION

 

Forward-Looking Statements

 

This document contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended. All statements other than statements of historical fact are “forward-looking statements” for purposes of federal and state securities laws, including any projections of earnings, revenue or other financial items; any statements of the plans, strategies and objectives of management for future operations; any statements concerning proposed new services or developments; any statements regarding future economic conditions or performance; any statements of belief; and any statements of assumptions underlying any of the foregoing. Forward-looking statements may include the words “may,” “will,” “estimate,” “intend,” “continue,” “believe,” “expect” or “anticipate” and any other similar words. Although we believe that the expectations reflected in any of our forward-looking statements are reasonable, actual results could differ materially from those projected or assumed in any of our forward-looking statements. Our future financial condition and results of operations, as well as any forward-looking statements, are subject to change and to inherent risks and uncertainties, such as those disclosed or incorporated by reference in our filings with the Securities and Exchange Commission. Important factors that could cause our actual results, performance and achievements, or industry results to differ materially from estimates or projections contained in our forward- looking statements include, among others, the following:

 

●	product liability claims;
●	our relationship with, and our ability to influence the actions of, our distributors;
●	adverse publicity associated with our industry, products or ingredients;
●	improper action by our employees in violation of applicable law;
●	changing consumer preferences and demands;
●	loss or departure of any member of our senior management team which could negatively impact our distributor and/or buyer relations and operating results;
●	the competitive nature of our business;
●	regulatory matters governing our products, including potential governmental or regulatory actions concerning the safety or efficacy of our products or ingredients;
●	risks associated with operating internationally and the effect of economic factors, including foreign exchange, inflation, pricing and currency devaluation risks;
●	our dependence on increased penetration of existing markets;
●	contractual limitations on our ability to expand our business;
●	our reliance on our information technology infrastructure and outside manufacturers;
●	the sufficiency of trademarks and other intellectual property rights;
●	product concentration;
●	our reliance on our management team;
●	uncertainties relating to the application of transfer pricing, duties, value added taxes, and other tax regulations, and changes thereto;
●	changes in tax laws, treaties or regulations, or their interpretation;
●	any collateral impact resulting from the ongoing worldwide financial “crisis,” including the availability of liquidity to us, our customers and our suppliers or the willingness of our customers to purchase products in a recessionary economic environment; and;
●	whether we will purchase any of our shares in the open markets or otherwise.

 

10

 

OVERVIEW

 

As a development stage food and beverage company we have been primarily engaged in developing our infrastructure and our product portfolio which was designed to help people achieve and maintain their healthy weight. We commenced sales of two products from our product lines in the third quarter of fiscal year 2011 and had net revenue of $314,980 for the fiscal year ended June 30, 2012.

 

During 2013, we began to implement our strategic plan, which provides for future growth of our existing core brands through a new expanded distribution method, innovation and advertising. Our primary focus was on decreasing general and administrative costs associated with network marketing and improving sales and profit margins through pricing strategies and enhanced packaging and product configuration. To accomplish this we began the process of phasing out the network marketing sales in order to better position the Company to serve retailers and ultimately, the end consumer. We completed this project in the last quarter of fiscal 2013 in order to focus on mass retail distribution of beverages. To more effectively facilitate the process of shifting to retail distribution, in November 2013, Richard Damion joined our Company as the acting Chief Executive Officer. He was then approved by the Board of Directors as the Company’s Chief Executive Officer in January, 2014. Since the hiring of Mr. Damion, the Company has focused on the export of branded organic and natural food products mainly in Asia and the development of a new line of healthy beverages. During this time of transition into the beverage market, we generated no revenues during the fiscal years ended June 30, 2015 or 2014.

