PINX:FBEC Frontier Beverage Co Inc Quarterly Report 10-Q Filing - 6/30/2012

Effective Date 6/30/2012

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q
(Mark One)

x
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2012

or
 

¨
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ________________________________to _______________________________

Commission File No. 000-52297

FRONTIER BEVERAGE COMPANY, INC.
(Exact name of registrant as specified in its charter)

Nevada
 
06-1678089
(State or other jurisdiction of incorporation or organization)
 
(I.R.S. Employer Identification No.)

1837 Harbor Avenue, Post Office Box 13098,
Memphis, Tennessee
 
38113
(Address of principal executive offices)
 
(Zip Code)

(877) 233-7359
(Registrant’s telephone number, including area code)
 
(Former name, former address and former fiscal year if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.   Yes  x  No  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate 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  x  No  ¨
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer  ¨                                                                                         Accelerated filer  ¨

Non-accelerated filer ¨                                                                           Smaller reporting company x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes  ¨  No x

The number of shares outstanding of the Registrant’s Common Stock as of July 31, 2012 was 18,781,000.

 
 

 
 
TABLE OF CONTENTS
 
 
 
 

 
 
 
 
FRONTIER BEVERAGE COMPANY, INC.
   
June 30,
   
December 31,
 
   
2012
   
2011
 
   
(unaudited)
   
(audited)
 
ASSETS
           
Current Assets:
           
Cash
  $ 441     $ 255  
Accounts receivable, net of allowance of $3,234 and $3,234
    1,188       811  
Inventory
    27,122       31,641  
Prepaid expenses
    5,532       9,146  
Total current assets
    34,283       41,853  
                 
Total assets
  $ 34,283     $ 41,853  
                 
 LIABILITIES AND STOCKHOLDERS’ DEFICIT
               
 
               
Current Liabilities:
               
Notes and loans payable to related party
  $ 372,916     $ 376,393  
Accrued compensation-related parties
    364,932       305,096  
Accounts payable
    56,603       61,058  
Accrued interest-related parties
    48,251       34,215  
Accrued royalties
    4,625       4,625  
Total current liabilities
    847,327       781,387  
                 
Commitments and Contingencies
               
                 
Stockholders’ Deficit:
               
Preferred stock - par value $0.001; 100,000,000 shares authorized; no shares issued and outstanding at June 30, 2012 and December 31, 2011
    -       -  
Common stock - par value $0.001; 100,000,000 shares authorized; 18,781,000 shares issued and outstanding at June 30, 2012 and December 31, 2011
    18,781       18,781  
Additional paid-in capital
    1,386,166       1,377,166  
Accumulated deficit
    (2,217,991 )     (2,135,481 )
Total stockholders’ deficit
    (813,044 )     (739,534 )
                 
Total liabilities and stockholders’ deficit
  $ 34,283     $ 41,853  
 
 
1

 
 
FRONTIER BEVERAGE COMPANY, INC.
 
   
Three Months Ended
   
Six Months Ended
 
   
June 30,
   
June 30,
 
   
2012
   
2011
   
2012
   
2011
 
                         
Revenues, net
  $ 1,117     $ 162,186     $ 71,252     $ 203,152  
                                 
Cost of goods sold
    831       143,500       8,430       182,649  
                                 
Gross profit
    286       18,686       62,822       20,503  
                                 
Selling, general and administrative
    64,573       90,247       131,295       240,306  
                                 
Total operating expenses
    64,573       90,247       131,295       240,306  
                                 
Loss from operations
    (64,287 )     (71,561 )     (68,473 )     (219,803 )
                                 
Interest expense
    (6,515 )     (8,265 )     (14,037 )     (14,220 )
                                 
Total other expense
    (6,515 )     (8,265 )     (14,037 )     (14,220 )
                                 
Loss before taxes
    (70,802 )     (79,826 )     (82,510 )     (234,023 )
Provision for income taxes
    -       -       -       -  
                                 
Net loss
  $ (70,802 )   $ (79,826 )   $ (82,510 )   $ (234,023 )
                                 
Loss per share, basic and diluted
  $ (0.00 )   $ (0.00 )   $ (0.00 )   $ (0.01 )
                                 
Weighted average number of shares outstanding, basic and diluted
    18,781,000       18,781,000       18,781,000       18,781,000  
 
 
2

 
 
FRONTIER BEVERAGE COMPANY, INC.
 
