Item 1. Business
Overview of Our Business
Tiger Reef, Inc. was incorporated under the laws of the State of Colorado on June 27, 2013 under the name Stream Flow Media, Inc. The Company amended its Articles of Incorporation on October 14, 2015 to change its name to Blue Water Bar & Grill, Inc. and further amended its Articles of Incorporation on October 24, 2016 to change its name to Tiger Reef, Inc. Tiger Reef is a diversified producer of ultra premium rums under the Tiger Reef® brand and a developer of Caribbean casual dining restaurant properties under the Mermaid Reef Ocean Grill & Lounge™ brand.
Emerging Growth Company Status
We are an "emerging growth company", as defined in the Jumpstart our Business Startups Act of 2012 (“JOBS Act”), and we may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies, including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved. We cannot predict if investors will find our common stock less attractive because we may rely on these exemptions. If some investors find our common stock less attractive as a result, there may be a less active trading market for our common stock and our stock price may be more volatile.
Section 107 of the JOBS Act provides that an “emerging growth company” can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an “emerging growth company” can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. Tiger Reef has elected not to opt out of the transition period pursuant to Section 107(b).
We could remain an “emerging growth company” for up to five years, or until the earliest of (i) the last day of the first fiscal year in which our annual gross revenues exceed $1 billion, (ii) the date that we become a “large accelerated filer” as defined in Rule 12b-2 under the Exchange Act, which would occur if the market value of our common stock that is held by non-affiliates exceeds $700 million as of the last business day of our most recently completed second fiscal quarter, or (iii) the date on which we have issued more than $1 billion in non-convertible debt during the preceding three-year period.
Notwithstanding the above, we are also currently a “smaller reporting company”, meaning that we are not an investment company, an asset-backed issuer, or a majority-owned subsidiary of a parent company that is not a smaller reporting company and have a public float of less than $75 million and annual revenues of less than $50 million during the most recently completed fiscal year. In the event that we are still considered a “smaller reporting company”, at such time are we cease being an “emerging growth company”, the disclosure we will be required to provide in our SEC filings will increase, but will still be
less than it would be if we were not considered either an “emerging growth company” or a “smaller reporting company”. Specifically, similar to “emerging growth companies”, “smaller reporting companies” are able to provide simplified executive compensation disclosures in their filings; are exempt from the provisions of Section 404(b) of the Sarbanes-Oxley Act requiring that independent registered public accounting firms provide an attestation report on the effectiveness of internal control over financial reporting; and have certain other decreased disclosure obligations in their SEC filings, including, among other things, only being required to provide two years of audited financial statements in annual reports. Decreased disclosures in our SEC filings due to our status as an “emerging growth company” or “smaller reporting company” may make it harder for investors to analyze our results of operations and financial prospects.
Therefore, an investment in our business is considered extremely risky and is suitable only for those who can afford to lose their entire investment.
Plan of Operation
Tiger Reef was incorporated under the laws of the State of Colorado on June 27, 2013 under the name Stream Flow Media, Inc. We amended our Articles of Incorporation on October 14, 2015 to change our name to Blue Water Bar & Grill, Inc. and further amended its Articles of Incorporation on October 24, 2016 to change its name to Tiger Reef, Inc. Tiger Reef is a diversified producer of ultra premium rums under the Tiger Reef® brand and a developer of casual dining restaurant properties in the Caribbean under the Mermaid Reef Ocean Grill & Lounge™ brand.
The projected costs and other related expenses are estimates made by our management and our actual costs related to opening our proposed restaurants may differ significantly.
In addition to the foregoing, and unless otherwise noted, all of the cost estimates and forecasts throughout our business plan are mere estimates made by our management. Our actual costs related to opening and operating the proposed restaurants may differ significantly from our estimates, which could have a negative impact on our overall business, cause our business to fail, and result in you losing all of your investment.
Tiger Reef® Ultra Premium Rums
Tiger Reef has worked closely with a distinguished and multi-award winning Cuban Maestro Ronero (master rum maker) to formulate three new and very special ultra premium rums specifically for the US market. These rums will be produced and bottled in the Dominican Republic and are expected to be available to US consumers as early as Fall 2017.
Mermaid Reef Ocean Grill & Lounge™
The Mermaid Reef Ocean Grill & Lounge (“Mermaid Reef”) concept is an intimate restaurant of between 60 to 80 seats, with both indoor and outdoor seating, featuring a variety of proteins, both from the ocean and the land, seasonal crispy vegetables, and an array of rich, delectable sauces to please even the most discriminating palette. Each restaurant will be built on-site at an existing major Caribbean resort chain and, even though it will be operated as a resort amenity, each restaurant will also be actively marketed to non-resort guests and local residents.
Tiger Reef is currently in advanced negotiations for a leased restaurant space on the island of St. Maarten, Dutch West Indies to open the first Mermaid Reef. Tiger Reef anticipates these discussions will result in an executed lease agreement sometime in early Q2 2017. Updates on these material discussions and the Caribbean restaurant concept will be provided to shareholders once finalized.
Keys for Success
To better achieve our business objectives and successfully compete with other restaurants, we have developed the following focal points and strategies we anticipate implementing in all of our future restaurants:
Create a Fun, Energetic, Destination Drinking and Dining Experience. We wish to create and promote a fun and socially open atmosphere whereby our customers can, if they choose to do so, openly interact with one another. Topics of discussion and frequent interest will often center around where each other is from, what activities have they done while on the island, and giving and receiving recommendations for future activities while on the island; sometimes the floor and bar staff will participate in these discussions and offer their own words of advice. We intend to accomplish this by utilizing sectional floor and foot traffic planning, whereby the bar area will promote social interaction among customers, a stage area will feature local live entertainment performers to create a lively and festive atmosphere, and more intimate dining tables will be located further in
the back to provide separation for those who just wish to dine alone and enjoy the island atmosphere. We believe that if we are successful at achieving this goal, new customers - tourists, “local” ex-patriots and native locals alike - will become repeat, or “regular”, customers and subsequently promote the restaurant by word-of-mouth to their friends and family.
