UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SEC
CURITIES EXCHANGE ACT OF 1934
For the quarterly period ended
June 30, 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
000-55178
Galenfeha, Inc.
(Exact name of registrant as specified in its
charter)
Nevada
|
46-2283393
|
(State or other jurisdiction of
|
(I.R.S. Employer
|
incorporation or organization)
|
Identification No.)
|
420 Throckmorton Street, Suite 200
Fort Worth,
Texas 76102
(Address of principal executive offices) (Zip code)
(800) 280-2404
(Registrants
telephone number, including area code)
N/A
(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 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 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).
Yes [X] No [ ]
Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, a non-accelerated filer or a smaller
reporting company. See the definitions of large accelerated filer,
accelerated filer and smaller reporting company in Rule 12b-2 of the
Exchange Act.
Large Accelerated Filer [ ]
|
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]
As of August 14, 2016, there were 86,126,100 shares of the
registrants common stock outstanding, each with a par value of $0.001.
TABLE OF CONTENTS
FORM 10-Q
FOR THE
QUARTERLY PERIOD ENDED JUNE 30, 2016
2
Galenfeha, Inc.
INDEX TO CONSOLIDATED FINANCIAL
STATEMENTS
(Unaudited)
3
Galenfeha, Inc.
CONSOLIDATED
BALANCE
SHEETS
(Unaudited)
|
|
June 30, 2016
|
|
|
December 31, 2015
|
|
|
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
CURRENT ASSETS
|
|
|
|
|
|
|
Cash
|
$
|
57,235
|
|
$
|
47,333
|
|
Accounts receivable
|
|
27,248
|
|
|
107,424
|
|
Accounts receivable from
related parties
|
|
-
|
|
|
336
|
|
Inventory
|
|
829,847
|
|
|
950,617
|
|
Prepaid inventory
|
|
22,715
|
|
|
-
|
|
Prepaid expenses
|
|
12,935
|
|
|
10,083
|
|
Total current assets
|
|
949,980
|
|
|
1,115,793
|
|
FIXED ASSETS, net of accumulated depreciation of
$31,303 and $21,419, respectively
|
|
177,502
|
|
|
187,386
|
|
OTHER ASSETS
|
|
|
|
|
|
|
Goodwill
|
|
389,839
|
|
|
389,839
|
|
Customer list, net of
accumulated amortization of
$9,728 and $5,928,
respectively
|
|
13,070
|
|
|
16,870
|
|
Deposits
|
|
1,000
|
|
|
1,000
|
|
Total other assets
|
|
403,909
|
|
|
407,709
|
|
TOTAL ASSETS
|
$
|
1,531,391
|
|
$
|
1,710,888
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS EQUITY
|
|
|
|
|
|
|
CURRENT LIABILITIES
|
|
|
|
|
|
|
Accounts payable and accrued
liabilities
|
$
|
119,854
|
|
$
|
228,014
|
|
Accounts payable to
related parties
|
|
16,291
|
|
|
123,282
|
|
Current maturities of long term debt
|
|
9,888
|
|
|
95,771
|
|
Convertible
notes, net of unamortized discounts
of
$98,182 and $0, respectively
|
|
29,318
|
|
|
-
|
|
Line of credit
|
|
171,000
|
|
|
100,000
|
|
Related party
convertible note, net of
unamortized
discounts of $0
|
|
125,000
|
|
|
125,000
|
|
Related party short term debt
|
|
100,000
|
|
|
-
|
|
Derivative liabilities
|
|
902,616
|
|
|
-
|
|
Total current liabilities
|
|
1,473,967
|
|
|
672,067
|
|
LONG TERM DEBT
|
|
|
|
|
|
|
Convertible notes, net of
unamortized discount of
$173,211
and $0, respectively
|
|
32,489
|
|
|
-
|
|
Total liabilities
|
|
1,506,456
|
|
|
672,067
|
|
|
|
|
|
|
|
|
STOCKHOLDERS EQUITY
|
|
|
|
|
|
|
Common stock
|
|
|
|
|
|
|
Authorized: 500,000,000 common shares,
$0.001 par value,
86,126,100 issued and outstanding at June 30, 2016
and
December 31, 2015
|
|
86,126
|
|
|
86,126
|
|
Additional paid-in capital
|
|
3,150,012
|
|
|
3,162,529
|
|
Accumulated deficit
|
|
(3,211,203
|
)
|
|
(2,209,834
|
)
|
Total stockholders equity
|
|
24,935
|
|
|
1,038,821
|
|
TOTAL LIABILITIES AND STOCKHOLDERS
EQUITY
|
$
|
1,531,391
|
|
$
|
1,710,888
|
|
The accompanying notes are an integral part of these unaudited
consolidated financial statements.
F-1
Galenfeha, Inc.
