XOTC:HJOE Hangover Joes Holding Corp Quarterly Report 10-Q Filing - 6/30/2012

Effective Date 6/30/2012

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 FORM 10-Q

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

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

Commission file number: 000-525-33

HANGOVER JOES HOLDING CORPORATION
 (Exact name of the registrant as specified in its charter)
 
 
 Colorado 
 20-8097439
 (State or other jurisdiction of incorporation or organization)
(IRS Employer Identification No.)
 
2 N. Cascade Avenue, Suite 1400
Colorado Springs, CO 80903
(Address of principal executive offices)

719-265-5821
Telephone number, including
Area code
 
ACCREDITED MEMBERS HOLDING CORPORATION 
(Former name or former address if changed since last report)
 

Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 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 o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No o

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

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company:

Large accelerated filer o       Accelerated filer o       Non-accelerated filer o       Smaller reporting Company x
 
There were 120,322,628 shares of the issuer's common stock, par value $0.001, outstanding as of August 14, 2012.
 


 
 
 

 

HANGOVER JOE’S HOLDING CORPORATION
(FORMERLY ACCREDITED MEMBERS HOLDING CORPORATION)
QUARTERLY REPORT ON FORM 10-Q
FOR THE PERIOD ENDED JUNE 30, 2012

 
CONTENTS
 
PART I – Financial Information
Page
   
Item 1.  Financial Statements
 2
   
Condensed consolidated financial statements (unaudited):
 
   
    Balance sheets 
 2
   
    Statements of operations and comprehensive loss 
 3
   
    Statement of changes in equity (deficit)
 4
   
    Statements of cash flows 
 5
   
    Notes to unaudited consolidated financial statements 
 6 – 26
   
Item 2. Management’s Discussion and Analysis
 27
   
Item 3.  Quantitative and Qualitative Disclosures About Market Risk
 33
   
Item 4. Controls and Procedures 
 34
   
PART II – Other Information
 
   
Item 1A. Risk Factors 
 35
   
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 
 35
   
Item 5.  Other Information  
 35
   
Item 6. Exhibits 
 35
 
 

 
 

 
 
HANGOVER JOE’S HOLDING CORPORATION
(FORMERLY ACCREDITED MEMBERS HOLDING CORPORATION)
CONSOLIDATED BALANCE SHEETS
 
   
June 30,
   
December 31,
 
   
2012
   
2011
 
Assets
 
(Unaudited)
       
Current assets:
           
Cash
  $ 152,038     $ 320,971  
      Accounts receivable, net
    142,861       35,423  
      Related party receivable, net
    65,500       67,083  
      Prepaid expenses and other
    59,318       70,570  
      Investment in marketable securities
    73,462       113,631  
      Investment in debt securities
    30,000       30,000  
         Total current assets
    523,179       637,678  
                 
Property and equipment, net
    116,068       147,629  
Intangible asset
    12,500       12,500  
Cost investments
    609,672       609,672  
Investment in marketable securities
    294,403       496,530  
Investment in debt securities
    25,000       25,000  
Investment in warrants, including related party warrants of
               
$30,641 at June 30, 2012 and $15,000 at December 31, 2011
    38,490       99,501  
Deposits and other assets
    6,294       6,294  
      1,102,427       1,397,126  
Total assets
  $ 1,625,606     $ 2,034,804  
                 
Liabilities
               
Current liabilities:
               
      Accounts payable
  $ 508,266     $ 497,570  
      Related party payable
    25,000       25,000  
      Accrued expenses
    155,666       99,032  
      Deferred revenue
    304,031       349,006  
         Total current liabilities
    992,963       970,608  
Notes payable:
               
      Related parties
    188,158       196,655  
      Other
    619,905       712,214  
Deferred rent liability
    23,107       24,523  
Derivative liability
    77,000       77,000  
      908,170       1,010,392  
         Total liabilities
    1,901,133       1,981,000  
                 
Equity (Deficit)
               
      Preferred stock; $0.10 par value; authorized shares - 10,000,000
         
         Series A; authorized shares - 425,000
               
         Series A; issued and outstanding shares - 89,168 (2012)
               
         and 385,143 (2011)
    321,081       1,386,983  
      Common stock; $0.001 par value;
               
         Authorized shares - 100,000,000
               
         Issued and outstanding shares - 38,107,801 and 36,807,801
               
         (2012) and 35,746,531 and 34,446,531 (2011)
    36,807       34,446  
      Additional paid-in capital
    7,099,772       6,014,763  
      Other comprehensive income
    56,002       274,548  
      Accumulated deficit
    (7,701,612 )     (7,569,761 )
Total AMHC shareholders' equity (deficit)
    (187,950 )     140,979  
Noncontrolling interest
    (87,577 )     (87,175 )
          Total equity (deficit)
    (275,527 )     53,804  
Total liabilities and equity (deficit)
  $ 1,625,606     $ 2,034,804  
 
 See notes to unaudited condensed consolidated financial statements.

2
 
 
 

 
 
HANGOVER JOE’S HOLDING CORPORATION
(FORMERLY ACCREDITED MEMBERS HOLDING CORPORATION)
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(Unaudited)
                         
   
Three months ended
   
Six months ended
 
   
June 30,
   
June 30,
 
   
2012
   
2011
   
2012
   
2011
 
                         
Revenue, net:
                       
Investment and management services
  $ 260,172     $ 402,975     $ 536,492     $ 981,488  
Management services - related party
    207,000       -       369,641       -  
Premium meat products
    -       17,990       6,969       34,978  
Total net revenue
    467,172       420,965       913,102       1,016,466  
Cost of revenue:
                               
Investment and management services
    99,377       181,822       201,427       389,611  
Management services - related party
    125,368       -       247,599       -  
Premium meat products
    -       88,764       392       136,400  
Total cost of revenue
    224,745       270,586       449,418       526,011  
Gross profit
    242,427       150,379       463,684       490,455  
Operating expenses:
                               
General and administrative
    202,201       529,910       432,421       1,133,293  
Selling and marketing
    18,030       462,430       132,397       745,572  
Total operating expenses
    220,231       992,340       564,818       1,878,865  
Operating  income (loss)
    22,196       (841,961 )     (101,134 )     (1,388,410 )
Other income (expense):
                               
Interest expense:
                               
Related parties
    (6,536 )     (3,627 )     (13,291 )     (6,127 )
Other
    (28,364 )     (6,029 )     (58,088 )     (8,529 )
Gain on derivative liability
    -       348,162       -       509,962  
(Loss) Gain on value of warrants
    (2,353 )     (1,685 )     (19 )     17,393  
Impairment of marketable securities
    -       (142,650 )     -       (142,650 )
Gain on sale of marketable securities, net
    37,847       7,469       37,847       22,470  
Other income, net
    1,215       7       2,432       2,464  
      1,809       201,647       (31,119 )     394,983  
  Net income (loss)
  $ 24,005     $ (640,314 )   $ (132,253 )   $ (993,427 )
                                 
Net income (loss) attributable to noncontrolling interest
  $ 35     $ (4,957 )   $ (402 )   $ (5,547 )
                                 
Net income (loss) attributable to AMHC
    23,970       (635,357 )     (131,851 )     (987,880 )
                                 
  Net income (loss)
    24,005       (640,314 )     (132,253 )     (993,427 )
                                 
Other comprehensive income (loss):
                               
   Unrealized gain (loss) from available for sale securities
    (168,225 )     66,059       (218,546 )     242,327  
                                 
Comprehensive loss
  $ (144,220 )   $ (574,255 )   $ (350,799 )   $ (751,100 )
                                 
Comprehensive income (loss) attributable to noncontrolling interest
  $ 35     $ (4,957 )   $ (402 )   $ (5,547 )
                                 
Comprehensive loss attributable to AMHC
  $ (144,255 )   $ (569,298 )   $ (350,397 )   $ (745,553 )
                                 
Net income (loss) per share - basic and diluted
  $ *     $ (0.02 )   $ *     $ (0.03 )
                                 
Weighted average number of common shares
                               
outstanding - basic
    35,824,853       32,835,090       35,135,691       32,443,318  
   - diluted
    41,660,611       32,835,090       35,135,691       32,443,318  
 
* less than $0.01 per share
 
See notes to unaudited condensed consolidated financial statements.