Distinctive Concept. In each restaurant we wish to create a fun and consistent experience for our customers centered around our full bar service, dining offerings, and daily entertainment. The restaurant’s concept will be carried throughout our customers’ entire visit and will involve all aspects of the experience, including the exterior design of the building, interior layout and decorum, employee greetings and uniforms, specialty drinks and menu items, and fun and creative souvenirs such as interestingly shaped drink glasses and bright and flamboyant t-shirts that can remind the customer of their vacation or make an excellent gift for someone back home.
Comfortable Adult Atmosphere. Our restaurants will be primarily adult orientated. While children will be welcomed during daytime hours as long as they are accompanied by a responsible adult at all times during their visit, no one under 21 years of age (or the minimum legal drinking age as established by statute) will be allowed into our restaurants after 10pm. We believe that this policy will help maintain a fun and relaxed atmosphere that appeals to adult customers, and will help attract groups such as private parties and business organizations.
High Standard of Customer Service. Because service is one the key areas restaurants differentiate themselves from one another - and a constant source of either compliments or complaints from customers - we intend to foster a high level of customer service among our employees, ranging from the general manager to the greeters, through intense training (cross training for all manager level employees and a one-week training course, complete with required testing on all food and drink offerings, operational procedures, and computer checkout for all other employees), constant monitoring (from the on-duty manager and surprise visits from “secret shoppers”), and emphasizing consideration of our customers first and foremost in all decisions. From the moment a customer walks into the front door, we want them to experience a high level of guest service provided by a knowledgeable, energetic staff. Bar tenders will be required to be able to free pour simultaneously from multiple liquor bottles and perform “flare” techniques (flipping, tossing, and twirling of liquor bottles) for our customers’ entertainment; greeters and servers will be required to introduce customers to the concept, explain the drink and entree menus and daily specials, and generally set the stage for a fun and memorable experience for them.
Provide Dining Value. We believe that our restaurants should provide our customers with interesting, high quality, and generously portioned (covering the entire plate) menu items that are aesthetically appealing and result in the customer leaving fully satisfied. Complementing the dining aspect, we intend to offer the customer a unique variety of original drinks, each designed to perpetuate and immerse the customer in the restaurant’s overall concept. It is our goal to generate at least a US$35 average check per guest, inclusive of food and drinks. We estimate that our overall gross sales will be comprised of 65% food and 35% drinks. We anticipate achieving and maintaining a 30% food cost and 18% liquor cost, which relates to our actual cost of the product compared to the gross revenue the product generates. For example, if we sold a fish entree for $20 our actual cost would be $6 and our gross profit would be $14. Prices for entrees will start at around $12 for a hamburger and rise to $42 (or more) for a surf and turf dinner; prices for drinks will start at $3 for beer, $6 for basic well mixed drinks, and $8 for specialty drinks.
It is important to note that although we aspire to operate at or below the above food and liquor costs, we cannot guarantee that we will ever achieve such food or liquor costs or, if achieved, will be able to maintain them.
Operations and Management
Our ability to effectively manage an operation including high volume restaurants (annual gross sales of US$1,000,000 or more) with live entertainment offerings is critical to our overall success. In order to maintain quality and consistency at each of our future restaurants we must carefully train and properly supervise our personnel and the establishment of, and adherence to, high standards relating to personnel performance, food and beverage preparation, entertainment productions and equipment, and maintenance of the restaurant facilities. We believe our current management is capable of overseeing our planned growth over the next two years. While staffing levels will vary from restaurant to restaurant depending on actual sales volumes, we anticipate our typical restaurant management staff to be comprised of a general manager, a kitchen manager (who also serves as the head chef) and a bar manager (who also serves as the head bartender); the kitchen manager and bar manager will also act as assistant general managers when the general manager is off-duty and will receive a slightly higher base salary compared to our other chefs and bartenders to compensate for their added responsibilities.
Recruiting. We will actively recruit and select individuals who share our passion for customer service. Our selection process includes testing and multiple interviews to aid in the selection of new employees, regardless of their prospective position. We will offer a competitive compensation plan to our managers that includes a base salary, bonuses for achieving performance
objectives, and possibly incentive stock options once they have worked for us for at least one full year. For example, the general manager in our initial restaurant will most likely be offered a base salary of $3,500 a month, plus up to $1,000 a month in additional performance incentives for achieving minimum gross sales and exceeding the minimum targeted food, liquor, and labor costs, as determined by our executive management team. In addition, all employees are entitled to discount meals at any of our future restaurants.
Training. We believe that proper training is the key to exceptional customer service. Each new management hire will go through an extensive training program, which will include cross-training in all management duties. All non-management new hires will go through a standard training program where they will learn and be tested on all of our food and drink offerings, operational procedures, and our point-of-sale (POS) computer system.
Management Information Systems (MIS). All of our future restaurants will be equipped with a variety of integrated management information systems. These systems will include an easy-to-use point-of-sale (POS) computer system which facilitates the movement of customer food and drink orders between the customer areas and kitchen and bar operations, controls cash, handles credit card authorizations, keeps track of sales on a per employee basis for incentive awards purposes, and provides on-site and executive level management with real-time sales and inventory data. Additionally, we intend to implement a centralized accounting system that will include a food cost program and a labor scheduling and tracking program. Physical inventories of food and drink items will be performed on a weekly basis. Further, daily, weekly, and monthly financial information will be provided to executive level management for analysis and comparison to our budget and to comparable restaurants. By closely monitoring each restaurant’s gross sales, cost of sales, labor, and other cost trends we will be better able to control our costs, inventory levels, and identify problems with individual operations, if any, early on.
Secret Shopper. Because we believe exceptional customer service is paramount to our success, we intend to implement a “secret shopper” program to monitor the quality control at all of our future restaurants. Secret shoppers are independent persons who test the quality of our food, drink, and service as paying customers without the knowledge of the restaurant’s management or employees. Secret shoppers then report their unbiased experiences to our executive level management.
Long-Term Growth Plan (5+ Years)
Ultra Premium Rums
Over the next five years we plan to expand and grow the Tiger Reef® brand of ultra premium rums into new territories, including:
 Asia;
 European Union;
 Caribbean Region;
 Australia; and
 India.