   
Six Months Ended
 
   
June 30, 2012
   
June 30, 2011
 
             
CASH FLOWS FROM OPERATING ACTIVITIES
           
Net loss
  $ (82,510 )   $ (234,023 )
Adjustments to reconcile net loss to net cash flows from operating activities:
               
Impairment of inventory
    (2,621 )     (27,500 )
Changes in assets and liabilities:
               
Accounts receivable
    (377 )     (29,153 )
Inventory
    7,140       65,113  
Prepaid expenses
    3,614       6,245  
Accounts payable
    (4,456 )     (31,478 )
Accrued expenses
    73,872       131,579  
                 
Net cash flows used in operating activities
    (5,338 )     (119,217 )
                 
CASH FLOWS FROM INVESTING ACTIVITIES
    -       -  
                 
CASH FLOWS FROM FINANCING ACTIVITIES
               
Proceeds from related parties
    24,519       199,637  
Capital contribution
    9,000       9,000  
Repayment of related party debt
    (27,995 )     (88,264 )
Bank overdraft
    -       (33 )
                 
Net cash flows provided by financing activities
    5,524       120,340  
                 
Increase in cash
    186       1,123  
Cash, beginning of year
    255       -  
Cash, end of year
  $ 441     $ 1,123  
                 
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
                 
Interest paid
  $ -     $ -  
                 
Income taxes paid
  $ -     $ -  
 
 
3

 

FRONTIER BEVERAGE COMPANY, INC.
JUNE 30, 2012 AND JUNE 30, 2011
 
NOTE A – BASIS OF PRESENTATION AND RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
 
Interim Financial Reporting
 
While the information presented in the accompanying interim financial statements is unaudited, it includes all adjustments, which are, in the opinion of management, necessary to present fairly the financial position, results of operations and cash flows for the interim periods presented in accordance with generally accepted accounting principles in the United States of America ("GAAP").  These interim financial statements follow the same accounting policies and methods of application as used in the December 31, 2011 audited financial statements of Frontier Beverage Company, Inc. (the “Company”).  All adjustments are of a normal, recurring nature.  Interim financial statements and the notes thereto do not contain all of the disclosures normally found in year-end audited financial statements and these Notes to Financial Statements are abbreviated and contain only certain disclosures related to the six month periods ended June 30, 2012 and 2011.  It is suggested that these interim financial statements be read in conjunction with our audited financial statements and related notes for the year ended December 31, 2011 included in our Form 10-K, filed with the Securities Exchange Commission on April 16, 2012.  Operating results for the three and six months ended June 30, 2012 are not necessarily indicative of the results that can be expected for the year ending December 31, 2012.
 
Going Concern
 
The financial statements of the Company have been prepared in conformity with GAAP, and assume that the Company will continue as a going concern.  The Company expects to incur losses as it expands.  To date, the Company’s cash flow requirements have been met through the sale of its common stock, cash advances from related parties, minimal sales and established trade credit.  There is no assurance that additional funds will be available for the Company to finance its operations should the Company be unable to realize profitable operations.  These conditions, among others, give rise to substantial doubt about the Company’s ability to continue as a going concern.  The financial statements do not include adjustments relating to the recoverability and realization of assets and classification of liabilities that might be necessary should the Company be unable to continue in operation.
 
Recent Accounting Pronouncements
 
The Company does not expect the adoption of recently issued accounting pronouncements to have a significant impact on its results of operations, financial position or cash flow.
 
NOTE B INVENTORY
 
Inventory consists of the following:
 
   
June 30,
2012
   
December 31,
2011
 
Raw materials
  $ 27,122     $ 27,337  
Finished goods
    -0-       4,304  
      27,122       31,641  
Less: reserve for impairment
    -0-       -0-  
Inventory, Net
  $ 27,122     $ 31,641  
 
 
4

 
 
FRONTIER BEVERAGE COMPANY, INC.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2012 AND JUNE 30, 2011
 
NOTE B INVENTORY (Continued)
 
During the three months ended June 30, 2012, the Company recovered $348 of obsolete inventory while for the six months ended June 30, 2012 the Company’s net writeoff of obsolete inventory totaled $2,621.
 