CONSOLIDATED
STATEMENTS OF
OPERATIONS
(Unaudited)
|
|
For the Three
|
|
|
For the Three
|
|
|
For the Six
|
|
|
For the Six
|
|
|
|
Months Ended
|
|
|
Months Ended
|
|
|
Months Ended
|
|
|
Months Ended
|
|
|
|
June 30, 2016
|
|
|
June 30, 2015
|
|
|
June 30, 2016
|
|
|
June 30, 2015
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
Third Parties
|
$
|
85,372
|
|
$
|
29,989
|
|
$
|
371,411
|
|
$
|
29,989
|
|
Related Parties
|
|
19,002
|
|
|
212,795
|
|
|
36,384
|
|
|
529,497
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of Sales
|
|
72,582
|
|
|
110,770
|
|
|
292,164
|
|
|
305,596
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross Profit
|
|
31,792
|
|
|
132,014
|
|
|
115,631
|
|
|
253,890
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
General and administrative
|
|
64,292
|
|
|
118,370
|
|
|
157,600
|
|
|
157,782
|
|
Payroll expenses
|
|
107,710
|
|
|
159,440
|
|
|
216,740
|
|
|
270,488
|
|
Professional fees
|
|
18,376
|
|
|
27,716
|
|
|
36,671
|
|
|
30,629
|
|
Engineering research and development
|
|
(39
|
)
|
|
97,475
|
|
|
(21,213
|
)
|
|
99,076
|
|
Depreciation and amortization expense
|
|
6,842
|
|
|
4,957
|
|
|
13,684
|
|
|
9,804
|
|
Total
operating expenses
|
|
197,181
|
|
|
407,958
|
|
|
403,482
|
|
|
567,779
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from continuing operations
|
|
(165,389
|
)
|
|
(275,944
|
)
|
|
(287,851
|
)
|
|
(313,889
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other (expense) income
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain (loss) on sale of assets
|
|
-
|
|
|
(5,317
|
)
|
|
-
|
|
|
(5,317
|
)
|
Interest income
|
|
3
|
|
|
25
|
|
|
6
|
|
|
40
|
|
Miscellaneous income
|
|
2,682
|
|
|
-
|
|
|
2,682
|
|
|
-
|
|
Interest expense
|
|
(57,491
|
)
|
|
(33,583
|
)
|
|
(67,315
|
)
|
|
(68,407
|
)
|
Loss on derivative instruments
|
|
(475,311
|
)
|
|
-
|
|
|
(648,891
|
)
|
|
-
|
|
Total other
(expense)
|
|
(530,117
|
)
|
|
(38,875
|
)
|
|
(713,518
|
)
|
|
(73,684
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
$
|
(695,506
|
)
|
$
|
(314,819
|
)
|
$
|
(1,001,369
|
)
|
$
|
(387,573
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss per share, basic and diluted
|
$
|
(0.01
|
)
|
$
|
(0.00
|
)
|
$
|
(0.01
|
)
|
$
|
(0.00
|
)
|
Weighted average number of common
shares outstanding,
basic and diluted
|
|
86,126,100
|
|
|
86,700,770
|
|
|
86,126,100
|
|
|
82,594,198
|
|
The accompanying notes are an integral part of these unaudited
consolidated financial statements.
F-2
Galenfeha, Inc.
CONSOLIDATED
STATEMENT OF
CHANGES IN STOCKHOLDERS EQUITY
(Unaudited)
|
|
|
|
|
|
|
|
Additional
|
|
|
|
|
|
|
|
|
|
Common Stock
|
|
|
Paid-in
|
|
|
Accumulated
|
|
|
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Capital
|
|
|
Deficit
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance December 31, 2015
|
|
86,126,100
|
|
|
86,126
|
|
|
3,162,529
|
|
|
(2,209,834
|
)
|
|
1,038,821
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reclass of conversion option to derivative
liabilities
|
|
-
|
|
|
-
|
|
|
(6,175
|
)
|
|
-
|
|
|
(6,175
|
)
|
Options expense
|
|
-
|
|
|
-
|
|
|
43,444
|
|
|
-
|
|
|
43,444
|
|
Revaluation of common shares issued for
services
|
|
-
|
|
|
-
|
|
|
(23,041
|
)
|
|
-
|
|
|
(23,041
|
)
|
Non-vested options returned and cancelled
|
|
-
|
|
|
-
|
|
|
(26,745
|
)
|
|
-
|
|
|
(26,745
|
)
|
Net loss
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(1,001,369
|
)
|
|
(1,001,369
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance June 30, 2016
|
|
86,126,100
|
|
$
|
86,126
|
|
$
|
3,150,012
|
|
$
|
(3,211,203
|
)
|
$
|
24,935
|
|
The accompanying notes are an integral part of these unaudited
consolidated financial statements.
F-3
Galenfeha, Inc.
CONSOLIDATED
STATEMENTS OF
CASH FLOWS
(Unaudited)
|
|
Six Months
|
|
|
Six Months
|
|
|
|
Ended
|
|
|
Ended
|
|
|
|
June 30, 2016
|
|
|
June 30, 2015
|
|
|
|
|
|
|
|
|
OPERATING ACTIVITIES
|
|
|
|
|
|
|
Net loss
|
$
|
(1,001,369
|
)
|
$
|
(387,573
|
)
|
Adjustments to reconcile net loss to
net cash used in operating activities:
|
|
|
|
|
|
|
Depreciation and amortization
|
|
13,684
|
|
|
9,804
|
|
Non-vested options forfeited
|
|
(26,745
|
)
|
|
-
|
|
Common shares issued for services
|
|
(23,041
|
)
|
|
95,000
|
|
Options expense
|
|
43,444
|
|
|
-
|
|
Loss on disposal of assets
|
|
-
|
|
|
5,317
|
|
Loss on derivative instruments
|
|
648,891
|
|
|
-
|
|
Amortization of debt discounts on convertible
notes
|
|
61,806
|
|
|
-
|
|
Changes in Operating Assets
and Liabilities:
|
|
|
|
|
|
|
(Increase) Decrease in accounts
receivable
|
|
80,176
|
|
|
(78,530
|
)
|
(Increase)
Decrease in accounts receivable from related party
|
|
336
|
|
|
-
|
|
(Increase) Decrease in inventory
|
|
120,770
|
|
|
(159,890
|
)
|
(Increase)
Decrease in prepaid expenses and other assets
|
|
(25,567
|
)
|
|
(342,867
|
)
|
Increase (Decrease) in accounts
payable and accrued liabilities
|
|
(108,160
|
)
|
|
196,949
|
|
Increase
(Decrease) in accounts payable to related parties
|
|
(106,991
|
)
|
|
-
|
|
Net cash used in operating activities
|
|
(322,766
|
)
|
|
(661,790
|
)
|
|
|
|
|
|
|
|
INVESTING ACTIVITIES
|
|
|
|
|
|
|
Proceeds from sale of assets
|
|
-
|
|
|
47,016
|
|
Purchase of fixed assets
|
|
-
|
|
|
(22,367
|
)
|
Cash paid for acquisition of
subsidiary
|
|
-
|
|
|
(154,887
|
)
|
Net cash used in financing activities
|
|
-
|
|
|
(130,238
|
)
|
|
|
|
|
|
|
|
FINANCING ACTIVITIES
|
|
|
|
|
|
|
Proceeds from line of credit/notes
payable
|
|
82,371
|
|
|
70,895
|
|
Payments on notes payable
|
|
(88,980
|
)
|
|
(56,825
|
)
|
Proceeds from convertible debentures,
net of original issue discounts
|
|
247,550
|
|
|
-
|
|
Proceeds from related party promissory
note
|
|
100,000
|
|
|
-
|
|
Payment on promissory
notes
|
|
-
|
|
|
(125,000
|
)
|
Payments on finance contracts
|
|
(8,273
|
)
|
|
-
|
|
Proceeds from sale of common stock
|
|
-
|
|
|
1,162,200
|
|
Net cash provided by financing activities
|
|
332,668
|
|
|
1,051,270
|
|
|
|
|
|
|
|
|
INCREASE IN CASH
|
|
9,902
|
|
|
259,242
|
|
CASH AT BEGINNING OF PERIOD
|
|
47,333
|
|
|
94,668
|
|
CASH AT END OF PERIOD
|
$
|
57,235
|
|
$
|
353,910
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL INFORMATION
|
|
|
|
|
|
|
Cash paid for:
|
|
|
|
|
|
|
Interest expense
|
$
|
3,557
|
|
$
|
6,421
|
|
Income taxes
|
|
-
|
|
|
-
|
|
|
|
|
|
|
|
|
NONCASH INVESTING AND FINANCING ACTIVITIES
|
|
|
|
|
|
|
Common stock issued for acquisition of subsidiary
|
$
|
-
|
|
$
|
191,750
|
|
Debt discount due to derivative
liabilities
|
|
247,550
|
|
|
-
|
|
Reclass of conversion option from equity to
derivative liabilities
|
|
6,175
|
|
|
-
|
|
The accompanying notes are an integral part of these unaudited
consolidated financial statements.
