UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
FORM
10-K
(Mark one)
☒ ANNUAL
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For
the Year Ended June 30, 2015
or
☐ TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
For
the transition period from
Commission File Number: 000-53049
SMACK
SPORTSWEAR
(Exact
name of registrant as specified in its charter)
Nevada |
|
26-1665960 |
(State
or Other Jurisdiction |
|
(I.R.S.
Employer |
of
Incorporation or Organization) |
|
Identification
No.) |
6025
Macadam Ct, Agoura Hills, CA |
|
90501 |
(Address
of principal executive offices) |
|
(Zip
Code) |
(818)
404-5541
(Registrant’s
telephone number, including area code)
Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for 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
☒ No ☐
Indicate
by check mark whether the registrant has submitted electronically and posted on its corporate Website, 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 ☐ 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 the “large accelerated filer,” “accelerated filer,” “non-accelerated
filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
Large
accelerated filer |
☐ |
Accelerated
filer |
☐ |
Non-accelerated
filer |
☐.
(Do not check if a smaller reporting company) |
Smaller
reporting company |
☒. |
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes ☒ No ☐
The number
of shares of registrant’s common stock outstanding as of October 14, 2015 was 22,117,776.
TABLE
OF CONTENTS
FORWARD-LOOKING STATEMENTS |
3 |
|
|
|
PART I |
|
|
ITEM 1. DESCRIPTION OF BUSINESS |
4 |
|
ITEM 1A. RISK FACTORS |
6 |
|
ITEM 2. DESCRIPTION OF PROPERTY |
6 |
|
ITEM 3. LEGAL PROCEEDINGS |
6 |
|
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS |
6 |
PART II |
|
|
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS AND SMALL BUSINESS ISSUER PURCHASES OF EQUITY SECURITIES |
7 |
|
ITEM 6. SELECTED FINANCIAL DATA |
7 |
|
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION |
8 |
|
ITEM
7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
12 |
|
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTAL DATA |
13 |
|
ITEM
9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE |
14 |
PART III |
|
|
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS, CONTROL PERSONS AND CORPORATE GOVERNANCE; COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT |
16 |
|
ITEM
11. EXECUTIVE COMPENSATION |
17 |
|
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS |
18 |
|
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE |
19 |
|
ITEM 14. EXHIBITS |
19 |
|
ITEM
15. PRINCIPAL ACCOUNTANT FEES AND SERVICES |
20 |
SIGNATURES |
21 |
FORWARD-LOOKING
STATEMENTS
This
Annual Report contains forward-looking statements, including, without limitation, in the sections captioned “Description
of Business,” “Risk Factors,” and “Management’s Discussion and Analysis of Financial Condition and
Results of Operations,” and elsewhere. Any and all statements contained in this Report that are not statements of historical
fact may be deemed forward-looking statements. Terms such as “may,” “might,” “would,” “should,”
“could,” “project,” “estimate,” “pro forma,” “predict,” “potential,”
“strategy,” “anticipate,” “attempt,” “develop,” “plan,” “help,”
“believe,” “continue,” “intend,” “expect,” “future,” and terms of
similar import (including the negative of any of the foregoing) may be intended to identify forward-looking statements. However,
not all forward-looking statements may contain one or more of these identifying terms. Forward-looking statements in this Report
may include, without limitation, statements regarding (i) the plans and objectives of management for future operations, including
plans or objectives relating to exploration programs, (ii) a projection of income (including income/loss), earnings (including
earnings/loss) per share, capital expenditures, dividends, capital structure or other financial items, (iii) our future financial
performance, including any such statement contained in a discussion and analysis of financial condition by management or in the
results of operations included pursuant to the rules and regulations of the SEC, and (iv) the assumptions underlying or relating
to any statement described in points (i), (ii) or (iii) above.
The
forward-looking statements are not meant to predict or guarantee actual results, performance, events or circumstances and may
not be realized because they are based upon our current projections, plans, objectives, beliefs, expectations, estimates and assumptions
and are subject to a number of risks and uncertainties and other influences, many of which we have no control over. Actual results
and the timing of certain events and circumstances may differ materially from those described by the forward-looking statements
as a result of these risks and uncertainties. Factors that may influence or contribute to the inaccuracy of the forward-looking
statements or cause actual results to differ materially from expected or desired results may include, without limitation, our
inability to obtain adequate financing, insufficient cash flows and resulting illiquidity, our inability to expand our business,
government regulations, lack of diversification, volatility in the price of gold, increased competition, results of arbitration
and litigation, stock volatility and illiquidity, and our failure to implement our business plans or strategies.
Readers
are cautioned not to place undue reliance on forward-looking statements because of the risks and uncertainties related to them.
We disclaim any obligation to update the forward-looking statements contained in this Report to reflect any new information or
future events or circumstances or otherwise.
Readers
should read this Report in conjunction with our financial statements and the related notes thereto in this Report, and other documents
which we may file from time to time with the SEC.
PART
I
ITEM
1. DESCRIPTION OF BUSINESS.
This
Report contains summaries of the material terms of various agreements executed in connection with the transactions described herein.
The summaries of these agreements are subject to, and are qualified in their entirety by reference to, these agreements, all of
which are incorporated herein by reference.
Business
Development
SMACK
Sportswear (“SMACK or the Company”) was originally incorporated in Nevada in October 2007. Through June 30, 2015,
we were a manufacturer and seller of performance and lifestyle based indoor and sand volleyball apparel and accessories. As of
July 31, 2015 we completed the disposition of certain assets of the Company to William Sigler, a former director of the Company;
in connection with said transactions Mr. Sigler resigned and agreed to sell all his shares of common stock in the Company. As
a result of the sale of certain inventory from the Company to Mr. Sigler, the Company is now considered a “shell company”
(as such term is defined in Rule 12b-2 of the Securities Exchange Act of 1934, as amended).
The
Company is now focusing its efforts on seeking a business opportunity. The Company will attempt to locate and negotiate with a
business entity for the merger of that target company into the Company. In certain instances, a target company may wish to become
a subsidiary of the Company or may wish to contribute assets to the Company rather than merge. No assurances can be given that
the Company will be successful in locating or negotiating with any target company. The Company will provide a method for a foreign
or domestic private company to become a reporting (“public”) company whose securities are qualified for trading in
the United States secondary market. We are now considered a “blank check” company.
The
selection of a business opportunity in which to participate is complex and extremely risky and will be made by management in the
exercise of its business judgment. There is no assurance that we will be able to identify and acquire any business opportunity
which will ultimately prove to be beneficial to our company and shareholders.
Because
we have no specific business plan or expertise, our activities are subject to several significant risks. In particular, any business
acquisition or participation we pursue will likely be based on the decision of management without the consent, vote, or approval
of our shareholders.
Sources
of Opportunities
We
anticipate that business opportunities may arise from various sources, including officers and directors, professional advisers,
securities broker-dealers, venture capitalists, members of the financial community, and others who may present unsolicited proposals.
We
will seek potential business opportunities from all known sources, but will rely principally on the personal contacts of our officers
and directors as well as indirect associations between them and other business and professional people. Although we do not anticipate
engaging professional firms specializing in business acquisitions or reorganizations, we may retain such firms if management deems
it in our best interests. In some instances, we may publish notices or advertisements seeking a potential business opportunity
in financial or trade publications.
Criteria
We
will not restrict our search to any particular business, industry or geographical location. We may acquire a business opportunity
in any stage of development. This includes opportunities involving “start up” or new companies. In seeking a business
venture, management will base their decisions on the business objective of seeking long-term capital appreciation in the real
value of our company. We will not be controlled by an attempt to take advantage of an anticipated or perceived appeal of a specific
industry, management group, or product.
In
analyzing prospective business opportunities, management will consider the following factors:
| ● | available
technical, financial and managerial resources; |
| ● | working
capital and other financial requirements; |
| ● | the
history of operations, if any; |
| ● | prospects
for the future; |
| ● | the
nature of present and expected competition; |
| ● | the
quality and experience of management services which may be available and the depth of
the management; |
| ● | the
potential for further research, development or exploration; |
| ● | the
potential for growth and expansion; |
| ● | the
potential for profit; |
| ● | the
perceived public recognition or acceptance of products, services, trade or service marks,
name identification; and other relevant factors. |
Generally,
our management will analyze all available factors and make a determination based upon a composite of available facts, without
relying on any single factor.
Methods
of Participation of Acquisition
Management
will review specific business and then select the most suitable opportunities based on legal structure or method of participation.
Such structures and methods may include, but are not limited to, leases, purchase and sale agreements, licenses, joint ventures,
other contractual arrangements, and may involve a reorganization, merger or consolidation transactions. Management may act directly
or indirectly through an interest in a partnership, corporation, or other form of organization.
Procedures
As
part of the our investigation of business opportunities, officers and directors may meet personally with management and key personnel
of the firm sponsoring the business opportunity. We may visit and inspect material facilities, obtain independent analysis or
verification of certain information provided, check references of management and key personnel, and conduct other reasonable measures.
We
will generally ask to be provided with written materials regarding the business opportunity. These materials may include the following:
| ● | descriptions
of product, service and company history; management resumes; |
| ● | available
projections with related assumptions upon which they are based; |
| ● | an
explanation of proprietary products and services; |
| ● | evidence
of existing patents, trademarks or service marks or rights thereto; |
| ● | present
and proposed forms of compensation to management; |
| ● | a
description of transactions between the prospective entity and its affiliates; |
| ● | relevant
analysis of risks and competitive conditions; |
| ● | a
financial plan of operation and estimated capital requirements; |
| ● | and
other information deemed relevant. |
Competition
We
expect to encounter substantial competition in our efforts to acquire a business opportunity. The primary competition is from
other companies organized and funded for similar purposes, small venture capital partnerships and corporations, small business
investment companies and wealthy individuals.
Employees
During the
year ended June 30, 2015, and at the present time, we have no employees. During the year ended June 30, 2015, we did have up to
eight part-time independent contractors. Doug Samuelson is currently our sole officer and director. Mr. Samuelson will devote
such time as required to actively seek a business opportunity for the Company.
ITEM
1A. RISK FACTORS
Smaller
reporting companies are not required to provide the information required by this Item 1A.
ITEM
1B. Unresolved Staff Comments
None
ITEM
2. DESCRIPTION OF PROPERTY.
We
do not currently own or lease any property. We utilize office space in the residence of our Interim CEO and CFO at no cost. We
will not seek other office space until we pursue a viable business opportunity and recognize income.
ITEM
3. LEGAL PROCEEDINGS.
We
know of no existing or pending legal proceedings against our company, nor are we involved as a plaintiff in any material proceeding
or pending litigation. There are no proceedings in which any of our directors, officers or affiliates, or any registered or beneficial
stockholder, is an adverse party or has a material interest adverse to our interest.
ITEM
4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None.
PART II
ITEM
5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS AND SMALL BUSINESS ISSUER PURCHASES OF EQUITY SECURITIES.
Our common stock is quoted on
the Financial Industry Regulatory Authority’s OTC Bulletin Board under the symbol “SMAK”. The following quotations
obtained from Yahoo! Finance reflect the highs and low bids for our common stock based on inter-dealer prices, without retail mark-up,
mark-down or commission and may not represent actual transactions.
The high
and low bid prices of our common stock for the previous two fiscal years are as follows:
Quarter Ended | |
High | | |
Low | |
June 30, 2015 | |
$ | 0.03 | | |
$ | 0.03 | |
March 31, 2015 | |
$ | 0.07 | | |
$ | 0.07 | |
December 31, 2014 | |
$ | 0.23 | | |
$ | 0.19 | |
September 30, 2014 | |
$ | 0.11 | | |
$ | 0.11 | |
June 30, 2014 | |
$ | 0.10 | | |
$ | 0.08 | |
March 31, 2014 | |
$ | 0.19 | | |
$ | 0.18 | |
December 31, 2013 | |
$ | 0.03 | | |
$ | 0.03 | |
September 30, 2013 | |
$ | 0.09 | | |
$ | 0.09 | |
Transfer Agent
Our transfer agent for our common
stock is Empire Stock Transfer, Inc. They are located at 1859 Whitney Mesa Drive, Henderson NV 89014. Tel: 702 818-5898 Fax: 702
974-1444.
