XOTC:RLIA Quarterly Report 10-Q Filing - 3/31/2012

Effective Date 3/31/2012

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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 MARCH 31, 2012

OR

o
TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE TRANSITION FROM _______ TO ________.

COMMISSION FILE NUMBER: 000-54300

RELIABRAND INC.

(Exact Name of Small Business Issuer as Specified in its Charter)

Nevada 
75-3260541
(State or other jurisdiction of incorporation or organization) 
(I.R.S. Employer ID No.)
   
430 Banks Road, Suite 100, Kelowna BC Canada
V1X 6A3
(Address of principal executive offices) 
(Zip code)

Issuer's telephone number: (661) 414-7125
 
 

(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 o 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

At May 4, 2012, 59,727,000 shares of the Registrant's Common Stock were issued and outstanding.

Transitional Small Business Disclosure Format: Yes o No x
 
 
 
 
1

 
 

 
RELIABRAND, INC.
 
TABLE OF CONTENTS
 
   
Page No.
     
     
PART I
FINANCIAL INFORMATION
 
     
ITEM 1
Condensed Financial Statements
3
     
 
Condensed Balance Sheets, as of March 31, 2012 ( unaudited) and June 30, 2011
3
     
 
Unaudited Condensed Statements of Operations for the three and nine months ended March 31, 2012 and 2011, and cumulative during development
stage from February 22, 2007 (inception) through March 31, 2012
4
     
 
Unaudited Condensed Statements of Cash Flows for the nine months ended March 31, 2012 and 2011, and cumulative during development stage from February 22, 2007 (inception) through March 31, 2012
5 - 6
     
 
Notes to Condensed Financial Statements (unaudited)
7
     
ITEM 2
Management’s Discussion and Analysis of Financial Condition and Results of Operations
14
     
ITEM 3
Quantitative and Qualitative Disclosures about Market Risk
16
     
ITEM 4T
Controls and Procedures
16
     
PART II
OTHER INFORMATION
 
     
ITEM 2
Unregistered Sales of Equity Securities and Use of Proceeds
17
     
ITEM 5
Legal Matters
17
     
ITEM 6
Exhibits
17
     
SIGNATURE
 
17
     
 

 
 
2

 
 
 
RELIABRAND, INC.
 
(Formerly known as A&J Venture Capital Group, Inc.)
 
(A DEVELOPMENT STAGE ENTERPRISE)
 
CONDENSED BALANCE SHEETS
 
             
             
             
   
March 31,
   
June 30,
 
   
2012
   
2011
 
   
(unaudited)
       
ASSETS
           
             
CURRENT ASSETS
           
     Cash
  $ 9,107     $ 29,873  
     Inventory
    150,229       9,421  
     Note receivable - related party
               
       (including accrued interest of $5,243 - March 31, 2012
               
       and $2,722  - June 30, 2011) (Note 4)
    67,656       65,136  
     Deposits - utilities
    4,292       1,456  
     Prepaid expenses (Note 5)
    9,789       34,554  
                 
TOTAL CURRENT ASSETS
    241,073       140,440  
                 
OTHER ASSETS
               
     Property and equipment, net (Note 6)
    29,336       2,642  
     Intellectual and product properties (Note 7)
    143,828       139,485  
     Patents, net of amortization of $55,215 (Note 7)
    1,318,406       1,363,581  
     Product molds, net of amortization of $10,842 (Note 7)
    86,740       5,266  
                 
TOTAL OTHER ASSETS
    1,578,310       1,510,974  
                 
Total Assets
  $ 1,819,383     $ 1,651,414  
                 
                 
                 
                 
                 
LIABILITIES AND STOCKHOLDERS' EQUITY
               
                 
CURRENT LIABILITIES
               
       Accounts payable
  $ 55,241     $ 24,044  
       Accounts payable - related party
    150,902       55,000  
       Accrued taxes payable
    74       -  
       Note Payable to shareholder
               
         (including accrued interest of $1,353) (Note 8)
    345,243       -  
       Shareholder advances
    156,445       98,766  
       Accrued liabilities - related party
    4,231       -  
                 
TOTAL CURRENT LIABILITIES
    712,136       177,810  
                 
STOCKHOLDERS' EQUITY
               
                 
     Preferred stock, par value $.0001, 10,000,000
               
        shares authorized, 10,000 issued and outstanding
               
        March 31, 2012 and June 30, 2011
    1       1  
                 
     Common stock, par value $.0001, 100,000,000 shares authorized,
               
        59,727,000 issued and outstanding - March 31, 2012
               
        59,122,500 issued and outstanding - June 30, 2011
    5,974       5,912  
     Paid in Capital
    2,152,036       2,009,764  
     (Deficit) accumulated during the development stage
    (1,050,764 )     (542,073 )
                 
                 
Total Stockholders' Equity
    1,107,247       1,473,604  
                 
Total Liabilities and Stockholders' Equity
  $ 1,819,383     $ 1,651,414  
                 
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
 
 
 
3

 
 
RELIABRAND, INC.
 
(Formerly known as A&J Venture Capital Group, Inc.)
 