F-4
Galenfeha, Inc.
Notes to Unaudited Consolidated
Financial Statements
June 30, 2016
NOTE 1 - BASIS OF PRESENTATION
The accompanying financial statements have been prepared by the
Company without audit. In the opinion of management, all adjustments (which
include only normal recurring adjustments) necessary to present fairly the
financial position, results of operations, and cash flows at June 30, 2016, and
for all periods presented herein, have been made.
Certain information and footnote disclosures normally included
in financial statements prepared in accordance with accounting principles
generally accepted in the United States of America have been omitted. It is
suggested that these unaudited interim financial statements be read in
conjunction with the financial statements and notes thereto included in the
Companys December 31, 2015 audited financial statements included in its Form
10-K filed with the Securities and Exchange Commission. The results of
operations for the three and six months ended June 30, 2016 and the same period
last year are not necessarily indicative of the operating results for the full
years.
NOTE 2 - GOING CONCERN
The accompanying financial statements have been prepared
assuming that the Company will continue as a going concern. The Company has
incurred net losses and net cash used in operations since inception. These
conditions raise substantial doubt about the Companys ability to continue as a
going concern. The Companys ability to continue as a going concern is dependent
upon the Companys ability to achieve a level of profitability. The Company
intends on financing its future development activities and its working capital
needs largely from the sale of public equity securities with some additional
funding from other traditional financing sources, including term notes until
such time that funds provided by operations are sufficient to fund working
capital requirements. The financial statements of the Company do not include any
adjustments relating to the recoverability and classification of recorded
assets, or the amounts and classifications of liabilities that might be
necessary should the Company be unable to continue as a going concern.
NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
CONCENTRATIONS
During the six months ended June 30, 2016, 9% of sales were to
a single related party customer. In addition, one other third party customer
contributed to 48% of total revenue for six months ended June 30, 2016. For the
six months ended June 30, 2015, 95% of sales were to a single related party
customer. During the three months ended June 30, 2016, 18% of sales were to a
single related party customer. In addition, one other third party customer
contributed to 54% of total revenue for three months ended June 30, 2016. For
the three months ended June 30, 2015, 95% of sales were to a single related
party customer.
As of June 30, 2016, accounts receivable from one related party
customer comprised 51% of total accounts receivable before it netted with
accounts payable due to the same related party and accounts receivable from one
third party customer comprised 31% of accounts receivable. As of December 31,
2015, accounts receivable from one third party customer comprised 81% of
accounts receivable, while another third-party customer comprised 12% of
accounts receivable.
INVENTORIES
Inventories are stated at the lower of cost, determined on a
first-in, first-out basis (FIFO), or market, including direct material costs
and direct and indirect manufacturing costs. Inventory consists of the following
amounts as of June 30, 2016 and December 31, 2015.
|
|
June 30, 2016
|
|
|
December 31, 2015
|
|
Raw Materials
|
$
|
265,824
|
|
$
|
311,673
|
|
Work In Process
|
|
-
|
|
|
-
|
|
Finished Goods
|
|
564,023
|
|
|
638,944
|
|
|
|
|
|
|
-
|
|
Total Inventory
|
$
|
829,847
|
|
$
|
950,617
|
|
FAIR VALUE ACCOUNTING
As required by the Fair Value Measurements and Disclosures
Topic of the FASB ASC, fair value is measured based on a three-tier fair value
hierarchy, which prioritizes the inputs used in measuring fair value as follows:
(Level 1) observable inputs such as quoted prices in active markets; (Level 2)
inputs, other than the quoted prices in active markets, that are observable
either directly or indirectly; and (Level 3) unobservable inputs in which there
is little or no market data, which require the reporting entity to develop its
own assumptions.
F-5
The three levels of the fair value hierarchy are described
below:
Level 1 Unadjusted quoted prices in active markets that are
accessible at the measurement date for identical, unrestricted assets or
liabilities;
Level 2 Quoted prices in markets that are not active, or inputs
that are observable, either directly or indirectly, for substantially the full
term of the asset or liability;
Level 3 Prices or valuation techniques that require inputs that
are both significant to the fair value measurement and unobservable (supported
by little or no market activity).
The following table sets forth by level with the fair value
hierarchy the Companys assets and liabilities measured at fair value as of June
30, 2016:
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
None
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative liabilities
|
$
|
|
|
$
|
|
|
$
|
902,616
|
|
$
|
902,616
|
|
NOTE 4 PROPERTY AND EQUIPMENT
Property and equipment are stated at cost, less accumulated
depreciation. Depreciation is recorded using the straight-line method over the
estimated useful lives of the related assets, ranging from three to forty years.