 

We determined during the first quarter of 2015 that we would transition out of our lower margin, perishable snack food product lines and have focused our resources solely on developing our new healthy beverages. Amaize Beverage Corporation will continue to focus on developing its healthy beverage product line with a plan to sell to large retailers and club stores in the United States. The Company recently completed development of a unique “better for you” beverage with purple corn as its primary ingredient. Purple corn has historical roots of over thousands of years yet is newly rediscovered for its incredible health benefits. Leading Research & Development companies in the United States have been gathering data on its health benefits and working on integrating its benefits into a number of consumer products. The beverage, with super antioxidant status, is a unique blend of fruits and spices, offering extraordinary health benefits and great taste. Our initial portfolio design includes three beverage lines; Amaize™ 100% Natural Purple Corn Beverage, Amaizing Tea™ and Amaizing Lemonade™. We plan to launch our Amaize™ 100% Natural Purple Corn Drink ahead of our blended teas and blended lemonades to establish our distribution network with a one of a kind product and to later, ‘red-carpet’ our tea and lemonade beverages through an established distribution system. The fact that the average American drinks over seven drinks per day allows plenty of opportunity to market a healthy drink, helping us to achieve our mission of providing a positive healthy delicious beverage . While there can be no assurance, management believes that this strategy will ultimately prove successful. The launch of these beverages is subject to the Company’s ability to obtain the necessary funding.

 

Amaize Beverage Corporation is a virtual company with a focus on staying lean through the use of cloud based technologies, maintaining low overhead, subcontracting services, creating sales through commissioned brokers, developing products through reputable co-packers and keeping little to no inventory except for use in sales and business development activities.

 

Industry wide factors that affect us include the increasing prevalence of obesity in adults and children and demand for healthier, all-natural products which are driving the demand for healthier food and beverage alternatives worldwide.

 

Significant Accounting Policies

 

For the Company’s significant accounting policies see “Footnote 2” to the accompanying March 31, 2016 condensed unaudited financial statements.

 

Presentation

 

“Net sales,” reflect distribution allowances, handling and shipping income, represent what we collect and recognize as net revenues in our financial statements.

 

11

 

Our “gross profit” consists of net sales less “cost of sales,” which represents the prices we pay to our raw material suppliers and manufacturers of our products as well as costs related to product shipments to our warehouse and distribution center, duties and tariffs, expenses relating to shipment of products to customers and importers and similar expenses.

 

“Selling fees” consist of commissions, overrides and production bonuses.

 

Our “operating margins” consist of net sales, less cost of sales and selling fees.

 

“General and administrative expenses” represent our operating expenses, components of which include labor and benefits, sales and marketing events, professional fees, travel and entertainment, marketing, occupancy costs, communication costs, bank fees, depreciation and amortization and other miscellaneous operating expenses.

 

RESULTS OF OPERATIONS

 

Our results of operations for the periods below are not necessarily indicative of results of operations for future periods, which depend on numerous factors, including our ability to distribute our products through major retailers, open new markets, penetrate existing markets, and our ability to secure, develop and introduce new products.

 

Three Months Ended March 31, 2016 Compared to Three Months Ended March 31, 2015

and Nine Months Ended March 31, 2016 Compared to Nine Months Ended March 31, 2015

 

Revenue

 

The Company revised its sales method from network marketing sales through individual brand partners to direct to consumer and retail store sales at the end of its fiscal year June 30, 2013. The Company had no revenues in the three months ended March 31, 2016 and March 31, 2015, nor did it have revenues during the nine months ended March 31, 2016 or 2015.

 

Cost of Revenues

 

The Company recognized no cost of sales in the three and nine months periods ended March 31, 2016 or 2015 as it recognized no sales during these periods.

 

Gross Profit

 

The Company recognized no gross profit in the three and nine months ended March 31, 2016 and 2015 due to the factors described above.

 

Selling Expenses

 

The Company incurred no selling expenses in the three months and nine months ended March 31, 2016 and 2015 as it had no sales activity in these periods.

 

General and Administrative Expenses

 

General and administrative expenses comprised the following for the three months ended March 31, 2016 and 2015:

 

		GENERAL AND ADMINISTRATIVE
		Three Months Ended March 31, 2016				Three Months Ended March 31, 2015
Independent contractors		$	3,125			$	1,450,760
Directors' fees							-
Professional fees			(4,368	)			3,435
Technology			3,087				2,419
Travel and entertainment			159				3,192
Office expenses			2,077				184
Telephone			531				1,788
Rent			-				4,317
Amortization			-				-
Depreciation			712				712
		$	5,323			$	1,466,807

 

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General and administrative expenses consist primarily of professional advisor fees, audit fees and travel associated with exploring new opportunities. Our general and administrative expenses for the three months ended March 31, 2016 were $1,461,484 less than for the three months ended March 31, 2015. The decrease was primarily due to the issuance of 2,500,000 shares of common stock for services to a related party valued at $1,250,000 for three months ended March 31, 2015.