3
 
 
 
 

 
 
HANGOVER JOE’S HOLDING CORPORATION
(FORMERLY ACCREDITED MEMBERS HOLDING CORPORATION)
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (DEFICIT)
SIX MONTHS ENDED JUNE 30, 2012
(Unaudited) 
 
 
   
Common stock
   
Preferred stock
   
Additional
paid-in
    Accumulated    
Other
comprehensive
income 
   
Non-
controlling
         
   
Shares
   
Amount
   
Shares
   
Amount
   
capital
   
deficit
     (loss)    
interest
     
Total
 
Balance, January 1, 2012
  34,446,531   $ 34,446     385,143   $ 1,386,983   $ 6,014,763   $ (7,569,761 ) $ 274,548   $ (87,175 )   $ 53,804  
Share-based compensation
                          21,468                         21,468  
Conversion of preferred to common stock
  2,361,270     2,361     (295,975 )   (1,065,902 )   1,063,541                         -  
Net loss
                                (131,851 )         (402 )     (132,253 )
Other comprehensive loss:
                                                       
Unrealized loss on available for sale securities                                       (123,809 )           (123,809 )
Reclassification adjustments for gains included in net income
                                      (94,737           (94,737
Comprehensive loss
                                                    (350,799 )
Balance, June 30, 2012
  36,807,801   $ 36,807     89,168   $ 321,081   $ 7,099,772   $ (7,701,612 ) $ 56,002   $ (87,577 )   $ (275,527 )
 

See notes to unaudited condensed consolidated financial statements.
 
 

 4
 
 
 

 

HANGOVER JOE’S HOLDING CORPORATION
(FORMERLY ACCREDITED MEMBERS HOLDING CORPORATION)
CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
 
   
Six months ended
 
   
June 30,
 
   
2012
   
2011
 
Cash flows from operating activities
           
Net loss
  $ (132,253 )   $ (993,427 )
Adjustments to reconcile net loss to net cash used in
               
 operating activities:
               
Depreciation and amortization expense
    31,561       54,519  
Amortization of debt discount
    17,164       1,840  
Stock-based compensation expense
    21,468       91,125  
Gain on sale of marketable securities, net
    (37,847 )     (18,407 )
Gain on conversion of debt security to marketable security
    -       (5,760 )
Impairment on marketable securities
    -       142,650  
Gain (loss) on value of derivative warrants
    19       (14,922 )
Gain on value of derivative liabilities
    -       (509,962 )
Bad debt expense
    2,000       5,000  
Accretion of discount on debt securities
    -       (948 )
Changes in operating assets and liabilities:
               
Accounts receivable, including related party
    (107,855 )     125,625  
Prepaid expenses and other
    11,252       (29,271 )
Inventory
    -       (17,046 )
Accounts payable
    10,696       230,805  
Accrued expenses, including related party
    56,634       (170,430 )
Deferred revenue
    (60,616 )     (327,175 )
Deferred rent liability
    (1,416 )     3,560  
Net cash used in operating activities
    (189,193 )     (1,432,224 )
Cash flows from investing activities
               
Purchase of debt securities
    -       (30,000 )
Sale of investment securities
    138,230       70,306  
Purchase of property and equipment
    -       (11,812 )
Net cash provided by investing activities
    138,230       28,494  
Cash flows from financing activities
               
Proceeds from issuance of notes payable
    10,000       417,500  
Repayment on principal of notes payable
    (127,970 )     -  
Proceeds from issuance of common stock
    -       757,000  
Sale of subsidiary common stock
    -       110,000  
Net cash (used in) provided by financing activities
    (117,970 )     1,284,500  
Net decrease in cash
    (168,933 )     (119,230 )
Cash, beginning
    320,971       511,626  
Cash, ending
  $ 152,038     $ 392,396  
Supplemental disclosure of cash flow information
               
   Cash paid for interest
  $ 54,076     $ 5,545  
Supplemental disclosure of non-cash investing and financing activities
               
     Investments received in lieu of cash
  $ 15,641     $ 142,000  
     Conversion of debt investments to marketable securities
  $ -     $ 19,607  
     Conversion of warrant to marketable securities
  $ 76,633     $ -  
     Conversion of preferred stock to common stock
  $ 1,065,902     $ -  
 
See notes to unaudited condensed consolidated financial statements. 

5

 
 

 

 
HANGOVER JOE’S HOLDING CORPORATION
(FORMERLY ACCREDITED MEMBERS HOLDING CORPORATION)
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SIX MONTHS ENDED JUNE 30, 2012
 
 
NOTE 1 – ORGANIZATION, RECENT EVENTS AND MANAGEMENT’S PLANS

Organization and recent events:
 
Accredited Members Holding Corporation (“AMHC” or the “Company”) is headquartered in Colorado Springs, Colorado. Through July 25, 2012, the Company operated through its subsidiary corporations, Accredited Members, Inc. (“AMI”), World Wide Premium Packers, Inc. (“WWPP”) and AMHC Managed Services (“AMMS”).

As disclosed in a Form 8-K filed with the SEC on July 30, 2012, the Company, on July 25, 2012, entered into an Agreement and Plan of Merger and Reorganization (the “Merger Agreement”) with Hangover Joe’s, Inc., a privately-held Colorado corporation (“HOJ”), whereby the Company would acquire HOJ in a reverse triangular merger (the “Acquisition”).  On July 25, 2012, the parties closed the Acquisition and a Statement of Merger was filed and effective with the Colorado Secretary of State on that day.  Upon closing the Acquisition, the Company issued 83,514,827 common shares to the HOJ shareholders in exchange for all of their ownership interests in HOJ such that the former owners of HOJ own approximately 69% of the Company (Note 14).  The shareholders of the Company prior to the Acquisition now own approximately 31% of the Company.  As a result of the Acquisition on July 25, 2012, the Company changed its name to Hangover Joe’s Holding Corporation.

The Merger Agreement further provided that, within five business days after the closing of the Acquisition the Company would sell to Accredited Members Acquisition Corporation (“Buyer”) all of the equity interests in three of the Company’s subsidiaries (the “Sale”), being Accredited Members, Inc., AMHC Managed Services, Inc. and World Wide Premium Packers, Inc. (collectively, the “Subsidiaries”).  Buyer is a privately-held Colorado corporation owned by the Company’s two directors, JW Roth and David Lavigne.  The parties closed the Sale on July 27, 2012.  Buyer paid $10,000 and assumed all liabilities of the Subsidiaries in exchange for all of the shares in the Subsidiaries owned by the Company.  

AMI is primarily a publisher of investment-related research and information regarding microcap companies, which it provides through various channels including its website, print media, and investment conferences.   As part of its services, AMI provides an online social networking website intended for high net-worth investors (www.accreditedmembers.com), as well as certain services to corporate or issuer clients (referred to herein as “Profiles”) – representing multiple types of investor-related services (including web articles, press releases and research).  As a primary component of its services, AMI hosts multiple investment conferences each year that are intended for individuals and companies to identify and build relationships and build awareness of their business plans and operations.  AMI also provides institutional and individual investors with proprietary research on “microcap” and “small-cap” companies (companies with a market capitalization less than $300 million), and AMI sells business valuation reports that it prepares for customers. AMI’s services are generally sold in the form of customer memberships, which typically have terms of 30 days up to one year.  Beginning in the second quarter 2010, AMI began providing management services to third parties, including chief financial officer functions on a fixed-contract basis.  In June 2011, the Company formed AMMS.  All management services projects were transferred to AMMS from AMI in connection with the formation.  Beginning in the quarter ended September 30, 2011, AMMS also began providing management services to certain related party companies.

HOJ is a Colorado corporation formed on March 5, 2012.  HOJ was formed for the purpose of acquiring all of the assets of both Hangover Joe’s Products LLC (the “LLC”) and Hangover Joe’s Joint Venture (the “JV”).  The LLC had conducted operations through the JV, with the owner of the LLC being the same owners and control persons of the JV. The assets consist of intellectual property relating to Hangover Joe’s Recovery Shot, including but not limited to a license agreement dated July 19, 2011, between the LLC and Warner Bros. Consumer Products, Inc.  The license agreement permits HOJ to use the character names, costumes, artwork logos, and other elements depicted in the 2009 movie “The Hangover” during the term of the license agreement, which expires January 31, 2013.  HOJ has registered the trademark “Hangover Joe’s Get Up & Go” with the United States Patent and Trademark Office.  HOJ’s principal product is the Hangover Joe’s Recovery Shot.  HOJ is actively seeking to expand the distribution of its product, the Hangover Joe’s Recovery Shot, and has recently entered into distribution agreements to expand its reach to Australia, New Zealand and Canada.
 

6
 
 

 

 HANGOVER JOE’S HOLDING CORPORATION
(FORMERLY ACCREDITED MEMBERS HOLDING CORPORATION)
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SIX MONTHS ENDED JUNE 30, 2012


NOTE 1 – ORGANIZATION, RECENT EVENTS AND MANAGEMENT’S PLANS (CONTINUED)

The Company, through its subsidiaries described above, had three reporting segments through July 25, 2012: Investment Services and Management Services, provided through AMI and AMMS, and Premium Meat Products, provided through WWPP.

The accompanying condensed consolidated financial statements and notes thereto have been prepared in accordance with the instructions to quarterly reports on Form 10-Q.  In the opinion of management, these financial statements include all adjustments (consisting of normal recurring adjustments) that the Company considers necessary to present a fair statement of its results of operations, financial position and cash flows.  The results reported in these condensed, consolidated financial statement should not be regarded as necessarily indicative of results that may be expected for the entire year.  Certain information and footnote data necessary for fair presentation of financial position and results of operations in conformity with accounting principles generally accepted in the United States of America have been condensed or omitted.  Therefore, it is suggested that these condensed consolidated financial statements be read in conjunction with the financial statement and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2011.