Holders of Common Stock
As of October 13, 2015, we have
662 registered shareholders holding 22,117,776 shares of our common stock.
Dividends
We have not declared any dividends
since incorporation and do not anticipate that we will do so in the foreseeable future. Our directors will determine if and when
dividends should be declared and paid in the future based on our financial position at the relevant time. All shares of our common
stock are entitled to an equal share of any dividends declared and paid.
Recent Sales of Unregistered
Securities; Use of Proceeds from Registered Securities
During the year ended June
30, 2015, the Company sold 3,250,000 shares of its common stock. Total gross proceeds were $195,000. The
foregoing issuances were deemed to be exempt from the registration requirements of the Securities Act of 1933, as amended, by virtue
of Section 4(a) (2) thereof, as a transaction by an issuer not involving a public offering.
ITEM 6. SELECTED FINANCIAL DATA.
As a smaller reporting company, we are not required
to provide the information required by this Item.
ITEM 7. Management's Discussion and Analysis
of Financial Condition and Results of Operations
The following discussion and analysis of financial
condition and results of operations should be read in conjunction with our consolidated financial statements and related notes
included elsewhere in this report. This discussion contains forward-looking statements that involve risks, uncertainties and assumptions.
See “Note Regarding Forward-Looking Statements.” Our actual results could differ materially from those anticipated
in the forward-looking statements as a result of certain factors discussed in “Risk Factors” and elsewhere in this
report.
The following discussion and analysis of the Company’s
financial condition and results of operations is based on the preparation of our financial statements in accordance with U.S. generally
accepted accounting principles. You should read this discussion and analysis together with such financial statements and the
related notes thereto.
Plan of Operation
Subsequent to June 30, 2015, the Company ceased its
operations relating to the manufacturing and sales of sportswear. During the next 12 months, the Company intends to seek, investigate
and, if such investigation warrants, acquire an interest in one or more business opportunities presented to it by persons or firms
who or which desire to seek the perceived advantages of a publicly held corporation. At this time, the Company has no plan, proposal,
agreement, understanding or arrangement to acquire or merge with any specific business or company, and the Company has not identified
any specific business or company for investigation and evaluation. No member of management or promoter of the Company has had any
material discussions with any other company with respect to any acquisition of that company.
The Company will not restrict its search to any specific
business, industry or geographical location, and the Company may participate in a business venture of virtually any kind or nature.
The discussion of the proposed plan of operation under this caption and throughout this Annual Report is purposefully general and
is not meant to be restrictive of the Company's virtually unlimited discretion to search for and enter into potential business
opportunities.
The Company will have to obtain funds in one or more
private placements to finance the operation of any acquired business. Persons purchasing securities in these placements and other
shareholders will likely not have the opportunity to participate in the decision relating to any acquisition. The Company's proposed
business is sometimes referred to as a "blind pool" because any investors will entrust their investment monies to the
Company's management before they have a chance to analyze any ultimate use to which their money may be put. Consequently, the Company's
potential success is heavily dependent on the Company's management, which will have virtually unlimited discretion in searching
for and entering into a business opportunity. None of the officers and directors of the Company has had any experience in the proposed
business of the Company. There can be no assurance that the Company will be able to raise any funds in private placements. In any
private placement, management may purchase shares on the same terms as offered in the private placement.
Management anticipates that it will only participate
in one potential business venture. This lack of diversification should be considered a substantial risk in investing in the Company
because it will not permit the Company to offset potential losses from one venture against gains from another. The Company may
seek a business opportunity with a firm which only recently commenced operations, or a developing company in need of additional
funds for expansion into new products or markets, or seeking to develop a new product or service, or an established business which
may be experiencing financial or operating difficulties and is in the need for additional capital which is perceived to be easier
to raise by a public company. In some instances, a business opportunity may involve the acquisition or merger with a corporation
which does not need substantial additional cash but which desires to establish a public trading market for its common stock. The
Company may purchase assets and establish wholly owned subsidiaries in various business or purchase existing businesses as subsidiaries.
The Company anticipates that the selection of a business
opportunity in which to participate will be complex and extremely risky. Because of general economic conditions, rapid technological
advances being made in some industries, and shortages of available capital, management believes that there are numerous firms seeking
the benefits of a publicly traded corporation. Such perceived benefits of a publicly traded corporation may include facilitating
or improving the terms on which additional equity financing may be sought, providing liquidity for the principals of a business,
creating a means for providing incentive stock options or similar benefits to key employees, providing liquidity (subject
to restrictions of applicable statutes) for all shareholders, and other factors. Potentially available business opportunities may
occur in many different industries and at various stages of development, all of which will make the task of comparative investigation
and analysis of such business opportunities extremely difficult and complex.
As part of any transaction, the acquired company may
require that management or other stockholders of the Company sell all or a portion of their shares to the acquired company, or
to the principals of the acquired company. It is anticipated that the sales price of such shares will be lower than the current
market price or anticipated market price of the Company's Common Stock. The Company's funds are not expected to be used for purposes
of any stock purchase from insiders. The Company shareholders will not be provided the opportunity to approve or consent to such
sale. The opportunity to sell all or a portion of their shares in connection with an acquisition may influence management's decision
to enter into a specific transaction. However, management believes that since the anticipated sales price will be less than market
value, that the potential of a stock sale by management will be a material factor on their decision to enter a specific transaction.
The above description of potential sales of management
stock is not based upon any corporate bylaw, shareholder or board resolution, or contract or agreement. No other payments of cash
or property are expected to be received by management in connection with any acquisition.
The Company has not formulated any policy regarding
the use of consultants or outside advisors, but does not anticipate that it will use the services of such persons.
The Company has, and will continue to have, insufficient
capital with which to provide the owners of business opportunities with any significant cash or other assets. However, management
believes the Company will offer owners of business opportunities the opportunity to acquire a controlling ownership interest in
a public company at substantially less cost than is required to conduct an initial public offering. The owners of the business
opportunities will, however, incur significant post-merger or acquisition registration costs in the event they wish to register
a portion of their shares for subsequent sale. The Company will also incur significant legal and accounting costs in connection
with the acquisition of a business opportunity including the costs of preparing post-effective amendments, Forms 8-K, agreements
and related reports and documents nevertheless, the officers and directors of the Company have not conducted market research and
are not aware of statistical data which would support the perceived benefits of a merger or acquisition transaction for the owners
of a business opportunity.
The Company does not intend to make any loans to any
prospective merger or acquisition candidates or to unaffiliated third parties.
Critical Accounting Policies and Estimates
Management’s
discussion and analysis of our financial condition and results of operations are based on our financial statements, which
have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these
financial statements requires management to make estimates and judgments that affect the reported amounts of assets,
liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an ongoing basis,
management evaluates its estimates, including those related to impairment of long-lived assets, including finite lived
intangible assets, accrued liabilities, fair value of warrant derivatives and certain expenses. We base our estimates on
historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results
of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily
apparent from other sources. Actual results may differ materially from these estimates under different assumptions or
conditions.
Our significant accounting
policies are summarized in Note 2 of our financial statements. We believe the following critical accounting policies affect our
more significant judgments and estimates used in the preparation of our financial statements:
Revenue Recognition
The Company recognizes revenue upon shipment of the
Company’s products to its customers, provided that evidence of an arrangement exists, title and risk of loss have passed
to the customer, fees are fixed or determinable, and collection of the related receivable is reasonably assured. Title to the Company’s
products is transferred to the customer once the product is shipped from the Company’s warehouse. Products are not shipped
until there is a purchase agreement signed by the customer with a specified payment arrangement. The Company’s sales are
primarily customized, made to order apparel, where after a deposit is made there are no refunds after the customer has committed
to the sale through a signed contract. Therefore, the Company has not recorded an allowance for returned products.
Stock-Based Compensation
The Company periodically issues common stock to employees
and non-employees in non-capital raising transactions for services and for financing costs. The Company accounts for stock payments
to employees by measuring the cost of services received in exchange for equity on the grant date fair value of the awards, with
the cost recognized as compensation expense in the Company’s financial statements over the vesting period of the awards.
The Company accounts for stock grants to non-employees in accordance with the authoritative guidance of the Financial Accounting
Standards Board whereas the value of the stock compensation is based upon the measurement date as determined at either a) the date
at which a performance commitment is reached, or b) at the date at which the necessary performance to earn the equity instruments
is complete. Non-employee stock-based compensation charges generally are amortized over the vesting period on a straight-line basis.
In certain circumstances where there are no future performance requirements by the non-employee, grants are immediately vested
and the total stock-based compensation charge is recorded in the period of the measurement date.
Use of Estimates
The preparation of the condensed financial statements
in conformity with accounting principles generally accepted in the U.S requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the financial statement
date, and reported amounts of revenue and expenses during the reporting period. Significant estimates are used in valuing our allowances
for doubtful accounts, inventory valuations and common stock issued for services, among others. Actual results could differ from
these estimates.
Results of Operations for the year ended June
30, 2015 compared to the year ended June 30, 2014
Revenue and Cost of Goods Sold
Revenue for the years ended June 30, 2015 and 2014
was $547,905 and $1,084,206, respectively. The decrease of $536,300 was primarily due to significant management changes made in
2015 and the lack of cash to fund sufficient sales and marketing operations.
Cost of sales for the years ended June 30, 2015 and
2014, was $330,832 and $984,648, respectively. Gross profit for the years ended June 30, 2015 and 2014 was $217,073 and $99,558,
respectively. The gross profit increase of $117,515 for the year ended June 30, 2015 was due to the write down of fabric and prior
year inventory items during the third and fourth quarters of fiscal 2014, which amounted to approximately $331,000. The total write
down of fabric was approximately $115,000 and the total amount of finished products was approximately $216,000.
Selling, General and Administrative Expenses
Selling, general and administrative (“SG&A”)
expenses decreased by $340,111 to $777,332 for the year ended June 30, 2015, compared to $1,117,443 for the year ended June 30,
2014. The decrease in SG&A expenses was due primarily to a decrease in stock issued for services to officers and former officers
of $245,738 and bad debt expense of $41,278.
Other Income and Expense
During the year ended June 30, 2015, the Company had
interest expense of $29,962 relating to its notes payable. The Company also received $84,827 of accounts payable settlement income
(see Note 9). The interest expense in 2014 also related to the two promissory notes, but also related to the amortization of the
debt discount on a convertible note payable. Also during the year ended June 30, 2014, the Company incurred other expenses of $13,500
relating to the loss on conversion of accounts payable to common stock, financing costs of $22,642 and a loss of $66,667 on the
conversion of debt to common stock.
Net Loss
Our net loss decreased by $741,094 to $505,394 for
the year ended June 30, 2015, compared to a net loss of $1,246,488 for the year ended June 30, 2014. The decrease in net loss was
due to the decrease in operating expenses of $340,111, the net decrease in other income (expense) of $283,468 and the increase
in gross profit of $117,515.
Liquidity and Capital Resources
Comparison of years ended June 30, 2015 and
2014
As of June 30, 2015, we had no cash, negative working
capital of $900,489 and an accumulated deficit of $2,381,624.
As of June 30, 2014, we had $824 in cash, negative
working capital of $600,326 and an accumulated deficit of $1,876,230.
Cash flows used in operating activities
During the year ended
June 30, 2015, the Company used cash flows in operating activities of $212,024 compared to $191,447 used in the year ended
June 30, 2014. The reasons for the increase in cash used in operating activities in the amount of $20,577 was primarily due
to the decrease in non-cash items, which totaled to $902,450 in 2014 compared to $77,638 in 2015, offset by the decrease in
net loss in 2015 compared to 2014 of $716,094.
Cash flows provided
by financing activities
Cash flows from financing activities for the years
ended June 30, 2015 and 2014 provided net cash of $211,200 and $189,857, respectively, primarily relating to proceeds from the
notes payable. In 2015, the Company also raised $195,000 from the sale of its common stock, while also repaying $3,800 of its notes
payable. In 2014, the Company repaid $148,143 of its notes payable.