A summary is as follows:
|
|
June
30, 2016
|
|
|
December 31, 2015
|
|
Manufacturing assets
|
$
|
168,015
|
|
$
|
168,015
|
|
Vehicles
|
|
-
|
|
|
-
|
|
Furniture and equipment
|
|
19,318
|
|
|
19,318
|
|
Improvements
|
|
21,472
|
|
|
21,472
|
|
|
|
208,805
|
|
|
208,805
|
|
|
|
|
|
|
|
|
Less accumulated depreciation
|
|
(31,303
|
)
|
|
(21,419
|
)
|
|
|
|
|
|
|
|
Property and equipment, net
|
$
|
177,502
|
|
$
|
187,386
|
|
Depreciation expense related to property and equipment was
$9,883 and $9,804 for the six months ended June 30, 2016 and 2015, respectively
and $4,942 and $4,957 for the three months ended June 30, 2016 and 2015,
respectively.
NOTE 5 NOTES PAYABLE
On May 12, 2016, the Company incurred a loan of $5,625 relating
to the renewal of their commercial general liability insurance. The note has an
interest rate of 8.00%, payable in payments of $583 for 10 months. Additionally
in May of 2016, the Company incurred a loan of $5,746 relating to the renewal of
their workers compensation, commercial property, and commercial automobile
insurance. The note has an interest rate of 0.00%, payable in payments of $936
and $1,223 in months one and two, respectively, and $599 per month for the
remaining six months. The outstanding balance on these finance agreements was
$9,888 and $6,791, as of June 30, 2016 and December 31, 2015, respectively.
In August 2015, the Company incurred a loan of $78,593 that is
secured by a customer purchase order. The loan has an interest rate of 4.75%
payable in four payment of $19,843 with the first payment due on December 28,
2015. Since the prior customer purchase orders had been fulfilled and paid, the
loan of $78,593 was repaid by a second loan of $88,980 on December 28, 2015
which was secured by current customer purchase orders. The second loan of
$88,980 has an interest rate of 4.75% and is payable in one principal payment of
$88,980 plus accrued interest on April 28, 2016. The outstanding balance on this
loan was $0 and $88,980 as of June 30, 2016 and December 31, 2015, respectively.
The Company also took out a line of credit of $100,000 on
August 5, 2015 which is payable on demand. The line of credit is secured by all
present and future inventory, all present and future accounts receivable, other
receivables, contract rights, instruments, documents, notes, and all other
similar obligation and indebtedness that may now and in the future be owed to
the Company, and all general intangibles. On January 15, 2016 the Companys line
of credit was increased from $100,000 to $200,000. The Company withdrew an
additional $70,000 in funds from the line of credit and paid loan origination
and documentation fees of $1,000 at closing to bring the total outstanding line
of credit balance to $171,000 as of January 15, 2016. Under the terms of the new
agreement the loan is a fixed rate (4.75%) revolving line of credit loan to the
Company for $200,000 due on January 15, 2017.
F-6
Additionally, the line of credit is secured by a deposit
account held at the Grantors institution which had a cash balance of $1,081 and
$11,499 as of June 30, 2016 and December 31, 2015, respectively. Interest only
payments were made during the six months ended June 30, 2016. The outstanding
balance on the line of credit was $171,000 and $100,000 as of June 30, 2016 and
December 31, 2015, respectively.
The current maturities and five year debt schedule for the
notes is as follows:
2016
|
$
|
-
|
|
2017
|
|
171,000
|
|
2018
|
|
-
|
|
2019
|
|
-
|
|
2020
|
|
-
|
|
Total current notes payable
|
$
|
171,000
|
|
NOTE 7 CONVERTIBLE LOANS
At June 30, 2016 and December 31, 2015, convertible loans
consisted on the following:
|
|
June
30, 2016
|
|
|
December 31, 2015
|
|
February 2016 Note
|
$
|
82,500
|
|
|
-
|
|
March 2016 Note
|
|
123,200
|
|
|
|
|
April 2016 Note
|
|
75,000
|
|
|
-
|
|
May 2016 Note
|
|
52,500
|
|
|
|
|
|
|
|
|
|
|
|
Total notes payable
|
|
333,200
|
|
|
-
|
|
|
|
|
|
|
|
|
Less: Unamortized debt discounts
|
|
(271,393
|
)
|
|
-
|
|
|
|
|
|
|
|
|
Total convertible loans, net
|
|
61,807
|
|
|
-
|
|
|
|
|
|
|
|
|
Less: current portion of convertible loans
|
|
(29,318
|
)
|
|
-
|
|
|
|
|
|
|
|
|
Long-term convertible loans, net
|
$
|
32,489
|
|
|
-
|
|
February 2016 Note
Effective February 29, 2016 the Company entered into a
Convertible Promissory Note (Vista Note) with Vista Capital Investments, LLC
pursuant to which the Company issued Vista Capital Investments, LLC a
convertible note in the amount of $275,000 with an original issue discount in
the amount of $25,000. The principal amount due Vista Capital Investments, LLC
is based on the consideration paid. The maturity date is two years from the
effective date of each payment. On February 29, 2016 the Company received
consideration of $75,000 for which an original issue discount of $7,500 was
recorded. In addition, the Company recognized a discount of $5,625 on fees paid
upon entering into this agreement. There were no additional borrowings under the
Vista Note during the six months ended June 30, 2016. The Vista Note carries an
interest rate of 6% which shall be applied on the issuance date to the original
principal amount. Accrued interest due under the Vista Note totaled $16,500 at
June 30, 2016.
The Vista Note provides Vista Capital Investments, LLC the
right at any time, to convert the outstanding balance (including accrued and
unpaid interest) into shares of the Companys common stock at 70% of the lowest
trade price in the 25 trading days previous to the conversion, additional
discounts may apply in the case that conversion shares are not deliverable or if
the shares are ineligible. As a result of the derivatives calculation (see Note
8) an additional discount of $52,875 was recorded. Amortization of the debt
discount totaled $13,787 for the six months ended June 30, 2016. The principal
balance due, net of the amortized discount under the Vista Note was $13,787 at
June 30, 2016.