Management’s plans:

The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business.  The Company reported net income of approximately $24,000 and a net loss of approximately $132,300 for the three and six months ended June 30, 2012, has a working capital deficiency of approximately $469,800, and has an accumulated deficit of approximately $7.7 million at June 30, 2012. The consolidated financial statements do not include any adjustments relating to the recoverability and classification of assets or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

In addition, the report of the Independent Registered Public Accounting Firm on the 2011 financial statements of HOJ (which are included in a Form 8-K filed by the Company on July 30, 2012) included a going concern explanatory paragraph expressing substantial doubt about HOJ’s ability to continue as a going concern. HOJ reported a net loss of approximately $256,700 for the year ended December 31, 2011, and a working capital deficiency and accumulated deficit of approximately $150,300 and $318,500, respectively, at December 31, 2011.  HOJ has a limited operating history, and HOJ cannot provide any assurance it will be able to raise funds through a future issuance of debt or equity to carry out its business plan. These conditions raise substantial doubt about HOJ’s ability to continue as a going concern. Management’s plans for 2012 include steps to increase profitability with new distribution deals in Australia, New Zealand and Canada.  In addition, on March 14, 2012, HOJ initiated a $1.5 million offering of common stock to accredited investors at $1.00 per share.  Through May 2012, HOJ raised $500,000.   On June 14, 2012, HOJ initiated a $500,000 offering of common stock to accredited investors at $2.00 per share.  Through July 25, 2012, HOJ raised $210,000.

7
 
   
 
 

 

HANGOVER JOE’S HOLDING CORPORATION
(FORMERLY ACCREDITED MEMBERS HOLDING CORPORATION)
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SIX MONTHS ENDED JUNE 30, 2012
 
 
 
NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES

Principles of consolidation:

The consolidated financial statements include the accounts of the Company and its subsidiaries.  All material intercompany accounts, transactions, and profits are eliminated in consolidation.

Use of estimates:
 
The preparation of financial statements in accordance with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
 
Significant estimates are used in accounting for certain items such as investments, long-lived assets, allowance for doubtful accounts, investments in warrants, derivative liabilities, revenue recognition, and stock-based compensation. Estimates are based on historical experience, where applicable, and assumptions that management believes are reasonable under the circumstances. Due to the inherent uncertainty involved with estimates, actual results may differ.

Accounts receivable and concentration of credit risk:
 
The Company is subject to credit risk through trade receivables. This credit risk is mitigated by the diversification of the Company’s operations, as well as its customer base. The Company grants varying payment terms to its customers. Payment terms for valuation reports prepared and sold by the Company typically require a portion of the fee to be paid up front, and the remaining amount due upon report delivery (typically within 45 days of the up-front payment).  Payment terms for memberships vary, but generally are either paid up-front, which includes a small discount, or are paid monthly over the term of the membership. The majority of the accounts receivable are generated from the Issuer Profile Contracts.   These contracts are either paid in full with cash or equity-based payments or in monthly payments spread over the term of the contract.  For contracts that provide for equity-based payment (such as stock) from the customer (discussed below), a receivable is recorded until the stock certificates have been received.
 
Four customers comprise approximately 47% of trade accounts receivable at June 30, 2012; these individual customer balances represent approximately 14%, 12%, 11%, and 10% of the total trade accounts receivable.  Five customers comprise approximately 91% of the trade accounts receivable at December 31, 2011; these individual customer balances represent approximately 29%, 23%, 17%, 11%, and 11% of the total trade accounts receivable. Two customers comprise substantially all of the related party accounts receivable at June 30, 2012; these individual accounts represent approximately 77% and 23% of the total related party accounts receivable. Two customers comprise substantially all of the related party accounts receivable at December 31, 2011; these individual customer balance represent approximately 52% and 40% of the total related party accounts receivable. One individual customer accounted for 24% of net revenues for the three and six months ended June 30, 2012, respectively, while one individual customer accounted for 18% and 15% of net revenues for the three and six months ended June 30, 2011.
 
Ongoing credit evaluations of customers’ financial condition are performed. Collateral is not required. The Company maintains an allowance when necessary for doubtful accounts that is the Company’s best estimate of potentially uncollectible trade receivables. Provisions are made based upon a specific review of all significant outstanding invoices that are considered potentially uncollectible in whole or in part. For those invoices not specifically reviewed or considered uncollectible, general provisions are provided at different rates, based upon the age of the receivable, historical experience, and other currently available evidence. The allowance estimates are adjusted as additional information becomes known or as payments are made. As of June 30, 2012 and December 31, 2011, the allowance for doubtful accounts was $11,000, and $56,900, respectively.
 

 
 

 
 HANGOVER JOE’S HOLDING CORPORATION
(FORMERLY ACCREDITED MEMBERS HOLDING CORPORATION)
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SIX MONTHS ENDED JUNE 30, 2012

 
NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
 
Marketable securities:
 
The Company accepts equity-based payment from certain customers as consideration for services.  This equity-based payment is generally from issuers for which there is a public market for their securities (or for which the Company expects there to be a public market in the near future).  The Company accounts for these transactions as deferred revenue based on the fair value of the equity instrument received or the fair value of the goods or services provided.  The Company recognizes revenue in a similar manner as if the Company had received cash.

All of the Company’s investments in marketable securities are classified as available-for-sale. These marketable securities are stated at fair value.  Any unrealized gains or losses are recorded in accumulated other comprehensive income (loss), a component of equity, until realized. Other-than-temporary declines in market value from original cost are included in operations. In determining whether an other-than-temporary decline in the market value has occurred, the Company considers the duration that, and extent to which, fair value of the investment is below its cost. Realized gains and losses are calculated based on specific identification to the individual securities involved with the resulting gains and losses included in non-operating income and expense on the statement of operations.

Cost method investments:

The Company accepts equity securities of certain customers for which there is no public market in their securities.  These non-marketable equity securities, over which the Company has no ability to exercise significant influence, are accounted for under the cost method.  Since there is no active trading market for these investments, they are, for the most part, illiquid.  Decreases in fair value below the recorded value are recognized as losses when the decrease is determined to be an other-than-temporary impairment.

Debt securities and derivative warrants:
 
In 2010, the Company purchased convertible promissory notes and warrants to purchase common stock of two publicly-traded companies. The convertible promissory notes are classified as available-for-sale debt securities and were valued using a recurring market-based method which approximates fair value by using the amortized cost basis of the promissory notes, with the discount being accreted to interest income over the respective terms of the notes.  One of the warrants was converted to stock during the six months ended June 30, 2012 (Note 5).  In 2011, the Company purchased two convertible promissory notes in two private companies.  The convertible promissory notes are accounted for as cost method investments as there is no public market in their securities and there is no active trading market for these investments.

Investments in warrants are recorded as assets and measured at their fair values.  The warrants are accounted for as derivative instruments if the underlying securities are readily convertible to cash, or available for sale securities if they are not readily convertible to cash.  Changes in the fair value of warrants accounted for as derivative instruments are recognized in earnings (loss), while changes in the fair value of available-for-sale warrant securities are recognized in other comprehensive income (loss).
 
Financial instruments:

At June 30, 2012, the carrying amounts of cash, accounts receivable and accounts payable approximate their fair values due to their short duration. Convertible notes payable to unrelated parties approximate their fair values based on current market rate information.   The fair value of the derivative liability was determined using a probability-weighted discounted cash flow model.  The fair value of receivables and notes payable to related parties is not practicable to estimate, due to the related party nature of the underlying transactions.  The fair value of cost investments are not practicable to estimate, as quoted market prices are not available, and the Company has not yet obtained or developed a valuation model necessary to estimate fair value.
 
The Company values its financial assets and liabilities utilizing a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. These tiers include: Level 1, defined as observable inputs, such as quoted prices in active markets; Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions. In determining fair value, the Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible.


9
 
 
 
 

 
 HANGOVER JOE’S HOLDING CORPORATION
(FORMERLY ACCREDITED MEMBERS HOLDING CORPORATION)
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SIX MONTHS ENDED JUNE 30, 2012
 
 
 
NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
 
Financial instruments (continued):
 
The following fair value hierarchy table presents information about the Company’s assets measured at fair value on a recurring basis as of June 30, 2012 and December 31, 2011, and indicates the fair value hierarchy of the valuation techniques utilized by the Company to determine such fair value.
 