During the three months ended March 31, 2011, the Company decided to discontinue the further production and distribution of its 16 oz. Unwind Orange product (the “Discontinued Product”). To that end the Company sold 4,112 cases of the Discontinued Product at a significant reduction in price and accordingly reduced the reserve for impairment.  Such amount has reduced cost of revenues for the three and six months ended June 30, 2011.
 
NOTE C – PREPAID EXPENSE
 
Prepaid expense consists of the following:
 
   
June 30,
2012
   
December 31,
2011
 
Prepaid insurance
  $ 3,699     $ 1,813  
Prepaid marketing
    1,833       7,333  
    $ 5,532     $ 9,146  
 
NOTE D – CAPITAL STOCK
 
The Company is authorized to issue up to 100,000,000 shares of common stock at $0.001 par value per share ("Common Stock").  As of June 30, 2012, December 31, 2011, and June 30, 2011, the Company had 18,781,000 shares of Common Stock issued and outstanding.  Holders of Common Stock are entitled to one vote per share and are to receive dividends or other distributions when and if declared by the Company’s Board of Directors.  None of our Common Stock is subject to outstanding options or rights to purchase, nor do we have any issued and outstanding securities that are convertible into our Common Stock.  We have not agreed to register any of our stock.  We do not currently have in effect an employee stock option plan.
 
NOTE E – INCOME TAXES
 
Deferred income tax assets and liabilities are determined based upon differences between the financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. The Company does not expect to pay any significant federal or state income tax for 2012 as a result of the losses recorded during the six months ended June 30, 2012, the additional losses expected for the remainder of 2012, and from generating net operating loss carry forwards from prior years.  Accounting standards require the consideration of a valuation allowance for deferred tax assets if it is "more likely than not" that some component or all of the benefits of deferred tax assets will not be realized.  As of June 30, 2012 and 2011, the Company maintained a full valuation allowance for all deferred tax assets. Based on these requirements, no provision or benefit for income taxes has been recorded.  There were no recorded unrecognized tax benefits at the end of the reporting period.
 
 
5

 
 
FRONTIER BEVERAGE COMPANY, INC.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2012 AND JUNE 30, 2011
 
NOTE F – RELATED PARTIES
 
During the six months ended June 30, 2012, the Company received an aggregate of $16,193 and $8,325, respectively, from HBB, LLC (“HBB”) and Baked World, LLC (“Baked World”), both of which are Tennessee limited liability companies beneficially owned and controlled by Terry Harris, the Company’s President, Treasurer and sole director, and Timothy Barham, a former officer and director of the Company (who resigned those positions effective November 15, 2011).  The Company agreed to pay interest on the loans at eight percent (8%). The loans are due on demand.
 
The following table details the cash activity between the Company and HBB and Baked World.
 
   
HBB
   
Baked World
 
Balance, 1/1/11
  $ 207,321     $ -0-  
Advances
    171,018       9,630  
Repayments
    (12,501 )     -0-  
Balance, 12/31/11
    365,838       9,630  
Advances
    16,193       8,325  
Repayment
    (22,190 )     (5,805 )
Balance, 6/30/12
  $ 359,841     $ 12,150  
 
On May 12, 2010, Mr. Barham loaned the Company $120,000 on which the Company agreed to pay interest at six percent (6%).  Through June 30, 2012, the Company has repaid $119,075, leaving a balance due of $925.  The loan is due on demand.
 
Since November 2009, the Company was provided office space, the use of office equipment and accounting personnel by HBB.  From January 2012 through June 30, 2012, and January 1, 2011 through June 30, 2011, the services were provided to the Company at $1,500 per month, which amounts are included in operating expense and recorded as capital contribution on the accompanying financial statements.
 
 
6

 
 
 
We urge you to read the following discussion in conjunction with management’s discussion and analysis contained in our Annual Report on Form 10-K for the year ended December 31, 2011, as well as with our condensed consolidated financial statements and the notes thereto included elsewhere herein.
 