Mermaid Reef Ocean Grill & Lounge™
Over the next five years we plan to focus on a disciplined growth strategy of opening one new Mermaid Reef restaurant each year. We have also identified the following Caribbean islands we intend to eventually open a Mermaid Reef restaurant:
 St. Maarten, Dutch West Indies
 Aruba, Dutch West Indies;
 Nassau, Bahamas;
 Cozumel, Mexico;
 Grand Cayman; and
 Barbados.
We estimate that we will need to raise a minimum of $5 million to achieve the above listed goals and milestones. This capital will most likely be raised through the sales of additional equity securities, which will have a dilutive effect on existing shareholders.
Sales and Marketing
Our marketing strategy is aimed at attracting new customers through both traditional and creative avenues. We intend to focus on building a reputation among local customers (those living on the island) while directing our marketing efforts toward tourists staying on the island or visiting for the day on a cruise ship. We intend to accomplish this through:
 Grand opening promotions;
 Traditional paid advertising (e.g. radio, television, newspaper, etc.);
 Free media exposure (e.g. hosting charity events, food reviews, etc.); and
 Working directly with tourism bureau representatives and transportation representatives (taxi association, bus association, day sail and charter businesses, etc.).
When opening a new restaurant we intend to host grand opening parties for local leaders, media personalities, hospitality employees such as resort and hotel staff, and tourism bureau representatives (inclusive of cruise ship industry representatives and hotel/resort industry representatives). Our goal with courting these groups is to introduce them to our concept and court them to refer new customers to our restaurants and provide us with free future media exposure.
Afterwards we will sustain awareness through more traditional marketing methods, including radio and television spots, newspaper ads, billboards and road signs, and resort and hotel concierge promotional cards and discount coupons.
If our strategy is successful it will lead to “word of mouth” referrals, which is our ultimate goal. This is accomplished by providing our customers with consistently excellent service and quality food and drinks.
While we do not have a fixed marketing budget, we do anticipate launching each new restaurant with a marketing blitz campaign and tapering it down to less than 5% of the restaurant’s annual gross sales once it is sufficiently established with regular and recurring revenue.
Financing
We estimate that we will need to generate at least $1.5 million in additional financing in order to maintain our current level of operations and meet our planned fiscal 2017 capital expenditures. Further, in order to proceed with our long-term plans, we anticipate that we will need to generate at least between $4 and $5 million in additional long-term financing.
We presently do not have an established or dependable source of financing. Currently we are exploring various sources of new financing to meet our basic working capital needs and provide for our planned capital expenditures. Without limiting our available options, future financings will most likely be through the sale of additional shares of our common stock. It is possible that we could also offer warrants, options and/or rights in conjunction with any future issuances of our common stock. However, we can give no assurance that sufficient financing will be available to us, and if available to us, in amounts or on terms acceptable to us. If we are unable to obtain additional funds to meet our basic working capital needs, we may need to cease or curtail our business operations.
Government Regulation
The restaurant industry is subject to many various laws which directly affect our organization and planned operations. Each restaurant we open must comply with various licensing requirements and regulations by a number of governmental authorities, which typically include health, safety and fire authorities in the municipality where our restaurant is located. The development and operation of a successful restaurant depends upon selecting and acquiring a suitable location, which is normally subject to zoning, land use, environmental, traffic, and other regulations. Further, our operations will also be subject to various laws governing such matters as wages, health insurance requirements, working conditions, citizenship and work permit requirements, and mandatory overtime pay, all of which will directly affect our labor costs.
Additionally, because we anticipate a significant portion of our revenue to be generated from the sale of alcoholic beverages, we must comply with any and all regulations governing their sale. Typically this requires the proper licensing at each restaurant location (in many cases it needs to be renewed on an annual basis). Such licenses may be revoked or suspended for cause at any time. These regulations often relate to many aspects of the restaurant, including the minimum age of patrons and employees, hours of operation, advertising, wholesale purchasing, inventory control and handling, and storage and dispensing of alcoholic beverages. The failure of any of our future restaurants to obtain and retain such a license would limit its ability
to generate sufficient revenues to achieve profitability at that particular location, which could subsequently impact our business’s overall revenues and ability to achieve (and if achieved, maintain) profitability.
Compliance with Environmental Laws
We have not incurred and do not anticipate incurring any expenses associated with environmental laws.
Patents and Trademarks
Our Tiger Reef trademark and logo have been registered with the U.S. Patent and Trademark Office (“USPTO”) with a serial number of 87158477, which is owned by our wholly-owned subsidiary, Tiger Reef Spirits, Ltd., an Anguilla International Business Company (“IBC”) that we formed on August 31, 2016.
Property and Equipment
Our principal executive office is located at Wellsburg Street #7, Cole Bay, St. Maarten, Dutch West Indies. This space is provided to us by our President and CEO, J. Scott Sitra, free of charge. There is no written agreement or other material terms relating to this arrangement.
Executive Offices and Telephone Number
Our executive office, US mailing address and main telephone number is currently:
Executive Office US Mailing Address (Mail Forwarding Service)
Wellsburg Street #7 c/o The Mailbox #5241
Cole Bay P. O. Box 523882
St. Maarten, Dutch West Indies Miami, FL 33152
Telephone and Other Contact Information Corporate Internet Websites
Tel:(949) 264-1475 www.tigerreefinc.com
Fax: (949) 607-4052
E-Mail: info@tigerreefinc.com
Jumpstart Our Business Startups Act
In April 2012, the Jumpstart Our Business Startups Act ("JOBS Act") was enacted into law. The JOBS Act provides, among other things:
 Exemptions for emerging growth companies from certain financial disclosure and governance requirements for up to five years and provides a new form of financing to small companies;
 Amendments to certain provisions of the federal securities laws to simplify the sale of securities and increase the threshold number of record holders required to trigger the reporting requirements of the Securities Exchange Act of 1934;
 Relaxation of the general solicitation and general advertising prohibition for Rule 506 offerings;
 Adoption of a new exemption for public offerings of securities in amounts not exceeding $50 million; and
 Exemption from registration by a non-reporting company of offers and sales of securities of up to $1,000,000 that comply with rules to be adopted by the SEC pursuant to Section 4(6) of the Securities Act and exemption of such sales from state law registration, documentation or offering requirements.
