UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
Form
10-Q
☒
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For
Quarter Ended: March 31, 2020
Commission
File Number 000-51232
PREMIER PRODUCTS GROUP, INC.
(Exact
name of registrant as specified in its charter)
Delaware |
|
68-0582275 |
(State
or other jurisdiction of |
|
(I.R.S.
Employer |
incorporation
or organization) |
|
Identification
No.) |
850
Stephenson Hwy, Suite 601
Troy,
Michigan 48083
(Address
of principal executive offices) (Zip Code)
(586)
467-5841
(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 Web site, if any, every Interactive
Data File required to be submitted and posted pursuant to Rule 405
of Regulation S-T (§232.405 of this chapter) during the preceding
12 months (or for such shorter period that the registrant was
required to submit and post such files).
Yes ☒ No ☐
Indicate
by check mark whether the registrant is a large accelerated filer,
an accelerated filer, a non-accelerated filer, or a smaller
reporting company. See the definitions of “large accelerated
filer,” “accelerated filer” and “smaller reporting company” in Rule
12b-2 of the Exchange Act.
|
Large
accelerated filer |
☐ |
Accelerated
filer |
☐ |
|
Non-accelerated
filer |
☐ |
Smaller
reporting company |
☒ |
|
Emerging
growth
company ☒ |
|
|
If an
emerging growth company, indicate by check mark if the registrant
has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided
pursuant to Section 13(a) of the exchange act. ☐
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 the registrant’s only class of common stock
issued and outstanding as of November 23, 2020, was 285,555,605
shares.
TABLE
OF CONTENTS
|
|
Page |
PART
I – FINANCIAL INFORMATION |
|
|
|
Item
1. |
Consolidated
Financial Statements. |
3 |
|
|
|
Item
2. |
Management’s
Discussion and Analysis of Financial Condition and Results of
Operations. |
4 |
|
|
|
Item
3. |
Quantitative
and Qualitative Disclosures About Market Risk. |
6 |
|
|
|
Item
4. |
Controls
and Procedures. |
6 |
|
|
|
PART
II – OTHER INFORMATION |
|
|
|
Item
1. |
Legal
Proceedings. |
7 |
|
|
|
Item
1A. |
Risk
Factors. |
7 |
|
|
|
Item
2. |
Unregistered
Sales of Equity Securities and Use of Proceeds. |
7 |
|
|
|
Item
3. |
Defaults
Upon Senior Securities. |
7 |
|
|
|
Item
4. |
Mine
Safety Disclosures. |
7 |
|
|
|
Item
5. |
Other
Information. |
7 |
|
|
|
Item
6. |
Exhibits. |
8 |
|
|
|
Signatures |
|
9 |
|
|
|
PART I – CONSOLIDATED FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements
PREMIER PRODUCTS GROUP, INC.
March 31, 2020 and 2019
Index
to the Consolidated Financial Statements
Contents |
Page(s) |
|
|
Consolidated
Balance Sheets at March 31, 2020 (Unaudited) and December 31,
2019 |
F-1 |
|
|
Consolidated
Statements of Operations for the Three Months Ended March 31, 2020
and 2019 (Unaudited) |
F-2 |
|
|
Consolidated
Statements of Changes in Shareholders’ (Deficit) for the Three
Months Ended March 31, 2020 and 2019
(Unaudited)
|
F-3 |
|
|
Consolidated
Statements of Cash Flows for the Three Months Ended March 31, 2020
and 2019 (Unaudited) |
F-4 |
|
|
Notes
to the Consolidated Financial Statements (Unaudited) |
F-5 |
PREMIER PRODUCTS GROUP, INC.
CONSOLIDATED BALANCE SHEETS
(unaudited)
|
|
March
31, |
|
December
31, |
|
|
2020 |
|
2019 |
|
|
|
|
|
ASSETS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
Assets |
|
$ |
- |
|
|
$ |
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES
& STOCKHOLDERS' DEFICIT |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
liabilities |
|
|
|
|
|
|
|
|
Accounts
payable and accrued expenses |
|
$ |
268,099 |
|
|
$ |
268,099 |
|
Contingent
liability – legal |
|
|
197,283 |
|
|
|
197,283 |
|
Contingent
liability – notes |
|
|
225,200 |
|
|
|
225,200 |
|
Derivative
liability – warrants |
|
|
1,957 |
|
|
|
5,941 |
|
Notes
payable – related parties |
|
|
166,267 |
|
|
|
163,916 |
|
Notes
payable |
|
|
317,306 |
|
|
|
312,743 |
|
Total
current liabilities |
|
|
1,176,112 |
|
|
|
1,173,182 |
|
|
|
|
|
|
|
|
|
|
Total
liabilities |
|
|
1,176,112 |
|
|
|
1,173,182 |
|
|
|
|
|
|
|
|
|
|
Stockholders'
Equity |
|
|
|
|
|
|
|
|
Common
stock, $0.00001 par value, 500,000,000 shares authorized,
285,555,605 |
|
|
|
|
|
|
|
|
and
285,555,605 shares issued and outstanding, respectively |
|
|
2,856 |
|
|
|
2,856 |
|
Preferred
stock (Series B), $0.001 par value, 51 shares authorized, and 51
shares |
|
|
|
|
|
|
|
|
Issued
and outstanding, respectively |
|
|
— |
|
|
|
— |
|
Paid
in capital |
|
|
6,253,949 |
|
|
|
6,253,949 |
|
Accumulated
deficit |
|
|
(7,432,917 |
) |
|
|
(7,429,987 |
) |
Total
Stockholders' (Deficit) |
|
|
(1,176,112 |
) |
|
|
(1,173,182 |
) |
Total
Liabilities and Stockholders' (Equity) |
|
$ |
— |
|
|
$ |
— |
|
The accompanying notes are an integral part of these
financial statements.