(A DEVELOPMENT STAGE ENTERPRISE)
 
UNAUDITED CONDENSED STATEMENTS OF OPERATIONS
 
                               
                               
                           
Cumulative
 
                           
from
 
                           
February 22, 2007
 
   
For the three months ended
   
For the nine months ended
   
(Inception)
 
   
March 31,
   
March 31,
   
to
 
   
2012
   
2011
   
2012
   
2011
   
March 31, 2012
 
                               
REVENUES
  $ 2,962     $ -     $ 3,916     $ -     $ 3,916  
                                         
COST OF GOODS
    17,291       -       20,028       -       20,028  
                                         
GROSS LOSS
    (14,329 )     -       (16,112 )     -       (16,112 )
                                         
EXPENSES
                                       
                                         
   Amortization and Depreciation
    15,497       5,000       46,420       15,000       96,499  
   Accounting, Audit, and Legal fees
    11,509       45,219       87,305       87,502       250,746  
   Consulting fees
    (0 )     -       3,551       -       93,051  
   Consulting fees - related parties
    42,365       19,925       128,898       64,925       258,902  
   Rent expense
    11,261       4,200       30,583       5,923       61,518  
   General and administrative
    35,873       6,107       79,004       13,229       153,292  
   Consulting contract benefits - related party
    1,154       -       4,231       -       4,231  
   Inventory impairment
    110,397       -       110,397       -       114,278  
                                         
                                         
   Total expenses
    228,056       80,451       490,389       186,579       1,032,517  
                                         
NET OPERATING (LOSS)
    (242,385 )     (80,451 )     (506,501 )     (186,579 )     (1,048,629 )
                                         
OTHER INCOME (EXPENSE)
                                       
   Interest Income
    834               2,521       -       3,080  
   Interest Expense
    (2,044 )     -       (4,711 )     -       (5,215 )
                                         
NET (LOSS)
  $ (243,595 )   $ (80,451 )   $ (508,691 )   $ (186,579 )   $ (1,050,764 )
                                         
                                         
NET (LOSS) PER SHARE - BASIC
    *       *     $ (0.01 )     *          
                                         
WEIGHTED AVERAGE NUMBER OF
                                       
  COMMON SHARES OUTSTANDING
    59,677,000       32,972,500       59,480,405       29,629,167          
                                         
*  less than $(.01) per share
                                       
                                         
                                         
                                         
                                         
                                         
                                         
                                         
                                         
                                         
                                         
                                         
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
 
 
 
 
 
 
4

 
 
RELIABRAND, INC.
 
(Formerly known as A&J Venture Capital Group, Inc.)
 
(A DEVELOPMENT STAGE ENTERPRISE)
 
UNAUDITED CONDENSED STATEMENTS OF CASH FLOWS
 
                   
                   
               
Cumulative
 
               
from
 
               
February 22, 2007
 
   
For the nine months ended
   
(Inception)
 
   
March 31,
         
to
 
   
2012
   
2011
   
March 31, 2012
 
                   
OPERATING ACTIVITIES
                 
         Net (loss)
  $ (508,691 )   $ (186,579 )   $ (1,050,764 )
    Adjustments to reconcile net income (loss) to net cash used by
                       
       operating activities:
                       
         Stock issued for services
    5,504       52,500       155,504  
         Depreciation and amortization
    57,263       15,000       107,391  
         Inventory impairment
    -       -       3,881  
    Changes in operating assets and liabilities:
                       
         Accrued interest - notes receivable
    (2,521 )     -       (2,521 )
         Accounts payable
    31,199       (3,191 )     32,407  
         Accounts payable - related party
    95,902       27,537       156,609  
         Prepaid expenses
    21,930       7,500       (54,080 )
         Inventory
    (140,808 )     -       (144,229 )
         Accrued liabilities
    4,305       -       4,305  
         Accrued interest - notes payable
    1,353       -       794  
                         
 
                       
NET CASH (USED BY) OPERATING ACTIVITIES
    (434,567 )     (87,233 )     (790,706 )
                         
INVESTING ACTIVITIES
                       
         Cash received from the BC Ltd. asset acquisition
    3,705       -       103,705  
         Purchase of property and equipment
    (12,682 )     -       (16,986 )
         Increase in capitalized patent costs
    (4,343 )     -       (4,343 )
         Increase in intellectual properties
    (94,448 )     -       (101,589 )
                         
NET CASH (USED BY) INVESTING ACTIVITIES
    (107,769 )     -       (19,214 )
                         
FINANCING ACTIVITIES
                       
         Proceeds from sale of common stock
    120,000       -       190,693  
         Proceeds from shareholder advances
    77,808       67,631       322,481  
         Proceeds from notes payable
    343,890       -       343,890  
         Repayment of shareholder advances
    (20,128 )     -       (38,037 )
                         
NET CASH PROVIDED BY FINANCING ACTIVITIES
    521,570       67,631       819,027  
                         
NET INCREASE (DECREASE) IN CASH
    (20,766 )     (19,602 )     9,107  
                         
CASH, BEGINNING OF PERIOD
    29,873       19,602       -  
                         
CASH, END OF PERIOD
  $ 9,107     $ -     $ 9,107  
                         
 
 
 
5

 
 
UNAUDITED CONDENSED STATEMENTS OF CASH FLOWS - continued
 
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES
                 
                         
Past president's debt contributed to capital
                       
   Shareholder advances on behalf of company
  $ -     $ 95,312     $ 131,903  
   Property and equipment net of depreciation exchanged for debt
    -       -       (1,573 )
   Account payable - related party contributed to capital
    -       (537 )     (537 )
   Shareholder's debt contributed to capital
    -       (94,775 )     (129,793 )
    $ -     $ -     $ -  
B.C. Ltd asset acquisition
                       
   Fair value of assets acquired
  $ -     $ -     $ 1,585,688  
   Less liabilities assumed
    -       -       (21,034 )
   Net assets acquired
    -       -       1,564,654  
   Less shares issued
    -       -       (1,664,654 )
   Net cash acquired
  $ -     $ -     $ (100,000 )
                         
Shares issued for website development
                       
    Website development
  $ (13,125 )   $ -     $ (13,125 )
    Common stock issued
    13,125       -       13,125  
    $ -     $ -     $ -  
                         
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
6

RELIABRAND, INC.
(FORMERLY A & J VENTURE CAPITAL GROUP, INC.)
 (A Development Stage Enterprise)
NOTES TO CONDENSED INTERIM FINANCIAL STATEMENTS
For the nine months ended March 31, 2012 and 2011
(Unaudited)
 
NOTE 1 - BASIS OF PRESENTATION

Interim periods

The accompanying unaudited financial statements have been prepared in accordance with the instructions to Form 10-Q and Regulation S-K.  Accordingly, they do not include all of the information required by accounting principles generally accepted in the United States of America for annual financial statements.  In the opinion of the Company’s management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included.  Operating results for the nine months ended March 31, 2012 are not necessarily indicative of results for any future period.  These statements should be read in conjunction with the financial statements and notes thereto included in the Company’s Form 10-K for the year ended June 30, 2011.