In general, under the JOBS Act a company is an emerging growth company if its initial public offering ("IPO") of common equity securities was effected after December 8, 2011 and the company had less than $1 billion of total annual gross revenues during its last completed fiscal year. A company will no longer qualify as an emerging growth company after the earliest of:
(i) the completion of the fiscal year in which the company has total annual gross revenues of $1 billion or more,
(ii) the completion of the fiscal year of the fifth anniversary of the company's IPO;
(iii) the company's issuance of more than $1 billion in nonconvertible debt in the prior three-year period, or
(iv) the company becoming a "larger accelerated filer" as defined under the Securities Exchange Act of 1934.
The JOBS Act provides additional new guidelines and exemptions for non-reporting companies and for non-public offerings. Those exemptions that impact Tiger Reef are discussed below.
Financial Disclosure. The financial disclosure in a registration statement filed by an emerging growth company pursuant to the Securities Act of 1933 will differ from registration statements filed by other companies as follows:
(i) audited financial statements required for only two fiscal years;
(ii) selected financial data required for only the fiscal years that were audited; and
(iii) executive compensation only needs to be presented in the limited format now required for smaller reporting companies. (A smaller reporting company is one with a public float of less than $75 million as of the last day of its most recently completed second fiscal quarter)
However, the requirements for financial disclosure provided by Regulation S-K promulgated by the Rules and Regulations of the SEC already provide certain of these exemptions for smaller reporting companies. Tiger Reef is a smaller reporting company. Currently a smaller reporting company is not required to file as part of its registration statement selected financial data and only needs audited financial statements for its two most current fiscal years and no tabular disclosure of contractual obligations.
The JOBS Act also exempts the company's independent registered public accounting firm from complying with any rules adopted by the Public Company Accounting Oversight Board ("PCAOB") after the date of the JOBS Act's enactment, except as otherwise required by SEC rule.
The JOBS Act also exempts an emerging growth company from any requirement adopted by the PCAOB for mandatory rotation of the company's accounting firm or for a supplemental auditor report about the audit.
Internal Control Attestation. The JOBS Act also provides an exemption from the requirement of the company's independent registered public accounting firm to file a report on the company's internal control over financial reporting, although management of the company is still required to file its report on the adequacy of the company's internal control over financial reporting.
Section 102(a) of the JOBS Act exempts emerging growth companies from the requirements in §14A(e) of the Securities Exchange Act of 1934 for companies with a class of securities registered under the 1934 Act to hold shareholder votes for executive compensation and golden parachutes.
Other Items of the JOBS Act. The JOBS Act also provides that an emerging growth company can communicate with potential investors that are qualified institutional buyers or institutions that are accredited to determine interest in a contemplated offering either prior to or after the date of filing the respective registration statement. The JOBS Act also permits research reports by a broker or dealer about an emerging growth company regardless if such report provides sufficient information for an investment decision. In addition the JOBS Act precludes the SEC and FINRA from adopting certain restrictive rules or regulations regarding brokers, dealers and potential investors, communications with management and distribution of a research reports on the emerging growth company IPO.
Section 106 of the JOBS Act permits emerging growth companies to submit 1933 Securities Act registration statements on a confidential basis provided that the registration statement and all amendments are publicly filed at least 21 days before the issuer conducts any road show. This is intended to allow the emerging growth company to explore the IPO option without disclosing to the market the fact that it is seeking to go public or disclosing the information contained in its registration statement until the company is ready to conduct a roadshow.
Election to Opt Out of Transition Period. Section 102(b) (1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a 1933 Act registration statement declared effective or do not have a class of securities registered under the 1934 Act) are required to comply with the new or revised financial accounting standard.
The JOBS Act provides a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such an election to opt out is irrevocable. Tiger Reef has elected not to opt out of the transition period pursuant to Section 107(b).
Item 1A.
Item 1A. Risk Factors
If any of the following risks actually occur, our business, financial condition and results of operations could be harmed and you may lose your entire investment.
Distilled Spirits (Rum) Industry Risk Factors
We have a new and unknown brand. If our brand does not achieve widespread consumer acceptance, our future growth and profitability may be limited.
Our brand is new and unknown. It has not achieved brand recognition and may never become a recognizable brand. Accordingly, if consumers do not accept our brand, we will not be able to penetrate targeted markets and our growth prospects may be severely limited.
We depend on a limited number of suppliers. Failure to obtain satisfactory performance from our suppliers or loss of our existing suppliers could cause us to lose sales, incur additional costs and lose credibility in the marketplace.
We depend on a limited number of third-party suppliers for the sourcing of all of our products. These suppliers consist of third-party distillers, bottlers and glass manufacturers in the Dominican Republic and China. We do not have long-term written agreements with any of our suppliers. We do not currently have a long-term source for supply of aged rum and there can be no assurance we can source adequate amounts of aged rum at satisfactory prices, or at all in the future.
If our suppliers decide to increase their prices, we may not have alternative sources of supply and may not be able to raise the prices of our products to cover all or even a portion of our increased costs. Also, our suppliers’ failure to perform satisfactorily or handle increased orders, delays in shipments of products from suppliers or the loss of our existing suppliers, especially our key suppliers, could cause us to fail to meet orders for our products, lose sales, incur additional costs and/or expose us to product quality issues. In turn, this could cause us to lose credibility in the marketplace and damage our relationships with distributors, ultimately leading to a decline in our business and results of operations. If we are not able to renegotiate these contracts on acceptable terms or find suitable alternatives, it could have a material adverse effect on our business, results of operations, and overall financial condition.
National and local governments may adopt regulations that could limit our business activities or increase our costs.
Our industry is subject to extensive regulatory requirements regarding production, exportation, importation, marketing and promotion, labeling, distribution, pricing, and trade practices, among others. Changes in laws, regulatory measures, or governmental policies, or in the manner in which current ones are interpreted, could cause us to incur material additional costs or liabilities, jeopardize the growth of our business in the affected market, or force us to discontinue marketing and selling our products entirely in the affected market.
We face substantial competition in our industry and many factors may prevent us from competing successfully.
We compete on the basis of product taste and quality, brand image, price, service and ability to innovate in response to consumer preferences. The global spirits industry is highly competitive and is dominated by several large, well-funded international companies. It is possible that our competitors may either respond to industry conditions or consumer trends more rapidly or effectively or resort to price competition to sustain market share, which could adversely affect our sales and future profitability.