PREMIER PRODUCTS GROUP, INC.
CONSOLIDATED STATEMENTS OF
OPERATIONS
(unaudited)
|
|
|
|
|
|
|
For
the three months ended |
|
|
March
31, 2020 |
|
March
31, 2019 |
|
|
|
|
|
Revenue |
|
$ |
— |
|
|
$ |
— |
|
|
|
|
|
|
|
|
|
|
Operating
Expenses: |
|
|
|
|
|
|
|
|
Administrative
expense |
|
|
— |
|
|
|
— |
|
General
and administrative |
|
|
— |
|
|
|
15,000 |
|
Professional
Fees |
|
|
— |
|
|
|
60,720 |
|
Total
operating expenses |
|
|
— |
|
|
|
75,720 |
|
(Loss)
from operations |
|
|
— |
|
|
|
(75,720 |
) |
Other
expense |
|
|
|
|
|
|
|
|
Gain
(loss) on derivative liability |
|
|
3,984 |
|
|
|
(3,371 |
) |
Interest
expense |
|
|
(6,914 |
) |
|
|
(6,599 |
) |
Loss
on issuance of shares for debt |
|
|
— |
|
|
|
— |
|
Income
(loss) before provision for income taxes |
|
|
(2,930 |
) |
|
|
(9,970 |
) |
Provision
for income taxes |
|
|
— |
|
|
|
— |
|
Net
(Loss) |
|
$ |
(2,930 |
) |
|
$ |
(85,690 |
) |
|
|
|
|
|
|
|
|
|
Basic
and diluted earnings(loss) per common share |
|
$ |
(0.00 |
) |
|
$ |
(0.00 |
) |
|
|
|
|
|
|
|
|
|
Weighted
average number of shares outstanding |
|
|
285,555,605 |
|
|
|
285,555,605 |
|
The accompanying notes are an integral part of these financial
statements.
PREMIER PRODUCTS GROUP, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS'
EQUITY
|
|
|
|
|
|
|
|
|
|
Additional |
|
|
|
Total |
|
|
Common
Stock |
|
Preferred
Stock |
|
Paid-in |
|
Accumulated |
|
Stockholders' |
|
|
Shares |
|
Value |
|
Shares |
|
Value |
|
Capital |
|
Deficit |
|
Equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance,
December 31, 2018 |
|
|
285,555,605 |
|
|
$ |
2,856 |
|
|
|
51 |
|
|
$ |
— |
|
|
$ |
6,253,949 |
|
|
$ |
(7,328,173 |
) |
|
$ |
(1,071,368 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income (loss) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(85,690 |
) |
|
|
(85,690 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance,
March 31, 2019 |
|
|
285,555,605 |
|
|
$ |
2,856 |
|
|
|
51 |
|
|
$ |
— |
|
|
$ |
6,253,949 |
|
|
$ |
(7,413,863 |
) |
|
$ |
(1,157,058 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance,
December 31, 2019 |
|
|
285,555,605 |
|
|
$ |
2,856 |
|
|
|
51 |
|
|
$ |
— |
|
|
$ |
6,253,949 |
|
|
$ |
(7,429,987 |
) |
|
$ |
(1,173,131 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income (loss) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2,930 |
) |
|
|
(2,930 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance,
March 31, 2020 |
|
|
285,555,605 |
|
|
$ |
2,856 |
|
|
|
51 |
|
|
$ |
— |
|
|
$ |
6,253,949 |
|
|
$ |
(7,432,917 |
) |
|
$ |
(1,176,112 |
) |
The accompanying notes are an integral part of these
financial statements.
PREMIER PRODUCTS GROUP, INC.
CONSOLIDATED STATEMENTS OF CASH
FLOWS
(unaudited)
As of March 31, 2020
|
|
March
31, |
|
March
31, |
|
|
2020 |
|
2019 |
Cash
Flows From Operating Activities: |
|
|
|
|
|
|
|
|
Net
income (loss) |
|
$ |
(2,930 |
) |
|
$ |
(85,690 |
) |
Adjustments
to reconcile net income to net cash |
|
|
|
|
|
|
|
|
Loss
(gain) on derivative liability |
|
|
(3,984 |
) |
|
|
3,371 |
|
Loss
on issuance of shares for debt |
|
|
|
|
|
|
— |
|
Changes
in operating assets and liabilities: |
|
|
|
|
|
|
|
|
Accounts
payable and accrued expenses |
|
|
6,914 |
|
|
|
30,760 |
|
Net
cash provided by (used for) operating activities |
|
|
— |
|
|
|
(51,559 |
) |
|
|
|
|
|
|
|
|
|
Cash
Flows From Investing Activities: |
|
|
|
|
|
|
|
|
Net
cash provided by (used for) investing activities |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
Cash
Flows From Financing Activities: |
|
|
|
|
|
|
|
|
Proceeds
from notes payable |
|
|
— |
|
|
|
51,559 |
|
Net
cash provided by (used for) financing activities |
|
|
— |
|
|
|
51,559 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
Increase (Decrease) In Cash |
|
|
— |
|
|
|
— |
|
Cash
At The Beginning Of The Period |
|
|
— |
|
|
|
— |
|
Cash
At The End Of The Period |
|
$ |
— |
|
|
$ |
— |
|
|
|
|
|
|
|
|
|
|
Supplemental
disclosure of cash flow information: |
|
|
|
|
|
|
|
|
Cash
paid for interest |
|
$ |
— |
|
|
$ |
— |
|
|
|
|
|
|
|
|
|
|
Non-Cash
Financing Activities |
|
|
|
|
|
|
|
|
Common
stock issued to retire debt and accrued interest |
|
$ |
— |
|
|
$ |
— |
|
The accompanying notes are an integral part of these
financial statements.