Reclassifications

Certain amounts in the period ended March 31, 2011 financial statements have been reclassified to conform to the current period ended March 31, 2012 presentation.

Revenue Recognition

The Company generally recognizes sales revenue when shipment of the purchased product has occurred. Cash payments received in advance are recorded as deferred revenue. The Company currently permits its customers to return or exchange defective products. We have analyzed our quality control procedures and feel that our main exposure is from damages in shipping, and we do not need to establish a reserve for returns at this time. We will continue to analyze this each period and implement one if the need arises.

Shipping and Handling

Shipping and handling costs of $2,129 for the period ended March 31, 2012 are included in general and administrative expenses.

Business Composition

On January 20, 2011, we entered into an Asset Purchase Agreement (the “Agreement”) with 0875505 B.C. Ltd. (“BC Ltd”), a British Columbia, Canadian company.  The Agreement provided for us to acquire multiple patents and trademarks acquired by BC Ltd through a receivership proceeding of Adiri, Inc. (Adiri”). Adiri was granted the initial patents and trademarks.  These patents and trademarks relate to a baby bottle and related components that BC Ltd expended approximately $1,500,000 in cash in acquiring and further development; as of December 31, 2010 the patents, and related expenses to acquire and maintain the patents, had a net book value, which approximates fair value, of $1,436,768.  As part of the Agreement, the Company also acquired $100,000 in cash, total note receivables and accrued interest in the amount of $63,296 owed by Watergeeks, Inc, a related party entity, to BC Ltd, resin inventory of $8,160, pacifier inventory of $6,000, product molds of $5,266, assumed an executory contract with a plastics manufacturer, and assumed accounts payable of approximately $45,176.  In exchange, at the closing on April 26, 2011 we issued 35,000,000 shares of our common stock, par value $.001, post-split

On March 16, 2012, we entered into a Share Purchase Agreement (the “agreement 2”) with 0875505 B.C. Ltd. (“BC Ltd”), a British Columbia, Canadian company to acquire the company through a share exchange. As noted above, we had already purchased all the assets and liabilities from the company in the above agreement. We decided to purchase the equity in BC Ltd because while we were beginning the process to transfer the patents and trademarks to our company name, we found the process to be very costly and very lengthy. Whereas if we acquired the BC Ltd as a wholly owned subsidiary we would own the patents and trademarks without completing the transfer process, which was most cost effective for our company with our limited cash reserves, and offered the quickest and most cost effective remedy to protect our interests and our shareholders assets. In exchange for the shares of stock of BC Ltd, we agreed to issue to the shareholders of BC Ltd 50,000 shares of our restricted common stock. We would also acquire the remaining cash of approximately $3,675CAD.
 

 
 
7

RELIABRAND, INC.
(FORMERLY A & J VENTURE CAPITAL GROUP, INC.)
(A Development Stage Enterprise)
NOTES TO CONDENSED INTERIM FINANCIAL STATEMENTS
For the nine months ended March 31, 2012 and 2011
(Unaudited)

NOTE 2 – GOING CONCERN

Our financial statements have been presented on the basis that we are a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business.  We have sustained operating losses since inception.

As of March 31, 2012 we have a working capital deficit of $474,768, and accumulated deficit of $1,050,764. During the period ended March 31, 2012 we had a net loss of $508,691 and cash used in operating activities of $434,568. The Company’s ability to continue in existence is dependent on its ability to develop additional sources of capital, and/or achieve profitable operations and positive cash flows. Management’s plan is to aggressively pursue its present business plan. Since inception we have funded our operations through the issuance of common stock and related party loans and advances, and will seek additional debt or equity financing as required. The accompanying financial statements do not include any adjustments that might result from the outcome of this uncertainty.


NOTE 3 – RECENTLY ISSUED ACCOUNTING STANDARDS

In May 2011, the FASB issued ASU No. 2011-04 which relate to fair value measurement (FASB ASC Topic 820), which amends current guidance to achieve common fair value measurement and disclosure requirements in U.S. GAAP and International Financial Reporting Standards. The amendments generally represent clarification of FASB ASC Topic 820, but also include instances where a particular principle or requirement for measuring fair value or disclosing information about fair value measurements has changed. The guidance also expands the disclosures for fair value measurements that are estimated using significant unobservable (Level 3) inputs. This guidance is effective during interim and annual periods beginning after December 15, 2011 and is to be applied prospectively. The adoption of this standard will not materially impact the Company's financial statement statements.

In June 2011, the FASB issued Accounting Standards Update No. 2011-5, Presentation of Comprehensive Income. This standard requires presentation of the items of net income and other comprehensive income in one continuous statement, referred to as the statement of comprehensive income, or in two separate, but consecutive, statements of net income and other comprehensive income. The new requirements are effective for fiscal years beginning after December 15, 2011. Early adoption is permitted and full retrospective application is required. The Company does not expect a significant impact on the Company's financial positions as a result of adoption of these new requirements.