Demand for our products may be adversely affected by many factors, including changes in consumer preferences and trends.
Consumer preferences may shift due to a variety of factors including changes in demographic and social trends, public health initiatives, product innovations, changes in vacation or leisure activity patterns and a downturn in economic conditions, which
may reduce consumers’ willingness to purchase distilled spirits or cause a shift in consumer preferences toward beer, wine or non-alcoholic beverages. Our success depends in part on fulfilling available opportunities to meet consumer needs and anticipating changes in consumer preferences with successful new products and product innovations. The competitive position of our brands could also be affected adversely by any failure to achieve consistent, reliable quality in the product or in service levels to customers.
If the social acceptability of our products declines, or governments adopt policies disadvantageous to distilled spirits, our business could be adversely affected.
Our ability to market and sell our products depends heavily on societal attitudes toward drinking and governmental policies that both flow from and affect those attitudes. In recent years, increased social and political attention has been directed at the distilled spirits industry. For example, there remains continued attention focused largely on public health concerns related to alcohol abuse, including drunk driving, underage drinking, and the negative health impacts of the abuse and misuse of alcohol. While most people who drink enjoy distilled spirits in moderation, it is commonly known and well reported that excessive levels or inappropriate patterns of drinking can lead to increased risk of a range of health conditions and, for certain people, can result in alcohol dependence. Some academics, public health officials, and critics of the alcohol industry in the United States, Europe, and other countries continue to seek governmental measures to make distilled spirits more expensive, less available, or more difficult to advertise and promote. If future research were to indicate more widespread serious health risks associated with alcohol consumption - particularly with moderate consumption - or if for any reason the social acceptability of alcohol were to decline significantly, future sales of our products could decrease and have a material adverse effect on our business, results of operations, and overall financial condition.
Significant additional labeling or warning requirements or limitations on the availability of our products could inhibit sales of affected products.
Various jurisdictions have adopted or may seek to adopt significant additional product labeling or warning requirements or limitations on the availability of our products relating to the content or perceived adverse health consequences of some of our products. Several such labeling regulations or laws require warnings on any product with substances that the state lists as potentially causing cancer or birth defects. Our products already raise health and safety concerns for some regulators, and heightened requirements could be imposed. If additional or more severe requirements of this type become applicable to one or more of our major products under current or future health, environmental, or other laws or regulations, they could inhibit future sales of such products and have a material adverse effect on our business, results of operations, and overall financial condition.
Litigation and legal disputes could expose our business to financial and reputational risk.
Major private or governmental litigation challenging the production, marketing, promotion, distribution, or sale of distilled spirits could affect our ability to sell products in the future. Because litigation and other legal proceedings can be costly to defend, even actions that are ultimately decided in our favor could have a negative impact on our business reputation or financial results. Lawsuits have been brought against distilled spirits companies alleging problems related to alcohol abuse, negative health consequences from drinking, problems from alleged marketing or sales practices, or underage drinking. While these lawsuits have been largely unsuccessful in the past, others may succeed in the future. We could also experience employment-related class actions, environmental claims, commercial disputes, product liability actions stemming from a beverage or container production defect, a whistleblower suit, or other major litigation that could have a material adverse affect on our business, results of operations, and overall financial condition.
Restaurant Industry Risk Factors
Our industry is historically seasonal, especially in the Caribbean region where we intend to open our restaurants.
Our industry is historically seasonal, especially in the Caribbean region where we intend open our restaurants. Typically the high season spans the months from November through April. Low season, which typically spans May through October and coincides with hurricane season, often experiences unpredictable and severe weather, storms and other similar conditions which negatively impact overall tourism. Since our restaurants will primarily cater to tourists, failure to generate sufficient sales volumes during high season could prevent our business from reaching profitability, or if profitability is ever obtained, fail to maintain such profitability.
Our industry is highly competitive and as a smaller reporting company we may be at a disadvantage to our competitors.
The restaurant industry is highly competitive in general. Although our targeted marketplace is the Caribbean region where we will be competing primarily with “mom and pop” restaurants, which are typically comprised of smaller family or individually owned and operated non-franchised restaurants, we may have to compete in the future against larger competitors that have greater financial resources and name recognition than we have. We anticipate facing a high level of competition when opening new restaurants for customers (both tourists and locals), securing prime leasehold locations where we wish to open our restaurants, and attracting and retaining qualified employees. Many aspects of our business model are not proprietary and, if they prove successful, may be replicated by others. We cannot prevent such competitors from entering the markets in which we seek to open new restaurants.
Further, because our industry is particular sensitive to cost increases and consists of mostly non-public reporting companies we may be at a competitive disadvantage because of our reporting obligations. We face additional expenses, which a non-public restaurant business does not, including:
 quarterly and annual PCAOB auditor fees;
 EDGAR filing fees; and
 legal and consulting fees related to our ongoing SEC compliance and reporting obligations.
Our non-public competitors do not incur these costs, which puts us at a competitive disadvantage. These expenses are projected to aggregate approximately $175,000 annually in 2017. As our business continues to grow and develop our financial statements and our SEC filings will become more complex, which we estimate will cause these compliance expenses to continue increasing annually, potentially substantially. If we are unable to effectively compete on a continuing basis or unforeseen competitive pressures arise, such inability to compete could have a material adverse effect on our business, results of operations, and overall financial condition.
Our industry is subject to many various government regulations which could require unexpected expenditures and/or reduce our ability to generate sufficient revenues to obtain profitability.
Our industry is subject to many various laws which directly affect our organization and operations. Each restaurant we open must comply with various licensing requirements and regulations by a number of governmental authorities, which typically include health, safety and fire authorities in the municipality where our restaurant is located. The development and operation of a successful restaurant depends upon selecting and acquiring a suitable location, which is normally subject to zoning, land use, environmental, traffic, and other regulations.