CAUTION REGARDING FORWARD-LOOKING STATEMENTS
 
Our prospects are subject to uncertainties and risks. In this Quarterly Report on Form 10-Q, we make forward-looking statements in this Item 2 and elsewhere that also involve substantial uncertainties and risks. These forward-looking statements are based upon our current expectations, estimates and projections about our business and our industry, and reflect our beliefs and assumptions based upon information available to us at the date of this report. In some cases, you can identify these statements by words such as “if,” “may,” “might,” “will, “should,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “potential,” “continue,” and other similar terms. These forward-looking statements include, among other things, projections of our future financial performance and our anticipated growth, descriptions of our strategies, our product and market development plans, and other objectives, expectations and intentions, the trends we anticipate in our business and the markets in which we operate, and the competitive nature and anticipated growth of those markets.
 
We caution readers that forward-looking statements are predictions based on our current expectations about future events. These forward-looking statements are not guarantees of future performance and are subject to risks, uncertainties and assumptions that are difficult to predict. Our actual results, performance or achievements could differ materially from those expressed or implied by the forward-looking statements as a result of a number of factors, including but not limited to the risks and uncertainties discussed in our other filings with the SEC or our sales results or changes in costs associated with ingredients for our products, manufacture of our products, distribution and sales. We undertake no obligation to revise or update any forward-looking statement for any reason.
 
Overview
 
The Company abandoned its prior data storage business operations in November 2009 and is now focused exclusively on the development, marketing and distribution of New Age/Alternative Beverages and snack products. The descriptive term “New Age/Alternative Beverages” describes products that include energy drinks/infused water, fruit juices and drinks, dairy and dairy substitutes and bottled/canned teas.  On February 4, 2010, the Company changed its name to Frontier Beverage Company, Inc.
 
In March 2010, we acquired certain intellectual property rights for a proprietary relaxation beverage known as UnWind™ which we currently market. We also intend to develop additional proprietary beverage products in various categories to provide consumers with an array of fresh and unique concepts in the New Age/Alternative Beverage category.
 
In the first quarter of 2011, management expanded the Company’s product offerings and began development, marketing and distribution of Up SnaxTM, an energy brownie product. Up SnaxTM  is currently sold on a limited basis through one major distributor and to a few small retailers who order directly from the Company.
 
Our mission is to supply the highest quality New Age/Alternative Beverages and unique snack products at the most economical cost to distributors servicing the retail industry and directly to consumers through our website. Our service-oriented approach integrates the elements of research, development, product quality assurance, packaging/distribution efficiency, and advanced management systems to generate higher profit margins for our retailers.  Collaboration with our distributors and retailers carrying our product is expected to build long-term relationships and help us manage our carefully planned growth.
 
Basis of Presentation of Financial Information
 
The accompanying financial statements have been prepared in conformity with generally accepted accounting principles in the United States of America (“GAAP”), which contemplate continuation of the Company as a going concern, which is dependent upon the Company’s ability to establish itself as a profitable business.  At June 30, 2012, the Company had an accumulated deficit of $2,217,991, and for the six months ended June 30, 2012 incurred net losses of $82,510.  Management’s plans with regard to operations include the aggressive marketing of the Company’s snack products and
 
 
7

 
 
obtaining additional funds through the issuance of securities or borrowings.  However, there can be no assurance that management will be successful in obtaining additional funding or in attaining profitable operations. Furthermore, no stockholder is required to provide any such additional funding.
 
The financial statements do not include adjustments relating to the recoverability and realization of assets and classification of liabilities that might be necessary should the Company be unable to continue in operation.
 
Critical Accounting Policies
 
There have been no changes from the Critical Accounting Policies described in the Annual Report on Form 10-K filed with the Securities and Exchange Commission on April 16, 2012.
 
Liquidity and Capital Resources
 
We began current operations in November 2009 and have yet to attain a level of operations which allows us to meet our current overhead requirements.  We do not contemplate attaining profitable operations prior to 2013, and there is no assurance that such an operating level will ever be achieved.  We will be dependent upon obtaining additional financing in order to adequately fund working capital, infrastructure, production expenses and significant marketing related expenditures to gain market recognition, so that we can achieve a level of revenue adequate to support our cost structure, none of which can be assured. These factors raise substantial doubt about our ability to continue as a going concern and the accompanying financial statements do not include any adjustments related to the recoverability or classification of asset carrying amounts or the amounts and classification of liabilities that may result should we be unable to continue as a going concern.
 
As of June 30, 2012, the Company’s cash balance was $441.  Outstanding loans and accounts payable as of June 30, 2012 totaled $429,519, of which $372,916 is attributable to loans from related parties.  The Company’s working capital deficit as of June 30, 2012 was $813,044.
 