NOTE 4 – NOTES RECEIVABLE – RELATED PARTY

As of the period ended March 31, 2012, our notes receivable – related party included the following:

On May 7, 2010, 0875505 BC Ltd. (“BC Ltd”) advanced $17,413 to Watergeeks Laboratories Inc. on a non-interest, non-collateralized, payable on demand basis.  The entire amount is reflected in the notes receivable balance at March 31, 2012.

On September 8, 2010, BC Ltd loaned Watergeeks Laboratories Inc. $15,000 under a note receivable bearing 8% per annum.  Principal and accrued interest were due in full on September 8, 2011, and was not paid in full as agreed. On January 16, 2012, we amended and extended this note, and it will be due and payable on December 31, 2012, and all other terms of the original loan agreement remain in force. In the period ended March 31, 2012, we recorded a total of $917 in accrued interest. Total accrued interest on this note at March 31, 2012 is $1,900.

On October 6, 2010, BC Ltd loaned Watergeeks Laboratories, Inc. an additional $30,000 under a note receivable bearing 7% per annum.  Principal and accrued interest are due in full on October 6, 2011, and was not paid in full as agreed. On January 16, 2012, we amended and extended this note, and it will be due and payable on December 31, 2012, and all other terms of the original loan agreement remain in force. In the period ended March 31, 2012, we recorded a total of $1,604 in accrued interest. Total accrued interest on this note at December 31, 2011 is $3,343.

Reliabrand acquired all three Watergeeks’ notes as part of the January 2011 Asset Purchase Agreement in Note 1.


 
 
8

RELIABRAND, INC.
(FORMERLY A & J VENTURE CAPITAL GROUP, INC.)
(A Development Stage Enterprise)
NOTES TO CONDENSED INTERIM FINANCIAL STATEMENTS
For the nine months ended March 31, 2012 and 2011
(Unaudited)
 
NOTE 5 – PREPAID EXPENSES

Prepaid expenses consisted of the following at March 31, 2012:

Name
Description
 
Amount
 
Thumbprint
Technical support fees for future periods
  $ 2,500  
MacQuarie Premium Funding
Prepayment for commercial insurance
    1,939  
Schwed, McGinley & Kahle
Legal fee retainer
    5,350  
 
Total
  $ 9,789  

Prepaid expenses consisted of the following at June 30, 2011:

Name
Description
 
Amount
 
McDowell Odom Law Firm
Prepayment retainer for legal fees
  $ 9,554  
Nova Genisis
Prepayment for product molds production
    25,000  
 
Total
  $ 34,554  
 
 
NOTE 6 – PROPERTY AND EQUIPMENT

Property and equipment consisted of the following:

               
March 31, 2012
 
   
Cost
   
Accumulated Depreciation
   
Net Book
Value
 
Website
  $ 15,256       -     $ 15,256  
Product production molds
    97,582       10,842       86,740  
Office furniture and computer equipment
    15,364       1,284       14,080  
Total
  $ 128,202     $ 12,126     $ 116,076  

Depreciation was $1,244 for the nine months ended March 31, 2012. The Company also recorded amortization of products molds expense for the period ended March 31, 2012 of $10,842 as reflected in amortization and depreciation on the accompanying Statement of Operations.


 
9

RELIABRAND, INC.
(FORMERLY A & J VENTURE CAPITAL GROUP, INC.)
(A Development Stage Enterprise)
NOTES TO CONDENSED INTERIM FINANCIAL STATEMENTS
For the nine months ended March 31, 2012 and 2011
(Unaudited)
 
NOTE 7 – INTELLECTUAL PROPERTIES AND PATENTS

Patents

Patents and licenses consist of the following:

   
March 31, 2012
   
June 30, 2011
 
Adiri patents
  $ 1,014,246     $ 1,014,246  
Adiri trademarks
    359,375       359,375  
Plastic technology properties
    143,828       139,485  
      1,517,449       1,513,106  
Less accumulated amortization
    (55,215 )     (10,039 )
    $ 1,462,234     $ 1,503,067  

The Company has recorded amortization of patents expense for the period ended March 31, 2012 of $45,176 as reflected in amortization and depreciation on the accompanying Statement of Operations.


NOTE 8 – LOANS PAYABLE - SHAREHOLDER

On August 26, 2011 the Company borrowed CDN$200,000 from Gerry Dalen, one of Company’s shareholders. In connection with the above note, the Company agreed to restrictive covenants on substantially all of its assets to maintain them free of indebtedness or liens, and that we will maintain our corporate status. On February 27, 2012, we entered into an extension of the above loan agreement, all terms and conditions remain in full force, the only change is the maturity date was extended from the original date of February 28, and extended to August 31, 2012. As of March 31, 2012, the Company is in full compliance with all of the restrictive covenants.

On March 1, 2012 the Company borrowed CDN$150,000 from Gerry Dalen, one of Company’s shareholders on an uncollateralized, non-interest bearing, demand note that matures on February 28, 2013.

As of March 31, 2012, the loans payable balance comprised of:

   
March 31,
 
Description
 
2012
 
Uncollateralized demand note to a related entity bearing no interest per annum which matures on February 28, 2013.
  $ 151,410  
Collateralized demand note to an unrelated entity bearing 4% interest per annum which matures on August 31, 2012. The interest is payable monthly until the maturity of the note.
    192,480  
    $ 343,890  
Less current liabilities
    343,890  
Total long term liabilities
  $ -0-  

The Company owed $1,353 in accrued interest for the above note as of March 31, 2012.  For the nine months ended March 31, 2012, the Company accrued $4,667 in interest expense, and paid $1,289 in cash for accrued interest.