PREMIER PRODUCTS GROUP, INC.
Notes to the Consolidated Financial Statements
March 31, 2020
(Unaudited)
NOTE 1 – BASIS OF PRESENTATION
PREMIER PRODUCTS GROUP, INC. (the Company”) has prepared the
accompanying financial statements without audit. In the opinion of
management, all adjustments (which include only normal recurring
adjustments) necessary to present fairly the financial position,
results of operations, and cash flows for all periods presented
herein, have been made.
As filed on Form 8-K with the Securities Exchange Commission on
March, 1, 2018, the Company completed a Holding Company
Reorganization, whereby On February 22, 2018, the issuer (having
been renamed, immediately prior to this Holding Company
Reorganization, from “Premier Products Group, Inc.” to “Valley High
Mining Company”) completed a corporate reorganization (the “Holding
Company Reorganization”) pursuant to which Valley High Mining
Company, as previously constituted (the “Predecessor”) became a
direct, wholly-owned subsidiary of a newly formed Delaware
corporation, Premier Products Group, Inc. (the “Holding Company”),
which became the successor issuer. In other words, the Holding
Company is now the public entity. The Holding Company
Reorganization was effected by a merger conducted pursuant to
Section 251(g) of the Delaware General Corporation Law (the
“DGCL”), which provides for the formation of a holding company
without a vote of the stockholders of the constituent
corporations.
In accordance with Section 251(g) of the DGCL, Premier Services,
Inc. (“Merger Sub”), another newly formed Delaware corporation and,
prior to the Holding Company Reorganization, was an indirect,
wholly owned subsidiary of the Predecessor, merged with and into
the Predecessor, with the Predecessor surviving the merger as a
direct, wholly owned subsidiary of the Holding Company (the
“Merger”). The Merger was completed pursuant to the terms of an
Agreement and Plan of Merger among the Predecessor, the Holding
Company and Merger Sub, dated February 22, 2018 (the “Merger
Agreement”).
As of the effective time of the Merger and in connection with the
Holding Company Reorganization, all duly authorized outstanding
shares of common stock and preferred stock of the Predecessor were
automatically converted into identical shares of common stock or
preferred stock, as applicable, of the Holding Company on a
one-for-one basis, and the Predecessor’s existing stockholders and
other holders of equity instruments, became stockholders and
holders of equity instruments, as applicable, of the Holding
Company in the same amounts and percentages as they were in the
Predecessor prior to the Holding Company
Reorganization.
The executive officers and board of directors of the Holding
Company are the same as those of the Predecessor in effect
immediately prior to the Holding Company
Reorganization.
For purposes of Rule 12g-3(a), the Holding Company is the successor
issuer to the Predecessor, now as the sole shareholder of the
Predecessor. Accordingly, upon consummation of the Merger, the
Holding Company’s common stock was deemed to be registered under
Section 12(b) of the Securities Exchange Act of 1934, as amended,
pursuant to Rule 12g-3(a) promulgated thereunder.
On February 22, 2018, the Predecessor changed its name and then
re-domiciled from Wyoming to Delaware. Immediately following such
re- domiciliation, the Holding Company adopted a certificate of
incorporation (the “Certificate”) and bylaws (the “Bylaws”) that
are, in all material respects, identical to the certificate of
incorporation and bylaws of the Predecessor immediately prior to
the Holding Company Reorganization, with the possible exception of
certain amendments that are permissible under Section 251(g)(4) of
the DGCL. The Holding Company has the same authorized capital stock
and the designations, rights, powers and preferences of such
capital stock, and the qualifications, limitations and restrictions
thereof are the same as that of the Predecessor’s capital stock
immediately prior to the Holding Company
Reorganization.
The common stock of the Holding Company trades on OTCMarkets under
the symbol “PMPG” under which the common stock of the Predecessor
was previously listed and traded. As a result of the Holding
Company Reorganization, the common stock of the Predecessor will no
longer be publicly traded.
PREMIER PRODUCTS GROUP, INC.
Notes to the Consolidated Financial Statements
March 31, 2020
(Unaudited)
Based on the preceding action, the Company is presenting the
financial statements as consolidated financial statements, but also
including exhibits representing the respective income statement and
balance sheet items associated with the new parent Holding Company
and the wholly- owned Predecessor company.
Certain information and footnote disclosures normally included in
financial statements prepared in accordance with accounting
principles generally accepted in the United States of America have
been condensed or omitted. It is suggested that these condensed
financial statements be read in conjunction with the financial
statements and notes thereto included in the Company’s December 31,
2019 audited financial statements included in the Company’s Annual
Report on Form 10-K, as filed with the United States Securities and
Exchange Commission (the “SEC”) on April 15, 2019. The results of
operations for the period ended March 31, 2020 are not necessarily
indicative of the operating results for the full
year.
NOTE 2 – GOING CONCERN
The Company’s financial statements are prepared using generally
accepted accounting principles in the United States of America
applicable to a going concern, which contemplates the realization
of assets and liquidation of liabilities in the normal course of
business. The Company has a working capital deficit and has not yet
established an ongoing source of revenues sufficient to cover its
operating costs and allow it to continue as a going
concern.