March 2016 Note
Effective March 2, 2016 the Company entered into a Convertible
Promissory Note (JMJ Note) with JMJ Financial pursuant to which the Company
issued JMJ Financial a convertible note in the amount of $500,000 with an
original issue discount in the amount of $50,000. The principal amount due JMJ
is based on the consideration paid. The maturity date is two years from the
effective date of each payment. On March 2, 2016 the Company received
consideration of $100,000 for which an original issue discount of $10,000 was
recorded. In addition, the Company recognized a discount of $7,500 on fees paid
upon entering into this agreement There were no additional borrowings under the
JMJ Note during the six months ended June 30, 2016. The Company has not
currently made any principal payments on the JMJ Note. If the Company doesnt
repay the JMJ Note on or before 90 days from the effective date the Company may not make further payments on this JMJ Note prior to
the maturity date and a one-time interest charge of 12% will be applied to the
principal amount. Since no payments were made on the note on or before 90 days
from the effective date of the note, accrued interest due was recorded in the
amount of $13,200 at June 30, 2016.
F-7
The JMJ Note provides JMJ Financial the right at any time, to
convert the outstanding balance (including accrued and unpaid interest) into
shares of the Companys common stock at 60% of the lowest trade price in the 25
trading days previous to the conversion, additional discounts may apply in the
case that conversion shares are not deliverable or if the shares are ineligible.
As a result of the derivatives calculation (see Note 8) an additional discount
of $92,500 was recorded. Amortization of the debt discount totaled $18,701 for
the six months ended June 30, 2016. The principal balance due, net of the
amortized discount under the JMJ Note was $18,701 at June 30, 2016.
April 2016 Note
Effective April 22, 2016 the Company entered into a Convertible
Promissory Note (Auctus Note) with Auctus Fund, LLC pursuant to which the
Company issued Auctus Fund, LLC a convertible note in the amount of $75,000. The
maturity date is January 22, 2017. On April 22, 2016 the Company received
consideration of $75,000. In addition, the Company recognized a discount of
$6,750 on fees paid upon entering into this agreement. The Auctus Note carries
an interest rate of 10% which shall be applied on the issuance date to the
original principal amount. Interest paid under the Auctus Note totaled $5,625 at
June 30, 2016.
The Auctus Note provides Auctus Fund, LLC the right at any
time, to convert the outstanding balance (including accrued and unpaid interest)
into shares of the Companys common stock at 60% of the lowest trade price in
the 25 trading days previous to the conversion, additional discounts may apply
in the case that conversion shares are not deliverable or if the shares are
ineligible. As a result of the derivatives calculation (see Note 8) an
additional discount of $62,625 was recorded. Amortization of the debt discount
totaled $18,818 for the six months ended June 30, 2016. The principal balance
due, net of the amortized discount under the Auctus Note was $18,818 at June 30,
2016.
May 2016 Note
Effective April 18, 2016 the Company entered into a Convertible
Promissory Note (Adar Note) with Adar Bays, LLC pursuant to which the Company
issued Adar Bays, LLC a convertible note in the amount of $52,500 with an
original issue discount in the amount of $2,500. The maturity date is April 18,
2017. On May 12, 2016 the Company received consideration of $50,000 for which an
original issue discount of $2,500 was recorded. In addition, the Company
recognized a discount of $6,250 on fees paid upon entering into this agreement.
The Adar Note carries an interest rate of 8% which shall be applied on the
issuance date to the original principal amount. Accrued interest due under the
Adar Note totaled $4,200 at June 30, 2016.
The Adar Note provides Adar Bays, LLC the right at any time, to
convert the outstanding balance (including accrued and unpaid interest) into
shares of the Companys common stock at 60% of the lowest trade price in the 20
trading days previous to the conversion, additional discounts may apply in the
case that conversion shares are not deliverable or if the shares are ineligible.
As a result of the derivatives calculation (see Note 8) an additional discount
of $39,550 was recorded. Amortization of the debt discount totaled $10,500 for
the six months ended June 30, 2016. The principal balance due, net of the
amortized discount under the Adar Note was $10,500 at June 30, 2016.
NOTE 7 CONVERTIBLE LOANS RELATED PARTY
The Company issued a convertible promissory note to a related
party in 2014 for $250,000 (see Note 12). The note is convertible into common
stock of the Company at $0.50 per share. The intrinsic value of the beneficial
conversion feature was determined to be $125,000 at the commitment date and the
discount is being amortized over the one year life of the promissory note. As of
June 30, 2016, $125,000 of the discount has been amortized as interest expense.
Interest amortized for the six months ended June 30, 2016 and 2015 was $0 and
$61,986, respectively. The Company repaid $125,000 under this note during the
twelve months ended December 31, 2015 and the outstanding balance was $125,000
as of June 30, 2016.
This conversion option was accounted for as a derivative
liability during the six months ended June 30, 2016 resulting in a
reclassification of the fair value of the derivative liability of $6,175 from
equity (see Note 8).
NOTE 8 DERIVATIVE LIABILITY
During the six months ended June 30, 2016, the Company
identified conversion features embedded within its convertible debt. The Company
has determined that the conversion feature of the Notes represents an embedded
derivative since the Notes are convertible into a variable number of shares upon
conversion. Accordingly, the embedded conversion feature must be bifurcated from
the debt host and accounted for as a derivative liability. Therefore, the fair
value of the derivative instruments have been recorded as liabilities on the
balance sheet with the corresponding amount recorded as discounts to the Notes.
Such discounts will be accreted from the issuance date to the maturity date of
the Notes. The change in the fair value of the derivative liabilities will be
recorded in other income or expenses in the statement of operations at the end
of each period, with the offset to the derivative liabilities on the balance
sheet. The fair value of the embedded derivative liabilities were determined
using the Black-Scholes valuation model on the issuance dates with the
assumptions in the table below.