Going Concern
The accompanying consolidated condensed financial statements
have been prepared on a going concern basis of accounting, which contemplates continuity of operations, realization of assets and
liabilities and commitments in the normal course of business. The accompanying consolidated financial statements do not reflect
any adjustments that might result if the Company is unable to continue as a going concern. During the year ended June 30, 2015,
the Company incurred a net loss of $505,394 and cash used in operating activities was $212,024, and as of that date, is delinquent
in payments of $271,398 for payroll and sales taxes. As of June 30, 2015, the Company had a working capital deficiency of $900,489
and a shareholders’ deficit of $1,050,489. Furthermore, on July 27, 2015, the Company sold substantially all of its assets
and business operations to a former officer. As a result, the Company’s operations since that date have ceased. These factors,
among others, raise substantial doubt about the Company’s ability to continue as a going concern.
The ability of the Company to continue as a going concern
and appropriateness of using the going concern basis is dependent upon, among other things, an additional cash infusion and an
identification of new business opportunities. Subsequent to June 30, 2015, the Company raised $47,500 from an investor to pay past
obligations and to allow the Company to continue operating in its shell status. Management believes this funding and future funding
will provide the additional cash needed to meet the Company’s obligations as they become due, and will allow it to continue
looking for opportunities to acquire operating companies or merge with other operational entities. No assurance can be given that
any future financing will be available or, if available, that it will be on terms that are satisfactory to the Company. Even if
the Company is able to obtain additional financing, it may contain undue restrictions on our operations, in the case of debt financing,
or cause substantial dilution for our stock holders, in case of equity financing.
New Accounting Standards
In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting
Standards Update No. 2014-09 (ASU 2014-09), Revenue from Contracts with Customers. ASU 2014-09 will eliminate transaction- and
industry-specific revenue recognition guidance under current U.S. GAAP and replace it with a principle based approach for determining
revenue recognition. ASU 2014-09 will require that companies recognize revenue based on the value of transferred goods or services
as they occur in the contract. The ASU also will require additional disclosure about the nature, amount, timing and uncertainty
of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets
recognized from costs incurred to obtain or fulfill a contract. ASU 2014-09 is effective for reporting periods beginning after
December 15, 2017. Entities can transition to the standard either retrospectively or as a cumulative-effect adjustment as of the
date of adoption. Management is currently assessing the impact the adoption of ASU 2014-09 and has not determined the effect of
the standard on our ongoing financial reporting.
In August 2014, the FASB issued Accounting Standards Update No. 2014-15
(ASU 2014-15), Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern, which provides guidance
on determining when and how to disclose going-concern uncertainties in the financial statements. The new standard requires management
to perform interim and annual assessments of an entity’s ability to continue as a going concern within one year of the date
the financial statements are issued. An entity must provide certain disclosures if conditions or events raise substantial doubt
about the entity’s ability to continue as a going concern. The ASU applies to all entities and is effective for annual periods
ending after December 15, 2016, and interim periods thereafter, with early adoption permitted. The adoption of this ASU is not
expected to have a material impact on the Company’s consolidated results of operations, financial condition or liquidity.
In November 2014, the FASB issued Accounting Standards Update No. 2014-16
(ASU 2014-16), Determining Whether the Host Contract in a Hybrid Financial Instrument Issued in the Form of a Share Is More Akin
to Debt or to Equity. The amendments in this ASU do not change the current criteria in U.S. GAAP for determining when separation
of certain embedded derivative features in a hybrid financial instrument is required. The amendments clarify that an entity should
consider all relevant terms and features, including the embedded derivative feature being evaluated for bifurcation, in evaluating
the nature of the host contract. The ASU applies to all entities that are issuers of, or investors in, hybrid financial instruments
that are issued in the form of a share and is effective for public business entities for fiscal years, and interim periods within
those fiscal years, beginning after December 15, 2015. Early adoption is permitted. The adoption of this ASU is not expected to
have a material impact on the Company’s consolidated results of operations, financial condition or liquidity.
In January 2015, the FASB issued ASU No. 2015-01, which eliminates the concept
of extraordinary items for financial statement presentation purposes. This ASU is effective for fiscal years beginning after December
15, 2015. The adoption of this ASU is not expected to have a material impact on the Company’s consolidated results of operations,
financial condition or liquidity.
Other recent accounting pronouncements issued by the FASB, including its
Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the Securities and Exchange Commission
did not or are not believed by management to have a material impact on the Company’s present or future consolidated financial
statements.
Off-Balance Sheet Arrangements
We do not have any 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 or operations, liquidity, capital expenditures or capital resources that is material to investors.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We are a smaller reporting company as defined by Rule 12b-2 of the Exchange
Act and are not required to provide the information under this item.
ITEM 8.
FINANCIAL STATEMENTS AND SUPPLEMENTAL DATA
|
|
Page
|
PART
I - FINANCIAL INFORMATION |
|
|
|
|
|
Report
of Independent Registered Public Accounting Firm |
|
F-1
|
Consolidated
Balance Sheets as of June 30, 2015 and 2014 |
|
F-2 |
Consolidated
Statements of Operations for the Years Ended June 30, 2015 and 2014 |
|
F-3 |
Consolidated
Statements of Shareholders’ Deficit for the Years Ended June 30, 2015 and 2014 |
|
F-4 |
Consolidated
Statements of Cash Flows for the Years Ended June 30, 2015 and 2014 |
|
F-5 |
Notes
to Consolidated Financial Statements |
|
F-6
to F-17 |
REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To
the Board of Directors and Stockholders
Smack
Sportswear
We
have audited the accompanying consolidated balance sheets of Smack Sportswear, Inc. and Subsidiary (the “Company”)
as of June 30, 2015 and 2014 and the related consolidated statements of operations, stockholders’ deficit and cash flows
for the years then ended. The Company’s management is responsible for these consolidated financial statements. Our responsibility
is to express an opinion on these consolidated financial statements based on our audits.
We
conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those
standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial
statements are free of material misstatement. The company is not required to have, nor were we engaged to perform, an audit of
its internal control over financial reporting. Our audits included consideration of internal control over financial reporting
as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the company’s internal control over financial reporting. Accordingly, we express no such
opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In
our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated
financial position of the Company as of June 30, 2015 and 2014 and the consolidated results of their operations and cash flows
for the years then ended in conformity with accounting principles generally accepted in the United States of America.
The
accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern.
As discussed in Note 1 to the financial statements, the Company has a shareholders’ deficiency and has experienced recurring
operating losses and negative operating cash flows since inception. In addition, as discussed in Note 9, on July 27, 2015, the
Company sold substantially all of its assets and business operations to a former officer. As a result, the Company’s operations
since that date have ceased. These conditions raise substantial doubt about the Company’s ability to continue as a going
concern. Management’s plans in regard to these matters are also described in Note 1 to the consolidated financial statements.
The accompanying consolidated financial statements do not include any adjustments to reflect the possible future effects on the
recoverability and classification of assets or the amounts and classifications of liabilities that might result from the outcome
of this uncertainty.
/s/
Weinberg and Company, P.A
Los
Angeles, California
October
13, 2015
Smack Sportswear, Inc. |
Consolidated Balance Sheets |
| |
June 30, | | |
June 30, | |
| |
2015 | | |
2014 | |
ASSETS | |
| | |
| |
CURRENT ASSETS | |
| | |
| |
Cash | |
$ | - | | |
$ | 824 | |
Accounts receivable, net of allowance of $63,953 at June 30, 2014 | |
| - | | |
| 31,078 | |
Inventories | |
| - | | |
| 25,072 | |
Total current assets | |
| - | | |
| 56,974 | |
| |
| | | |
| | |
Other assets | |
| - | | |
| 8,000 | |
TOTAL ASSETS | |
$ | - | | |
$ | 64,974 | |
| |
| | | |
| | |
LIABILITIES AND SHAREHOLDERS' DEFICIT | |
| | | |
| | |
CURRENT LIABILITIES | |
| | | |
| | |
Accounts payable and accrued expenses | |
$ | 220,790 | | |
$ | 216,628 | |
Payroll and sales taxes payable | |
| 271,398 | | |
| 270,664 | |
Customer deposits | |
| 8,500 | | |
| - | |
Due to former officer | |
| 132,900 | | |
| 121,000 | |
Amounts due to related parties | |
| 113,000 | | |
| 25,700 | |
Notes payable - related parties | |
| 153,901 | | |
| 23,308 | |
Total current liabilities | |
| 900,489 | | |
| 657,300 | |
| |
| | | |
| | |
Notes payable - related parties | |
| 150,000 | | |
| 280,000 | |
Total liabilities | |
| 1,050,489 | | |
| 937,300 | |
| |
| | | |
| | |
SHAREHOLDERS' DEFICIT | |
| | | |
| | |
Preferred stock, no par value, 5,000,000 shares authorized; | |
| | | |
| | |
Series A Voting Preferred stock, 2,000,000 shares authorized; | |
| | | |
| | |
No shares issued and outstanding | |
| - | | |
| - | |
Common stock, $0.001 par value, 70,000,000 shares authorized; | |
| | | |
| | |
22,117,776 and 18,626,110 shares issued and outstanding, respectively | |
| 66,353 | | |
| 55,878 | |
Additional paid-in capital | |
| 1,264,782 | | |
| 948,026 | |
Accumulated deficit | |
| (2,381,624 | ) | |
| (1,876,230 | ) |
Total shareholders' deficit | |
| (1,050,489 | ) | |
| (872,326 | ) |
| |
| | | |
| | |
TOTAL LIABILITIES AND SHAREHOLDERS' DEFICIT | |
$ | - | | |
$ | 64,974 | |
The accompanying notes are an integral part of these consolidated financial statements. |
Smack Sportswear, Inc. |
Consolidated Statements of Operations |
| |
Years Ended | |
| |
June 30 | |
| |
2015 | | |
2014 | |
Sales: | |
| |
Related party | |
$ | 274,808 | | |
$ | - | |
Trade | |
| 273,097 | | |
| 1,084,206 | |
Total sales | |
| 547,905 | | |
| 1,084,206 | |
| |
| | | |
| | |
Cost of goods sold | |
| 330,832 | | |
| 984,648 | |
| |
| | | |
| | |
Gross profit | |
| 217,073 | | |
| 99,558 | |
| |
| | | |
| | |
Selling, general and administrative expenses | |
| 777,332 | | |
| 1,117,443 | |
| |
| | | |
| | |
Loss from operations | |
| (560,259 | ) | |
| (1,017,885 | ) |
| |
| | | |
| | |
Other income (expense) | |
| | | |
| | |
Settlement of liabilities | |
| 84,827 | | |
| - | |
Interest expense | |
| (29,962 | ) | |
| (125,794 | ) |
Loss on conversion of accounts payable | |
| - | | |
| (13,500 | ) |
Financing costs | |
| - | | |
| (22,642 | ) |
Loss on note conversion | |
| - | | |
| (66,667 | ) |
| |
| 54,865 | | |
| (228,603 | ) |
| |
| | | |
| | |
NET LOSS | |
$ | (505,394 | ) | |
$ | (1,246,488 | ) |
| |
| | | |
| | |
BASIC AND DILUTED LOSS PER SHARE | |
| (0.02 | ) | |
| (0.07 | ) |
| |
| | | |
| | |
WEIGHTED-AVERAGE COMMON SHARES OUTSTANDING | |
| | | |
| | |
BASIC AND DILUTED | |
| 20,853,507 | | |
| 17,974,185 | |
The accompanying notes are an integral part of these consolidated financial statements.