These factors raise substantial doubt regarding the Company’s
ability to continue as a going concern. The ability of the Company
to continue as a going concern is dependent on the Company
obtaining adequate capital to fund operating losses until it
consummates a business combination. If the Company is unable to
obtain adequate capital, it could be forced to cease
operations.
In order to continue as a going concern, the Company will need,
among other things, additional capital resources. Management’s plan
is to obtain such resources for the Company by obtaining capital
from management and significant shareholders sufficient to meet its
minimal operating expenses and seeking equity and/or debt
financing. However, management cannot provide any assurances that
the Company will be successful in accomplishing any of its
plans.
The ability of the Company to continue as a going concern is
dependent upon its ability to successfully accomplish the plans
described in the preceding paragraph and eventually secure other
sources of financing and attain profitable operations. The
accompanying financial statements do not include any adjustments
that might be necessary if the Company is unable to continue as a
going concern.
NOTE 3 – SIGNIFICANT ACCOUNTING POLICIES
Use of Estimates
The preparation of financial statements in conformity with
accounting principles generally accepted in the United States of
America requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities at the date
of the financial statements and the reported amounts of revenue and
expenses during the reporting period. Actual results could differ
from those estimates.
Income Taxes
The Company accounts for income taxes in accordance with ASC Topic
No. 740, “Accounting for Income Taxes.” This statement requires an
asset and liability approach for accounting for income taxes. The
Company adopted the provisions of ASC Topic No. 740, “Accounting
for Income Taxes,” on January 1, 2007. As a result of the
implementation of ASC Topic No. 740, the Company recognized no
liability for unrecognized tax liabilities. The Company has no tax
positions at December 31, 2019 and 2018 for which the ultimate
deductibility is highly certain but for which there is uncertainty
about the timing of such deductibility.
Interest Accruals
The Company recognizes interest accrued related to unrecognized tax
liabilities in interest expense and penalties in operating
expenses.
Loss Per Share
The computation of loss per share is based on the weighted average
number of shares outstanding during the period presented in
accordance with ASC Topic No. 260, “Earnings Per
Share.”
Cash and Cash Equivalents
The Company considers all highly liquid investments purchased with
a maturity of three months or less to be cash
equivalents.
Recently Issued Accounting Pronouncements
Management has considered all recent accounting pronouncements
issued since the last audit of our financial statements. The
Company’s management believes that these recent pronouncements will
not have a material effect on the Company’s financial
statements.
FASB ASU 2016-02 “Leases Topic 842)” – In February 2016, the
FASB issued Accounting Standards Update No. 2016-02, Leases (Topic
842), which amended the existing accounting standards for lease
accounting to increase transparency and comparability among
organizations by requiring the recognition of right-of-use assets
and lease liabilities on the balance sheet.
We adopted the standard effective January 1, 2019 and have elected
to use January 1, 2019 as our date of initial application.
Consequently, financial information will not be updated, and
disclosures required under the new standard will not be provided
for periods presented before January 1, 2019 as these prior periods
conform to the Accounting Standards Codification 840. We elected
the package of practical expedients permitted under the transition
guidance within the new standard. By adopting these practical
expedients, we were not required to reassess (1) whether an
existing contract meets the definition of a lease; (2) the lease
classification for existing leases; or (3) costs previously
capitalized as initial direct costs. As of March 31, 2020 we are not a lessor
or lessee under any lease arrangements.
FASB ASU 2018-02 “Income Statement- Reporting Comprehensive
Income (Topic 220): Reclassification of Certain Tax Effects from
Accumulated Other Comprehensive Income” – Effective for all
entities for fiscal years beginning after December 15, 2018, and
interim periods within those fiscal years. The amendments in this
Update allow a reclassification from accumulated other
comprehensive income to retained earnings for stranded tax effects
resulting from the Tax Cuts and Jobs Act. Consequently, the
amendments eliminate the stranded tax effects resulting from the
Tax Cuts and Jobs Act and will improve the usefulness of
information reported to financial statement users. However, because
the amendments only relate to the reclassification of the income
tax effects of the Tax Cuts and Jobs Act, the underlying guidance
that requires that the effect of a change in tax laws or rates be
included in income from continuing operations is not affected. The
adoption of this update does not have a material effect on the
Company.
FASB ASU 2018-03 “Fair Value Measurement (ASC 820): Disclosure
Framework-Changes to the Disclosure Requirements for Fair Value
Measurement” – In August 2018, the FASB issued ASU 2018-13. ASU
2018-13 removes certain disclosures, modifies certain disclosures
and adds additional disclosures. The ASU is effective for annual
periods, including interim periods within those annual periods,
beginning after December 15, 2019. Early adoption is permitted. The
Company is evaluating the effect that this update will have on its
financial statements and related disclosures.
FASB ASU 2016-15 “Statement of Cash Flows (Topic 230)” – In
August 2016, the FASB issued 2016-15. Stakeholders indicated that
there is a diversity in practice in how certain cash receipts and
cash payments are presented and classified in the statement of cash
flows. ASU 2016-15 addresses eight specific cash flow issues with
the objective of reducing the existing diversity in practice. This
ASU is effective for annual reporting periods beginning after
December 15, 2017, and interim periods within those fiscal years.
Early adoption is permitted. Adoption of this ASU will not have a
significant impact on our statement of cash
flows.