F-8
The change in fair value of the Companys derivative
liabilities for the six months ended June 30, 2016 is as follows:
December 31, 2015 fair value
|
$
|
-
|
|
Additions recognized as derivative loss at inception
|
|
380,283
|
|
Additions recognized as note discount
at inception
|
|
247,550
|
|
Reclass from equity to derivative liability
|
|
6,175
|
|
Loss on change in fair value
|
|
268,608
|
|
June 30, 2016 fair value
|
$
|
902,616
|
|
The loss on the change in fair value of derivative liabilities
for the six months ending June 30, 2016 totaled $648,891
The fair value at the issuance and remeasurement dates for the
convertible debt treated as derivative liabilities are based upon the following
estimates and assumptions made by management for the six months ended June 30,
2016:
Exercise prices
|
See Notes 6 and
7
|
Expected dividends
|
0%
|
Expected volatility
|
188%-400%
|
Expected term
|
See Notes 6 and 7
|
Discount rate
|
.45%-.85%
|
NOTE 9 - SHAREHOLDERS EQUITY
COMMON STOCK
The authorized common stock of the Company consists of
500,000,000 shares with a par value of $0.001.
As of June 30, 2016 and December 31, 2015, 86,126,100 shares of
the Companys common stock were issued and outstanding.
In October 2014, the Company entered into an agreement for the
issuance of 1,000,000 common shares for CAD/CAM Engineering Design Services for
GLFH1200 series battery development. The shares vest in equal installments of
250,000 each year following the date of the agreement. On May 1, 2015, the
Company issued 250,000 shares under this award. Since inception through June 30,
2016, $118,311 was expensed under this award and $14,189 remains to be expensed
over the remaining service period. This nonemployee award is valued upon
completion of services. The fair value of the award as of the reporting date of
June 30, 2016 resulted in a reduction to expense during the six months ended
June 30, 2016 of $23,041.
NOTE 10 - OPTIONS
During the year ended December 31, 2015, the Company granted an
aggregate of 2,050,000 options to a military sales representative and three
employees. Col. Ashton Naylor (Ret) received 100,000 options exercisable at
$0.25 per share, Chris Watkins received 750,000 options exercisable at $0.25 per
share, Jeff Roach received 1,000,000 options exercisable at $0.20 per share, and
Brian Nallin received 200,000 options exercisable at $0.20 per share. These
options expire on April 1, 2016; June 11, 2020, February 1, 2017, and December
31, 2017 respectively. The options granted to Brian Nallin vest immediately and
the other options vest in equal tranches over periods ranging from 2 to 5 years.
The aggregate fair value of the option grants was determined to be $430,839
using the Black-Scholes Option Pricing Model and the following assumptions:
volatilities between 218% and 396%, risk free rates between .27% and 1.74%,
expected terms between 1 and 5 years and zero expected dividends. The fair value
of the award is being expensed over the vesting periods. $295,553 was expensed
during the year ended December 31, 2015, $24,703 was expensed during the three
months ended March 31, 2016, and $18,741 was expensed during the three months
ended June 30, 2016. Jeff Roach and Brian Nallin both voluntarily terminated
employment with the Company on February 12, 2016 resulting in Jeff returning
non-vested options back to the Company. This resulted in a reversal of prior
period share based compensation and option expense of $26,745 during the three
months ended March 31, 2016. As of June 30, 2016, $74,655 remains to be expensed
over the remaining vesting period.
As of June 30, 2016, there were 1,700,000 options outstanding
of which 1,250,000 were exercisable. The range of exercise prices and remaining
weighted average life of the options outstanding at June 30, 2016 were $0.20 to
$0.25 and 2.18 years, respectively. The aggregate intrinsic value of the
outstanding options at June 30, 2016 was $0.
F-9
NOTE 11 - COMMITMENTS AND CONTINGENCIES
The Company entered into a lease agreement for office and
research facilities in Louisiana. One lease is for $10,200 per year for 24
months beginning May 1, 2014. Beginning in May of 2016 this lease is now month
to month and is $850 per month. The second lease is $2,600 per month for 24
months beginning on November 1, 2014.
Additionally, the Company leases space in Fort Worth, Texas for
corporate facilities for $99 monthly or $1,188 per year. The terms of this lease
are also month to month.
Year Ended
|
|
Amount
|
|
2016
|
$
|
18,200
|
|
2017
|
|
-
|
|
2018
|
|
-
|
|
2019
|
|
-
|
|
2020
|
|
-
|
|
|
$
|
18,200
|
|
From time to time the Company may be a party to litigation
matters involving claims against the Company. Management believes that there are
no current matters that would have a material effect on the Companys financial
position or results of operations.
NOTE 12 RELATED PARTY TRANSACTIONS
On November 1, 2014, the Company entered into a Convertible
Promissory Note Agreement with Ray Moore Sr., a related party, in the amount of
$250,000. The note bears an interest rate of 7% per annum until paid in full.
Repayment of the loan is due on or before November 7, 2015. The lender shall
have the right to convert this indebtedness to equity shares of Galenfeha at the
rate of one share per $.50 of indebtedness for a total of 500,000 shares upon
the expiration date, or at any time the Lender desired for the relieve of
indebtedness of Maker. As of June 30, 2016, the principal and interest due on
the note is $136,699 (the accrued interest of $11,699 is presented as accounts
payable to related parties in the consolidated balance sheet).
On May 12, 2016, the Company entered into a Promissory Note
Agreement with Diane Moore, a related party, in the amount of $100,000. The note
bears an interest rate of 5% per annum until the balance is pain in full.
Repayment of the loan is due on or before December 31, 2016.
Falcon Resources, LLC & MarionAv, LLC are two companies
owned by Board Member, Trey Moore, and CEO/President, Lucien Marioneaux, Jr.,
respectively. These related party entities provide flight services to employees
and directors of the Company. The total amount paid for flight services to
Falcon Resources and MarionAv, LLC for the six months ending June 30, 2016
totaled $6,600 and $1,240, respectively. As of June 30, 2016, the Company had
outstanding accounts payable balances to Falcon Resources, LLC totaling $6,600
and MarionAv, LLC totaling $1,240.