 
Fair value measurement as of
 
 
June 30, 2012
 
   
Level 1
   
Level 2
   
Level 3
 
Cash
  $ 152,038     $ -     $ -  
Investment in marketable securities
    367,865       -       -  
Investment in debt securities
    -       -       55,000  
Investment in warrants
    -       -       38,490  
Derivative liability
    -       -       (77,000 )
 
 
Fair value measurement as of
 
 
December 31, 2011
 
   
Level 1
   
Level 2
   
Level 3
 
Cash
  $ 320,971     $ -     $ -  
Investment in marketable securities
    610,161       -       -  
Investment in debt securities
    -       -       55,000  
Investment in warrants
    -       -       99,501  
Derivative liability
    -       -       (77,000 )


Level 3 recurring fair value measurements represent the Company’s investment in debt securities, warrants (Note 5) and the derivative liability (Note 6).  The change in carrying value of the Company’s level 3 fair value measurements is as follows:
 
   
Investment
   
Investment
       
   
in Debt
   
in
   
Derivative
 
   
Securities
   
Warrants
   
Liability
 
Fair value at January 1, 2012
  $ 55,000     $ 99,501     $ (77,000 )
Receipt of warrant from a customer
    -       15,641       -  
Conversion of warrant to marketable securities
    -       (76,633 )     -  
Change in fair value
            (19 )     -  
Fair value at June 30, 2012
  $ 55,000     $ 38,490     $ (77,000 )


10

 
 
 

 
HANGOVER JOE’S HOLDING CORPORATION
(FORMERLY ACCREDITED MEMBERS HOLDING CORPORATION)
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SIX MONTHS ENDED JUNE 30, 2012
 
 

NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Intangible asset:

Intangible asset consists of a trademark license with Pat Boone, which has an indefinite useful life, and is not currently amortized.  Authoritative guidance requires that intangible assets not subject to amortization (indefinite-lived assets) be tested for impairment on an annual basis, or more frequently if events or changes in circumstances indicate that the asset might be impaired.  The impairment test consists of a comparison of the estimated fair value of an intangible asset with its carrying amount.    Significant judgments are required to estimate the fair value of intangible assets including estimating future cash flows, determining appropriate discount rates and other assumptions. Changes in these estimates and assumptions or the occurrence of one or more confirming events in future periods could cause the actual results or outcomes to materially differ from such estimates and could also affect the determination of fair value and/or impairment at future reporting dates.  

Revenue recognition:
 
The Company recognizes revenue pursuant to SEC Staff Accounting Bulletin No. 104, Revenue Recognition, and Accounting Standards Codification (ASC) 605-25 (formerly known as Emerging Issues Task Force Issue No. (EITF) 00-21, Revenue Arrangements with Multiple Deliverables). The Company recognizes revenue when persuasive evidence of an arrangement exists, delivery has occurred, the sale price is fixed or determinable, and collectability is reasonably assured.
 
AMI membership service contracts typically consist of multiple deliverables which include web-based services over the membership term, advertising space in the Company’s magazine publications, and participation in conferences and conference presentations.  The Company defers the revenue associated with any undelivered elements. The amount of revenue deferred in connection with the undelivered elements is based on each element's price sold on a stand-alone basis. Revenue is recognized once products are delivered, services are provided or over the term of the contract.  For valuation products that are sold to customers, such as valuation reports, revenues are recorded upon delivery and acceptance of the product to the customer. Management services revenue is recognized as services are provided, once collectability is reasonably assured.  Deferred revenue represents contractual billings in excess of revenue recognized.
 
The Company records revenues from such sales of third-party advertising slots in accordance with Principal Agent Considerations within the Revenue Recognition Topic of the FASB Accounting Standards Codification. The Company evaluates these sales on a case-by-case basis to determine whether the transaction should be recorded gross or net, including but not limited to assessing whether or not the Company (1) acts as principal in the transaction, (2) has the risks and rewards of the transaction, such as the risk of loss for collection, and (3) acts as an agent or broker with compensation on a commission or fee basis. Accordingly, sales of third-party advertising slots are typically recorded on a net basis.  Expenses of $3,750 and $38,725 were recognized for third parties for their advertising slots during the three months ended June 30, 2012 and 2011, respectively.

From November 2010 through August 17, 2011, WWPP derived revenue from the sale of premium meat products to consumers through its website, and WWPP recorded revenue upon delivery of the product to the consumer.  Product returns were not significant and WWPP also sold gift cards. The liability is relieved and net revenue is recorded upon redemption by the consumer. These gift cards were to be used to purchase premium meat products, and the gift cards were expected to be redeemed within one year of issuance. With the shift in business plan in the third quarter 2011, the gift cards are not currently redeemable but may be redeemable in the future, should WWPP be able to take the business into retail space (of which there is no guaranty) before the expiration of the gift cards. WWPP recognized approximately $0 and $7,000 of revenue in the three and six months ended June 30, 2012 as a result of the expiration of gift cards.  The gift card liability recorded at June 30, 2012 is $0.  Management believes WWPP is not subject to applicable escheat laws as the gift cards have a specific expiration date.
 

11


 
 

 
HANGOVER JOE’S HOLDING CORPORATION
(FORMERLY ACCREDITED MEMBERS HOLDING CORPORATION)
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SIX MONTHS ENDED JUNE 30, 2012
 
 

NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Revenue recognition (continued):

Management evaluated the terms of its WWPP sales in consideration of the criteria outlined in Principal Agent Consideration with regards to its determination of gross respect to gross versus net reporting of revenue for transactions with customers.  WWPP, through its website, sold premium meat and other products. In these transactions, management determined that the Company (i) acted as principal; (ii) had the risks and rewards of ownership, including the risk of loss for collection, delivery or returns; and (iii) had latitude in establishing price with the customer.  For these transactions, the Company recognized revenue on a gross basis.
 
Stock-based compensation:
 
The Company accounts for stock-based compensation under ASC 718, Share-Based Payment.  ASC 718 requires the recognition of the cost of services received in exchange for an award of equity instruments in the financial statements and is measured based on the grant date fair value of the award.  ASC 718 also requires the stock-based compensation expense to be recognized over the period of service in exchange for the award (generally the vesting period).  The Company estimates the fair value of each stock option at the grant date by using an option pricing model, typically the Black-Scholes model.
 
Net loss per share:
 
Basic net loss per share is computed by dividing the net loss applicable to common shareholders by the weighted-average number of shares of common stock outstanding for the period. Diluted net loss per share reflects the potential dilution that could occur if dilutive securities were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the earnings of the Company, unless the effect of such inclusion would reduce a loss or increase earnings per share. For each of the periods presented in the accompanying consolidated financial statements, the effect of the inclusion of dilutive shares would have resulted in a decrease in loss per share. Common stock options and warrants and shares underlying convertible debt and preferred stock aggregating 5,835,747 and 8,943,694 as of June 30, 2012, and June 30, 2011, respectively, have been excluded from the calculation of diluted net loss per common share.

Advertising:
 
Advertising costs are charged to expense when incurred. Advertising costs for the three and six months ended June 30, 2012 and 2011, were approximately $1,300, $94,970, $378,200 and $590,600, respectively.
 
  


12
 

 
 

 
HANGOVER JOE’S HOLDING CORPORATION
(FORMERLY ACCREDITED MEMBERS HOLDING CORPORATION)
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
SIX MONTHS ENDED JUNE 30, 2012
 
 
 
NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
 
Recently issued and adopted accounting pronouncements:
 
In June 2011, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2011-05, " Presentation of Comprehensive Income " ("ASU No. 2011-05"), which improves the comparability, consistency, and transparency of financial reporting and increases the prominence of items reported in other comprehensive income ("OCI") by eliminating the option to present components of OCI as part of the statement of changes in stockholders' equity. The amendments in this standard require that all non-owner changes in stockholders' equity be presented either in a single continuous statement of comprehensive income or in two separate but consecutive statements. Subsequently in December 2011, the FASB issued Accounting Standards Update No. 2011-12, " Deferral of the Effective Date for Amendments to the Presentation of Reclassifications of Items Out of Accumulated Other Comprehensive Income " ("ASU No. 2011-12"), which indefinitely defers the requirement in ASU No. 2011-05 to present on the face of the financial statements reclassification adjustments for items that are reclassified from OCI to net income in the statement(s) where the components of net income and the components of OCI are presented. The amendments in these standards do not change the items that must be reported in OCI, when an item of OCI must be reclassified to net income, or change the option for an entity to present components of OCI gross or net of the effect of income taxes. The amendments in ASU No. 2011-05 and ASU No. 2011-12 are effective for interim and annual periods beginning after December 15, 2011 and are to be applied retrospectively. The adoption of the provisions of ASU No. 2011-05 and ASU No. 2011-12 did not have a material impact on the presentation of the Company's consolidated statements of operations and comprehensive loss.

NOTE 3 – PROPERTY AND EQUIPMENT
 
As of June 30, 2012 and December 31, 2011, property and equipment consists of the following:
 
   
June 30,
   
December 31,
 
   
2012
   
2011
 
             
Website development
  $ 229,566     $ 229,566  
Furniture and fixtures
    25,265       25,265  
Equipment
    30,024       30,024  
      284,855       284,855  
Less accumulated depreciation and amortization
    (168,787 )     (137,226 )
    $ 116,068     $ 147,629  

Depreciation and amortization expense on property and equipment for the three and six months ended June 30, 2012 and 2011 was $15,780, $31,560, $27,500 and $54,500, respectively.