Future maturity of our notes payable is presented in the table below:

For the years ended June 30,
     
2012
  $ 192,480  
2013
    151,410  
    $ 343,890  



 
10

RELIABRAND, INC.
(FORMERLY A & J VENTURE CAPITAL GROUP, INC.)
(A Development Stage Enterprise)
NOTES TO CONDENSED INTERIM FINANCIAL STATEMENTS
For the nine months ended March 31, 2012 and 2011
(Unaudited)
 
NOTE 9 – RELATED PARTY TRANSACTIONS AND BALANCES

Related party transactions

On April 1, 2011 the Company entered into a consulting agreement with Brent Markus, the son of our current President, for his consulting services at a rate of $500 CAD per week.  The agreement will be in effect for a period of nine months, ending on December 31, 2011, and is renewable.  The agreement may be terminated by the Company at any time, or by mutual consent, without consequence.

On May 1, 2011, the Company entered into a consulting agreement with Marant Holdings Inc., a company controlled by our President and Chief Executive Officer, for his consulting services at a rate of $10,000 per month. For the period ended March 31, 2012, we recorded $90,000 in consulting fees expense in connection with this contract. As of March 31, 2012, we owe $100,000 which is included in accounts payable - related party.

As of March 31, 2012, the Company owes our President $25,000, for his previous consulting fees before the above agreement was in force, which is reflected in accounts payable – related party.
 
Shareholder advances

In the nine month period ended March 31, 2012, our current President paid operating bills on behalf of the Company totaling $77,808, and was repaid $20,128 in cash, and is still owed $57,680 which is included in accounts payable – related party. The Company also owes an additional $98,104 to our current President for previous advances through June 30, 2011.

Operating Leases

In January 2011, the Company rented office space in Canada from a related party, Design Mode Studios, a company owned by a son of our Company’s President, on a month to month basis for approximately $800 CAD per month; beginning in February 2011 we took on more rental space within the office and began paying approximately $1,860 CAD per month. Rent expense was $16,757 and $5,923 for the nine months ended March 31, 2012 and 2011, respectively.


NOTE 10 - COMMITMENTS AND CONTINGENCIES

Purchase Commitment

On September 6, 2011, we entered into a non-cancellable contract to purchase 72,000 baby bottles and components from a 3rd party supplier in the amount of $135,360, and we have fully pre-paid this commitment. In the nine months ended March 31, 2012, we purchased an additional $119,372 of inventory from the same 3rd party supplier; we have fully paid for all the product shipments.  As of March 31 , 2012, we found that we had defective and substandard products we have checked our inventory and have destroyed and disposed of the unusable inventory and recorded an inventory loss of $110,397 which nis reflected in our statement of operations.

Product Molds Agreement

In June 2011, the Company entered into an agreement with Nova Genisis Ltd. for it to create product molds for certain types of baby bottles for $52,026.  The agreement called for the Company to make a prepaid deposit of $25,000, which the Company paid on June 9, 2011. In September 2011, we entered into an additional agreement for additional product molds for $40,290. The molds were completed in the beginning of October, and put into service on December 1, 2011 (Note 6), and have began to amortize these over the useful life of three years, in accordance with our intangible assets policy. As of March 31, 2012, we have fully paid for the molds.

Warehouse lease
 
On October 4, 2011 the Company entered into a month-to-month lease agreement of a warehouse space located in Kelowna, BC.  The lease, commencing on October 5, 2011 requires monthly payment of CDN $2,500 plus related taxes and a CDN $2,500 security deposit. Rent expense was $13,826 for the nine months ended March 31, 2012.



 
11

RELIABRAND, INC.
(FORMERLY A & J VENTURE CAPITAL GROUP, INC.)
(A Development Stage Enterprise)
NOTES TO CONDENSED INTERIM FINANCIAL STATEMENTS
For the nine months ended March 31, 2012 and 2011
(Unaudited)

NOTE 11 – STOCKHOLDER’S EQUITY

Stock Shares – Authorized

The Company has 100,000,000 common shares authorized at a par value of $0.0001 per share and 10,000,000 shares of preferred stock, par value $0.0001 per share.  All common stock shares have equal voting rights, are non-assessable and have one vote per share.  Voting rights are not cumulative and, therefore, the holders of more than 50% of the common stock could, if they choose to do so, elect all the directors of the Company. There is currently only one designated class of preferred shares, “A,” see below. The holders of the preferred stock shall have such rights, preferences and privileges as may be determined by the Board of Director’s prior to the issuance of such shares. The preferred stock may be issued in such series as are designated by the Board of Director’s and the Board of Director’s may fix the number of authorized shares of preferred stock for each series and the rights, preferences, and privileges of each series of preferred stock. As of the period ended March 31, 2012 and June 30, 2011, there were 59,727,000 and 59,122,500 shares of our common stock issued and outstanding, respectively. As of the period ended March 31, 2012 and June 30, 2011, there were 10,000 and 10,000 shares of our preferred stock issued and outstanding, respectively.

Common Shares – Issued and Outstanding

In the nine months ended March 31, 2012, we closed several private placements for an aggregate total of $120,000, or 480,000 units consisting of one share of our common stock and one share common stock warrant to purchase shares of our common stock, with a purchase price of $0.25 per share and an expiration date, for the warrants, of two years from the closing.

Preferred Stock – Series “A”

On February 26, 2010, the Company filed with the Secretary of State of the State of Nevada a Certificate of Designation of Series “A” Preferred Stock (the "Certificate of Designations") designating ten thousand (10,000) of the Company's previously authorized preferred stock.

