ITEM 1. BUSINESS
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This periodic report contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 with respect to the financial condition, results of operations, business strategies, operating efficiencies or synergies, competitive positions, growth opportunities for existing products, plans and objectives of management. Statements in this periodic report that are not historical facts are hereby identified as “forward-looking statements.”
BUSINESS
Organization and Corporate History
Pacific Ventures Group, Inc. (“Pacific Ventures” or the “Company”) was incorporated under the laws of the State of Delaware on October 3, 1986. Pacific Ventures operated as an insurance holding company that, through its subsidiaries, marketed and underwrote specialized property and casualty coverage in the general aviation insurance marketplace. Historically, the Company's business has been organized into three divisions. In 1997, after selling several of its divisions, the Company’s remaining insurance operations were placed into receivership and the Company ceased operating its insurance business. Since the Company terminated its business operations, management has been focused on settling debts and closing outstanding operations.
Since the termination of its prior business, the Company has had no operations other than seeking an acquisition or merger to bring an operating entity into the Company. The Company does not propose to restrict its search for a business opportunity to any particular industry or geographical area and may, therefore, engage in essentially any business in any industry. The Company has unrestricted discretion in seeking and participating in a business opportunity, subject to the availability of such opportunities, economic conditions, and other factors.
The selection of a business opportunity in which to participate is complex and risky. Additionally, the Company has only limited resources and may find it difficult to locate good opportunities. There can be no assurance that the Company will be able to identify and acquire any business opportunity which will ultimately prove to be beneficial to the Company and its stockholders. The Company will select any potential business opportunity based on management's business judgment.
Currently, the Company is in the process of investigating potential business ventures which, in the opinion of management, will provide a source of eventual profit to the Company. Such involvement may take many forms, including the acquisition of an existing business or the acquisition of assets to establish subsidiary businesses. At this time, the Company’s management has been focused on investigating whether there are merger and acquisition
activities in certain targeted industries. To this end, management has focused on the medical and “green” energy industries. These efforts have been focused on discussions with management in these industries and research.
The Company is not currently conducting any business, nor has it conducted any business for several years. Therefore, it does not possess products or services, distribution methods, competitive business positions, or major customers. The Company does not possess any unexpired patents or trademarks and any and all of its licensing and royalty agreements from the insurance it sought to market in the past have since expired, and are not currently valid. The Company does not employ any employees.
The activities of the Company are subject to several significant risks which arise primarily as a result of the fact that the Company has no specific business and may acquire or participate in a business opportunity based on the decision of management which potentially could act without the consent, vote, or approval of the Company's stockholders. The risks faced by the Company are further increased as a result of its lack of resources and its inability to provide a prospective business opportunity with significant capital.
ITEM 2.
ITEM 2. PROPERTIES
The Company owns no properties and utilizes space on a rent-free basis from Kip Eardley, the Company’s officer and director. This arrangement is expected to continue until such time as the Company becomes involved in a business venture which necessitates its relocation, as to which no assurances can be given. The Company has no agreements with respect to the maintenance or future acquisition of the office facilities, however, if a successful merger/acquisition is negotiated, it is anticipated that the office of the Company will be moved to that of the acquired company.
The Company is not actively engaged in conducting any business. Rather, the Company is in the process of investigating potential business ventures which, in the opinion of management, will provide a source of eventual profit to the Company. Therefore, the Company does not presently intend to invest in real estate or real estate securities, nor have we formulated any investment policies regarding investments in real estate, real estate mortgages, or securities of or interests in persons engaged in real estate activities.
ITEM 3.
Item 3
Articles of Incorporation and Bylaws
3.01
Articles of Incorporation
Incorporated
by reference*
3.02
Bylaws
Incorporated
by reference*
Item 4
Item 4
Instruments Defining the Rights of Security Holders
4.01
Specimen Stock Certificate
Incorporated
by reference*
31.01
CEO certification
This Filing
31.02
CFO certification
This Filing
32.01
CEO certification
This Filing
32.02
CFO certification
This Filing
* Incorporated by reference from the Company's registration statement on Form 10-SB filed with the Commission, SEC file no. 000-54584.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated:
Pacific Ventures Group, Inc.