Smack Sportswear, Inc. |
Consolidated Statements of Shareholders' Deficit |
Years Ended June 30, 2015 and 2014 |
| |
Preferred Stock | | |
Common Stock | | |
Treasury Stock | | |
Additional
Paid-in | | |
Accumulated | | |
| |
| |
Shares | | |
Amount | | |
Shares | | |
Amount | | |
Receivable | | |
Capital | | |
Deficit | | |
Total | |
| |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| |
Balance, June 30, 2013 | |
| 1,000,000 | | |
$ | 1,000 | | |
| 13,333,333 | | |
$ | 37,500 | | |
$ | 2,500 | | |
$ | 331,657 | | |
$ | (629,742 | ) | |
$ | (257,085 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Fair value of common stock issued for services | |
| - | | |
| - | | |
| 98,333 | | |
| 295 | | |
| - | | |
| 83,405 | | |
| - | | |
| 83,700 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Fair value of common stock issued upon conversion of debt | |
| - | | |
| - | | |
| 4,444,444 | | |
| 13,333 | | |
| - | | |
| 253,334 | | |
| - | | |
| 266,667 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Fair value of common stock issued to former officers | |
| - | | |
| - | | |
| 600,000 | | |
| 1,800 | | |
| - | | |
| 198,200 | | |
| - | | |
| 200,000 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Fair value of common stock issued upon conversion of
accounts payable | |
| - | | |
| - | | |
| 150,000 | | |
| 450 | | |
| - | | |
| 22,050 | | |
| - | | |
| 22,500 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Beneficial conversion feature on issuance of note
payable | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| 38,380 | | |
| - | | |
| 38,380 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Fair value of common stock given to a Director by a former
officer | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| 20,000 | | |
| - | | |
| 20,000 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Recission of preferred stock agreement | |
| (1,000,000 | ) | |
| (1,000 | ) | |
| - | | |
| 2,500 | | |
| (2,500 | ) | |
| 1,000 | | |
| - | | |
| - | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Net loss for the year ended June 30, 2014 | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| (1,246,488 | ) | |
| (1,246,488 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Balance, June 30, 2014 | |
| - | | |
| - | | |
| 18,626,110 | | |
| 55,878 | | |
| - | | |
| 948,026 | | |
| (1,876,230 | ) | |
| (872,326 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Common stock issued for cash | |
| - | | |
| - | | |
| 3,250,000 | | |
| 9,750 | | |
| - | | |
| 185,250 | | |
| - | | |
| 195,000 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Fair value of common stock issued for services | |
| - | | |
| - | | |
| 366,666 | | |
| 1,100 | | |
| - | | |
| 46,131 | | |
| - | | |
| 47,231 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Fair value of common stock issued upon settlement with
former officer | |
| - | | |
| - | | |
| 208,333 | | |
| 625 | | |
| - | | |
| 49,375 | | |
| - | | |
| 50,000 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Cancellation of common stock | |
| - | | |
| - | | |
| (333,333 | ) | |
| (1,000 | ) | |
| - | | |
| 1,000 | | |
| - | | |
| - | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Additional stock compensation costs | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| 35,000 | | |
| - | | |
| 35,000 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Net loss for the year ended June 30, 2015 | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| (505,394 | ) | |
| (505,394 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Balance, June 30, 2015 | |
| - | | |
$ | - | | |
| 22,117,776 | | |
$ | 66,353 | | |
$ | - | | |
$ | 1,264,782 | | |
$ | (2,381,624 | ) | |
$ | (1,050,489 | ) |
The accompanying
notes are an integral part of these consolidated financial statements.
Smack Sportswear, Inc. |
Consolidated Statements of Cash Flows |
| |
Years Ended | |
| |
June 30 | |
| |
2015 | | |
2014 | |
Cash Flows from Operating Activities | |
| | |
| |
Net loss | |
$ | (505,394 | ) | |
$ | (1,246,488 | ) |
Adjustments to reconcile net loss to net cash used in operating activities | |
| | | |
| | |
Debt discount and beneficial conversion feature recognized as interest expense | |
| - | | |
| 116,071 | |
Loss on note conversion | |
| - | | |
| 66,667 | |
Fair value of common stock given to a Director by former officer | |
| - | | |
| 20,000 | |
Fair value of common stock issued for services | |
| 47,231 | | |
| 83,700 | |
Loss on conversion of accounts payable | |
| - | | |
| 13,500 | |
Fair value of common stock issued for services to former officers | |
| 50,000 | | |
| 200,000 | |
Provision for bad debts | |
| 30,234 | | |
| 71,512 | |
Additional stock compensation costs | |
| 35,000 | | |
| - | |
Accounts payable settlement income | |
| (84,827 | ) | |
| - | |
Write down of excess and obsolete inventories | |
| - | | |
| 331,000 | |
Changes in Assets and Liabilities | |
| | | |
| | |
(Increase) Decrease in: | |
| | | |
| | |
Accounts receivable | |
| 844 | | |
| (51,808 | ) |
Inventories | |
| 25,072 | | |
| 37,764 | |
Other assets | |
| 8,000 | | |
| 2,000 | |
(Decrease) Increase in: | |
| | | |
| | |
Accounts payable and accrued expenses | |
| 73,382 | | |
| 87,160 | |
Payroll and sales taxes payable | |
| 734 | | |
| 24,872 | |
Customer deposits | |
| 8,500 | | |
| (14,034 | ) |
Due to former officer | |
| 11,900 | | |
| 40,937 | |
Amounts due to related parties | |
| 87,300 | | |
| 25,700 | |
Net cash used in operating activities | |
| (212,024 | ) | |
| (191,447 | ) |
| |
| | | |
| | |
Cash Flows from Financing Activities | |
| | | |
| | |
Proceeds from promissory notes payable | |
| 20,000 | | |
| 338,000 | |
Repayment of notes payable | |
| (3,800 | ) | |
| (148,143 | ) |
Common stock issued for cash | |
| 195,000 | | |
| - | |
Net cash provided by financing activities | |
| 211,200 | | |
| 189,857 | |
| |
| | | |
| | |
Net decrease in cash | |
| (824 | ) | |
| (1,590 | ) |
Cash beginning of period | |
| 824 | | |
| 2,414 | |
Cash end of period | |
$ | (0 | ) | |
$ | 824 | |
| |
| | | |
| | |
Supplemental Disclosure of Cash Flow Information | |
| | | |
| | |
Interest paid | |
$ | - | | |
$ | - | |
Taxes paid | |
$ | - | | |
$ | - | |
| |
| | | |
| | |
Supplemental Disclosure of Non-cash Investing and Financing Activities | |
| | | |
| | |
Common stock issued for conversion of notes payable | |
$ | - | | |
$ | 200,000 | |
Beneficial conversion costs on issuance of convertible note payable | |
$ | - | | |
$ | 38,380 | |
Common stock issued for payable due to former officer | |
$ | - | | |
$ | 9,000 | |
Recission of preferred stock and treasury stock receivable | |
$ | - | | |
$ | 28,847 | |
The accompanying
notes are an integral part of these consolidated financial statements.
SMACK
SPORTSWEAR, INC. AND SUBSIDIARY
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
FOR
THE YEARS ENDED JUNE 30, 2015 AND 2014
NOTE 1 - ORGANIZATION,
OPERATIONS AND BASIS OF ACCOUNTING
Nature
of the Business
SMACK
Sportswear (“SMACK”) was originally incorporated in Nevada in October 2007. The Company’s primary business activities
were the manufacturer and sale of performance and lifestyle based indoor and sand volleyball apparel and accessories. As of July
1, 2015, the company has ceased operations and is looking for opportunities to acquire operating companies or merge with other
operational entities.
Going
Concern
The
accompanying consolidated financial statements have been prepared on a going concern basis of accounting, which contemplates continuity
of operations, realization of assets and liabilities and commitments in the normal course of business. The accompanying consolidated
financial statements do not reflect any adjustments that might result if the Company is unable to continue as a going concern.
During the year ended June 30, 2015, the Company incurred a net loss of $505,934 and cash used in operating activities was $212,024,
and as of that date, is delinquent in payments of $271,398 for payroll and sales taxes. As of June 30, 2015, the Company had a
working capital deficiency of $900,489 and a shareholders’ deficit of $1,050,489. Furthermore, on July 27, 2015, the Company
sold substantially all of its assets and business operations to a former officer. As a result, the Company’s operations
since that date have ceased. These factors, among others, raise substantial doubt about the Company’s ability to continue
as a going concern.
The
ability of the Company to continue as a going concern and appropriateness of using the going concern basis is dependent upon,
among other things, an additional cash infusion and an identification of new business opportunities. Subsequent to June 30, 2015,
the Company raised $47,500 from an investor to pay past obligations and to allow the Company to continue operating in its shell
status. Management believes this funding and future funding will provide the additional cash needed to meet the Company’s
obligations as they become due, and will allow it to continue looking for opportunities to acquire operating companies or merge
with other operational entities. No assurance can be given that any future financing will be available or, if available, that
it will be on terms that are satisfactory to the Company. Even if the Company is able to obtain additional financing, it may contain
undue restrictions on our operations, in the case of debt financing, or cause substantial dilution for our stock holders, in case
of equity financing.
NOTE 2 - SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES
This
summary of significant accounting policies of the Company is presented to assist in understanding the Company’s financial
statements. The financial statements and notes are representations of the Company’s management, which is responsible for
their integrity and objectivity. These accounting policies conform to accounting principles generally accepted in the United States
of America and have been consistently applied in the preparation of the financial statements.
Basis
of Consolidation
The
consolidated financial statements include the accounts of the Company and its wholly owned subsidiary, Team Sports Superstore.
All significant intercompany transactions and balances have been eliminated in consolidation.
Stock
Split
On
February 14, 2015, the Company’s shareholders authorized its Board of Directors to effectuate a reverse stock split of the
Company’s issued and outstanding shares of common stock at a ratio of 1-for-3 (the “Reverse Stock Split”), which
was ultimately declared effective by the Board of Directors as of the close of business on April 14, 2015. As a result of the
Reverse Stock Split, every three issued and outstanding shares of the Company’s common stock was changed and converted into
one share of common stock. All share related information presented in these financial statements and accompanying footnotes has
been retroactively adjusted to reflect the reduced number of shares resulting from this action.
SMACK
SPORTSWEAR, INC. AND SUBSIDIARY
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
FOR
THE YEARS ENDED JUNE 30, 2015 AND 2014
NOTE 2 - SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Revenue
Recognition
The
Company recognizes revenue upon shipment of the Company’s products to its customers, provided that evidence of an arrangement
exists, title and risk of loss have passed to the customer, fees are fixed or determinable, and collection of the related receivable
is reasonably assured. Management assesses the business environment, the customer's financial condition, historical collection
experience, accounts receivable aging and customer disputes to whether collectability is reasonably assured. If collectability
is not considered reasonably assured at the time of sales, the Company does not recognize revenue until collection occurs. Title
to the Company’s products is transferred to the customer once the product is shipped from the Company’s warehouse.
Products are not shipped until there is a purchase agreement signed by the customer with a specified payment arrangement. The
Company’s sales are primarily customized, made to order apparel, where after a deposit is made there are no refunds after
the customer has committed to the sale through a signed contract. Therefore, the Company has not recorded an allowance for returned
products.
Loss per Share
Calculations
Basic
earnings per share are computed by dividing income available to common shareholders by the weighted-average number of common shares
available. Diluted earnings per share is computed similar to basic earnings per share except that the denominator is increased
to include the number of additional common shares that would have been outstanding if the potential common shares had been issued
and if the additional common shares were dilutive. The Company’s diluted loss per share is the same as the basic loss per
share for the years ended June 30, 2015 and 2014, as the inclusion of any potential shares would have had an anti-dilutive effect
due to the Company generating a loss.
Concentration
of Sales and Accounts Receivable
For
the year ended June 30, 2015, the Company sold $274,808 of its products to a company owned by the Company’s former Chief
Executive Officer (CEO) and a former member of the Board of Directors (see Note 4). This amount represented approximately 50%
of the Company’s sales during that period. There were no other customers with sales representing more than 10% of the Company’s
total sales during this period or during the year ended June 30, 2014. At June 30, 2015 and 2014, there were no customers with
an accounts receivable balance that represented 10% or more of the Company’s total accounts receivable.