Galenfeha sells a portion of its finished goods to Fleaux
Services, LLC, a company owned by Board Member, Trey Moore. During the three and
six months ended June 30, 2016, sales to the related company totaled $19,002 and
$36,384, respectively. As of June 30, 2016, the Company had outstanding
receivables from the related party company of $28,018. As of June 30, 2016, the
Company had an outstanding accounts payable balance to Fleaux Services, LLC
totaling $31,009. The net related party accounts payable balance due to Fleaux
Services totaled $2,991 for the six months ended June 30, 2016. During the six
months ended June 30, 2016, the Company paid Fleaux Services, LLC $16,152 for
inventory and shop supply purchases.
Galenfeha purchases component parts used in the assembly of
inventory items from River Cities Machine, LLC, a company owned by
CEO/President, Lucien Marioneaux, Jr. During the six months ended June 30, 2016
purchases from the related company totaled $960. As of June 30, 2016, the
Company had an outstanding accounts payable balance to River Cities Machine, LLC
totaling $960.
Other outstanding accounts payable balances to related parties
totaled $4,500 as of June 30, 2016. The amounts are unsecured, due on demand and
bear no interest.
NOTE 13 UNCERTAIN TAX POSITIONS
The Company received a letter on May 17, 2016 from the
Caddo-Shreveport Sales and Use Tax Commission informing them of a parish sales
and use tax audit scheduled to begin on June 28, 2016. The audit period covered
is January 1, 2013 through May 31, 2016. The audit is currently under way and no
judgments or assessments have been issued. Management is of the opinion that
this audit will not result in any material change in the Companys financial
results.
F-10
Item 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis should be read in
conjunction with the consolidated financial statements and related notes
included in this report and those in our Form 10-K filed with the Securities and
Exchange Commission on March 30, 2016. This discussion contains forward-looking
statements that involve risks and uncertainties. Our actual results may differ
materially from those anticipated in such forward-looking statements as a result
of certain factors, including but not limited to, those described under Risk
Factors included in Part II, Item IA of this report.
Background Overview
Galenfeha incorporated in the State of Nevada on March 14,
2013, as a for-profit company with a fiscal year end of December 31. Our
executive office is located at 420 Throckmorton Street, Suite 200, Ft. Worth
Texas 76102, and the Companys manufacturing facility is located at 9204 Linwood
Avenue, Suite 104, Shreveport, LA. 71106. Our Telephone numbers are Toll free
1-800-280-2404
, International
1-817-945-6448
, and our facsimile
number is
817-887-1455
. Our email address is
info@galenfeha.com
and our website address is
www.galenfeha.com
.
In 2014, GLFH developed new battery technology primarily
designed to operate automation and measurement computers in remote oil field
locations. Such technology provides an environmentally friendly, inherently
safe, internally temperature regulated, uninterruptible power supply for oil and
gas well location automation and measurement equipment. Throughout 2014 this
battery system proved effective in rigorous field-testing and was placed in to
marketable production, now known as LiFePO4 battery systems.
During initial production, GLFH developed a private label,
unique, user interface driven, real-time battery state of charge and asset
tracking system that is internally integrated within the Companys line of
LiFePO4 battery systems. The system communicates the current battery
performance, and operates as a Cloud driven database to collect and collate
individual client information and uses unique ESN numeric identifiers to
reference each clients specific asset performance and inventory. Asset-tracking
utilizes a combination of CDMA technologies coupled with satellite geo-location
referencing to accurately monitor and track the battery system in the event of
theft.
Early third quarter 2014, GLFH began shipping its patent
pending battery systems to a multi-state distributor in Shreveport, Louisiana.
The battery system saw rapid acceptance within the industry, thus increasing oil
and gas demand through the remainder of 2014.
In 2015, GLFH began researching the use of this battery
technology outside of the oil and gas industry. In conjunction with alternative
markets, GLFH successfully tested a proof-of-concept model for use in zero
emission recreational vehicles such as golf carts and an off-road UTV
gas/electric hybrid platform. Additionally, GLFH sought additional product lines
to its battery systems to increase revenue while establishing a synergy among
products such that each product line could add value to the other.
GLFH acquired DayLight Pump, LLC, a chemical injection pump
manufacturing company, in early 2015 and all operations and manufacturing were
relocated to Shreveport, Louisiana. Following slight enhancements to the
DayLight Pump design, and following rigorous field-testing, DayLight Pumps, as
we know them today were manufactured and placed into final production. As
planned, these chemical injection stations incorporate the GLFH LiFePO4 battery
systems, at various levels. DayLight Pumps with GLFH LiFePO4 battery systems
were introduced into the commercial market mid-2015.
GLFH realized growth in overall product sales in 2015 for
reasons threefold: 1.) Increased market acceptance of our products, 2.)
Embedding the battery technology within our chemical injection pump systems
which not only serves to further validate product viability but also assisted in
expanding beyond automation and measurement to the production sector of the
petroleum industry, 3.) Introduction of our technology outside the petroleum
industry in to additional markets. 2015 goals were met regarding zero emissions
vehicle testing, the successful acquisition of Daylight Pump, LLC, as well as
the initial design of a second-generation battery management system. Chemical
injection pumps and accessories showed significant increase gross revenue, as
desired and the company was able to branch out of the oil and gas market to the
United States Armed Forces in the testing of GLFH LiFePO4 battery systems for
use in automated range targeting systems. Armed Forces testing was completed
mid-year 2015 with two facilities performing simultaneous field-testing which
ultimately proved successful. Third quarter 2015 saw the first shipment of GLFH
LiFePO4 battery systems to Fort Campbell. Such a milestone is of note as it
represents a first not only for GLFH, but also the acceptance and usage of the
LiFePO4 chemistry by the United States Government.
2015 also proved successful in that a solidified distribution
network was established with a number of national and long-standing regional
distribution partners opening the GLFH product line to nationwide distribution.
Promptly following the establishment of the distribution network, hands-on
product training sessions were conducted personally with each distribution hub
while initial stocking orders were placed and shipped across the nation.