13

 
 
 

 
HANGOVER JOE’S HOLDING CORPORATION
(FORMERLY ACCREDITED MEMBERS HOLDING CORPORATION)
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
SIX MONTHS ENDED JUNE 30, 2012
 
 
  
NOTE 4 – INTANGIBLE ASSET

At June 30, 2012 and December 31, 2011, the Company’s intangible asset consists of a license agreement with Pat Boone, which was acquired in the WWPP acquisition. The license agreement with Pat Boone grants WWPP a perpetual, worldwide license to use Mr. Boone’s name and likeness in connection with the Company’s marketing and sale of premium meats.  The carrying value of this license is approximately $12,500 at June 30, 2012 and December 31, 2011.
 
NOTE 5 – INVESTMENTS
 
Investment in marketable securities:

Investment in marketable securities consists of shares of common stock of 18 unrelated companies that are traded on an exchange or the OTC-bulletin board.  The cost, gross unrealized holding gains and losses, and fair value of these available-for-sale securities as of June 30, 2012 and December 31, 2011, are as follows:
 
   
As of June 30, 2012
 
         
Gross unrealized holding
   
Fair
 
   
Cost
   
Gains
   
Losses
   
value
 
Available for sale:
                       
Marketable securities
  $ 403,859     $ 124,491     $ (160,485 )   $ 367,865  
 
   
As of December 31, 2011
 
           
Gross unrealized holding
   
Fair
 
   
Cost
   
Gains
   
Losses
   
value
 
Available for sale:
                               
Marketable securities
  $ 427,859     $ 216,600     $ (34,298 )   $ 610,161  
 

The Company regularly reviews its investment portfolio to identify and evaluate investments that have indications of possible impairment.  Factors considered in determining whether a loss is temporary include: the length of time and extent to which fair value has been lower than the costs basis; the financial condition, credit quality and near-term prospects of the investee; and whether it is more likely than not that the Company will be required to sell the security prior to recovery of its costs basis.  The Company evaluates the near-term prospects of the investees in relation to the severity and duration of the decline in market value (approximately six months or less).

During the six months ended June 30, 2012, the Company did not recognize an other-than-temporary impairment of marketable securities and there were no sales of marketable securities.  The sale of marketable securities for the six months ended June 30, 2012, resulted in realized gains of $94,737 and realized losses of $56,890.  During the six months ended June 30, 2011, the Company recognized an other-than-temporary impairment of two marketable securities by reclassifying approximately $142,700 from other comprehensive loss (a component of equity) to the statement of operations.

During the three and six months ended June 30, 2012, a net unrealized loss of $168,225 and $123,809 was recorded due to an decrease in fair value of certain marketable securities in “microcap” and “small-cap” companies. There are no securities that have been in an unrealized loss position for greater than one year.  
 
14

 
 
 

 
HANGOVER JOE’S HOLDING CORPORATION
(FORMERLY ACCREDITED MEMBERS HOLDING CORPORATION)
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SIX MONTHS ENDED JUNE 30, 2012
 
 

NOTE 5 – INVESTMENTS (CONTINUED)

Cost method investments:
 
As of June 30, 2012, the carrying value of the Company's cost method investments was $609,672, which consists of investments in six different companies.  The Company's cost method investments are evaluated, on at least a quarterly basis, for potential other-than-temporary impairment, or for when an event of change in circumstances has occurred that may have a significant adverse effect on the fair value of the investment.

Impairment indicators the Company considers in each reporting period include the following: whether there has been a significant deterioration in earnings performance, asset quality or business prospects; a significant adverse change in the regulatory, economic, or technological environment; a significant adverse change in the general market condition or geographic area in which the investment operates; industry and sector performance; current equity and credit market conditions; any bona fide offers to purchase the investment for less than the carrying value; and factors that raise significant concern, such as negative cash flow from operations or working capital deficiencies. Since there is no active trading market for these investments, they are for the most part illiquid.

The fair value of the cost method investments was considered impracticable to estimate without incurring excessive costs relative to the materiality of the investment.  The impracticability in developing such an estimate is due to insufficient information necessary to prepare a valuation model to determine fair value. There were no events or changes in circumstances identified that could have had a significant adverse effect on the fair value of these investments.  As of June 30, 2012, no impairment was identified.

Debt securities and derivative warrants:
 
In February 2011, WWPP subscribed to purchase $150,000 of 12% convertible promissory notes and warrants to purchase convertible preferred shares of a private company.  Under this agreement, WWPP was to purchase the notes and warrants in five monthly tranches of $30,000 beginning in March 2011.  WWPP made the first and only $30,000 purchase in March 2011. The purchase price was allocated to the convertible promissory note.  It was determined that the warrants had a nominal value.  WWPP rescinded the original subscription agreement and is no longer required to purchase additional notes or warrants from this private company.
 
The Company has recorded warrants to purchase up to 12,500 shares of common stock exercisable at $6.00 per share of one company, and warrants to purchase up to 62,500 shares of restricted common stock of the other company exercisable at $0.50 per share. The warrants are exercisable immediately and have a term of five years. The warrants were recorded at their estimated fair value on the date of purchase. The fair value of the warrants will fluctuate primarily in relation to the value of the publicly-traded companies’ underlying securities, either providing an appreciation in value or potentially expiring with no value. The Company converted the warrant for 62,500 shares into 53,415 shares in a cashless exercise in accordance with the warrant agreement during the six months ended June 30, 2012.  These shares are reflected in the marketable securities.  The fair value of the remaining warrants is estimated to be approximately $7,848 as of June 30, 2012.
 
During the year ended December 31, 2011, the Company entered into three managed services agreements with three separate companies (Note 13). These companies are considered to be related parties, as the Company’s CEO was appointed to the board of directors of each of these companies at the date of these agreements.  The Company receives a fixed monthly fee in cash.  At the inception of the agreements, the Company also received warrants to purchase shares of common stock in each of these companies. The first warrant received was for the Company to purchase up to 250,000 common shares at $0.01 per share.  For the second warrant, the Company may purchase up to 500,000 common shares exercisable at $0.01 per share.  For the third warrant, the Company may purchase 500,000 common shares at $0.0005 per share. As of March 31, 2012, the Company entered into a managed service agreement with HOJ.  The Company received a warrant to purchase up to 1,000,000 shares of HOJ’s common stock at $0.01 per share.  This warrant was cancelled subsequent to June 30, 2012.  During the three months ended June 30, 2012 the Company entered into two managed service agreements with separate private companies, with one being considered a related party.  In regards to the related party managed services agreement, the Company is to receive a fixed monthly fee in cash and 5% of the company in the form of a warrant. For the additional managed service agreement, the Company is to receive cash payments in three tranches with the first payment received prior to June 30, 2012, with the following two payments due in the third quarter of 2012.  Once the deliverables are completed in this managed services agreement, the Company will receive 5% of the company in the form of a warrant.
 
Each of these warrants is from privately-held companies for which there is no liquidity mechanism and no historical financial information to predict further performance.  The Company valued the warrants based in part on the estimated value of the services provided over the term of the agreements.  The value of the three warrants from 2011was determined to be $15,000.  The value of the warrant from the agreement entered into in the first quarter of 2012 is determined to be approximately $10,600.  The value of the warrant from the agreement entered into in the second quarter of 2012 is determined to be approximately $5,000.  Revenues associated with the receipt of the warrants are deferred and recognized over the term of the managed service agreements.  


15

 
 

 
 
HANGOVER JOE’S HOLDING CORPORATION
(FORMERLY ACCREDITED MEMBERS HOLDING CORPORATION)
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SIX MONTHS ENDED JUNE 30, 2012
 
 
NOTE 6 – DERIVATIVE LIABILITIES
 
The Company follows the guidance found in Codification topic, ASC 815-40, “Derivative and Hedging, Contracts in Entity’s Own Equity”, This topic specifies that a contract that would otherwise meet the definition of a derivative but is both (a) indexed to the Company’s own stock and (b) classified in equity in the balance sheet would not be considered a derivative financial instrument. ASC 815-40-15 provides a two-step model to be applied in determining whether a financial instrument or an embedded feature is indexed to an issuer’s own stock and able to qualify for the scope exception. The Company determined the Series A preferred stock issued for the acquisition of WWPP contained an embedded conversion feature that requires liability classification.  Liability classification is required because these conversion provisions are not indexed to the Company’s own stock. The fair value of the embedded conversion feature at December 31, 2011, was $0. The Company uses a probability-weighted discounted cash flow model to calculate fair value of its derivative liability.  Key assumptions used to apply this model included consideration of the term of the conversion option, the fair value of the Company’s common stock, the probability of achieving WWPP earnings thresholds, and a discount rate. Due to the cessation of on-line sales, it was determined that the probability of the contingent consideration was reduced to zero, which resulted in the estimated fair value of $0 at June 30, 2012 and December 31, 2011.