Management has evaluated other recently issued accounting
pronouncements and does not believe that any of these
pronouncements will have a significant impact on our consolidated
financial statements and related disclosures.
Fair Value of Financial Instruments
The Company’s financial instruments consist principally of cash,
amounts due to a related party, accounts payable and accrued
expenses, and derivative liabilities. ASC 820, Fair Value
Measurements and Disclosures, and ASC 825, Financial Instruments,
establish a framework for measuring fair value, establish a fair
value hierarchy based on the quality of inputs used to measure fair
value, and enhance disclosure requirements for fair value
measurements.
The Company utilizes various types of financing to fund its
business needs, including warrants not indexed to the Company’s
stock. The Company is required to record its derivative instruments
at their fair value. Changes in the fair value of derivatives are
recognized in earnings in accordance with ASC
815.
PREMIER PRODUCTS GROUP, INC.
Notes to the Consolidated Financial Statements
March 31, 2020
(Unaudited)
The fair value of the derivative instruments are determined based
on “Level 3” inputs, which consist of inputs that are both
unobservable and significant to the overall fair value measurement.
We believe that the recorded values of all of our other financial
instruments approximate their current fair values because of their
nature and respective relatively short maturity dates or
durations.
The Company has categorized its financial instruments, based on the
priority of inputs to the valuation technique, into a three-level
fair value hierarchy. The fair value hierarchy gives the highest
priority to quoted prices in active markets for identical assets or
liabilities (Level 1) and the lowest priority to unobservable
inputs (Level 3).
Financial assets and liabilities recorded on the balance sheet are
categorized based on the inputs to the valuation techniques as
follows:
Level 1 Financial assets and liabilities for which values are based
on unadjusted quoted prices for identical assets or liabilities in
an active market that management has the ability to
access.
Level
2 Financial assets and liabilities for which values are based on
quoted prices in markets that are not active or model inputs that
are observable either directly or indirectly for substantially the
full term of the asset or liability (commodity derivatives and
interest rate swaps).
Level
3 Financial assets and liabilities for which values are based on
prices or valuation techniques that require inputs that are both
unobservable and significant to the overall fair value measurement.
These inputs reflect management’s own assumptions about the
assumptions a market participant would use in pricing the asset or
liability.
When the inputs used to measure fair value fall within different
levels of the hierarchy, the level within which the fair value
measurement is categorized is based on the lowest level input that
is significant to the fair value measurement in its entirety. The
Company conducts a review of fair value hierarchy classifications
on a quarterly basis. Changes in the observability of valuation
inputs may result in a reclassification for certain financial
assets or liabilities.
|
|
Balance |
Balance
forward, December 31, 2019 |
|
$ |
(5,941 |
) |
Total
gains (losses) included in earnings, three months ended March 31,
2020 |
|
|
3,984 |
|
|
|
|
|
|
Ending
balance, March 31, 2020 |
|
$ |
(1,957 |
) |
PREMIER PRODUCTS GROUP, INC.
Notes to the Consolidated Financial Statements
March 31, 2020
(Unaudited)
NOTE 4 – RELATED PARTY TRANSACTIONS
Management Compensation
For the three months ended March 31, 2020, the Company paid
its CEO, President, and CFO an aggregate of $0 as compensation. For
the three months ended March
31, 2019, the Company paid its CEO/President/CFO an
aggregate of $0 as compensation.
NOTE 5 – ADVANCES AND NOTES PAYABLE TO RELATED
PARTIES
Advances and notes payable to related parties at March 31, 2020 and
December 31, 2019 had an outstanding balance of $166,267 and
$163,916, respectively.
NOTE 6 – NOTES PAYABLE AND DERIVATIVE
LIABILITY
Notes Payable
At the period ended March 31, 2020, the Company had third party
notes payable and accrued interest in the amount of $483,573
compared to $476,659 in the prior fiscal year ended December 31,
2019. The notes included notes to four unaffiliated parties at
interest rates of between 6% and 8% per year. The notes expired
during the 2016 fiscal year and are not secured by collateral of
the Company. Several of these notes are in default and the Company
is in communication with the holders to resolve these outstanding
issues. The notes are convertible into common stock, at the
election of the holder, at discounts of between 40% and 50%. Two
additional notes, totaling $11,250 are convertible into common
stock of the Company at $0.001. Additionally, the Company is
carrying $225,200 in notes payable contingent liability
representing three (3) prior notes that are either in dispute or
the Company is unable to substantiate.
Derivative Liability
The Company entered into an agreement, which has been accounted for
as a derivative. The Company has recorded a loss contingency
associated with this agreement because it is both probable that a
liability had been incurred and the amount of the loss can
reasonably be estimated. The main factors that will affect the fair
value of the derivative are the number of the Company’s shares
outstanding post acquisition or post offering and the resulting
market capitalization.
ASC Topic 815 (“ASC 815”) requires that all derivative financial
instruments be recorded on the balance sheet at fair value. Fair
values for exchange traded securities and derivatives are based on
quoted market prices. Where market prices are not readily
available, fair values are determined using market based pricing
models incorporating readily observable market data and requiring
judgment and estimates.
PREMIER PRODUCTS GROUP, INC.
Notes to the Consolidated Financial Statements
March 31, 2020
(Unaudited)
The Company issued warrants and has evaluated the terms and
conditions of the conversion features contained in the warrants to
determine whether they represent embedded or freestanding
derivative instruments under the provisions of ASC 815. The Company
determined that the conversion features contained in the warrants
represent freestanding derivative instruments that meet the
requirements for liability classification under ASC 815. As a
result, the fair value of the derivative financial instruments in
the warrants is reflected in the Company’s balance sheet as a
liability. The fair value of the derivative financial instruments
of the warrants was measured at the inception date of the warrants
and each subsequent balance sheet date. Any changes in the fair
value of the derivative financial instruments are recorded as
non-operating, non-cash income, or expense at each balance sheet
date.