Additionally, because we anticipate a significant portion of our revenue to be generated from the sale of alcoholic beverages, we must comply with any and all regulations governing their sale. Typically this requires the proper licensing at each restaurant location (in many cases it needs to be renewed on an annual basis). Such licenses may be revoked or suspended for cause at any time. These regulations often relate to many aspects of the restaurant, including the minimum age of patrons and employees, hours of operation, advertising, wholesale purchasing, inventory control and handling, and storage and dispensing of alcoholic beverages. The failure of any of our future restaurants to obtain and retain such a license would limit its ability to generate sufficient revenues to achieve profitability at that particular location, which could subsequently impact our business’s overall revenues and ability to achieve (and if achieved, maintain) profitability.
Focusing all of our restaurant business interests entirely on the Caribbean region may result in increased costs and risks.
We are presently attempting to open our first restaurant in St. Maarten, Dutch West Indies and intend to expand the concept to other islands throughout the Caribbean region. Because most islands within the Caribbean region are independent nations or territories of other sovereign nations, operating internationally throughout the Caribbean region will expose us to a number of risks on each island we chose to operate, including:
 risks of social, political, and economic instability;
 risks of increases in duties and taxes;
 labor risks, including attracting and retaining qualified local workers, general labor unrest, and complying with different labor laws on each island we operate;
 risks relating to government corruption and anti-bribery laws;
 changes in laws and policies governing the operations of foreign-based companies; and
 we may be exposed to exchange rate risks if some of our future revenues and expenses are incurred in foreign currencies that fluctuate independently of the US dollar.
We cannot assure you that our business will not be affected by the aforementioned risks, each of which could have a material adverse effect on our business, potentially causing us to cease operations and you to lose your entire investment.
Company Risk Factors
We lack an operating history and have losses which we expect to continue into the future. There is no assurance our future operations will result in profitable revenues. If we cannot generate sufficient revenues to operate profitably, our business will fail.
We were incorporated on June 27, 2013, and have incurred ($1,227,108) in losses through December 31, 2016. We have very little operating history upon which an evaluation of our future success or failure can be made. We have not achieved profitability and expect to continue to incur net losses throughout the fiscal year ending December 31, 2017. We expect to incur significant operating expenses and, as a result, will need to generate significant revenues to achieve profitability, which may not occur. Even if we do achieve profitability, we may be unable to sustain or increase profitability on an ongoing basis which could cause us to go out of business.
We need to raise additional capital. Failure to secure adequate financing may prevent us from generating sufficient levels of revenue which could cause our business to fail.
Our operations to date have been primarily funded by our officers, directors, and current stockholders. We estimate that we will need to generate at least $1.5 million in additional financing in order to maintain our current level of operations and meet our planned fiscal 2017 capital expenditures. Further, in order to proceed with our long-term plans, we anticipate that we will need to generate at least between $4 and $5 million in additional long-term financing.
Without limiting our available options, future financings will most likely be through the sale of additional shares of our common stock. It is possible that we could also offer warrants, options and/or rights in conjunction with any future issuances of our common stock. However, we can give no assurance that financing will be available to us, and if available to us, in amounts or on terms acceptable to us. If we are unable to generate profits or unable to obtain additional funds to meet our working capital needs, we may need to cease or curtail our business operations. Further, there is no assurance that the net proceeds from any successful financing arrangement will be sufficient to cover our projected expenditures over the next 12 months.
If we are not able to obtain sufficient additional financing, we may have to cease operations and investors will lose their entire investment.
There is substantial uncertainty as to whether we will continue operations. If we discontinue operations, you could lose your entire investment.
Our independent registered public accounting firm has discussed their uncertainty regarding our business operations in their audit report dated April 5, 2017 which is part of the financial statements that are part of this Annual Report. This means that there is substantial doubt that we can continue as an ongoing business for the next 12 months. The financial statements do not include any adjustments that might result from the uncertainty about our ability to continue in business. As such, we may have to cease operations and you could lose your entire investment.
Because all of our future operating activities and profits, if any, will be generated outside of the United States, we may be subjected to restrictions or substantial tax consequences should we try to repatriate our funds to the United States, thereby potentially limiting our ability to conduct future business within the United States.
All of our intended future business operations will be conducted within the Caribbean region. Although we have not experienced any delays or restrictions on transferring cash between the United State and Caribbean region, we could be subjected to restrictions and unexpected delays on transferring our cash balances into or out of the US under the provisions of the Patriot Act or applicable Anti-Money Laundering (AML) laws. Should our banking institution or the US government take such precautions to verify the source of our funds, they could suspend transfers of our cash to the US until such verification procedures are completed, which could delay the transfer of our funds by several business days. Such verification procedures could be enacted if either our bank or the US government were to suspect any of the funds held in our accounts were linked to:
 financing terrorism;
 illicit profits from drug trafficking; or
 proceeds from money laundering activities.
In addition to the foregoing considerations, we will also be subjected to other tax considerations when repatriating our funds in the United States.
Under current law taxes profits earned by US corporations abroad may be deferred indefinitely, as long as those profits remain in the country they were earned. Because the countries in the Caribbean region where we intend to operate levy little to no corporate income taxes, it will be in our interest to maintain our profits, if any, where they are earned.
Should we wish to repatriate our profits to the United States, those profits would be subject to US income taxes, less applicable foreign tax credits. Because the United States currently has one of the highest corporate tax rates in the world (35%), repatriating funds in the United States could significantly increase our overall effective tax rate which would have a material adverse effect on our results of operations and financial condition and impede our ability to grow and expand our business.
We intend to retain most, if not all, of our profits outside of the United States. We intend to repatriate only enough funds annually to maintain our US operations, which presently, and will continue to, consist of maintaining reporting and compliance requirements with the Securities and Exchange Commission, which we project to aggregate approximately $175,000 annually in 2017. As our business continues to grow and develop our financial statements and our SEC filings will become more complex, which we estimate will cause these compliance expenses to continue increasing annually, potentially substantially. If these expenses increase substantially, then our effective tax rate may also increase as the amount of funds we are required to repatriate each fiscal year increases.
As a holder of our common stock, a delay in repatriating our funds or an increase in our overall effective tax rate could result in you experiencing:
 lower per share earnings, if any, relating to our common stock; and
 a decrease in the valuation or loss in your investment in our common stock.
Our principal officer and sole director, J. Scott Sitra, currently controls approximately 80% of our eligible votes in all voting matters. Accordingly, Mr. Sitra can solely determine and control all corporate decisions, even if such decisions may not be in the best interest of minority shareholders.