In April 2011, the Company began selling secured promissory notes each containing an embedded feature that requires a payment in excess of principal and interest based on certain terms and conditions. This embedded feature has been determined to be a derivative instrument and classified as a liability. Liability classification is required because this provision will require the Company to pay an additional sum of 10% to the secured note holders if the collateral keeps the value of the principal and any outstanding interest.
 
The Company allocated the proceeds from the issuance of notes payable and the Additional Sum based on the fair value of the instruments on the date of sale.  The fair value of the Additional Sum is estimated using a probability weighted discounted cash flow model.  The fair value of the liability at the date of sale was $77,000. The Company determined that there was no significant change in the fair value of the embedded feature from the date of the sale of the promissory notes at June 30, 2012.
 
NOTE 7 – NOTES PAYABLE
 
Convertible notes:
 
As of June 30, 2012, convertible notes that were originally issued in 2009 with an aggregate face amount of $200,000 are outstanding. These notes bear interest at 10% per annum, they are unsecured, and their maturity dates are in 2014. By their original terms, principal and interest are convertible at any time by the holder into shares of the Company’s common stock at $0.30 per share if the conversion is effected prior to the close of the third consecutive calendar month in which the Company is cash-flow positive, as defined; or, $0.60 per share if the conversion is effected after the close of the third consecutive calendar month in which the Company is cash-flow positive.
 
Promissory notes:
 
Beginning in April 2011, the Company began selling 12% secured promissory notes (“the Notes”) in principal increments of $25,000.  For the year ended December 31, 2011, the Company sold notes with a face amount of $770,000 for cash.  These notes bear interest at 12% per annum with a maturity date of April 15, 2014.  The Notes are collateralized by certain investment securities, as defined, (the “Collateral”) held by the Company as of April 18, 2011. In addition to the principal and interest due under the Notes, the lenders are entitled to receive an amount equal to 10% of the original principal amount of each Note (the “Additional Sum”), provided that the proceeds of the Collateral are sufficient to cover the principal and interest due under the Notes. The Company is not obligated to liquidate the Collateral to pay the Additional Sum, and unless an event of default, as defined in the agreement, is declared, any sales of all or part of the Collateral will be made in the Company’s sole discretion. Payments from the sale of the Collateral shall be applied first to the interest due under the Notes, then to the principal amount owing, and finally to the payment of the Additional Sum.  For the three months ended June 30, 2012, the Company sold a portion of the securities used as collateral for a total of $127,970 and applied this amount to the principal of the notes, leaving a principal balance of $642,030.  As of June 30, 2012, the carrying amount of the collateral is approximately $701,923; $294,403 is recorded as long-term marketable securities, $399,672 is recorded as cost investments, and $7,848 is recorded as warrants.

On October 3, 2011, the Company initiated an offering of up to $250,000 of 12% secured promissory notes which mature on October 3, 2014.  The notes are collateralized by certain investments in related party warrants. In addition, each subscriber is to receive a warrant to purchase shares of the Company's common stock at $.40 per share. The Company began selling these notes in January 2012.  As of June 30, 2012, the Company sold notes with a face amount of $10,000 for cash. The value of the warrant is considered immaterial.

16
 

 
 

 
HANGOVER JOE’S HOLDING CORPORATION
(FORMERLY ACCREDITED MEMBERS HOLDING CORPORATION)
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SIX MONTHS ENDED JUNE 30, 2012


NOTE 8 – COMMITMENTS AND CONTINGENCIES
 
License agreement:

Pursuant to terms of the License with Pat Boone (who is a minority shareholder of the Company), the Company is required to remit royalties to Pat Boone, or his designee, as well as to certain designated charities, as defined. The royalties, in aggregate, are 10% of net sales, as defined. The Company may sub-license the rights to other entities, for which sub-license net revenues are also subject to royalties. The Company is to pay a minimum royalty amount of $10,000 per month as an advance payment of a quarterly royalty amount. At each quarter-end, the Company is to pay any amounts of royalties due in excess of the monthly minimum payments. During the three and six months ended June 30, 2012 and 2011, the Company expensed royalties of $0, $0, $30,000 and $60,000, which is recorded as a component of cost of premium meat products revenue.  The license fees were no longer due when online sales were ceased pursuant to the license agreement; however, said payments will be required at such time the Company commences any new revenue generating activities.

Contingencies:

From time to time, the Company may become party to litigation and other claims in the ordinary course of business. To the extent that such claims and litigation arise, management provides for them if upon the advice of counsel, losses are determined to be both probable and estimable.

On April 7, 2011, WWPP filed a complaint in the federal district court for the district of Colorado seeking a declaratory judgment against All American Meats, Inc.  WWPP was not seeking monetary damages from All American Meats, Inc., instead the complaint was filed after All American Meats advised WWPP that it believed that the name it used in commerce and as trademarks “Pat Boone All American Meats”  infringed upon All American Meat’s common law trademark.  WWPP disagreed with All American Meats’ assertions, believes it was entitled to use the name and trademark “Pat Boone All American Meats”, and filed the complaint requesting that the court declare that the use of the name “Pat Boone All American Meats” did not constitute trademark infringement.   On January 9, 2012, both parties agreed to a settlement for WWPP to cease using the phrase “All American”, and the Company has subsequently removed this phrasing from all marketing materials.

On September 27, 2011, Salem Radio Network, Inc. (“SRN”) filed a petition in the County Court at Law No. 5 in Dallas Texas naming WWPP as a defendant. In the petition, SRN has asserted damages of $140,000 and is also seeking its attorneys’ fees, as well as interest.  The court has subsequently entered a default judgment against WWPP.  WWPP has $152,500 recorded in accounts payable related to the service provided.

NOTE 9 – INCOME TAXES
 
Deferred tax assets and liabilities represent the future impact of temporary differences between the financial statement and tax bases of assets and liabilities.  The Company’s net deferred tax assets have been fully reserved, effectively by a valuation allowance, because management does not believe realization of the deferred tax assets is sufficiently assured at the balance sheet date.

17


 
 

 
HANGOVER JOE’S HOLDING CORPORATION
(FORMERLY ACCREDITED MEMBERS HOLDING CORPORATION)
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SIX MONTHS ENDED JUNE 30, 2012
 
 

NOTE 9 – INCOME TAXES (CONTINUED)

The provision for income taxes is recorded at the end of each interim period based on the Company’s best estimate of its effective income tax rate expected to be applicable for the full fiscal year.  The Company’s expected income tax (expense) benefit was approximately $(8,100), $44,900, $217,700 and $337,800 for the three and six months ended June 30, 2012 and 2011, respectively.  The expected income tax benefit differs from the actual benefit of $0 each period, due primarily to the change in valuation allowance.
 
NOTE 10 –  EQUITY

Preferred stock:

Of the 10,000,000 shares of the Company’s authorized Preferred Stock, ($0.10 par value per share), 425,000 shares are designated as Series A Convertible Preferred Stock (the “Series A Preferred”).  The holders of outstanding shares of Series A Preferred are entitled to notice of any shareholders’ meeting and to vote as a single class with the common stock upon any matter submitted for approval by the holders of common stock, on an as-converted basis, as defined. Each share of Series A Preferred shall have eight votes per share. If any dividend or distribution is declared or paid by the Company on common stock, whether payable in cash, property, securities or rights to acquire securities, the holders of the Series A Preferred will be entitled to participate with the holders of common stock in such dividend or distribution, as defined.

Additionally, upon liquidation, dissolution or winding up on the Company, the Series A Preferred shareholders are entitled to be paid together with the common shareholders on a pro-rata basis.  The Series A Preferred holders may convert such shares of Series A Preferred in whole or in part, at any time, or from time-to-time upon written notice to the Company subject to the terms set forth below. The Series A Preferred may, or shall, be converted into shares of the Company’s authorized but unissued common stock on the following bases: (i) At the option of the holder, at any time before the “Financial Milestone” is met each share of Series A Preferred shall be convertible into eight shares of the Company’s common stock. (ii) Upon the “Financial Milestone” being met, each share of Series A Preferred shall automatically be converted into 28.8 shares of the Company’s common stock. (iii) If the “Financial Milestone” has not been met by October 8, 2013, each share of Series A Preferred then outstanding shall automatically be converted into eight shares of the Corporation’s Common Stock.  In 2011, two Series A Preferred holders converted 13,334 Series A Preferred shares into 106,672 shares of the Company’s common stock at the prevailing conversion rate at that date as the Company had not yet reached the “Financial Milestone.” During the six months ended June 30, 2012, 43 Series A Preferred holders converted 295,993 Series A Preferred Shares into 2,361,272 shares of the Company’s common stock.