Since we began our current operations, we have obtained financing through loans to the Company from the following sources:
 
   
Loan
Amount
   
Amount
Repaid
   
Balance Due
June 30, 2012
 
HBB, LLC
  $ 545,167     $ 185,325     $ 359,842  
Baked World, LLC
  $ 18,010     $ 5,860     $ 12,150  
Terry Harris
  $ 176,479     $ 176,479     $ -0-  
Timothy Barham
  $ 120,000     $ 119,075     $ 925  
 
The Company will need to raise additional capital to expand operations to the point at which the Company can achieve profitability. The terms of financing that may be raised may not be on terms acceptable by the Company. If adequate funds cannot be raised outside of the Company, the Company’s current stockholders may need to contribute funds to sustain operations. The Company does not have any agreements with any of its stockholders to provide any capital and there can be no assurance that any stockholder would be able or willing to fund the Company’s continued operations.
 
Results of Operations
 
Comparison of Three Months Ended June30, 2012 and 2011
 
For the three month periods ended June 30, 2012 and 2011, the Company’s revenue totaled $1,117 and $162,186, respectively, for which its respective cost of revenues totaled $831 and $143,500.  A breakdown of the Company’s revenue and cost of sales follows:
 
 
8

 
 
   
Three Months Ended
       
REVENUE
 
June 30, 2012
   
June 30, 2011
   
Change
 
Beverage Products
  $ -0-     $ 162,186     $ (162,186 )
Snack Products
    1,117       -0-       1,117  
Total Revenue
  $ 1,117     $ 162,186     $ (161,069 )
 
   
Three Months Ended
       
COST OF REVENUE
 
June 30, 2012
   
June 30, 2011
   
Change
 
Beverage Products
  $ -0-     $ 143,500     $ (143,500 )
Snack Products
    831       -0-       831  
Total Cost of Revenue
  $ 831     $ 143,500     $ (142,669 )
 
During the three months ended June 30, 2012, the Company reported minimal sales of its snack products. And no sales of beverage products.  During the three months ended June 30, 2011, the Company sold beverage products at its wholesale prices and recorded cost of revenue accordingly.  Snack products were introduced in mid-2011, therefore no revenue and cost of revenue are reflected in the above table for the three months ended June 30, 2011.
 
For the three month periods ended June 30, 2012 and 2011, the Company had operating expenses totaling $64,573 compared to $90,247, respectively, a decrease of $25,674.  This decrease is in large part a direct result of officers’ compensation decreasing by approximately $30,000 as a result of the November 2011 resignation of Timothy Barham as the Company’s Vice President.
 
Comparison of Six Months Ended June 30, 2012 and 2011
 
For the six month periods ended June 30, 2012 and 2011, the Company’s revenue totaled $71,252 and $203,152, respectively, for which its respective cost of revenues totaled $8,430 and $182,649.  A breakdown of the Company’s revenue and cost of sales follows:
 
   
Six Months Ended
       
REVENUE
 
June 30, 2012
   
June 30, 2011
   
Change
 
Beverage Products
  $ 63,205     $ 203,152     $ (139,947 )
Snack Products
    8,047       -0-       8,047  
Total Revenue
  $ 71,252     $ 203,152     $ (131,900 )
 
   
Six Months Ended
       
COST OF REVENUE
 
June 30, 2012
   
June 30, 2011
   
Change
 
Beverage Products
  $ -0-     $ 182,649     $ (182,649 )
Snack Products
    8,430       -0-       8,430  
Total Revenue
  $ 8,430     $ 182,649     $ (174,219 )
 
During the six months ended June 30, 2012, the Company sold previously written off beverage product at a discount and recorded no cost associated with these sales, as well as a minimal amount of its snack products.  During the six months ended June 30, 2011, the Company sold beverage product at its wholesale prices and recorded cost of revenue accordingly.  Snack products were introduced in mid-2011, therefore no revenue and cost of revenue are reflected in the above table for the six months ended June 30, 2011.
 
For the six month periods ended June 30, 2012 and 2011, the Company had operating expenses totaling $131,295 compared to $240,306, respectively, a decrease of $109,011.  This decrease is in large part a direct result of the following:
 
 
Officers compensation decreased by approximately $59,000 as a result of the November 2011 resignation of Timothy Barham as the Company’s Vice President; and
 
Consulting expenses decreased approximately $34,000, as result of the expiration in 2011 of a consulting agreement providing public relations services.
 