The 10,000 Series “A” Preferred Stock shall have an aggregate voting power of 45% of the combined voting power of the entire Company’s shares, Common Stock and Preferred Stock as long as the Company is in existence. Each holder of the Series “A” Preferred Stock shall have full voting rights and powers equal to the voting rights and powers of the holders of Common Stock, and shall be entitled, notwithstanding any provision hereof, to notice of any stockholders’ meeting in accordance with the by-laws of the Company, and shall be entitled to vote, together with holders of Common Stock, with respect to any question upon which holders of Common Stock have the right to vote.

Without the vote or consent of the holders of at least a majority of the shares of Series “A” Preferred Stock then outstanding, the Company may not (i) authorize, create or issue, or increase the authorized number of shares of, any class or series of capital stock ranking prior to or on a parity with the Series “A” Preferred Stock, (ii) authorize, create or issue any class or series of common stock of the Company other than the Common Stock, (iii) authorize any reclassification of the Series “A” Preferred Stock, (iv) authorize, create or issue any securities convertible into or exercisable for capital stock prohibited by (i) or (ii), (v) amend this Certificate of Designations or (vi) enter into any merger or reorganization, or disposal of assets involving 20% of the total capitalization of the Company.

Subject to the rights of the holders of any other series of Preferred Stock ranking senior to or on a parity with the Series “A” Preferred Stock with respect to liquidation and any other class or series of capital stock of the Company ranking senior to or on a parity with the Series “A” Preferred Stock with respect to liquidation, in the event of any liquidation, dissolution or winding up of the affairs of the Company, whether voluntary or involuntary, the holders of record of the issued and outstanding shares of Series “A” Preferred Stock shall be entitled to receive, out of the assets of the Company available for distribution to the holders of shares of Series “A” Preferred Stock, prior and in preference to any distribution of any of the assets of the Company to the holders of Common Stock and any other series of Preferred Stock ranking junior to the Series “A” Preferred Stock with respect to liquidation.

The holders of the Series A Preferred Stock shall not be entitled to receive dividends per share of Series “A” Preferred Stock.  The Company shall have no rights to redeem Series “A” Preferred Stock.

As of March 31, 2012, the Company had issued and outstanding 10,000 of Class “A” Preferred shares.
 
Private Placement Closed and Opened

On March 22, 2012, we closed our previously approved private placement offering at $.25 per unit, which is one share of our restricted common stock and two share purchase warrants to purchase additional shares of our restricted common stock.

On March 23, 2012, we also approved a new private placement offering of our restricted common stock at the offering price of $.10 per share and not to offer more than 5,000,000 shares of stock as part of this offering.
 
 
12

RELIABRAND, INC.
(FORMERLY A & J VENTURE CAPITAL GROUP, INC.)
(A Development Stage Enterprise)
NOTES TO CONDENSED INTERIM FINANCIAL STATEMENTS
For the nine months ended March 31, 2012 and 2011
(Unaudited)

NOTE 11 – STOCKHOLDER’S EQUITY - continued
 
Stock Based Compensation

On August 31, 2011, the Company issued 2,000 restricted shares of our common stock for payment of debt owed to a legal counsel for services performed on the note payable (Note 8), in the amount of $504.

On September 22, 2011, the same legal counsel converted $2,500 in accounts payable owed to them to 10,000 restricted shares of our common stock and 10,000 stock warrants to purchase shares of our common stock at $0.25 per share, and will expire two years from the date on granting.

On August 25, 2011, the Company issued 62,500 restricted shares of our common stock for payment of website design and maintenance services performed by an unrelated third party in the amount of $15,625. The value of the maintenance services is $2,500 and will be amortized over the six months contract period with that vendor, beginning in October 2011. The value allocated to the website design is capitalized and amortized over a three year period (Note 6).

Common Stock Warrants

In connection with the above private placement and payables to common stock conversions, we valued the common stock detachable warrants granted during the period ended March 31, 2012, using the Black-Scholes method. The following weighted average assumptions were used to calculate the valued warrants: terms of two years; risk free interest rate of 0.39%; volatility of 96%; and a weighted fair value of $0.126.
 
 A summary of the common stock warrants, exercise price of $0.25, granted during the period ended March 31, 2012 is presented below:

   
Number of Warrants
 
Balance at June 1, 2011
    -  
Granted
    490,000  
Exercised
    -  
Forfeited or Expired
    -  
Balance at March 31, 2012
    490,000  
Exercisable at March 31, 2012
    490,000  


NOTE 12 – LEGAL MATTERS

Pending legal action

In July 2011, the Company became aware of a claim against it by a previously contracted investor/ public relations firm. The agreement with the firm was for services to be performed and payment to be made in the Company’s common stock. The stock was issued to the firm and kept in trust, and the services were not performed in accordance with the agreement.

On January 19, 2012, the Company entered into a settlement agreement with the plaintiff of the above suit. The Company agreed to pay $15,000 in cash and 100,000 shares of our restricted common stock. The Company agreed to pay the cash payment in three equal payments commencing on March 1, 2012, and continuing through May 1, 2012, the Payment in common shares are to be issued on March 1, 2012. On March 30, 2012, we amended the settlement to pay $10,000 as total consideration instead of the original amounts above, and we paid this on April 2, 2012.
  
On October 27, 2011, the British Columbia Securities Commission issued a Cease Trade Order which prohibits the trading of the Company’s securities in British Columbia until such time as the Company files all required reports with SEDAR, the System for Electronic Analysis and Document Retrieval, operated by the Canadian securities administrators.  The Company has satisfied all the requests and the Cease Trade Order has been lifted as of March 31, 2012.
 

NOTE 13– SUBSEQUENT EVENTS

Management has evaluated subsequent events after the balance sheet date, through May 15, 2012 the issuance of the financial statements, for appropriate accounting and disclosure. The Company has determined that there were no such events that warrant disclosure or recognition in the financial statements.
 