Stock-Based
Compensation
The
Company periodically issues common stock to employees and non-employees in non-capital raising transactions for services and for
financing costs. The Company accounts for stock payments to employees by measuring the cost of services received in exchange for
equity on the grant date fair value of the awards, with the cost recognized as compensation expense in the Company’s financial
statements over the vesting period of the awards. The Company accounts for stock grants to non-employees in accordance with the
authoritative guidance of the Financial Accounting Standards Board whereas the value of the stock compensation is based upon the
measurement date as determined at either a) the date at which a performance commitment is reached, or b) at the date at which
the necessary performance to earn the equity instruments is complete. Non-employee stock-based compensation charges generally
are amortized over the vesting period on a straight-line basis. In certain circumstances where there are no future performance
requirements by the non-employee, grants are immediately vested and the total stock-based compensation charge is recorded in the
period of the measurement date.
SMACK
SPORTSWEAR, INC. AND SUBSIDIARY
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
FOR
THE YEARS ENDED JUNE 30, 2015 AND 2014
NOTE 2 - SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Advertising
Costs
The
Company expenses all advertising costs as incurred. Advertising costs included within selling, general and administrative expenses
were approximately $662 and $31,530 for the years ended June 30, 2015 and 2014, respectively.
Use
of Estimates
The
preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the U.S requires
management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent
assets and liabilities at the financial statement date, and reported amounts of revenue and expenses during the reporting period.
Significant estimates are used in valuing our allowances for doubtful accounts, inventory valuations and common stock issued for
services, among others. Actual results could differ from these estimates.
Allowance
for Doubtful Accounts
The
allowance for doubtful accounts is based on the Company’s assessment of the collectability of customer accounts. The Company
regularly reviews the allowance by considering factors such as historical experience, credit quality, the age of the accounts
receivable balances, economic conditions that may affect a customer’s ability to pay and expected default frequency rates.
Trade receivables are written off at the point when they are considered uncollectible. Bad debt expense was $30,234 and $71,512
for the years ended June 30, 2015 and 2014, respectively. The allowance for doubtful accounts was $63,953 as of June 30, 2014.
There was no allowance for doubtful accounts as of June 30, 2015.
Inventories
Inventories
are stated at the lower of cost or market. Cost is computed on a first-in, first-out basis. As of June 30, 2015, the Company had
either sold or written-off its entire inventory. As of June 30, 2014, the Company’s total inventory balance of $25,072 was
finished goods. The Company provides inventory write-downs based on excess and obsolete inventories determined primarily by future
demand forecasts. The write-down is measured as the difference between the cost of the inventory and market based upon assumptions
about future demand and charged to the provision for inventory, which is a component of cost of sales.
At
the point of the loss recognition, a new, lower cost basis for that inventory is established, and subsequent changes in facts
and circumstances do not result in the restoration or increase in that newly established cost basis. During the years ended June
30, 2015 and 2014, the Company recorded a charge of approximately $18,000 and $331,000, respectively, relating to the mark down
of inventories to net realizable value at June 30, 2015 and 2014. The mark downs related to inventories that management felt had
become obsolete or in excess of future estimated sales of those products over the next year, particularly fabric and prior year
products.
Shipping
and Handling Costs
The
Company’s shipping and handling costs are reported as selling, general and administrative expenses in the consolidated Statements
of Operations. These costs primarily relate to outbound freight. The Company classifies amounts billed to customers for shipping
fees as revenues.
Income Taxes
Income
tax expense is based on pretax financial accounting income. Deferred tax assets and liabilities are recognized for the expected
tax consequences of temporary differences between the tax bases of assets and liabilities and their reported amounts. Valuation
allowances are recorded to reduce deferred tax assets to the amount that will more likely than not be realized.
SMACK
SPORTSWEAR, INC. AND SUBSIDIARY
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
FOR
THE YEARS ENDED JUNE 30, 2015 AND 2014
NOTE 2 - SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Income Taxes
(continued)
The
Company accounts for uncertainty in income taxes using a two-step approach to recognizing and measuring uncertain tax
positions. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence
indicates that it is more likely than not that the position will be sustained on audit, including resolution of related
appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount that is more
than 50 percent likely of being realized upon settlement. The Company classifies the liability for unrecognized tax benefits
as current to the extent that the Company anticipates payment (or receipt) of cash within one year. Interest and penalties
related to uncertain tax positions are recognized in the provision for income taxes.
Customer Deposits
In many of its
customer agreements, the Company requires its customers pay a 50 percent deposit upon signing the agreement. At June 30, 2015,
there was $8,500 in outstanding customer deposits. There were no customer deposits at June 30, 2014.
Fair Value
of Financial Instruments
Fair
value is defined as the price that would be received upon sale of an asset or paid upon transfer of a liability in an orderly
transaction between market participants at the measurement date and in the principal or most advantageous market for that asset
or liability. The fair value should be calculated based on assumptions that market participants would use in pricing the asset
or liability, not on assumptions specific to the entity. In addition, the fair value of liabilities should include consideration
of non-performance risk including our own credit risk.
In
addition to defining fair value, the standard expands the disclosure requirements around fair value and establishes a fair value
hierarchy for valuation inputs. The hierarchy prioritizes the inputs into three levels based on the extent to which inputs used
in measuring fair value are observable in the market. Each fair value measurement is reported in one of the three levels which
are determined by the lowest level input that is significant to the fair value measurement in its entirety. These levels are:
Level 1 –
inputs are based upon unadjusted quoted prices for identical instruments traded in active markets.
Level
2 – inputs are based upon significant observable inputs other than quoted prices included in Level 1, such as quoted prices
for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant
assumptions are observable in the market or can be corroborated by observable market data for substantially the full term of the
assets or liabilities.
Level
3 – inputs are generally unobservable and typically reflect management’s estimates of assumptions that market participants
would use in pricing the asset or liability. The fair values are therefore determined using model-based techniques that include
option pricing models, discounted cash flow models, and similar techniques.
As
of June 30, 2015, the balances reported for cash, accounts receivable, accounts payable and accrued expenses approximate
their fair value because of their short maturities. Certain accounts and note payable are at agreed values. Debt balances are
stated at historical amounts less principal payments, which approximate fair market value. The Company believes interest
rates in its debt agreements are commensurate with lender risk profiles for similar companies.
SMACK
SPORTSWEAR, INC. AND SUBSIDIARY
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
FOR
THE YEARS ENDED JUNE 30, 2015 AND 2014
NOTE 2 - SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Recently Issued
Accounting Pronouncements
In
May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update No. 2014-09 (ASU 2014-09), Revenue
from Contracts with Customers. ASU 2014-09 will eliminate transaction- and industry-specific revenue recognition guidance under
current U.S. GAAP and replace it with a principle based approach for determining revenue recognition. ASU 2014-09 will require
that companies recognize revenue based on the value of transferred goods or services as they occur in the contract. The ASU also
will require additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer
contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill
a contract. ASU 2014-09 is effective for reporting periods beginning after December 15, 2017. Entities can transition to the standard
either retrospectively or as a cumulative-effect adjustment as of the date of adoption. Management is currently assessing the
impact the adoption of ASU 2014-09 and has not determined the effect of the standard on our ongoing financial reporting.
In
August 2014, the FASB issued Accounting Standards Update No. 2014-15 (ASU 2014-15), Disclosure of Uncertainties about an Entity’s
Ability to Continue as a Going Concern, which provides guidance on determining when and how to disclose going-concern uncertainties
in the financial statements. The new standard requires management to perform interim and annual assessments of an entity’s
ability to continue as a going concern within one year of the date the financial statements are issued. An entity must provide
certain disclosures if conditions or events raise substantial doubt about the entity’s ability to continue as a going concern.
The ASU applies to all entities and is effective for annual periods ending after December 15, 2016, and interim periods thereafter,
with early adoption permitted. The adoption of this ASU is not expected to have a material impact on the Company’s consolidated
results of operations, financial condition or liquidity.
In
November 2014, the FASB issued Accounting Standards Update No. 2014-16 (ASU 2014-16), Determining Whether the Host Contract in
a Hybrid Financial Instrument Issued in the Form of a Share Is More Akin to Debt or to Equity. The amendments in this ASU do not
change the current criteria in U.S. GAAP for determining when separation of certain embedded derivative features in a hybrid financial
instrument is required. The amendments clarify that an entity should consider all relevant terms and features, including the embedded
derivative feature being evaluated for bifurcation, in evaluating the nature of the host contract. The ASU applies to all entities
that are issuers of, or investors in, hybrid financial instruments that are issued in the form of a share and is effective for
public business entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. Early
adoption is permitted. The adoption of this ASU is not expected to have a material impact on the Company’s consolidated
results of operations, financial condition or liquidity.
In
January 2015, the FASB issued ASU No. 2015-01, which eliminates the concept of extraordinary items for financial statement presentation
purposes. This ASU is effective for fiscal years beginning after December 15, 2015. The adoption of this ASU is not expected to
have a material impact on the Company’s consolidated results of operations, financial condition or liquidity.
Other
recent accounting pronouncements issued by the FASB, including its Emerging Issues Task Force, the American Institute of Certified
Public Accountants, and the Securities and Exchange Commission did not or are not believed by management to have a material impact
on the Company’s present or future consolidated financial statements.
SMACK
SPORTSWEAR, INC. AND SUBSIDIARY
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
FOR
THE YEARS ENDED JUNE 30, 2015 AND 2014
NOTE 3 - NOTES
PAYABLE - RELATED PARTIES
Notes payable
and other debt to related parties consist of the following as of June 30, 2015 and 2014:
| |
June
30,
2015 | | |
June
30,
2014 | |
| |
| | |
| |
Loan
payable – related party (a) | |
$ | 3,901 | | |
$ | 19,508 | |
Note
payable (b) | |
| - | | |
| 3,800 | |
Unsecured
promissory note (c) | |
| 150,000 | | |
| 130,000 | |
Unsecured
promissory note (d) | |
| 150,000 | | |
| 150,000 | |
| |
| | | |
| | |
TOTAL | |
| 303,901 | | |
| 303,308 | |
| |
| | | |
| | |
Less:
Current portion | |
| (153,901 | ) | |
| (23,308 | ) |
| |
| | | |
| | |
LONG-TERM
PORTION | |
$ | 150,000 | | |
$ | 280,000 | |
| a. | As
of June 30, 2014, the Company had a loan payable due to a family member of the former
CEO in the amount of $19,508. The loan is unsecured, non-interest bearing and due upon
demand. As of June 30, 2015, the balance of the loan was $19,508. In August 2015, the
Company negotiated a settlement and release agreement with the individual in which the
principal amount was reduced to $3,901 and a gain on settlement of $15,607 was recorded
(see Note 9). In September 2015, the $3,901 balance was repaid and no amount was owed
under the agreement as of that date. |
| b. | As
of June 30, 2013, the Company had received advances from the former CFO in the amount
of $14,000. In February 2014, the advance amount, plus one time interest of $5,000, was
converted into a short-term note payable. The note calls for the Company to make five
$3,800 payments beginning in March 2014 and ending in July 2014. At June 30, 2014, the
outstanding balance of the short-term note was $3,800. At June 30, 2015, no amounts were
outstanding under the short-term note. |
| c. | In
February 2014, the Company entered into an unsecured promissory note agreement with a
shareholder. The agreement allows for the Company to borrow up to $150,000 at an interest
rate of 10 percent per year, of which $80,000 was advanced at closing. During the year
ended June 30, 2014, the Company borrowed an additional $50,000 on the note. As of June
30, 2014, the outstanding balance of the note was $130,000. During the year ended June
30, 2015, the Company borrowed an additional $20,000 on the note. As of June 30, 2015,
the outstanding balance of the note was $150,000. The outstanding principal amount and
all accrued and unpaid interest is due by December 2016. |
| d. | In
February 2014, the Company entered into an unsecured promissory note agreement with a
shareholder. The agreement allows for the Company to borrow up to $150,000 at an interest
rate of 10 percent per year. During the year ended June 30, 2014, the Company borrowed
$150,000 on the note which was outstanding as of June 30, 2015 and 2014. The outstanding
principal amount and all accrued and unpaid interest is due by January 2016. |
For
the years ended June 30, 2015 and 2014, the Company incurred $29,962 and $9,722, respectively, of interest expense relating to
the unsecured promissory notes. The total amount of accrued interest payable relating to those notes at June 30, 2015 and 2014
was $39,684 and $9,722, respectively, and is included in accounts payable and accrued expenses.