The Company valued the conversion features in its warrants using
the Black-Scholes model. The Black-Scholes model values the
embedded derivatives based on a risk-free rate of return of
0.0198%, grant dates at March 31, 2020 and December 31, 2019, the
term of the warrant extending 3 years from the date of a “reverse
merger”, conversion of warrant shares is equal to 0.005% of the
then outstanding common stock of the company, the conversion price
is $0.001, current stock prices on the measurement date ranging
from $0.0063 to $0.011, and the computed measure of the Company’s
stock volatility, ranging at 257.4%.
Included in the March 31, 2020 and December 31, 2019 financial
statements is a derivative liability in the amount of $1,957 and
$5,941, respectively, to account for this transaction. It is
revalued quarterly henceforth and adjusted as a gain or loss to the
consolidated statements of operations depending on its value at
that time.
Included in our Consolidated Statements of Operations for the three
months ended March 31, 2020 and year-end December 31, 2019 are
$3,984 and $1,313 in change of fair value of derivative in non-cash
charges pertaining to the derivative liability as it pertains to
the gain (loss) on derivative liability and debt discount,
respectively.
NOTE 7 – ACCOUNTS PAYABLE AND ACCRUED
EXPENSES
For the three months ended March 31, 2020, and the year ended
December 31, 2019, the Company recorded accounts payable and
accrued expenses in the amount of $268,099. The accounts payable
and accrued expenses include $261,543 in legal and professional
fees.
NOTE 8 – COMMITMENTS AND CONTINGENCIES
Contingent Liabilities
The Company recorded contingent liabilities for the three months ended March 31, 2020 in the amount of
$422,483. The contingent liability includes $197,283 for settlement
of an arbitration plus accrued interest. Additional contingent
liabilities has been accounted for in the amount of $150,200 and
$75,000 for notes payable. These notes date back to the purchase of
the mineral properties with a related party. The Company believes
that these notes are to be discharged, however, until additional
research and agreements have been reached, the Company is treating
the amount as a contingent liability.
PREMIER PRODUCTS GROUP, INC.
Notes to the Consolidated Financial Statements
March 31, 2020
(Unaudited)
Legal proceedings
On February 24, 2015, the Company was named a defendant in a
complaint filed by John Michael Coombs in the Third Judicial
District Court in and For Salt Lake County, State of Utah,
alleging, among other things, Breach of Contract, in connection
with a Warrant Agreement issued by the Company to Mr. Coombs in
2010. Management has informed Mr. Coombs that it fully intends to
honor the Warrant Agreement and is in discussions to settle this
matter.
NOTE 9 – CAPITAL STOCK
The Company has authorized 500,000,000 number of shares of common
stock with a par value of $0.00001. At March 31, 2020, the Company
had 285,555,606 shares issued and outstanding.
The Company has authorized 51 shares of preferred stock (Series B)
with a par value of $0.001. At March 31, 2020, the Company had 51
shares issued and outstanding.
During the three months ended March 31, 2020, no shares of common
or preferred shares were issued by the Company.
NOTE 10 – SUBSEQUENT EVENTS
None.
Item 2. Management’s Discussion and Analysis of Financial
Condition and Results of Operations.
This quarterly report on Form 10-Q and other reports filed by
PREMIER PRODUCTS GROUP, INC. (the “Company”) from time to time with
the SEC (collectively, the “Filings”) contain or may contain
forward-looking statements and information that are based upon
beliefs of, and information currently available to, the Company’s
management as well as estimates and assumptions made by Company’s
management. Readers are cautioned not to place undue reliance on
these forward-looking statements, which are only predictions and
speak only as of the date hereof. When used in the Filings, the
words “anticipate,” “believe,” “estimate,” “expect,” “future,”
“intend,” “plan,” or the negative of these terms and similar
expressions as they relate to the Company or the Company’s
management identify forward-looking statements. Such statements
reflect the current view of the Company with respect to future
events and are subject to risks, uncertainties, assumptions, and
other factors, including the risks relating to the Company’s
business, industry, and the Company’s operations and results of
operations. Should one or more of these risks or uncertainties
materialize, or should the underlying assumptions prove incorrect,
actual results may differ significantly from those anticipated,
believed, estimated, expected, intended, or
planned.
Although the Company believes that the expectations reflected in
the forward-looking statements are reasonable, the Company cannot
guarantee future results, levels of activity, performance, or
achievements. Except as required by applicable law, including the
securities laws of the United States, the Company does not intend
to update any of the forward-looking statements to conform these
statements to actual results.
Our financial statements are prepared in accordance with accounting
principles generally accepted in the United States (“GAAP”). These
accounting principles require us to make certain estimates,
judgments, and assumptions. We believe that the estimates,
judgments and assumptions upon which we rely are reasonable based
upon information available to us at the time that these estimates,
judgments and assumptions are made. These estimates, judgments, and
assumptions can affect the reported amounts of assets and
liabilities as of the date of the financial statements as well as
the reported amounts of revenues and expenses during the periods
presented. Our financial statements would be affected to the extent
there are material differences between these estimates and actual
results. In many cases, the accounting treatment of a particular
transaction is specifically dictated by GAAP and does not require
management’s judgment in its application. There are also areas in
which management’s judgment in selecting any available alternative
would not produce a materially different result. The following
discussion should be read in conjunction with our financial
statements and notes thereto appearing elsewhere in this
report.