 

General and administrative expenses comprised the following for the nine months ended March 31, 2016 and 2015.

 

		GENERAL AND ADMINISTRATIVE
		Nine Months Ended March 31, 2016				Nine Months Ended March 31, 2015
Independent contractors		$	1,448,233			$	1,499,011
Directors' fees			4,500				-
Professional fees			13,577				36,866
Technology			69,848				8,295
Product development			50,000				-
Travel and entertainment			3,794				29,304
Office expenses			2,365				2,366
Telephone			876				2,894
Rent			-				14,402
Amortization			-				1,250
Depreciation			2,136				2,136
Other			-				15,978
		$	1,595,329			$	1,612,502

 

General and administrative expenses consist primarily of professional advisor fees, audit fees and travel associated with exploring new opportunities. Our general and administrative expenses for the nine months ended March 31, 2016 were $17,173 less than for the nine months ended March 31, 2015. The decrease was primarily due to the non-cash payment of services to related parties valued at $50,778 classified as independent contractors, increase in product development of $50,000, increase in technology expense of $61,553, offset by decreases in professional fees, rent and other expenses.

 

Settlement of Liabilities with Equity

 

During the three and nine months ended March 31, 2015 the Company issued 3,178,650 common shares valued at $1,589,325 in settlement of loans payable to a related party of $127,146 resulting in a non-cash loss on settlement of liabilities of $1,462,179.

 

During the nine months ended March 31, 2016 the Company issued 25,000 common shares valued at $25,000 in settlement of loans payable to a related party of $8,575 resulting in a non-cash loss on settlement of liabilities of $16,125. During the nine month ended March 31, 2016 the Company issued 476,461 restricted shares of common stock in payment of Directors’ fees in the amount of $162,000.

 

Provision for Income Taxes

 

We incurred taxable losses; consequently, no liability for taxation was incurred during the three and nine months ended March 31, 2016 or 2015.

 

Net Loss

 

The net loss for the three months ended March 31, 2016 was $5,323 as compared to $2,928,986 for the three months ended March 31, 2015. The net loss for the nine months ended March 31, 2016 was $1,611,454 as compared to $3,074,681 for the nine months ended March 31, 2015. The variances between the periods arose due the factors described above.

 

Liquidity and Capital Resources

 

The Company had a cash balance of $0 at March 31, 2016 and a working capital deficit as follows:

 

Total Current Assets		$	-
Total current liabilities			575,098
Working Capial Deficit		$	(575,098	)

 

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The ability of the Company to continue as a going concern is dependent on the Company’s ability to raise additional capital and to successfully implement its business plan. Management believes that the actions presently being taken and the success of future operations may be sufficient to enable the Company to continue as a going concern. However, there can be no assurance that the raising of equity will be successful. Failure to achieve the needed equity funding could have a material adverse effect on the Company’s ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 

Cash Flows

 

The following table summarizes selected items from our accompanying Statement of Cash Flows for the nine months ended March 31, 2016 and March 31, 2015.

 

Net Cash Provided by (Used in):		March 31, 2016				March 31, 2015
Operating activities		$	(22,507	)		$	(53,525	)
Investment activities			-				-
Financing activities			20,506				53,525
Total Change in Cash		$	(2,001	)		$	-

 

During the nine months ended March 31, 2016 and 2015, the Company’s operating expenses were paid by a shareholder from their bank account in the amounts of $20,506 and $53,525 respectively. However, during the three months and nine months ended March 31, 2016 the amount in the Company’s merchant account in the amount of $2,001 was used to pay expenses.

 

Off Balance Sheet Arrangements

 

At March 31, 2016 we had no material off balance sheet arrangements as defined in Item 303(a)(4)(ii) of Regulation S-K.

 

ITEM 3 - Quantitative and Qualitative Disclosures about Market Risk

 

As a Smaller Reporting Company, as defined by Rule 12b-2 of the Exchange Act and in Item 10 (f) (1) of Regulation S-K, we are electing scaled disclosure reporting obligations and therefore are not required to provide the information requested by this Item.