Since the Companys inception, the Company has accomplished key
milestones outlined in its 2014-2015 statement of work. A majority of the monies
spent to date have been for initial financing actives related to creating a
public company, product development, including research and field-testing as
well as for the purchase of inventory and ordinary day-to-day operations. We
anticipate that in 2016, the Company will increase profitability, and that cash
flow will be such as to allow for the production of additional inventory items
to reduce lead-times for product sales, continued market growth and the
development of those products desired within our market sectors which may add to
the synergies already enjoyed.
4
Liquidity
Assets
At June 30, 2016, we had total assets of $1,531,391, of which
$57,235 was in cash.
Results of Operations for the Three Months ending June 30,
2016
Revenues
Revenues for the three months ended June 30, 2016 and 2015 were
$104,374, and $242,784, respectively. Of the $104,374; $85,372 were to third
parties and $19,002 were to related parties. Of the $242,784; $29,989 were to
third parties and $212,795 were to related parties. The decrease is from the
Company loosing distribution contracts with oil and gas supply companies due to
lack of demand in the oil and gas industry. However, sales from third parties
increased significantly compared to the prior year because of less dependence on
related parties of the Company.
Cost of Revenues
Cost of Revenues for the three months ended June 30, 2016 and
2015 were $72,582 and $110,770, respectively. Costs were cost of materials and
manufacturing supplies with the decrease due to lack of sales compared with the
prior period..
Operating Expense
Total operating expenses for the three months ended June 30,
2016 and 2015 were $197,181 and $407,958, respectively. Expenses decreased as
the Company has decreased its workforce and lowered overhead costs because of
the downturn in the oil and gas industry.
Net Operating Loss and Net Loss
Net operating loss for the three months ended June 30, 2016 and
2015 was $165,389 and $275,944 respectively. The Company realized a lower net
loss because of reduced payroll costs and corresponding share based compensation
relating to employee stock options, reduced option expense for initial research
and development engineering services, and lower advertising costs.
Net loss for the three months ended June 30, 2016 and 2015 was
$695,506 and $314,819 respectively. The Company realized a higher net loss
because of increased interest and amortization expense relating to amortization
of debt discounts on convertible promissory notes, and fair market value
adjustments on derivative contracts associated with procuring additional
financing.
Results of Operations for the Six Months ending June 30,
2016
Revenues
Revenues for the six months ended June 30, 2016 and 2015 were
$407,795, and $559,486, respectively. Of the $407,795; $371,411 were to third
parties and $36,384 were to related parties. Of the $559,486; $29,989 were to
third parties and $529,497 were to related parties. The decrease is from the
Company loosing distribution contracts with oil and gas supply companies due to
lack of demand in the oil and gas industry. However, sales from third parties
increased significantly compared to the prior year because of less dependence on
related parties of the Company.
Cost of Revenues
Cost of Revenues for the six months ended June 30, 2016 and
2015 were $292,164 and $305,596, respectively. Costs were cost of materials and
manufacturing supplies with the decrease due to lack of sales compared with the
prior period.
Operating Expense
Total operating expenses for the six months ended June 30, 2016
and 2015 were $403,482 and $567,779, respectively. Expenses decreased as the
Company has decreased its workforce and lowered overhead costs because of the
downturn in the oil and gas industry.
Net Operating Loss and Net Loss
Net operating loss for the six months ended June 30, 2016 and
2015 was $287,851 and $313,889 respectively. The Company realized a lower net
loss because of reduced payroll costs and corresponding share based compensation
relating to employee stock options, reduced option expense for initial research
and development engineering services, and lower advertising costs.
Net loss for the six months ended June 30, 2016 and 2015 was
$1,001,369 and $387,573 respectively. The Company realized a higher net loss
because of increased interest and amortization expense relating to amortization
of debt discounts on convertible promissory notes, and fair market value
adjustments on derivative contracts associated with procuring additional
financing.
5
Equity Distribution
Since our incorporation, we have raised capital through private
sales of our common equity. As of June 30, 2016, we have issued 86,126,100
shares of our common stock to various shareholders,
Off-Balance Sheet Arrangements
We have no significant 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 investors.
Item 3. Quantitative & Qualitative Disclosures about
Market Risks
Not applicable.
Item 4. CONTROLS AND PROCEDURES
(a) Evaluation of Disclosure Controls and Procedures
As of the end of period covered by this report, the Company
carried out an evaluation, with the participation of the Company's Chief
Executive Officer and Principal Financial Officer, of the effectiveness of the
Company's disclosure controls and procedures pursuant to Securities Exchange Act
Rule 13a-15. Based upon that evaluation, the Company's Chief Executive Officer
and Principal Financial Officer concluded that the Company's disclosure controls
and procedures were not effective in ensuring that information required to be
disclosed by the Company in the reports that it files or submits under the
Securities Exchange Act is recorded, processed, summarized and reported, within
the time periods specified in the SEC's rules and forms.
(b) Changes in internal controls over financial reporting.
No changes were made to the Company's internal controls in the
quarterly period covered by this report that have materially affected, or are
reasonably likely materially to affect, the Companys internal control over
financial reporting.
PART II. OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
None
Item 1A. Risk Factors
A description of the risks associated with our business,
financial condition and results of operations is set forth in our Annual Report
on Form 10-K for the fiscal year ended December 31, 2015, filed with the SEC on
March 30, 2016. These factors continue to be meaningful for your evaluation of
the Company and we urge you to review and consider the risk factors presented in
the Annual Report on Form 10-K. We believe there have been no changes that
constitute material changes from these risk factors.
Item 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF
PROCEEDS
None
Item 3. DEFAULTS UPON SENIOR SECURITEIES
None
Item 4. MINE SAFETY DISCLOSURES
Not applicable
Item 5. OTHER INFORMATION
None
Item 6. EXHIBITS
(a) Exhibits:
6
** XBRL (Extensible Business Reporting Language) information is
furnished and not filed or a part of a registration statement or prospectus for
purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, is
deemed not filed for purposes of Section 18 of the Securities Exchange Act of
1934, as amended, and otherwise is not subject to liability under these
sections.
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.
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Galenfeha, Inc.
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Date: August 12, 2016
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By:
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/s/
Lucien Marioneaux
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Name:
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Lucien Marioneaux
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President and Chief Executive Officer
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(Principal Financial Officer, Principal
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Accounting Officer)
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7
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