Plan of Operation
As of the date of this Report, we are an emerging growth company
that is currently seeking a viable prospect to develop. We are not
limiting our search to any specific geographic region. Our plan of
operation for the twelve months following the date of this Report
is to continue to review potential acquisitions in the resource
sector. Currently, we are in the process of completing due
diligence investigation of a letter of intent executed on October
8, 2018. We do not have enough funds currently on hand to cover our
administrative expenses for the next 12 months and therefore we
will need additional funding for the review, acquisition, and
development of a mining property once the same is identified. We
anticipate that additional funding will be required in the form of
equity financing from the sale of our common stock or debt
financing.
Results of Operations
Comparison of Results of Operations for the three months ended
March 31, 2020 and 2019
Total operating expenses, which included general and administrative
expenses incurred during the three-month period, ended March 31, 2020 were $0 compared to
$75,720 during the similar period in 2019, a decrease of $75,720.
This decrease was as a result of a decrease in professional fees of
$60,720. Additionally, we recorded other expenses of $2,930 for the
three months ended March
31, 2020, which included $3,984 gain on derivative liability
and $6,914 in interest expense, compared to the three months ended
March 31, 201, where
we recorded $(3,371) change in derivative liability, interest
expense of $6,599. We are currently actively engaged in
transitioning our business; incurring costs associated with
identifying businesses opportunities.
As a result, we incurred a net loss of $2,930, approximately
$(0.00) per share, during our three-month period ended March 31,
2020, compared to a net loss of $85,58, approximately ($0.00) per
share, during the three-month period ended March 31,
2019.
Cash flows from financing activities were $0 for the three-month
period ended March 31, 2020, compared to $51,559 during the three
months ended March 31, 2019 as a result of our issuance of debt
instruments. Cash flows provided by investing activities were $0
for the three months ended March 31, 2020 and
2019.
Certain of our shareholders have provided us with loans and
contributions aggregating $308,134 as of March 31, 2020. These
loans bare interest of 6% to 8% and are due upon demand. We
utilized the funds from these loans to cover our costs for working
capital.
We are not generating revenue from our operations, and our ability
to implement our new business plan for the future will depend on
the future availability of financing. Such financing will be
required to enable us to identify and develop alternative growing
methods, new business acquisition opportunities, and continue
operations. We intend to raise funds through private placements of
our Common Stock and through short- term borrowing from our
shareholders. Because we have not identified or secured a specific
acquisition as of the date of this report we cannot estimate how
much capital we will need to fully implement our business plan in
the future and there are no assurances that we will be able to
raise this capital. Our inability to obtain sufficient funds from
external sources when needed will have a material adverse effect on
our plan of operation, results of operations and financial
condition. We need to raise additional funds in order to continue
our existing operations, to initiate new projects and to finance
our plans to expand our operations for the next
year.
Liquidity and Capital Resources
As of March 31, 2020,
we had cash or cash equivalents of $0.
Net cash used in operating activities was $0 during the three-month
period ended March 31, 2020, compared to $51,559 for the
three-month period ended March 31, 2019. We anticipate that
overhead costs in current operations will continue to increase in
the future once we identify and acquire additional business
opportunities to develop.
Inflation
Although our operations are influenced by general economic
conditions, we do not believe that inflation had a material effect
on our results of operations during the three-month period ended
March 31, 2020.
Critical Accounting Estimates
The discussion and analysis of our financial condition and results
of operations are based upon 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 us to make estimates and judgments that affect
the amounts of assets, liabilities, revenues, and expenses, and
related disclosure of contingent assets and liabilities. On an
on-going basis, we evaluate our estimates based on historical
experience and on various other assumptions that are believed 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 from these estimates under different
assumptions or conditions. The following represents a summary of
our critical accounting policies, defined as those policies that we
believe are the most important to the portrayal of our financial
condition and results of operations and that require management’s
most difficult, subjective or complex judgments, often as a result
of the need to make estimates about the effects of matters that are
inherently uncertain.
Leases – We follow the guidance in SFAS No. 13 ”
Accounting for Leases ,” as amended, which requires us to
evaluate the lease agreements we enter into to determine whether
they represent operating or capital leases at the inception of the
lease.
Recently Adopted Accounting Standards – As of
November 1, 2011, we adopted new guidance on the testing of
goodwill impairment that allows the option to assess qualitative
factors to determine whether performing the two step goodwill
impairment assessment is necessary. Under the option, the
calculation of the reporting unit’s fair value is not required to
be performed unless as a result of the qualitative assessment, it
is more likely than not that the fair value of the reporting unit
is less than the unit’s carrying amount. The adoption of this
guidance impacts testing steps only, and therefore adoption did not
have an impact on our consolidated financial statements. As of
November 1, 2011, we adopted new guidance regarding disclosures
about fair value measurements.
The guidance requires that new disclosures related to activity in
Level 3 fair value measurements. This guidance requires purchases,
sales, issuances, and settlements to be presented separately in the
rollforward of activity in Level 3 fair value measurements. There
were various other accounting standards and interpretations issued
during 2010 and 2011, none of which are expected to have a material
impact on our consolidated financial position, operations or cash
flows.
Off-Balance Sheet Arrangements
We have not entered into 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 of operations, liquidity, capital
expenditures, or capital resources and would be considered material
to investors.
Item 3. Quantitative and Qualitative Disclosures About Market
Risk.