SMACK
SPORTSWEAR, INC. AND SUBSIDIARY
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
FOR
THE YEARS ENDED JUNE 30, 2015 AND 2014
NOTE 4 –
DUE TO FORMER OFFICER
Release
Agreement with Former CEO
In
September 2014 (the Effective Date), the Company entered into a mutual release agreement with its former CEO under which the CEO
agreed to resign his position and the Company agreed to pay the former officer $3,000 per month commencing as of the Effective
Date and ended on February 28, 2015. The Parties agreed that the Company’s accrued and unpaid salary obligation owed to
the former officer as of the Effective Date was $130,000 and is net of any and all other offsetting obligations owed by the former
officer to the Company. Fifty percent of the accrued salary ($65,000) will be converted into the Company’s common stock
at any time from the effective date. The conversion price shall be the lower of $0.06 or the same conversion price as the current
note holders (see Note 3). In the event that the former CEO is not able to exercise the above accrued salary conversation rights
by December 31, 2014, the amount of any such accrued salary obligation will be paid in cash in full by no later than January 15,
2016.
The
remaining fifty percent of the accrued salary obligation ($65,000) will be paid by the Company through cash payment(s) to be made
at the earlier of (i) the date of the Company’s closing of the next round of financing (debt or equity) of at least $400,000,
in which case the entire then-remaining unpaid portion of $65,000 shall be repaid, or (ii) in the event that the financing does
not occur by February 28, 2015 and to the extent that the financing has not occurred subsequent to that date, through payments
of $3,000 per month commencing on March 1, 2015 and continuing on a monthly basis thereafter until repayment is completed.
In
exchange for the mutual release agreement, the Company is required to pay the former CEO $3,000 a month commencing on the effective
date and ending on February 28, 2015.
Any
and all obligations not paid by the Company per the agreement (and exclusive of the accrued salary obligation), as well as loans
by the former CEO to the Company, which total $21,000 as of the Effective Date, shall be repaid by the Company by January 31,
2015 or earlier based on the occurrence of certain events.
As
of June 30, 2014, the Company owed $121,000 to the former officer under the mutual release agreement. During the year ended June
30, 2015, the Company accrued an additional $11,900 under the former CEO’s mutual release agreement. As of June 30, 2015,
a total of $132,900 was owed under the agreement and is reflected as Amounts Due to Former Officer on the accompanying June 30,
2015 consolidated Balance Sheet.
Concurrently
to the mutual release agreement, the former officer entered into an independent sales agent/team dealer agreement with
the Company to sell the Company’s products. During the year ended June 30, 2015, the Company sold $274,808 of product
to the former CEO’s new company. The independent sales agent/team dealer agreement was terminated in April
2015.
Asset
Purchase and Mutual Release Agreements with Former CEO
In
July 2015, the Company entered into an Asset Purchase agreement with the former CEO (see Note 9). Under the agreement, the Company
completed the disposition of certain assets of the Company to the former CEO. The purchase price of the assets sold was $132,900,
which was paid by the cancellation of indebtedness owed by the Company to the former CEO. The Company and the former CEO also
entered into mutual release agreements that released each party from any and all claims, liabilities and indebtedness owed to
the other. As of that date, the former CEO also resigned as a Director of the Company.
SMACK
SPORTSWEAR, INC. AND SUBSIDIARY
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
FOR
THE YEARS ENDED JUNE 30, 2015 AND 2014
NOTE 5 –
AMOUNTS DUE TO RELATED PARTIES
As
of June 30, 2014, the Company owed $2,200 to an officer for loans to the Company. During the year ended June 30, 2015, the Company
fully paid the balance owed to the officer for the personal loans. As of June 30, 2015 and 2014, the Company owed the officer
$88,000 and $23,500, respectively, relating to unpaid compensation and this amount is reflected in Amounts Due to Related Parties
on the accompanying June 30, 2015 and 2014 consolidated Balance Sheets.
During
the year ended June 30, 2015, the Company also accrued $25,000 of compensation to a former officer and Director. This amount is
reflected in Amounts Due to Related Parties on the accompanying June 30, 2015 consolidated Balance Sheet.
NOTE 6 - CAPITAL
STOCK
Common Stock
Issued to Former Officers
In
December 2012, the Company entered into an employment agreement with an officer with a term of three years. Under the agreement,
the officer was entitled to receive up to 1,000,000 shares of the Company’s common stock, subject to vesting at rate of
166,667 shares on a semi-annual basis, commencing June 30, 2013. The officer resigned in March 2014. During the year ended June
30, 2014, the Company issued 333,333 shares of common stock to the former officer valued at $160,000. The remaining 666,667 shares
of common stock were forfeited upon resignation of the Officer. The Company also accrued a total of $18,000 as part of the former
officer’s termination agreement, which is included in accounts payable and accrued expenses in the accompanying consolidated
balance sheet as of June 30, 2014.
During
the year ended June 30, 2014, the Company issued 266,667 shares of common stock to a former officer for services valued at $40,000.
The shares issued were valued at the trading price at the date of the agreement.
On
December 29, 2014, the Company entered into a settlement and mutual release agreement (the “Agreement”) with its
former CFO to settle the claims filed by the former CFO. Under the agreement, among others, the Company issued a total of
208,333 shares common stock valued at $50,000. The Agreement also required the former CFO to return for cancellation the
333,333 shares of common stock previously issued to the former CFO. Accordingly, the Company recorded an adjustment to reduce
its common stock outstanding as of June 30, 2015.
Common Stock
Issued for Services
During
the year ended June 30, 2014, the Company issued 40,000 shares of common stock valued at $73,200 to its legal counsel for services
provided to the Company.
In
April 2014, the Company entered into an agreement with its Chief Financial Officer under which the officer could earn up to 166,667
shares of the Company’s common stock upon reaching certain milestones, specific to the completion of the Company’s
quarterly SEC filings. The officer can also earn 16,667 shares per quarter upon reaching certain milestones, also specific to
the timely filing of the Company’s quarterly SEC filings. During the year ended June 30, 2014, the officer met the milestones
and earned a total of 58,333 shares, which were valued at $10,500 and are included in the accompanying consolidated statement
of operations for the year ended June 30, 2014. During the year ended June 30, 2015, the Company issued 233,333 shares of its
common stock to its Chief Financial Officer (CFO) under the terms of his service agreement valued at $37,500.
SMACK
SPORTSWEAR, INC. AND SUBSIDIARY
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
FOR
THE YEARS ENDED JUNE 30, 2015 AND 2014
NOTE 6 - CAPITAL
STOCK (continued)
Common Stock
Issued for Services (continued)
On
July 21, 2014, the Company entered into a service agreement with Mr. Christopher Jenks to serve as a member of the Board of
Directors for one year. As compensation, Mr. Jenks was to receive up to 250,000 shares of its common stock valued at $15,000.
The stock vests 66,667 shares on December 1, 2014; 66,667 shares on March 1, 2015; and 116,666 shares on August 15, 2015. Mr.
Jenks was subsequently appointed as the Company’s Chief Executive Officer (CEO) until February 13, 2015, when he
resigned. During the year ended June 30, 2015, 133,333 shares valued at $9,731 vested and were issued to Mr. Jenks for his
services. In June 2015, Mr. Jenks resigned as a Director of the Company. As of June 30, 2015, no amount of the award remained
unvested.
Sale
of Common Stock
During
the year ended June 30, 2015, the Company sold 3,250,000 shares of its common stock at the price of $0.06 per share through a
private placement memorandum. Gross proceeds from the issuance were $195,000. In connection with the financing, 833,333 shares
were sold to the Company’s former Chief Executive Officer (CEO) for cash at $0.06 per share. The market value of the stock
at issuance was $0.09 per share.
The difference in price of $25,000 between the market value of the stock and the cash value was recorded as additional compensation
to the CEO during the year ended June 30, 2015.
Other
Issuances
During
the year ended June 30, 2014, the Company issued 150,000 shares to a former officer valued at $22,500 upon conversion of $9,000
accounts payable owed to the officer. The shares issued were valued at the trading price at the conversion date. As a result,
the Company recorded a loss on conversion of accounts payable of $13,500 which has been included in the accompanying consolidated
statement of operations for the year ended June 30, 2014.
During
the year ended June 30, 2014, the Company issued 4,444,444 shares of common stock, with market value of $266,667 (or at $0.02
per share), for the settlement of convertible notes payable in the aggregate principal amount of $200,000. As a result, the Company
recorded a loss of $66,667 which has been reflected on the accompanying consolidated statement of operations for the year ended
June 30, 2014.
Effective
July 2013, the Company entered into a convertible note payable agreement in the principal amount of $53,000. The note had an interest
rate of 8 percent and was due on March 19, 2014. Per the agreement, if the note was not repaid by March 19, 2014, the note would
convert into shares of the Company’s common stock at a conversion rate of 58 percent of the market price of the average
of the three lowest closing prices of the common stock for the ten trading days prior to the date of conversion. As the conversion
price of the note was less than the market price of the Company’s common stock at the date of issuance, the Company determined
that the note contained a beneficial conversion feature of $ $38,380, which was reflected as additional paid-in capital. The note’s
beneficial conversion feature was considered as debt discount and was being amortized over the life of the note. In February 2014,
the note was paid off and all remaining unamortized note discount was recorded as interest expense.
SMACK
SPORTSWEAR, INC. AND SUBSIDIARY
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
FOR
THE YEARS ENDED JUNE 30, 2015 AND 2014
NOTE 6 - CAPITAL
STOCK (continued)
Other Issuances
(continued)
In
February 2014, the Company entered into an agreement with its former President and former Director under which the Company
agreed to pay him a monthly salary of $7,500. As part of the agreement, the Company’s former CEO agreed to issue the
President 166,667 shares of common stock from his personal holdings upon signing of the agreement. The fair value of those
shares at the date of grant was $20,000 which the Company accounted for as additional compensation expense and as additional
paid in capital contributed by the former CEO in the financial statements for the year ended June 30, 2014. The former CEO
also agreed to issue the President an additional 166,667 shares of common stock when corporate mission statement and standard
operating procedures are developed and implemented within 180 days from February 2014. The President developed and
implemented the mission statements and standard operating procedures timely. As a result, the former CEO issued 166,667
shares to the President from his personal holdings. The fair value of those shares at grant date was $10,000 which the
Company accounted for as additional compensation expense and as additional paid in capital contributed by the former CEO in
the accompanying consolidated financial statements for the year ended June 30, 2015.
Preferred
Stock
The
Company has two series of preferred stock. The Series A Voting preferred stock consists of 2,000,000 authorized shares, par value
$0.001. The holders of the Series A Voting preferred stock are not entitled to receive any dividends and do not have any liquidation
rights. The holders of Series A Voting preferred stock shall be entitled to (a) notice of any meeting of the shareholders of the
Company; and (b) have the power to vote each share at any shareholder meeting, where each share of Series A Voting preferred stock
carries the weight of 20 votes for each share of common stock.
At
June 30, 2015 and 2014, the Company had 4,000,000 undesignated authorized preferred shares of which there are no shares issued
or outstanding. The designation of these shares has yet to be determined by the Board of Directors.
NOTE
7 - COMMITMENTS AND CONTINGENCIES
Operating
Lease
Through
June 30, 2015, the Company leased its office and warehouse space in Torrance, California under a non-cancelable operating
lease that expired on June 30, 2015. The minimum lease payment was $4,289 per month. The Company did not renew the lease
and is currently utilizing office space in the residence of our Interim CEO and CFO at no cost. The Company does not plan to seek
new office space until we pursue a viable business opportunity and recognize income.
Rent
expense, which is classified in selling, general and administrative expenses, was $51,468 for the years ended June 30, 2015
and 2014.