Date:
March 28, 2013
By: /s/Kip Eardley
Kip Eardley, President, Director, (Principal Executive Officer)
By: /s/Kip Eardley
Kip Eardley, Principal Financial Officer
In accordance with the Securities Exchange Act of 1934, this report has been signed by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
Signature
Title
Date
/s/Kip Eardley
Kip Eardley
Director
March 28, 2013
Anderson Bradshaw [logo]
Russell E. Anderson, CPA
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Russ Bradshaw, CPA
William R. Denney, CPA
Sandra Chen, CPA
To The Board of Directors and Stockholders of
Pacific Ventures Group, Inc.
We have audited the accompanying balance sheets of Pacific Ventures Group, Inc., (the Company)
as of December 31, 2012 and 2011, and the related statements of operations, changes in
stockholders’ equity (deficit), and cash flows for each of the years ended December 31, 2012 and
2011, and the period from September 19, 2005 (date of reactivation) to December 31, 2012. These
financial statements are the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting
Oversight Board (United States of America). Those standards require that we plan and perform the
audits to obtain reasonable assurance about whether the financial statements are free of material
misstatement. The Company is not required to have, nor were we engaged to perform, an audit of
its internal control over financial reporting. Our audits included consideration of internal control
over financial reporting as a basis for designing audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the effectiveness of the
Company's internal control over financial reporting. Accordingly, we express no such opinion. An
audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the
financial position of Pacific Ventures Group, Inc. as of December 31, 2012 and December 31,
2011, and the results of its operations and its cash flows for the years ended December 31, 2012
and 2011, and the period from September 19, 2005 (date of reactivation) to December 31, 2012, in
conformity with accounting principles generally accepted in the United States of America.
The accompanying financial statements have been prepared assuming the Company will continue
5296 S. Commerce Dr
as a going concern. As discussed in Note 1 to the financial statements, the Company has an
Suite 300
accumulated deficit and has suffered recurring losses from operations. These factors, among
Salt Lake City, Utah
others, raise substantial doubt about the Company’s ability to continue as a going concern.
Management’s plans in regard to this matter are also described in Note 1. The financial statements
USA do not include any adjustments that might result from the outcome of this uncertainty.
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(F) 801.281.4701
Suite A, 5/F
Max Share Center
/s/Anderson Bradshaw PLLC
373 Kings Road
North Point
Anderson Bradshaw PLLC
Hong Kong
(T) 852.21.555.333
Salt Lake City, Utah
(F) 852.21.165.222
March 28, 2013
abcpas.net
Pacific Ventures Group, Inc.
(A Development Stage Company)
Balance Sheets
The accompanying notes are an integral part of these financial statements.
Pacific Ventures Group, Inc.
(A Development Stage Company)
Statements of Operations
The accompanying notes are an integral part of these financial statements.
The accompanying notes are an integral part of these financial statements.
Pacific Ventures Group, Inc.
(A Development Stage Company)
Statements of Cash Flows
The accompanying notes are an integral part of these financial statements.
Note 1: Basis of Presentation and Summary of Significant Accounting Policies
Organization - Pacific Ventures Group, Inc. (the “Company” or “Pacific Ventures”) was incorporated under the laws of the State of Delaware on October 3, 1986, under the name AOA Corporation. On November 12, 1991, the Company changed its name to American Eagle Group, Inc. On October 22, 2012, the Company changed its name to Pacific Ventures Group, Inc.
Reorganization, Development Stage Company - The Company is in the development stage since it is not currently conducting any business, nor has it conducted any business since current management was appointed in the reactivation on September 19, 2005. Since that time, the Company has been investigating potential business ventures which, in the opinion of management, will provide a source of eventual profit. Such involvement may take many forms, including the acquisition of an existing business or the acquisition of assets to establish subsidiary businesses.