 

 
13

 

ITEM 2 - Management’s Discussion and Analysis of Financial Condition and Results of Operations

You should read this section in conjunction with our financial statements and the related notes included in this Form 10-Q.  Some of the information contained in this section or set forth elsewhere in this Form 10-Q, including information with respect to our plans and strategies for our business, statements regarding the industry outlook, our expectations regarding the future performance of our business, and the other non-historical statements contained herein are forward-looking statements.

The following discussion highlights the principal factors that have affected our financial condition and results of operations as well as our liquidity and capital resources for the periods described. This discussion contains forward-looking statements. Please see “Forward-Looking Statements” and “Risk Factors” for a discussion of the uncertainties, risks and assumptions associated with these forward-looking statements.

The following discussion and analysis of the Company’s financial condition and results of operations are based on the Company’s financial statements, which the Company has prepared in accordance with U.S. generally accepted accounting principles. You should read the discussion and analysis together with such financial statements and the related notes thereto.

Plan of Operations

The Company’s strategy is to manufacture baby bottles and the related components initially and to offer those products for sale via the Company’s website or through distributors throughout the world.

Overall, during the next 12 months, we cannot predict accurately the amount of capital that we will need to accomplish our plan of operations. The amount of capital needed will vary depending on the projects that we seek.  If during the next 12 months, we are unsuccessful in effectuating our plan of operations as described above, we expect to incur total expenditures of at least $500,000. In this regard and during such period; we anticipate spending $50,000 on professional fees attributable to fulfilling our reporting obligations under the federals securities laws and $50,000 on general administrative costs and expenditures associated with complying with reporting obligations.  We anticipate that additional funding will be required in the form of equity financing from the sale of our common stock. However, we cannot provide investors with any assurance that we will be able to raise sufficient funding from the sale of our common stock to fund our marketing plan and operations. We believe that debt financing will not be an alternative for funding the marketing plan. We do not have any arrangements in place for any future equity financing. If we are required to raise additional funds, substantial dilution may result to existing shareholders. Our auditors have raised substantial doubt concerning our ability to continue as a going concern. Please see our audited financial statements contained in our Form 10-K for the period ended June 30, 2011.

Results of Operations for the Three Months Ended March 31, 2012 and the Three Months Ended March 31, 2011

We earned revenues of $2,962 for the period ended March 31, 2012 and had no revenues for the period ended March 31, 2011.

As of March 31, 2012, we had total assets of $1,819,383 and total liabilities of $712,136 compared to total assets of $1,651,414 and total liabilities of $177,810 as of June 30, 2011.

During the three months ended March 31, 2012, we incurred operating expenses in the amount of $228,056. These operating expenses were comprised of accounting, auditing and legal fees, general and administrative expenses, consulting fees, rent expenses and amortization and depreciation compared to operating expenses of $80,451 for the three months ended March 31, 2011.

For the three months ended March 31, 2012, we paid consulting fees of $42,365 to an entity controlled by our current President.

For the three months ended March 31, 2012, we paid rent expense to an unrelated party of $11,261.
 
 
We have generated minimal revenue since inception and are dependent upon obtaining financing to pursue marketing and distribution activities. For these reasons, our auditors believe that there is substantial doubt that we will be able to continue as a going concern.

 
14

 
 
ITEM 2 - Management’s Discussion and Analysis of Financial Condition and Results of Operations - continued
 
Results of Operations for the Nine Months Ended March 31, 2012 and the Nine Months Ended March 31, 2011

During the nine months ended March 31, 2012, we incurred operating expenses in the amount of $490,389 and revenues of $3,916. These operating expenses were comprised of accounting and audit fees, legal fees, general and management expenses, rent expense, and amortization expense, compared to operating expenses of $186,579 for the nine months ended March 31, 2011.

For the nine months ended March 31, 2012, we paid consulting fees of $128,898 to an entity controlled by our current President.  For the nine months ended March 31, 2012, we paid $64,925 in consulting fees to our current president.   For the nine month period ended March 31, 2012, our current President paid operating bills totaling $77,808, and was repaid $20,128 in cash, and is still owed $57,680 which is included in accounts payable – related party. The Company also owes an additional $98,104 to our current President for previous advances through June 30, 2011.

Liquidity and Capital Resources

As of March 31, 2012, the Company had a cash balance of $9,107, and as of June 30, 2011, the Company had a cash balance of $29,873.

For the nine months ended March 31, 2012, the Company raised $120,000 in private placements of its common stock, conducted in compliance with Regulation S of the Securities Act of 1933, as amended (“Regulation S”), selling 480,000 units, with each unit consisting of one share of its common stock, par value $.0001 and one common stock purchase warrant to purchase additional shares of the Company’s common stock for a two year period from the date of issuance.   The Company is utilizing the proceeds from this offering to fund its current operations.

On March 16, 2012, the Company issued 50,000 shares of its common stock to 0875505 B.C. Ltd., the entity from whom the Company acquired the Adiri™ patents and trademarks.  In exchange, the Company acquired all the issued and outstanding shares of 0875505 BC from its two shareholders.
 
 
If the Company is not successful in generating sufficient liquidity from operations or in raising sufficient capital resources, on terms acceptable to it, this could have a material adverse effect on its business, results of operations liquidity and financial condition.

The Company presently does not have any available credit, bank financing or other external sources of liquidity, other than the net proceeds from the Offering. Due to its brief history and historical operating losses, the Company’s operations have not been a source of liquidity. The Company will need to obtain additional capital in order to expand operations and become profitable. In order to obtain capital, the Company may need to sell additional shares of its common stock or borrow funds from private lenders. There can be no assurance that the Company will be successful in obtaining additional funding.