Our principal officer and sole director, J. Scott Sitra, currently controls an aggregate of 90,250,000 votes in all voting matters, or approximately 80%, of the eligible votes. Accordingly, Mr. Sitra can solely determine the outcome of all corporate transactions or other matters, including mergers, consolidations and the sale of all or substantially all of our assets. The interests Mr. Sitra may differ from the interests of the other shareholders and thus result in corporate decisions that are disadvantageous to other shareholders.
The success of our business depends heavily on key personnel, particularly J. Scott Sitra, and his business experience and understanding of our industry. Our business would likely fail if we were to lose his services.
The success of our business will depend heavily upon the abilities and experience of our principal executive officer J. Scott Sitra. The loss of Mr. Sitra would have a significant and immediate impact on our business, results of operations, and overall financial condition. Further, the loss of Mr. Sitra would force us to seek a replacement or replacements who may have less general business experience and, in particular, experience in our industry, fewer industry contacts, and less understanding of our overall business plan. We can make no assurances that we will be able to find a suitable replacement should Mr. Sitra depart, which could force us to curtail operations and/or cease operations, whereby you could lose your entire investment.
Mr. Sitra is not presently covered by an employment agreement nor is he subject to a non-compete agreement which would survive the termination of his employment. Mr. Sitra can terminate his relationship with us at any time without cause. Further, we do not carry “key person” insurance on any employee, including Mr. Sitra. The departure of Mr. Sitra would most likely have a severe and negative impact on our overall business and cause us to cease operations, whereby you could lose your entire investment.
In addition to our dependency on Mr. Sitra’s continued services, our future success will also depend on our ability to attract and retain additional future key personnel, especially in the areas of restaurant managers. We face intense competition for these individuals from well-established and better financed competitors. We may not be able to attract qualified new employees or retain existing employees, which may have a material adverse effect on our results of operations and financial condition.
Because our principal executive officer, J. Scott Sitra, devotes a limited amount of his time to our operations our business could fail if he is unable or unwilling to devote a sufficient amount of time to our business.
The responsibility of developing our core business, securing the financing necessary to complete the construction of our first restaurant, and fulfilling the reporting requirements of a public company all fall upon our principal executive officer, J. Scott Sitra. Mr. Sitra presently dedicates approximately 50% of his professional time to Tiger Reef, or between 20 and 25 hours per week.
We have not formulated a plan to resolve any possible conflict of interest with Mr. Sitra’s other competing business activities, which principally involves his position as President and Chief Executive Officer at Taurus Financial Partners, LLC and as Secretary and Director at African Resource Group, Inc. Mr. Sitra presently is not under an employment agreement with any of his business interests, including our business. If he were to enter into such an agreement with an outside business interest, he could be forced to resign from our business or devote even less time to our business interests than he presently does.
In the event Mr. Sitra is unable to fulfill any aspect of their duties, we may experience a shortfall or complete lack of revenue resulting in little or no profits and the eventual closure of our business, whereby you may lose your entire investment.
Our principal officer also serves as our sole director on our Board of Directors. As such, he has the ability to unilaterally decide all non-voting matters, including the ability to establish compensation packages, most notably his own.
Our principal officer, J. Scott Sitra, also serves as our sole director on our Board of Directors. As such, and in all non-voting matters, he can unilaterally determine corporate actions by issuing a Resolution of the Board of Directors. The interests of our sole director may differ from the interests of the other shareholders and thus result in corporate decisions that are disadvantageous to other shareholders. In particular, and at his sole discretion, he may establish his own compensation package which could be contrary to the interests of other shareholders and possibly prevent us from ever achieving profitability, have a negative impact on our overall business, and result in you losing all or part of your investment.
Our Sole Director and Principal Executive Officer, J. Scott Sitra, may be subject to conflicts of interest.
Our Sole Director and Principal Executive Officer, J. Scott Sitra, has potential conflicts of interest in his dealings with us. Circumstances under which a conflict of interest could arise between us and Mr. Sitra include:
 Mr. Sitra is free to arbitrarily establish his own compensation;
 Future compensation agreements with Mr. Sitra or others will not be negotiated at arm’s-length as would normally occur if the agreements were with unaffiliated third parties;
 Acquisitions and purchases or sales of assets and other similar transactions can be made without due diligence or extended negotiation; and
 Business combinations or the implementation anti-takeover “poison pill” preventative measures.
We have not formulated a policy for potential conflicts of interest that may arise between us and Mr. Sitra. If a potential conflict of interest arises and cannot be resolved, the result could be contrary to the interests of other shareholders and prevent us from ever achieving profitability, have a negative impact on our overall business, and result in you losing all or part of your investment.
The projected costs and other related expenses used in our business plan are estimates made by our management. Our actual costs related to opening our proposed restaurant may differ significantly.
The projected costs and other related expenses in our business plan and in the Plan of Operation starting on page 5 of this Annual Report are mere cost estimates and forecasts made by our management. Our actual costs related to opening and operating our proposed restaurant may differ significantly from these estimates, which could have a negative impact on our overall business, cause our business to fail, and result in you losing all of your investment.
We have agreed to indemnify our officers and directors against lawsuits to the fullest extent of the law.
We are a Colorado corporation. Colorado law permits the indemnification of officers and directors against expenses incurred in successfully defending against a claim. Colorado law also authorizes Colorado corporations to indemnify their officers and directors against expenses and liabilities incurred because of their being or having been an officer or director. Our organizational documents provide for this indemnification to the fullest extent permitted by Colorado law.
We currently do not maintain any insurance coverage. In the event that we are found liable for damages or other losses, we would incur substantial and protracted losses in paying any such claims or judgments. We have not maintained liability insurance in the past, but intend to acquire such coverage immediately upon resources becoming available. There is no guarantee that we can secure such coverage or that any insurance coverage, if ever secured, would protect us from any damages or loss claims filed against it.
We may incur additional risks and significant increases in annual costs to remain a public company, which requires us to maintain compliance with Securities and Exchange Commission reporting requirements. We may not be able to absorb such increased annual costs.