Going Concern - The Company’s financial statements have been prepared using accounting principles generally accepted in the United States of America applicable to a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company has not generated any revenue for several years and the sole officer and director of the Company has provided capital to pay prior and current obligations. The Company requires additional capital to continue its limited operations. Furthermore, the Company’s officer and director serves without compensation. The Company assumes that these arrangements and the availability of future capital sources will continue into the future, but no assurance thereof can be given. A change in these circumstances would have a material adverse effect on the Company’s ability to continue as a going concern. The accompanying financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Income Taxes
The Company utilizes the liability method of accounting for income taxes as set forth in ASC 740-20, “Accounting for Income Taxes.” Under the liability method, deferred taxes are determined based on the difference between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect in the years in which the differences are expected to reverse. An allowance against deferred tax assets is recorded when it is more likely than not that such tax benefits will not be realized.
Estimates
The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures 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.
Cash and Cash Equivalents
For purposes of reporting cash flows, the Company considers all highly-liquid debt instruments purchased with an original maturity of three months or less to be cash equivalents.
Revenue Recognition
The Company plans to recognize revenue when the following four conditions are present: (1) persuasive evidence of an agreement exists, (2) the price is fixed or determinable, (3) delivery has occurred or services are rendered, and (4) collection is reasonably assured.
Income (Loss) Per Common Share
Income (Loss) per common share is computed by dividing net loss available to common stockholders by the weighted average number of common shares outstanding during the periods presented. The Company has no potentially dilutive securities, in 2012 and 2011. Accordingly, basic and dilutive loss per common share are the same.
Fair Value
The carrying values of cash and cash equivalents, and accounts payable and accrued liabilities approximate their fair values because of the short-term maturity of these financial instruments.
Recently Issued Accounting Pronouncements
The Company has reviewed recently issued, but not yet adopted, accounting standards in order to determine their effects, if any, on its results of operations, financial position or cash flows. Based on that review, the Company believes that none of these pronouncements will have a significant effect on its financial statements.
Note 2: Income Taxes
Due to losses at December 31, 2012 and 2011, the Company had no income tax liability. At December 31, 2012 and 2011, the Company had available unused operating loss carry forwards of approximately $90,693 and $58,685, respectively, which may be applied against future taxable income and which expire in various years through 2032.
The amount of and ultimate realization of the benefits from the operating loss carry forwards for income tax purposes is dependent, in part, upon the tax laws in effect, the future earnings of the Company and other future events, the effects of which cannot be determined at this time. Because of the uncertainty surrounding the realization of the loss carry forwards, the Company has established a valuation allowance equal to the tax effect of the loss carry forwards and, therefore, no deferred tax asset has been recognized for the loss carry forwards. The net deferred
tax assets are approximately $33,828 and $21,889 as of December 31, 2012 and 2011, respectively, with an offsetting valuation allowance of the same amount resulting in a change in the valuation allowance of approximately $11,939 during the year ended December 31, 2012.
Components of income tax are as follows:
A reconciliation of the provision for income tax expense with the expected income tax computed by applying the federal statutory income tax rate to income before provision for income taxes as follows:
The Company has no tax positions at December 31, 2012 and 2011, for which the ultimate deductibility is highly certain but for which there is uncertainty about the timing of such deductibility. The Company recognizes interest accrued related to unrecognized tax benefits in interest expense and penalties in operating expenses. During the period ended December 31, 2012 and 2011, the Company recognized no interest and penalties. The Company had no accruals for interest and penalties at December 31, 2012 and 2011. Under the rules of the Internal Revenue Service, the Company's tax returns for the previous three years remain open for examination.
Note 3: Capital Stock
Preferred Stock and Common Stock - The Company’s Board of Directors is expressly granted the authority to issue, without stockholder action, the authorized shares of the Company’s preferred and common stock. The Board of Directors may issue shares and determine the powers, preferences, limitations, and relative rights of any class of shares before the issuance thereof.
Preferred Stock - On October 22, 2012, the Company filed a Restated and Amended Certificate of Incorporation increasing the authorized Preferred Stock to 10,000,000 shares, par value $.001 per share.