Common stock:

During the year ended December 31, 2011, the Company issued stock for prepaid services pursuant to a one-year service agreement.  There were 250,000 shares that were issued at $0.25 per share for a total value of $62,500.  The amount was recognized as a prepaid expense, as the shares were fully vested and non-forfeitable on the date they were granted.  During the three and six months ended June 30, 2012, $15,625 and $31,250 of expense was recognized as services were provided under this annual agreement.
 

18
 
 
 

 
HANGOVER JOE’S HOLDING CORPORATION
(FORMERLY ACCREDITED MEMBERS HOLDING CORPORATION)
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SIX MONTHS ENDED JUNE 30, 2012

NOTE 10 – EQUITY (CONTINUED)

Stock options:
 
Effective March 11, 2009, AMI established the AMI 2009 Stock Option Plan (the “Plan"). The Plan, as amended, covers up to 7,000,000 shares of the Company’s common stock (adjusted to reflect the terms of the AAEX Agreement and its prescribed exchange ratio).  The Plan was assumed by the Company upon AMI becoming a wholly-owned subsidiary (at which time all references to AMI common stock in the Plan were deemed to reference the Company’s common stock). Any employee, consultant or Director of the Company is eligible to participate. The exercise  prices  of  the  options  granted  are  determined  by  the  Plan Committee, whose members are appointed by the Board of Directors, and the exercise prices are generally to be established at the estimated fair value of the Company's common stock at the date of grant. Options granted have terms that do not exceed five years.
 

The stock-based compensation cost that has been included as a charge to general and administrative expense in the statements of operations was approximately $1,139, $9,148, $30,800 and $51,800 for the three and six months ended June 30, 2012 and 2011, respectively. The stock-based compensation cost that has been included to selling and marketing expense in the statements of operations was approximately $3,080, $12,320, $7,800 and $32,300, for the three and six months ended June 30, 2012 and 2011, respectively.  As of June 30, 2012, there was approximately $37,306 of unrecognized compensation cost related to non-vested stock options. The cost is expected to be recognized over a weighted-average period of one year.
 
The Company uses the Black-Scholes option pricing model to determine the weighted average fair value of options.  No options were granted during the six months ended June 30, 2012. 

The expected term of stock options represents the period of time that the stock options granted are expected to be outstanding. The expected volatility is based on the historical price volatility of the common stock of similar companies. The risk-free interest rate represents the U.S. Treasury bill rate for the expected term of the related stock options. The dividend yield represents the anticipated cash dividend over the expected term of the stock options.
 
The following table sets forth the activity in the Plan for the six months ended June 30, 2012:
 
                 
             
Weighted
 
         
Weighted
 
average
 
   
Shares
   
average
 
remaining
Aggregate
   
under
   
exercise
 
contractual
intrinsic
   
option
   
price
 
life
value
Outstanding at January 1, 2012
    2,087,070     $ 0.42      
Granted
    -     $ -      
Exercised
    -     $ -      
Forfeited/cancelled
    (250,000 )   $ 0.26      
Outstanding at June 30, 2012
    1,837,070     $ 0.36  
1.67
                 -
Exercisable at June 30, 2012
    1,328,032     $ 0.43  
0.73
                 -

 
19
 
 

 
HANGOVER JOE’S HOLDING CORPORATION
(FORMERLY ACCREDITED MEMBERS HOLDING CORPORATION)
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SIX MONTHS ENDED JUNE 30, 2012
 
 
NOTE 10 – EQUITY (CONTINUED)
 
The aggregate intrinsic value in the table above represents the total intrinsic value (the difference between the estimated fair value of the Company’s common stock on June 30, 2012, and the exercise price, multiplied by the number of in-the-money options) that would have been received by the option holders had they exercised their options on June 30, 2012.
 
The following table summarizes the activity and value of non-vested options as of and for the six months ended June 30, 2012:
 
         
Weighted
 
         
average
 
   
Number of
   
grant date
 
   
options
   
fair value
 
Non-vested options outstanding at January 1, 2012
    603,217     $ 0.43  
Granted
    -     $ -  
Vested
    (42,096 )   $ 0.22  
Forfeited/cancelled
    (52,083 )   $ 0.27  
Non-vested options outstanding at June 30, 2012
    509,038     $ 0.07  
 
Warrants:

In May 2011, the Company granted a warrant that immediately vested to purchase up to 500,000 shares of common stock to one outside consultant in connection with a one-year service agreement.  This warrant has a two-year term and an exercise price of $0.30 per share, and approximately $36,900 has been recognized in selling and marketing expense in the six months ended June 30, 2012.
 
In November 2011, the Company granted a warrant that immediately vested to purchase up to 750,000 shares of common stock to one outside consultant.  During the six months ended June 30, 2012, the warrant was returned by the holder and cancelled.

NOTE 11 – WWPP SALE OF COMMON STOCK AND NONCONTROLLING INTEREST
 
In March 2011, WWPP initiated an offering to accredited investors for the sale of up to 1,500,000 shares of newly-issued WWPP common stock. During the nine months ended September 30, 2011, WWPP sold 120,000 shares of its common stock to third parties for cash of $120,000.  As a result of WWPP’s sale of its common stock, the Company’s ownership interest in WWPP was reduced from 100% to approximately 96% as of September 30, 2011.  The 4% interest in WWPP owned by third parties at June 30, 2012 and December 31, 2011, is presented as a non-controlling interest in the consolidated financial statements.  WWPP has 3,120,000 shares outstanding as of June 30, 2012 and December 31, 2011, of which AMHC owns 3,000,000 and unrelated third parties own the non-controlling interest of 120,000 shares.
 
 
20
 
 

 

HANGOVER JOE’S HOLDING CORPORATION
(FORMERLY ACCREDITED MEMBERS HOLDING CORPORATION)
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SIX MONTHS ENDED JUNE 30, 2012
 
 
NOTE 12 – SEGMENT REPORTING
 
The Company’s reporting segments have been determined based on the nature of the products and/or services offered to customers or the nature of their function in the organization. Management evaluates performance based on the operating income contributed by each segment. The accounting policies of the reportable segments are the same as those described in the summary of significant accounting policies included in Note 2.
     
The tables below summarize information about the Company’s three reportable segments for the three and six months ended June 30, 2012 and 2011.
 
   
Investment
   
Management
   
Premium
             
   
Services
   
Services
   
Meat Products
   
Eliminations
   
Total
 
Three months ended June 30, 2012
                             
Sales
  $ 260,172     $ -     $ -     $ -     $ 260,172  
Sales - related party
            207,000       -       -       207,000  
Intercompany sales
    -       -       -       -       -  
Gross profit (loss)
    160,795       81,632       -       -       242,427  
Net income (loss)
    (58,327 )     81,426       906       -       24,005  
Three months ended June 30, 2011
                                       
Sales
  $ 352,975     $ 50,000     $ 17,990     $ -     $ 420,965  
Intercompany sales
    -       225,000       -       (225,000 )     -  
Gross profit (loss)
    171,154       275,000       (70,775 )     (225,000 )     150,379  
Net income (loss)
    (708,786 )     260,496       (192,024 )     -       (640,314 )
Six months ended June 30, 2012
                                       
Sales
  $ 536,492     $ -     $ 6,969 *   $ -     $ 543,461  
Sales - related party
            369,641       -       -       369,641  
Intercompany sales
    -       -       -       -       -  
Gross profit (loss)
    335,065       122,042       6,577       -       463,684  
Net income (loss)
    (228,523 )     106,715       (10,445 )     -       (132,253 )
Six months ended June 30, 2011
                                       
Sales
  $ 731,488     $ 250,000     $ 34,978     $ -     $ 1,016,466  
Intercompany sales
    -       450,000       -       (450,000 )     -  
Gross profit (loss)
    341,877       700,000       (101,422 )     (450,000 )     490,455  
Net income (loss)
    (1,004,156 )     637,025       (626,296 )     -       (993,427 )
 
* Represents gift card breakage revenue.
 
 
21
 
 

 
HANGOVER JOE’S HOLDING CORPORATION
(FORMERLY ACCREDITED MEMBERS HOLDING CORPORATION)
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SIX MONTHS ENDED JUNE 30, 2012

 
 
NOTE 13 – RELATED PARTY TRANSACTIONS

Related party management services agreements:

On March 1, 2012, AMMS entered into a new management services agreement with HOJ.  This agreement is for an initial 24 month term unless terminated by either party.  HOJ is to pay AMMS a monthly fee equal to $27,500 cash per month.  AMMS also received a warrant to purchase 1,000,000 common shares of HOJ exercisable for $10,000, which was accounted for as a related party transaction.  Subsequent to June 30, 2012, the warrant was cancelled. The Company’s CEO began serving on the board of directors of this company at the start of the management services agreement on March 1, 2012. See Note 1 regarding a merger agreement with the Company and HOJ.