 

This document contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended. All statements other than statements of historical fact are “forward-looking statements” for purposes of federal and state securities laws, including any projections of earnings, revenue or other financial items; any statements of the plans, strategies and objectives of management for future operations; any statements concerning proposed new services or developments; any statements regarding future economic conditions or performance; any statements of belief; and any statements of assumptions underlying any of the foregoing. Forward-looking statements may include the words “may,” “will,” “estimate,” “intend,” “continue,” “believe,” “expect” or “anticipate” and any other similar words. Although we believe that the expectations reflected in any of our forward-looking statements are reasonable, actual results could differ materially from those projected or assumed in any of our forward-looking statements. Our future financial condition and results of operations, as well as any forward-looking statements, are subject to change and to inherent risks and uncertainties, such as those disclosed or incorporated by reference in our filings with the Securities and Exchange Commission. Important factors that could cause our actual results, performance and achievements, or industry results to differ materially from estimates or projections contained in our forward- looking statements include, among others, the following:

 

●	product liability claims;
●	our relationship with, and our ability to influence the actions of, our distributors;
●	adverse publicity associated with our industry, products or ingredients;
●	improper action by our employees in violation of applicable law;
●	changing consumer preferences and demands;
●	loss or departure of any member of our senior management team which could negatively impact our distributor and/or buyer relations and operating results;

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●	the competitive nature of our business;
●	regulatory matters governing our products, including potential governmental or regulatory actions concerning the safety or efficacy of our products or ingredients;
●	risks associated with operating internationally and the effect of economic factors, including foreign exchange, inflation, pricing and currency devaluation risks;
●	our dependence on increased penetration of existing markets;
●	contractual limitations on our ability to expand our business;
●	our reliance on our information technology infrastructure and outside manufacturers;
●	the sufficiency of trademarks and other intellectual property rights;
●	product concentration;
●	our reliance on our management team;
●	uncertainties relating to the application of transfer pricing, duties, value added taxes, and other tax regulations, and changes thereto;
●	changes in tax laws, treaties or regulations, or their interpretation;
●	any collateral impact resulting from the ongoing worldwide financial “crisis,” including the availability of liquidity to us, our customers and our suppliers or the willingness of our customers to purchase products in a recessionary economic environment; and;
●	whether we will purchase any of our shares in the open markets or otherwise.

 

ITEM 4 - Controls and Procedures

 

Evaluation of Disclosure Controls and Procedures

 

A system of disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-l5(e)) under the Securities Exchange Act of 1934,as amended the “Exchange Act” are controls and other procedures that are designed to provide reasonable assurance that the information that the Company is required to disclose in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to the Company’s management, including the Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure. There are inherent limitations to the effectiveness of any system of disclosure controls and procedures, including the possibility of human error and the circumvention or overriding of the controls and procedures. Accordingly, even effective disclosure controls and procedures can only provide reasonable assurance of achieving their control objectives, and management necessarily is required to use its judgment in evaluating the cost-benefit relationship of possible controls and procedures. In addition, the design of any system of controls is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Moreover, over time, controls may become inadequate because of changes in conditions, or the degree of compliance with policies or procedures may deteriorate. Because of the inherent limitations in a control system, misstatements due to error or fraud may occur and not be detected.

 

The Company’s Chief Executive Officer and Chief Financial Officer are responsible for establishing and maintaining disclosure controls and procedures for the Company, and have concluded that our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) were not effective as of the end of the period covered by this report, based on their evaluation of these controls and procedures required by paragraph (b) of Rules 13a-15(f) and 15d-15(f), due to certain material weaknesses in our internal control over financial reporting as discussed below.

 

Internal Control over Financial Reporting

 

The Company’s management is responsible for establishing and maintaining adequate internal controls over financial reporting for the Company. Due to limited resources, Management conducted an evaluation of internal controls based on criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). The results of this evaluation determined that our internal control over financial reporting was ineffective as of March 31, 2016, due to material weaknesses. A material weakness in internal control over financial reporting is defined as a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control over financial reporting that is less severe than a material weakness, yet important enough to merit attention by those responsible for oversight of our financial reporting.