Legal
Matters
The
Company is, from time to time, involved in legal proceedings, regulatory actions, claims and litigation arising in the ordinary
course of business. Reserves are established for specific liabilities in connection with legal actions when they can be deemed
probable and estimable. These matters are not expected to have a material adverse effect upon the Company’s financial condition.
SMACK
SPORTSWEAR, INC. AND SUBSIDIARY
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
FOR
THE YEARS ENDED JUNE 30, 2015 AND 2014
NOTE 8
- INCOME TAXES
The
Company accounts for income taxes using the asset and liability method. Under this method, deferred tax assets and liabilities
are determined based on the difference between the financial statement and tax bases of assets and liabilities using the currently
enacted tax rates applied to taxable income in the periods in which the deferred tax assets and liabilities are expected to be
settled or realized.
Total
income taxes differ from expected income taxes (computed by applying the U.S. federal corporate tax rate of 34%) for the
years ended June 30, 2015 and 2014 as follows:
| |
June
30, 2015 | | |
June
30, 2014 | |
| |
| | |
| |
Income
taxes at federal statutory rate | |
$ | (180,334 | ) | |
$ | (423,806 | ) |
State
tax (net of federal benefit) | |
| (30,945 | ) | |
| (72,725 | ) |
Change
in valuation allowance | |
| 211,279 | | |
| 496,531 | |
| |
| | | |
| | |
Income
taxes at effective income tax rate | |
$ | - | | |
$ | - | |
The
Company’s effective tax rate differs from the statutory rate primarily as a result of the full valuation allowance on the
Company’s deferred taxes as of June 30, 2015 and 2014.
The
Company’s net deferred taxes include the following significant components as of June 30, 2015 and 2014:
| |
June
30, 2015 | | |
June
30, 2014 | |
| |
| | |
| |
U.S.
net operating loss carryforwards | |
$ | 947,251 | | |
$ | 735,094 | |
Less:
Valuation allowance | |
| (947,251 | ) | |
| (735,094 | ) |
| |
| | | |
| | |
Net
deferred tax assets | |
$ | - | | |
$ | - | |
The
Company’s deferred tax assets and liabilities represent the tax effects of taxable temporary differences between book and
tax reporting. The temporary differences arise from unused net operating loss carryforwards. The Company recorded a full valuation
allowance against its net deferred tax assets at June 30, 2015 and 2014. Based upon management’s assessment of all available
evidence, the Company has concluded that it is more likely than not that the net deferred tax assets will not be realized.
As
of June 30, 2015, the Company has U.S. federal and state income tax net operating loss carryforwards of approximately $2.4 million
that may be applied against future taxable income and that begin to expire in the year 2033.
The
Company files tax returns in the United States and California. Management has evaluated its tax positions and believes that there
are no adjustments or disclosures of possible additional tax liabilities for the year ended June 30, 2015. The amount that may
ultimately have to be recognized, in the event that the Company’s tax returns are examined by a taxing authority, may differ
from management’s estimate.
At
June 30, 2015, the Company has no material unrecognized tax positions. For the years ended June 30, 2015 and 2014, the Company
did not recognize any interest or penalties for uncertain tax positions. There are also no accrued interest and penalties at June
30, 2015 and 2014. The Company is currently not under examination by the United States Internal Revenue service or any other state,
city or local jurisdiction. As such, the Company is subject to the standard statutes of limitations by the relevant tax authorities
for federal and state purposes. The Company’s federal and state income tax returns are subject to examination by taxing
authorities for the years 2010 through 2015.
SMACK
SPORTSWEAR, INC. AND SUBSIDIARY
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
FOR
THE YEARS ENDED JUNE 30, 2015 AND 2014
NOTE 9 - SUBSEQUENT
EVENTS
On July 27, 2015,
the Company entered into an Asset Purchase agreement with William Sigler, a former officer and a director of the Company. Under
the agreement, the Company completed the disposition of certain assets of the Company to Mr. Sigler. The purchase price of the
assets sold to Mr. Sigler was $132,900, which was paid by the cancellation of indebtedness owed by the Company to Mr. Sigler.
The Company and Mr. Sigler also executed and delivered mutual release agreements that released each party from any and all claims,
liabilities and indebtedness owed to the other. As of that date, Mr. Sigler also resigned as a director of the Company. As a result
of Mr. Sigler resigning as a director of the Company, Mr. Doug Samuelson is the sole officer and director of the Company.
In connection
with such divestiture, Mr. Sigler also agreed to sell all his shares of common stock in the Company (6,824,336 shares, or approximately
31%) for an aggregate purchase price of $90,000. These sales will be made in four equal tranches, payable by an unidentified buyer
in cash on or prior to August 30, 2015, October 1, 2015, January 2, 2016 and April 1, 2016. If a buyer is not identified and/or
the sale is not consummated by any of said dates, Mr. Sigler has no further obligation to sell his shares. Mr. Sigler agreed not
to sell, dispose of or transfer his shares in the Company other as provided above.
In
August and September 2015, the Company entered into settlement and release agreements with certain of its vendors. Under the
agreements, the vendors agreed to accept reduced payment amounts from the total amount the Company owed them. The Company
also entered into a settlement and release agreement with an individual the Company had a loan payable to (see Note 3). The
total amount of forgiveness of accounts payable was $69,220 and $15,607 for the forgiveness of the loan payable. The
aggregate amount of the forgiveness was $84,827 and is included in Other Income and Expense on the consolidated Statement of
Operations as of June 30, 2015 as the Company believes the settlements represented the fair value of the liabilities as of
that date. The Company has also offered other of its vendors to enter into settlement agreements, but they currently have not
signed an agreement.
In August 2015,
the Company entered into a Promissory Note agreement with an individual in which the Company can borrow up to $47,650. In August,
the Company borrowed $47,500 under the agreement. The Note accrues interest at 10% per annum and is due on August 12, 2016. All
unpaid principal and interest is due as of that date.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE.
The Company has had no disagreements with its certified public accountants
with respect to accounting practices or procedures or financial disclosure.
ITEM 9A. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
Our disclosure controls and procedures, as
defined in Rule 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”),
are designed to ensure that information required to be disclosed in reports filed or submitted under the Exchange Act is recorded,
processed, summarized, and reported within the time periods specified in rules and forms adopted by the SEC, and that such information
is accumulated and communicated to management, including the Interim Chief Executive Officer and the Chief Financial Officer, to
allow timely decisions regarding required disclosures.
Management, with the participation of the Interim
Chief Executive Officer and the Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures
as of the end of the period covered by this report. Based on such evaluation, the Interim Chief Executive Officer and the Chief
Financial Officer concluded that, our disclosure controls and procedures were not effective. Our disclosure controls and procedures
were not effective because of the “material weaknesses” described below under “Management's Report on Internal
Control over Financial Reporting,” which are in the process of being remediated as described below under “Management
Plan to Remediate Material Weaknesses.”
Management's Report on Internal Control
over Financial Reporting
Our management is responsible for establishing
and maintaining adequate internal control over financial reporting. Internal control over financial reporting, as defined in rules
promulgated under the Exchange Act, is a process designed by, or under the supervision of, our Chief Executive Officer and Chief
Financial Officer and affected by our Board of Directors, management and other personnel to provide reasonable assurance regarding
the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP.
Internal control over financial reporting includes those policies and procedures that:
| ● | pertain to the maintenance of records
that in reasonable detail accurately and fairly reflect the transactions and dispositions of our assets; |
| ● | provide reasonable assurance that transactions
are recorded as necessary to permit preparation of financial statements in accordance with GAAP, and that our receipts and expenditures
are being made only in accordance with authorizations of our management and our Board of Directors; and |
| ● | provide reasonable assurance regarding
prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect
on our financial statements. |
Because of its inherent limitations, a system
of internal control over financial reporting can provide only reasonable, not absolute, assurance that the objectives of the control
system are met and may not prevent or detect misstatements. Internal control over financial reporting is a process that involves
human diligence and compliance and is subject to lapses in judgment and breakdowns resulting from human failures. Internal control
over financial reporting also can be circumvented by collusion or improper override. Because of such limitations, there is a risk
that material misstatements may not be prevented or detected on a timely basis by internal control over financial reporting. However,
these inherent limitations are known features of the financial reporting process, and it is possible to design into the process
safeguards to reduce, though not eliminate this risk. Further, over time control may become inadequate because of changes in conditions
or the degree of compliance with the policies or procedures may deteriorate.
Our management assessed the effectiveness of
our internal control over financial reporting as of June 30, 2015. In making its assessment, management used the criteria established
in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”).
Based on its assessment, management has concluded that we had certain control deficiencies described below that constituted material
weaknesses in our internal controls over financial reporting. As a result, our internal control over financial reporting was not
effective as of June 30, 2015.
A “material weakness” is defined
under SEC rules 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 a company's annual or interim financial statements will not be prevented
or detected on a timely basis by the company's internal controls. As a result of management's review of the investigation issues
and results, and other internal reviews and evaluations that were completed after the end of quarter related to the preparation
of management's report on internal controls over financial reporting required for this annual report on Form 10-K, management concluded
that we had material weaknesses in our control environment and financial reporting process consisting of the following:
1) lack of a functioning audit committee due
to a lack of a majority of independent members and a lack of a majority of outside directors on our board of directors, resulting
in ineffective oversight in the establishment and monitoring of required internal controls and procedures; and
2) insufficient written policies and procedures
for accounting and financial reporting with respect to the requirements and application of US GAAP and SEC disclosure requirements.
We do not believe the material weaknesses described
above caused any meaningful or significant misreporting of our financial condition and results of operations for the year ended
June 30, 2015. However, management believes that the lack of a functioning audit committee and the lack of a majority of outside
directors on our board of directors results in ineffective oversight in the establishment and monitoring of required internal controls
and procedures, which could result in a material misstatement in our financial statements in future periods.
Changes in Internal Control over Financial
Reporting
There was no change in our internal controls
over financial reporting that occurred during the period covered by this report that has materially affected, or is reasonably
likely to materially affect, our internal controls over financial reporting.
Item 9B – OTHER INFORMATION
None.
PART III
ITEM
10. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS, CONTROL PERSONS AND CORPORATE GOVERNANCE; COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE
ACT.
Directors
As of October 13, 2015, we have one director. The name, age and
appointment details are as follows:
Name | |
Position
Held with the Company | |
Age | | |
Date First Elected or Appointed |
Doug Samuelson | |
Director | |
| 56 | | |
July 2015 |
Executive Officers
As of October 13, 2015, we have one Executive Officer. His name,
age and appointment details are as follows:
Name
| |
Position Held with the Company | |
| Age | | |
Date First Elected or Appointed |
Doug Samuelson | |
Interim CEO and CFO | |
| 56 | | |
July 2015 |
Business Experience
The following is a brief account of the education and business experience
for at least the past five years of our director and our executive officer, indicating his business experience, principal occupation
during the period, and the name and principal business of the organization by which they were employed.
Doug Samuelson, Interim Chief Executive Officer and Chief Financial
Officer
Doug Samuelson has his CPA license in California
and has over 10 years of experience working for public accounting firms and over 10 years of experience as a CFO, Director and
Controller of both private and publicly traded companies. Most recently, Doug was the CFO for two years at Medacta USA, an orthopedic
distributor located in Camarillo, California. Before that, he had his own consulting practice, working as a contract CFO and assisting
public companies with their Sarbanes-Oxley (SOX) compliance. From 2005 to 2010, he worked for JH Cohn LLP in their audit and consulting
groups in Woodland Hills, California, primarily working with publicly traded companies with their SOX compliance, but also providing
technical accounting and financial reporting guidance to those companies. He also managed audits for privately held companies.
From 2002 to 2005, he worked for the RAND Corporation in Los Angeles, California, as a Director of Accounting. From 1998 to 2002,
he worked for Spirent Communications as their Director of Accounting in Calabasas, California. From 1992 to 1998, he worked for
Arthur Andersen LLP in their audit practice in Los Angeles, California.
Doug has his Bachelor of Science degree in
Accounting from the University of Utah and his Master of Science degree in Computer Science from the California State University,
Northridge.