The Company will need additional investments in order to continue operations. Additional investments are being sought, but the Company cannot guarantee that it will be able to obtain such investments. Financing transactions may include the issuance of equity or debt securities, obtaining credit facilities, or other financing mechanisms. However, the trading price of the Company’s common stock and a downturn in the U.S. stock and debt markets could make it more difficult to obtain financing through the issuance of equity or debt securities. Even if the Company is able to raise the funds required, it is possible that it could incur unexpected costs and expenses, fail to collect significant amounts owed to it, or experience unexpected cash requirements that would force it to seek alternative financing. Further, if the Company issues additional equity or debt securities, stockholders may experience additional dilution or the new equity securities may have rights, preferences or privileges senior to those of existing holders of the Company’s common stock. If additional financing is not available or is not available on acceptable terms, the Company will have to curtail its operations.

Critical Accounting Policies

Our financial statements are prepared in accordance with accounting principles generally accepted in the United States of America. Preparing financial statements in accordance with generally accepted accounting principles requires management to make estimates and assumptions which affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the balance sheet dates, and the recognition of revenues and expenses for the reporting periods. These estimates and assumptions are affected by management's application of accounting policies.
 
 
 
 
15

 
 
ITEM 2 - Management’s Discussion and Analysis of Financial Condition and Results of Operations - continued
 
Contractual Obligations

On October 4, 2011 the Company entered into a month-to-month lease agreement of a warehouse space located in Kelowna, BC.  The lease, commencing on November 1, 2011 requires monthly payment of CDN $2,500 plus related taxes and a CDN $2,500 security deposit.

Off-Balance Sheet Commitments and Arrangements

We have not entered into any financial guarantees or other commitments to guarantee the payment obligations of any third parties. In addition, we have not entered into any derivative contracts that are indexed to our own shares and classified as shareholder’s equity, or that are not reflected in our consolidated financial statements. Furthermore, we do not have any retained or contingent interest in assets transferred to an unconsolidated entity that serves as credit, liquidity or market risk support to such entity. Moreover, we do not have any variable interest in any unconsolidated entity that provides financing, liquidity, market risk or credit support to us or engages in leasing, hedging or research and development services with us.

Inflation

Inflation has not materially impacted our results of operations in recent years.

ITEM 3 - Quantitative and Qualitative Disclosures about Market Risk

As a “smaller reporting company” (as defined by Item 10 of Regulation S-K), the Company is not required to provide information required by this Item, as defined by Regulation S-K Item 305(e).

ITEM 4T - Controls and Procedures

Disclosure controls and procedures

As required by Rule 13a-15 under the Securities Exchange Act of 1934, as of the end of the period covered by this quarterly report, being December 31, 2011, we have carried out an evaluation of the effectiveness of the design and operation of our company’s disclosure controls and procedures. This evaluation was carried out under the supervision and with the participation of our management, including our Chief Executive Officer. Based upon that evaluation, our Chief Executive Officer concluded that our disclosure controls and procedures are effective as at the end of the period covered by this report. There have been no significant changes in our internal controls over financial reporting that occurred during our most recent fiscal quarter ended December 31, 2011 that have materially affected, or are reasonably likely to materially affect our internal controls over financial reporting.

Disclosure controls and procedures and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported, within the time period specified in the Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed under the Securities Exchange Act of 1934 is accumulated and communicated to management, including our Chief Executive Officer to allow timely decisions regarding required disclosure.

Our management, including our Chief Executive Officer and Chief Accounting Officer, does not expect that our disclosure controls and procedures or our internal controls will prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of the controls can provide absolute assurance that all control issues and instances of fraud, if any, within our company have been detected.

Changes in Internal Control over Financial Reporting
 
There were no changes in our internal controls over financial reporting during the three month period ended December 31, 2011 that materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.
 
 
 
16

 

PART II OTHER INFORMATION

ITEM 2 - Unregistered Sales of Equity Securities and Use of Proceeds

In the nine months ended March 31, 2012, we conducted private placements for an aggregate total of $120,000, or 480,000 units consisting of one share of our common stock and one share common stock warrant to purchase shares of our common stock, with a purchase price of $0.25 per share and an expiration date of two years from the closing. The Company relied on Regulation S for the issuance of these shares as all of the shares were sold to citizens of Canada.

On August 31, 2011, the Company issued 2,000 restricted shares of our common stock for payment of debt owed to a legal counsel for services.  On September 22, 2011, the same legal counsel converted $2,500 in accounts payable owed to them to 10,000 restricted shares of our common stock and 10,000 stock warrants to purchase shares of our common stock at $0.25 per share, which warrants will expire two years from the date on granting. The Company relied on Regulation S for these issuances as well.

On August 25, 2011, the Company issued 62,500 restricted shares of our common stock for payment of website design and maintenance services performed by an unrelated third party in the amount of $15,625. The value of the maintenance services is $2,500 and will be amortized over the six months contract period with that vendor, beginning in October 2011.  The Company relied on Regulation S for this issuance as well.

ITEM 6 - Exhibits
 
 


SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Exchange Act, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

 
 
RELIABRAND,  INC.
 
       
Date: May 10, 2012
By:
/s/ Antal Markus
 
   
Name: Antal Markus
 
   
Title: CEO, CFO
 
       

 
 
 
 
 
17

XOTC:RLIA Quarterly Report 10-Q Filling

XOTC:RLIA Stock - Get Quarterly Report SEC Filing of XOTC:RLIA stocks, including company profile, shares outstanding, strategy, business segments, operations, officers, consolidated financial statements, financial notes and ownership information.

XOTC:RLIA Quarterly Report 10-Q Filing - 3/31/2012
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