 

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Management’s assessment identified the following material weaknesses in internal control over financial reporting:

 

	●	The small size of our Company limits our ability to achieve the desired level of separation of internal controls and financial reporting. We currently do not have independent directors on our Board of Directors to review and oversee the financial policies and procedures of the Company.
	●	We do not have a functional audit committee since our Board of Directors acts as the audit committee.
	●	We have not achieved the desired level of documentation of our internal controls and procedures. When the Company obtains sufficient funding, this documentation will be strengthened through utilizing a third party consulting firm to assist management with its internal control documentation and further help to limit the possibility of any lapse in controls occurring.

 

As a result of the material weaknesses in internal control over financial reporting described above, the Company’s management has concluded that as of March 31, 2016, the Company’s internal control over financial reporting was not effective based on the criteria in Internal Control - Integrated Framework issued by the COSO.

 

To date, the Company has not been able to establish an Audit Committee with an independent director due its limited financial resources. When the Company obtains sufficient funding, Management intends to add establish its Audit Committee and charge them with assisting the Company in addressing the material weaknesses noted above. The Company’s lack of current financial resources makes it impossible for the Company to hire the appropriate personnel needed to overcome these weaknesses and ensure that appropriate controls and separation of responsibilities of a larger organization exist. We also will continue to follow the standards for the Public Company Accounting Oversight Board (United States) for internal control over financial reporting to include procedures that:

 

	●	Pertain to the maintenance of records in reasonable detail accurately that fairly reflect the transactions and dispositions of the Company’s assets;
	●	Provide reasonable assurance that transactions are recorded as necessary to permit preparation of the financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures are being made only in accordance with authorizations of management and the Board of Directors; and
	●	Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company’s assets that could have a material effect on the financial statements.

 

Changes in Internal Control over Financial Reporting

 

Our management determined that there were no changes made in our internal controls over financial reporting during the three months ended March 31, 2016 that have materially affected, or are reasonably likely to materially affect our internal control over financial reporting.

 

This quarterly report does not include an attestation report of the Company’s registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the Company’s registered public accounting firm pursuant to rules of the Securities and Exchange Commission that permit the Company to provide only management’s report in this period report.

 

PART II - OTHER INFORMATION

 

ITEM 1 - LEGAL PROCEEDINGS

 

In June 2013, a former officer of the Company filed a lawsuit against the Company and its President and directors alleging several counts, including a breach of contract and fiduciary duty, and seeking damages in the amount of $122,300 and other unspecified damages. On March 20, 2015 the court entered a final judgment in the amount of $200,761 comprised of the principal amount of $122,344 plus prejudgment interest from September 15, 2012 through the date of judgment in the amount of $54,421, costs in the amount of $773, and attorney’s fees of $23,222. The court dismissed the case against any party not listed in the final order and the case is now closed as to all parties. As of March 31, 2015 the Company had accrued in full for this liability of $200,761 in its financial statements.

 

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ITEM 2 - UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

 

During the three months ended March 31, 2016 the Company had no sales of unregistered equity securities.

 

ITEM 3 - DEFAULTS UPON SENIOR SECURITIES

 

During the nine months ended March 31, 2016 the Company had no senior securities issued and outstanding.

 

ITEM 4 - MINE SAFETY DISCLOSURES

 

Not applicable to our Company.

 

ITEM 5 - OTHER INFORMATION

 

None.

 

ITEM 6 - EXHIBITS

 

(a) Exhibits

 

Exhibit No.		Description
Exhibit 31.1		CERTIFICATION OF THE CHIEF EXECUTIVE OFFICER PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT
Exhibit 31.2		CERTIFICATION OF THE CHIEF FINANCIAL OFFICER PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT
Exhibit 32.1		CERTIFICATION OF THE CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT
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

 

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SIGNATURES

 

Pursuant to the requirements of Section 12 of the Securities Exchange Act of 1934, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized.

 

	AMAIZE BEVERAGE CORPORATION
Date: June 22, 2016	By:	/s/ Richard Damion
		Richard Damion
		Chief Executive Officer
	By:	/s/ William Lindberg
		William Lindberg
		Chief Financial Officer

 

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