Involvement in Certain Legal Proceedings
Our director and executive officer and control persons have not
been involved in any of the following events during the past five years:
| 1. | any bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either
at the time of the bankruptcy or within two years prior to that time; |
| 2. | any conviction in a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and
other minor offences); |
| 3. | being subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent
jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business,
securities or banking activities; or |
| 4. | being found by a court of competent jurisdiction (in a civil action), the Securities and Exchange Commission or the Commodity
Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed,
suspended, or vacated. |
ITEM
11. EXECUTIVE COMPENSATION.
Summary Compensation Table
The following table summarizes the compensation
of our executive officers, directors and President during the fiscal years ended June 30, 2015 and 2014. No other officers or directors
received annual compensation in excess of $100,000 during the fiscal year.
Name and Principal Position | |
Year | |
Salary ($) | | |
Bonus ($) | | |
Stock Awards ($) | | |
Option Awards ($) | | |
Non-Equity Incentive Plan Compensation ($) | | |
Nonqualified Deferred Compensation Earnings ($) | | |
All Other Compensa-tion ($) | | |
Total ($) | |
(a) | |
(b) | |
(c) | | |
(d) | | |
(e) | | |
(f) | | |
(g) | | |
(h) | | |
(i) | | |
(j) | |
William Sigler, | |
2015 | |
| 32,900 | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| 32,900 | |
Director and former CEO (1) | |
2014 | |
| 100,000 | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| 100,000 | |
Doug Samuelson, | |
2015 | |
| 64,500 | | |
| - | | |
| 37,500 | | |
| - | | |
| - | | |
| - | | |
| - | | |
| 102,000 | |
Interim CEO and CFO (2) | |
2014 | |
| 23,500 | | |
| - | | |
| 10,500 | | |
| - | | |
| - | | |
| - | | |
| - | | |
| 34,000 | |
Christopher Jenks | |
2015 | |
| - | | |
| 25,000 | | |
| 9,731 | | |
| - | | |
| - | | |
| - | | |
| - | | |
| 34,731 | |
| |
2014 | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | |
Tom Mercer, | |
2015 | |
| 52,500 | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| 52,500 | |
President and Director (3) | |
2014 | |
| 37,500 | | |
| - | | |
| 20,000 | | |
| - | | |
| - | | |
| - | | |
| - | | |
| 57,500 | |
Charles A. Lesser, | |
2015 | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | |
former CFO (4) | |
2014 | |
| 40,000 | | |
| - | | |
| 80,000 | | |
| - | | |
| - | | |
| - | | |
| - | | |
| 120,000 | |
Ray Valdez, | |
2015 | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | |
former CIO (5) | |
2014 | |
| - | | |
| - | | |
| 40,000 | | |
| - | | |
| - | | |
| - | | |
| - | | |
| 40,000 | |
|
(1) |
William Sigler was appointed as our Chief Executive Officer and a director in April 2012. During FY 2015 and FY 2014, Mr. Sigler accrued a salary of $32,000 and $100,000, respectively. |
|
(2) |
Doug Samuelson was appointed as our Chief Financial Officer (CFO) in April 2014. During FY 2015 and FY 2014, Mr. Samuelson accrued a salary of $64,500 and $23,500, respectively. Mr. Samuelson also earned stock awards of $37,500 and $10,500 during FY 2015 and FY 2014, respectively. |
|
(3) |
Tom Mercer was appointed President and Director in February 2014.
During FY 2015 and FY 2014, Mr. Mercer accrued a salary of $52,500 and $37,500, respectively. Mr. Mercer also earned stock awards
of $20,000 during FY 2014.
|
|
(4) |
Charles A. Lesser was appointed as our CFO in December 2012.
During FY 2014, Mr. Lesser accrued a salary of $40,000 and earned stock awards of $80,000. |
|
(5) |
Ramon Valdez was CFO and subsequently Chief Information Officer
for the Company. Mr. Valdez resigned his position during FY 2014. Mr. Valdez received stock awards of $40,000 in FY 2014. |
ITEM
12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.
The following tables set forth certain information
concerning the number of shares of our common stock known by us to be owned beneficially as of October 13, 2015: (i) each person
(including any group) that owns more than 5% of any class of the voting securities of our company; (ii) each director and officer
of our company; and (iii) directors and officers as a group. Unless otherwise indicated, the stockholders listed possess sole voting
and investment power with respect to the shares shown.
Security ownership of Management
Name and Address of Beneficial Owner | |
Title of Class | |
Amount and Nature of Beneficial Owner | |
Percent of Class(1) | |
William Sigler(2) Former Director and Officer 20316 Gramercy Place Torrance, CA 90501 | |
Common Stock | |
5,118,252 Direct (2) | |
| 23.1 | % |
Christopher Jenks, Former Director and Officer
| |
Common Stock | |
1,100,000 (5) | |
| 5.0 | % |
Doug Samuelson Interim Chief Executive Officer and Chief Financial Officer 6025 Macadam Ct Agoura Hills, CA | |
Common Stock | |
291,666 (3) Direct | |
| 1.3 | % |
Current Director and Officer | |
Common Stock | |
291,666 (3) Direct | |
| 1.3 | % |
(1) Based upon 22,117,776 issued and outstanding shares of common stock as of October 13, 2015.
(2) William Sigler holds 5,118,252 shares of common stock.
(3) Doug Samuelson is due 291,666 shares as of June 30,
2015 per his Employment Agreement (not yet issued). Mr. Samuelson is currently the Company’s only Officer and Director.
(4) Chris Jenks is due 833,333
shares from his $50,000 investment in October 2014. He also had purchased 133,334 shares prior to June 30, 2014. During the year
ended June 30, 2015, he is due 133,333 shares per his employment agreement (not yet issued).
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND
DIRECTOR INDEPENDENCE.
Transactions with Related Persons
During our last fiscal year and except as disclosed below, none
of the following persons has had any direct or indirect material interest in any transaction worth more than $120,000 to which
our company was or is a party, or in any proposed transaction to which our company proposes to be a party:
| (a) | any director or officer of our company; |
| (b) | any proposed director of officer of our company; |
| (c) | any person who beneficially owns, directly or indirectly, shares carrying more than 5% of the voting rights attached to our
common stock; or, |
| (d) | any member of the immediate family of any of the foregoing persons (including a spouse, parents, children, siblings, and in-laws). |
ITEM
14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
Audit Fees
The following table sets forth the fees billed to the Company for
professional services rendered by the Company's independent registered public accounting firm, for the years ended June 30, 2014
and June 30, 2013:
Fees | |
2015 | |
Weinberg & Company, CPAs | |
| |
| |
| |
Audit fees | |
$ | 39,380 | |
Audit Related Fees | |
$ | - | |
Tax fees | |
$ | - | |
All other fees | |
$ | - | |
| |
| | |
Total Fees | |
$ | 39,380 | |
Fees | |
| 2014 | |
Weinberg & Company, CPAs | |
| | |
| |
| | |
Audit fees | |
$ | 40,000 | |
Audit Related Fees | |
$ | - | |
Tax fees | |
$ | - | |
All other fees | |
$ | - | |
| |
| | |
Total Fees | |
$ | 40,000 | |
Audit Fees. Consist of fees billed for professional services
rendered for the audits of our financial statements and reviews of our interim consolidated financial statements included in quarterly
reports.
Tax Fees. Weinberg & Company, CPAs did not provide us
with professional services for tax compliance, tax advice and tax planning. These services include assistance regarding federal,
state and local tax compliance and consultation in connection with various transactions and acquisitions.
Item. 15. EXHIBITS
Exhibit Number |
|
Ref |
|
Description of Document |
31.1/2 |
|
* |
|
Certification of Principal Executive Officer and Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
|
|
|
|
|
32.1/2 |
|
* |
|
Certification of Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002. |
|
|
|
|
|
101.INS |
|
* |
|
XBRL Instance Document*** |
101.SCH |
|
* |
|
XBRL Taxonomy Extension Schema Document*** |
101.CAL |
|
* |
|
XBRL Taxonomy Extension Calculation Linkbase Document*** |
101.DEF |
|
* |
|
XBRL Taxonomy Extension Definition Linkbase Document*** |
101.LAB |
|
* |
|
XBRL Taxonomy Extension Label Linkbase Document*** |
101.PRE |
|
* |
|
XBRL Taxonomy Extension Presentation Linkbase Document*** |
101.INS |
|
* |
|
XBRL Instance Document*** |
101.SCH |
|
* |
|
XBRL Taxonomy Extension Schema Document*** |
101.CAL |
|
* |
|
XBRL Taxonomy Extension Calculation Linkbase Document*** |
* Filed herewith.
** This certification is being furnished and
shall not be deemed “filed” with the SEC for purposes of Section 18 of the Exchange Act, or otherwise subject to the
liability of that section, and shall not be deemed to be incorporated by reference into any filing under the Securities Act or
the Exchange Act, except to the extent that the Registrant specifically incorporates it by reference.
*** Furnished herewith. Pursuant
to Rule 406T of Regulation S-T, the Interactive Data Files on Exhibit 101 hereto are deemed not filed or part of any registration
statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, are deemed not filed for purposes of Section
18 of the Securities and Exchange Act of 1934, and otherwise are not subject to liability under those 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.
|
SMACK
SPORTSWEAR |
|
|
Dated:
October 13, 2015 |
By: |
/s/
Doug Samuelson |
|
|
Doug
Samuelson
Interim
Chief Executive Officer and Chief Financial Officer |
21
EXHIBIT 31.1/2
CERTIFICATION PURSUANT TO
SEC Rules 13a-14(a) and 15d-14(a),
AS ADOPTED PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Doug Samuelson, Interim Chief Executive
Officer and Chief Financial Officer of Smack Sportswear, certify that:
1. I have reviewed this Annual Report on Form
10-K of Smack Sportswear;
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to
the period covered by this report;
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all
material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented
in this report;
4.
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined
in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a)
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision,
to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by
others within those entities, particularly during the period in which this report is being prepared;
(b)
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed
under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with generally accepted accounting principles;
(c)
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions
about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on
such evaluation; and
(d)
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the
registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that
has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting;
and
5.
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control
over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors
(or persons performing the equivalent functions):
(a)
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which
are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information;
and
(b)
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s
internal control over financial reporting.
Date: October 13, 2014 |
By: |
/s/ Doug
Samuelson |
|
|
Doug Samuelson |
|
|
Interim Chief Executive Officer and Chief Financial Officer |
|
|
(Principal Executive and Principal Financial Officer) |
EXHIBIT 32.1/2
CERTIFICATION OF PRINCIPAL
EXECUTIVE OFFICER PURSUANT
TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT
TO SECTION 906
OF THE SARBANES-OXLEY ACT OF 2002.
In connection with the Annual Report on Form
10-K of Smack Sportswear, (the “Company”) for the period ended June 30, 2015, as filed with the Securities and Exchange
Commission on the date hereof (the “Report”), I, Doug Samuelson, Interim Chief Executive Officer and Chief Financial
Officer of the Company, certify, pursuant to 18 U.S.C Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002, to the best of my knowledge that:
1.
The Report fully complies with the requirements of Sections 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2.
The information contained in the Report fairly presents, in all material respects, the financial condition and results of
operations of the Company.
Date: October 13, 2014
Doug Samuelson
Interim Chief Executive Officer and Chief Financial
Officer
(Principal Executive and Principal Financial
Officer)
The foregoing certification is being furnished
as an exhibit to the Report pursuant to Item 601(b)(32) of Regulation S-K and Section 906 of the Sarbanes-Oxley Act of 2002 (subsections
(a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code) and, accordingly, is not being filed as part of the Report
for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and is not incorporated by reference into any filings
of the Company, whether made before or after the date hereof, regardless of any general incorporation language in such filing.
Almost Never Films (CE) (USOTC:HLWD)
Historical Stock Chart
From Mar 2024 to Apr 2024
Almost Never Films (CE) (USOTC:HLWD)
Historical Stock Chart
From Apr 2023 to Apr 2024