We are a smaller reporting company and are not required to provide
the information under this item pursuant to Regulation
S-K.
ITEM 4. CONTROLS AND PROCEDURES.
|
(a) |
Evaluation
of Disclosure Controls and Procedures. |
Our management, with the participation of our Chief Executive
Officer and Chief Financial Officer, has evaluated the
effectiveness of our disclosure controls and procedures (as such
term is defined in Rules 13a-15(e) and 15d-15(e) under the
Securities Exchange Act of 1934, as amended (the “Exchange Act”))
as of the end of the period covered by this
Report.
These controls are designed to ensure that information required to
be disclosed in the reports we file or submit pursuant to the
Securities Exchange Act of 1934 is recorded, processed, summarized
and reported within the time periods specified in the rules and
forms of the Securities and Exchange Commission, and that such
information is accumulated and communicated to our management,
including our Chief Executive Officer and Chief Financial Officer
to allow timely decisions regarding required
disclosure.
Based on management’s assessment, management believes that, as of
March 31, 2020, our internal control over financial reporting
presented a material weakness. The assessment is based on our
inability to effectively implement comprehensive entity level
internal controls and we are unable to adequately segregate duties
within the accounting department due to an insufficient number of
staff, and implement appropriate information technology
controls.
Inherent Limitations
Our management, including our Chief Executive Officer and Chief
Financial Officer, does not expect that our disclosure controls and
procedures will prevent all error and all fraud. A control system,
no matter how well conceived and operated, can provide only
reasonable, not absolute, assurance that the objectives of the
control system are met. The design of any system of controls is
based in part upon certain assumptions about the likelihood of
future events, and there can be no assurance that any design will
succeed in achieving its stated goals under all potential future
conditions. Further, the design of a control system must reflect
the fact that there are resource constraints, and the benefits of
controls must be considered relative to their costs. Because of the
inherent limitations in all control systems, no evaluation of
controls can provide absolute assurance that all control issues and
instances of fraud, if any, within our company have been detected.
These inherent limitations include the realities that judgments in
decision-making can be faulty, and that breakdown can occur because
of simple error or mistake. In particular, many of our current
processes rely upon manual reviews and processes to ensure that
neither human error nor system weakness has resulted in erroneous
reporting of financial data.
|
(b) |
Changes
in Internal Control over Financial Reporting. |
There were no changes in our internal control over financial
reporting, as defined in Rules 13a-15(f) and 15d-15(f) under the
Exchange Act, during our most recently completed fiscal quarter
that have materially affected, or are reasonably likely to
materially affect, our internal control over financial reporting.
As such, there remains a material weakness in our internal control
over financial reporting.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.
On February 24, 2015, the Company was named a defendant in a
complaint filed by John Michael Coombs in the Third Judicial
District Court in and For Salt Lake County, State of Utah,
alleging, among other things, Breach of Contract, in connection
with a Warrant Agreement issued by the Company to Mr. Coombs in
2010. Management has informed Mr. Coombs that it fully intends to
honor the Warrant Agreement and is in discussions to settle this
matter.
In March 2014, the Company entered into a settlement agreement with
one of its former CEO’s Andrew Telsey. A dispute arose with respect
to the Company’s performance under such settlement agreement and,
in accordance with the terms of such agreement, such party moved
for arbitration to resolve such dispute. An agreement was reached
in April 2015 during arbitration; however, the Company was unable
to perform under the settlement agreement. The Company has recorded
a liability in the amount of $125,000, plus accrued interest and
fees of $72,283, to account for a total liability of $197,283,
which was recorded as a judgment amount in September
2016.
In January 2019, we were notified by a previous law firm during the
audit confirmation process that they intent to file suit for the
collection of unpaid fees. The Company has included the debt and
indicated penalties and interest in their financial
filings.
Other than described above and as previously disclosed; we are
currently not involved in any litigation that we believe could have
a material adverse effect on our financial condition or results of
operations. There is no action, suit, proceeding, inquiry or
investigation before or by any court, public board, government
agency, self-regulatory organization or body pending or, to the
knowledge of the executive officers of our Company or any of our
subsidiaries, threatened against or affecting our company, our
common stock, any of our subsidiaries or of our companies or our
subsidiaries’ officers or directors in their capacities as such, in
which an adverse decision could have a material adverse
effect.
Item 1A. Risk Factors.
We believe there are no changes that constitute material changes
from the risk factors previously disclosed in our Annual Report on
Form 10-K, filed with the SEC on April 15, 2019.
Item 2. Unregistered Sales of Equity Securities and Use of
Proceeds.
There were no unregistered sales of the Company’s equity securities
during the quarter ended March 31, 2020, that were not otherwise
disclosed in a Current Report on Form 8-K.
Item 3. Defaults Upon Senior Securities.
There has been no default in payment of principal, interest,
sinking or purchase fund installment, or any other material
default, with respect to any indebtedness of the
Company.
Item 4. Mine Safety Disclosures.
Not Applicable.
Item 5. Other Information.
There is no other information required to be disclosed under this
item that has not previously been reported.
Item 6. Exhibits.
*Filed herewith
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly
authorized.
|
PREMIER
PRODUCTS GROUP, INC |
|
|
|
Date:
November 24, 2020 |
By: |
/s/
Darryl Calloway |
|
|
Name:
Darryl Calloway |
|
|
Title:
Interim Chief Executive Officer |
|
|
|
|
By: |
/s/
Arnold F. Sock |
|
|
Name:
Arnold F. Sock |
|
|
Title:
Interim Chief Financial Officer |
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