On June 15, 2012, AMMS entered into a management services agreement with a company.  This agreement is for an initial 24 month term unless terminated by either party.  The company is to pay AMMS a monthly fee of $30,000 cash per month; however, no payment is due until a specified amount in raised in financing.   AMMS received one stock warrant to purchase 5% of the company for $5,000, which will be accounted for as a related party transaction.  The AMMS CEO began serving on the board of directors of this company at the start of the management services agreement on June 21, 2012.

Related party payable:

In July 2011, an employee and minority shareholder of AMI advanced $25,000 to WWPP for short-term operating cash needs.  The amount is non-interest bearing, unsecured, and due on demand.

Related party debt security:

On November 3, 2011, the Company subscribed to a convertible note offering for $25,000 with a private related party entity in which the Company signed a management services agreement and the Company’s CEO began serving on the board of directors of this company.  The promissory note carries a 5% interest rate and is unsecured.  In addition, the Company received 25,000 shares of this company.  The purchase price was allocated to the convertible note as it was determined that the common stock had a nominal value.  The Company’s CEO and CFO both are minority shareholders in this company.

NOTE 14 – SUBSEQUENT EVENTS

As disclosed in a Form 8-K filed with the SEC on July 30, 2012, the Company, on July 25, 2012, entered into an Agreement and Plan of Merger and Reorganization (the “Merger Agreement”) with Hangover Joe’s, Inc., a private Colorado corporation (“HOJ”), whereby the Company would acquire HOJ in a reverse triangular merger (the “Acquisition”).  On July 25, 2012, the parties closed the Acquisition and a Statement of Merger was filed and effective with the Colorado Secretary of State on that day.  Upon closing the Acquisition, the Company issued a total number of common shares to the HOJ shareholders in exchange for all of their ownership interests in HOJ such that they now own approximately 69% of the Company.  The shareholders of the Company prior to the Acquisition now own approximately 31% of the Company.  An aggregate of 83,514,827 Company shares were issued in the Acquisition.

The Merger Agreement further provided that, within five business days after the closing of the Acquisition the Company would sell to Accredited Members Acquisition Corporation (“Buyer”) all of the equity interests in three of the Company’s subsidiaries (the “Sale”), being Accredited Members, Inc., AMHC Managed Services, Inc. and World Wide Premium Packers, Inc. (collectively, the “Subsidiaries”).  Buyer is a private Colorado corporation owned by the Company’s two directors, JW Roth and David Lavigne.  Buyer would pay $10,000 and assume all liabilities related to the Subsidiaries in exchange for all of the shares in the Subsidiaries owned by the Company.  The parties closed the Sale on July 27, 2012.

22

 
 
 

 
HANGOVER JOE’S HOLDING CORPORATION
(FORMERLY ACCREDITED MEMBERS HOLDING CORPORATION)
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SIX MONTHS ENDED JUNE 30, 2012

 
NOTE 14 – SUBSEQUENT EVENTS  (CONTINUED)
 
The following unaudited pro-forma statements of operations for the Company for the six months ended June 30, 2012 and 2011, and for the balance sheet as of June 30, 2012, give effect to the transactions described above as if they had occurred effective January 1, 2012 and 2011, respectively.  The following unaudited pro forma balance sheet as of June 30, 2012, gives effect to the transactions as if they had occurred on June 30, 2012:
 
PROFORMA BALANCE SHEET
(Unaudited)
JUNE 30, 2012
                             
   
Hangover Joe's
   
Hangover
   
Proforma
       
Proforma
 
   
Holding Corp.
   
Joe's, Inc.
   
Adjustments
       
Total
 
   
(Historical)
   
(Historical)
                 
Assets
                           
Current assets:
                           
Cash
  $ 152,038     $ 79,775     $ (152,038 ) A     $ 79,775  
                      10,000   B       10,000  
Accounts receivable, net
    142,861       118,400       (142,861 ) A       118,400  
Related party receivable
    65,500       -       (65,500 ) A       -  
Inventory
    -       19,823       -           19,823  
Prepaid expenses and other
    59,318       24,183       (59,318 ) A       24,183  
Investments in marketable securities
    73,462       -       (73,462 ) A       -  
Investments in debt securities
    30,000       -       (30,000 ) A       -  
Total current assets
    523,179       242,181       (513,179 )         252,181  
                                     
Property and equipment, net
    116,068       2,407       (116,068 ) A       2,407  
Intangible asset
    12,500       -       (12,500 ) A       -  
Cost investments
    609,672       -       (609,672 ) A       -  
Investment in marketable securities
    294,403       -       (294,403 ) A       -  
Investment in debt securities
    25,000       -       (25,000 ) A       -  
Investments in warrant, including related party
    38,490       -       (38,490 ) A       -  
Deposits and other assets
    6,294       -       (6,294 ) A       -  
      1,102,427       2,407       (1,102,427 )         2,407  
Total assets
  $ 1,625,606     $ 244,588     $ (1,615,606 )       $ 254,588  
                                     
Liabilities
                                   
Current liabilities:
                                   
Accounts payable and other
  $ 508,266     $ 191,580     $ (508,266 ) A     $ 191,580  
Related party payable
    25,000       -       (25,000 ) A       -  
Accrued expenses
    155,666       112,930       (155,666 ) A       112,930  
Advances payable, related parties
    -       89,422       -           89,422  
Deferred revenue
    304,031       -       (304,031 ) A       -  
Total current liabilities
    992,963       393,932       (992,963 )         393,932  
Notes payable:
                                   
Related parties
    188,158       -       (188,158 ) A       -  
Other
    619,905       -       (619,905 ) A       -  
Deferred rent liability
    23,107       -       (23,107 ) A       -  
Derivative liability
    77,000       -       (77,000 ) A       -  
      908,170       -       (908,170 )         -  
Total liabilities
    1,901,133       393,932       (1,901,133 )         393,932  
                                     
Equity (Deficit):
                                   
Preferred stock
    321,081       -       (321,081 ) A       -  
Common stock
    36,808       264       (36,808 ) A       264  
Contributed capital
    -       719,842       10,000   B       729,842  
Additional paid-in capital
    7,099,771       -       (7,099,771 ) A       -  
Other comprehensive income
    56,002       -       (56,002 ) A       -  
Accumulated deficit
    (7,701,612 )     (869,450 )     7,701,612   A       (869,450 )
Total equity (deficit)
    (187,950 )     (149,344 )     197,950           (139,344 )
Noncontrolling interest
    (87,577 )     -       87,577           -  
Total equity (deficit)
    (275,527 )     (149,344 )     285,527           (139,344 )
Total liabilities and equity (deficit)
  $ 1,625,606     $ 244,588     $ (1,615,606 )       $ 254,588  
 
 
23
 
 

 
 
PROFORMA STATEMENT OF OPERATIONS
(UNAUDITED)
SIX MONTHS ENDED JUNE 30, 2011
                                   
   
Hangover Joe's
   
Hangover
         
Proforma
       
Proforma
 
   
Holding Corp.
   
Joe's, Inc.
   
Total
   
Adjustments
       
Total
 
   
(Historical)
   
(Historical)
                       
                                   
Net sales
  $ 1,016,466     $ 43,467     $ 1,059,933     $ (1,016,466 ) A     $ 43,467  
Cost of goods sold
    526,011       59,801       585,812       (526,011 ) A       59,801  
Gross (loss) profit
    490,455       (16,334 )     474,121       (490,455 )         (16,334 )
                                             
Operating expenses:
                                           
General and administrative
    1,133,293       30,224       1,163,517       (1,133,293 ) A       30,224  
Selling and marketing
    745,572       2,250       747,822       (745,572 ) A       2,250  
Impairment of assets
    -       -       -       -   A       -  
Total operating expenses
    1,878,865       32,474       1,911,339       (1,878,865 )         32,474  
      (1,388,410 )     (48,808 )     (1,437,218 )     1,388,410           (48,808 )
Other income (expense):
                                           
Interest expense:
                                           
Related parties
    (6,127 )     -       (6,127 )     6,127   A       -  
Other
    (8,529 )     -       (8,529 )     8,529   A       -  
Gain on derivative liability
    509,962       -       509,962       (509,962 ) A       -  
Gain (loss) on value of derivative warrants
    17,393       -       17,393       (17,393 ) A       -  
Impairment of marketable securities
    (142,650 )     -       (142,650 )     142,650   A       -  
Gain on sale of marketable securities
    22,470       -       22,470       (22,470 ) A       -  
Other income, net
    2,464       -       2,464       (2,464 ) A       -  
      394,983       -       394,983       (394,983 )         -  
Net loss
  $ (993,427 )   $ (48,808 )   $ (1,042,235 )   $ 993,427         $ (48,808 )
                                             
Less: net loss attributable to noncontrolling interest
  $ (5,547 )   $ -     $ (5,547 )   $ 5,547   A     $ -  
                                             
Net loss attributable to AMHC/Hangover Joe's
    (987,880 )     (48,808 )