 
9

 
 
Off Balance Sheet Arrangements
 
We do not have any off balance sheet arrangements.
 
 
Our Company is a “smaller reporting company” as defined by Rule 12b-2 of the Exchange Act, and as such, is not required to provide the information required under this Item.
 
 
Evaluation of Disclosure Controls and Procedures
 
Terry Harris, our principal executive officer and principal financial officer, conducted an evaluation of the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) promulgated under the Exchange Act) as of June 30, 2012, pursuant to Exchange Act Rule 13a-15. Such disclosure controls and procedures are designed to ensure that information required to be disclosed by the Company is accumulated and communicated to the appropriate management on a basis that permits timely decisions regarding disclosure. Based upon that evaluation, the Company’s principal executive and financial officer concluded that the Company’s disclosure controls and procedures as of June 30, 2012 were effective to provide reasonable assurance that information required to be disclosed in the Company’s periodic filings under the Exchange Act is accumulated and communicated to our management to allow timely decisions regarding required disclosure.
 
Changes in Internal Control Over Financial Reporting
 
There were no changes in our internal controls over financial reporting during our quarter ended June 30, 2012 that have materially affected or are reasonably likely to materially affect our internal controls over financial reporting.

Limitations on the Effectiveness of Controls
 
Our disclosure controls and procedures provide our principal executive and financial officer with reasonable assurances that our disclosure controls and procedures will achieve their objectives. However, our management does not expect that our disclosure controls and procedures or our internal control over financial reporting can or will prevent all human error. A control system, no matter how well designed and implemented, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Furthermore, the design of a control system must reflect the fact that there are internal resource constraints, and the benefit of controls must be weighed relative to their corresponding costs. Because of the limitations in all control systems, no evaluation of controls can provide complete assurance that all control issues and instances of error, if any, within our company are detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur due to human error or mistake. Additionally, controls, no matter how well designed, could be circumvented by the individual acts of specific persons within the organization. The design of any system of controls is also 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 objectives under all potential future conditions.
 
Management is aware that there is a lack of segregation of duties at the Company due to the fact that the Company only has one director and executive officer dealing with general administrative and financial matters. This constitutes a significant deficiency in the internal controls. Management has decided that considering the officer/director involved, the control procedures in place, and the outsourcing of certain financial functions, the risks associated with such lack of segregation were low and the potential benefits of adding additional employees to clearly segregate duties did not justify the expenses associated with such increases. Management plans to re-evaluate this situation periodically. In light of the Company’s current cash flow situation, the Company does not intend to increase staffing to mitigate the current lack of segregation of duties within the general administrative and financial functions.
 
 
10

 
 
 
 
There are no material pending legal or governmental proceedings relating to our Company or its properties to which we are a party, and to our knowledge, there are no material proceedings to which any of our directors, executive officers, affiliates or shareholders are a party adverse to us or have a material interest adverse to us.

 
Our Company is a “smaller reporting company” as defined by Rule 12b-2 of the Exchange Act, and as such, is not required to provide the information required under this Item.
 
 
There are no unreported sales of unregistered securities during the quarter ended June 30, 2012.
 
 
None.
 
 
Not applicable.
 
 
None.
 
 
The following exhibits are filed with this Quarterly Report on Form 10-Q or are incorporated by reference as described below.
 
*Filed herewith.
 
 
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.
 
August 7, 2012
FRONTIER BEVERAGE COMPANY, INC.
     
 
By:
/s/ Terry Harris
 
Terry Harris
 
President and Treasurer
(Principal Executive Officer, Principal Financial and Accounting Officer and Authorized Signatory)
 
 
11 

 

PINX:FBEC Frontier Beverage Co Inc Quarterly Report 10-Q Filling

Frontier Beverage Co Inc PINX:FBEC Stock - Get Quarterly Report SEC Filing of Frontier Beverage Co Inc PINX:FBEC stocks, including company profile, shares outstanding, strategy, business segments, operations, officers, consolidated financial statements, financial notes and ownership information.

PINX:FBEC Frontier Beverage Co Inc Quarterly Report 10-Q Filing - 6/30/2012
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