The authorization to issue 162,857 shares of Series B Cumulative Preferred Stock was given on March 7, 1988, and 162,857 shares were issued June 21, 1990. Under the rights, preferences and privileges of the Series B Preferred Stock, the shares are non-voting, non-convertible, accrue $.60 per share per year dividends as declared by the board of directors, $10.00 per share liquidation preference over common stock, and can be redeemed by the Company for $10.00 per share. The Company never declared dividends for the shareholders of the Series B Cumulative Preferred shares. The Company redeemed 20,000 shares in January 1997 and the remaining 142,857 shares were redeemed on April 20, 2011, for $5,000. As of December 31, 2012 and 2011, there were zero Series B Cumulative Preferred shares outstanding.
Series E Preferred Stock was authorized October 2006 for up to 1,000,000 shares. Under the rights, preferences and privileges of the Series E Preferred Stock, the holders of the preferred stock receive a 10 to 1 voting preference over common stock. Accordingly, for every share of Series E Preferred Stock held, the holder received the voting rights equal to 10 shares of common stock. The Series E preferred Stock is not convertible into any other class of stock of the Company and has no preference to dividends or liquidation rights. As of December 31, 2012 and 2011, there were 1,000,000 Series E Preferred shares outstanding.
Common Stock - On October 22, 2012, the Company filed a Restated and Amended Certificate of Incorporation increasing the authorized common stock to 100,000,000 shares, par value $.001 per share. Effective November 8, 2012, there was reverse split of the issued and outstanding common stock of the Company on a basis of fifty (50) to one (1). All fractional shares were rounded up to the nearest whole share, with no shareholder falling below 100 shares. There were 43,089 shares issued for rounding. The effects of which have been included in these financial statements as if the split had occurred at the beginning of the first period presented.
As of December 31, 2012 and 2011, there were 184,031 and 184,031 shares, respectively, of common stock outstanding.
Note 4: Related Party Transactions
Between August 2005 and September 2006, Capital Builders, Inc., a company owned and controlled by Kip Eardley, who was also an officer and director of the Company, advanced $50,000 to the Company. Mr. Eardley resigned in September 2006. On October 23, 2006, the Company entered into a Debt Settlement Agreement with Capital Builders whereby 100% of the debt was exchanged for 1,000,000 Series E Preferred Shares. Each Series E Share has voting rights equal to 10 shares of common stock, are not convertible into any other class of stock of the Company and have no preference to dividends or liquidation rights.
Kip Eardley became the sole officer and director on December 31, 2008. On September 30, 2011, loans from Capital Builders in the total amount of $10,900 were converted to a promissory
note. On December 30, 2011, funds loaned during the quarter from Capital Builders were converted to a promissory note in the amount of $1,500. On March 31, 2012, funds loaned during the quarter from Capital Builders were converted to a promissory note in the amount of $16,335. On June 30, 2012, funds loaned during the quarter from Capital Builders were converted to a promissory note in the amount of $500. On July 23, 2012, funds were loaned by Capital Builders and converted to a promissory note in the amount of $6,000. All of the money was used to pay operating expenses. On November 6, 2012, funds were loaned by Capital Builders and converted to a promissory note in the amount of $4,000. All of the money was used to pay operating expenses. All of the notes accrue interest at 2% annually until repaid. Accrued interest on these notes at December 31, 2012 and 2011, was $583 and $55, respectively.
For 2012 and 2011, the sole officer and director of the Company has provided office space at no cost to the Company.
Note 5: Subsequent Events
ASC 855-16-50-4 establishes accounting and disclosure requirements for subsequent events. ASC 855 details the period after the balance sheet date during which we should evaluate events or transactions that occur for potential recognition or disclosure in the financial statements, the circumstances under which we should recognize events or transactions occurring after the balance sheet date in our financial statements and the required disclosures for such events. We have evaluated all subsequent events through the date these financial statements were issued and no subsequent events occurred that required disclosure.