We may incur additional risks and significant increases in annual costs associated with our public company reporting requirements, which include:
 compliance with applicable corporate governance requirements, including requirements under the Sarbanes-Oxley Act of 2002 and other rules implemented by the SEC;
 compliance with all applicable SEC rules and regulations, including reporting in a timely manner our quarterly and annual operating results, which will significantly increase our legal and financial compliance costs and make some activities more time consuming; and
 increased exposure to broader shareholder claims and litigation may make it more difficult and more expensive for us to obtain director and officer liability insurance. Without obtaining such insurance coverage, which we currently do not have, it may be more difficult for us to attract and retain qualified individuals to serve on our board of directors or as executive officers.
Presently we estimate these additional reporting and compliance requirements are projected to aggregate approximately $175,000 annually in 2017. As our business grows and develops our financial statements and our SEC filings will become more complex, we anticipate these annual costs will increase, potentially substantially. Additionally, we have not obtained quotes for officers and directors insurance and will not do so until we begin generating sufficient cash flows to pay the annual premiums on such a policy. Further, we may not be able to absorb these costs of being a public company which could negatively affect our business operations and may result in you losing your entire investment.
Risk Factors Relating to Our Common Stock
There is a limited, volatile, and sporadic public trading market for our common stock and we cannot assure you that an active public trading market for our common stock will develop, of if developed, be sustained. Even if a trading market does develop, you may not be able to sell at or near ask prices or at all if you need to sell your shares to raise money or otherwise desire to liquidate your shares.
There is presently a limited public trading market for our registered common stock which presently trades on the OTCQB under the trading symbol “TGRR”.
Even though our registered common stock is approved for quotation and electronic trading on the OTCQB, the number of institutions and/or persons interested in purchasing our registered common stock at or near ask prices at any given time may be relatively small or non-existent. This situation is attributable to a number of factors, including, among others, the fact that we are a small and unproven company that is relatively unknown to stock analysts, stock brokers, institutional investors, and others in the investment community responsible for generating or influencing trading volume, and that even if we were to come to the attention of such institutions and/or persons, they tend to be more risk averse and may be reluctant to follow an unproven business such as ours or purchase or recommend the purchase of our shares until such time as we have demonstrated sufficient success with our business plan. As such, there may be periods of several days or more when trading activity in our shares of common stock is minimal or non-existent, as compared to a seasoned issuer which has a large and steady volume of trading activity that will generally support continuous sales without adversely affecting their share price. We cannot assure you that an active public trading market for our registered common stock will develop and, if developed, be sustained.
Even if a sustained active public trading market develops for our registered common stock, the market price of our common stock may also fluctuate significantly in response to the following factors, most of which are beyond our control:
 variations in our quarterly operating results;
 changes in general economic conditions and consumer spending habits;
 announcements by us or our competitors of significant new contracts, acquisitions, strategic partnerships or joint ventures, or capital commitments;
 loss of a significant distributor, retailer, partner or joint venture participant; and
 the addition or loss of key managerial and collaborative personnel.
The equity markets have, on occasion, experienced significant price and volume fluctuations that have affected the market prices for many companies' securities and that have often been unrelated to the operating performance of these companies. Any such fluctuations may adversely affect the market price of our common stock, regardless of our actual operating performance. As a result, stockholders may be unable to sell their shares, or may be forced to sell them at a loss.
We do not intend to pay any dividends on our common stock, therefore there are limited ways in which you can make a profit on any investment in Tiger Reef, Inc.
We have never paid any cash dividends and currently do not intend to pay any dividends for the foreseeable future. To the extent that we may seek additional funding in the future, our future funding sources may likely prohibit us from paying any dividends. Because we do not intend to declare dividends, any gain on an investment in our shares of common stock will need to come through the appreciation of our common stock’s share price, for which we can give no assurances that our common stock will ever appreciate in value and, even if it does appreciate in value, that you will be able to sell your shares of our common stock for a profit.
We have certain anti-takeover provisions and may issue additional stock, both common and preferred, without shareholder consent which may make it difficult, if not impossible, to replace or remove our current management and could also result in significant dilution to an investment in our common stock.
Our Articles of Incorporation, as amended, authorizes the issuance of up to 500 million shares of common stock and of up to 1 million shares of preferred stock with such rights and preferences as may be determined from time to time by our Board of Directors. Our Board of Directors may, without requiring shareholder approval, issue shares of preferred stock with dividends, liquidation, conversion, voting or other rights which could supercede and/or adversely affect the voting power and/or other rights of the holders of our common stock. The ability of our Board of Directors to issue shares of common stock and/or preferred stock may prevent any shareholder attempt to replace or remove current management and/or could make it extremely difficult for a third party to acquire us, even if doing so would be beneficial to our stockholders. Additionally, the issuance of
additional common stock or preferred stock in the future may significantly reduce your proportionate ownership and voting power.
It is important to note that as of April 5, 2017 we could issue up to an additional 477,205,500 shares of common stock without shareholder consent.
We are presently subject to the "Penny Stock" rules of the SEC which could limit the trading and liquidity of our common stock, adversely affect the market price of our common stock, and increase your transaction costs to sell shares of our common stock.
The Securities and Exchange Commission has adopted Rule 15g-9 which establishes the definition of a "penny stock," for the purposes relevant to us, as any equity security that has a market price of less than $5.00 per share or with an exercise price of less than $5.00 per share, subject to certain exceptions. For any transaction involving a penny stock, unless exempt, the rules require:
 that a broker or dealer approve a person's account for transactions in penny stocks; and
 the broker or dealer receives from the investor a written agreement to the transaction, setting forth the identity and quantity of the penny stock to be purchased.
In order to approve a person's account for transactions in penny stocks, the broker or dealer must:
 obtain financial information, investment experience and investment objectives of the person; and
 make a reasonable determination that the transactions in penny stocks are suitable for that person and that the person has sufficient knowledge and experience in financial matters to be capable of evaluating the risks of transactions in penny stocks.
The broker or dealer must also deliver, prior to any transaction in a penny stock, a disclosure schedule prescribed by the SEC relating to the penny stock market, which, in highlight form:
 sets forth the basis on which the broker or dealer made the suitability determination; and
 that the broker or dealer received a signed, written agreement from the investor prior to the transaction.
Generally, brokers may be less willing to execute transactions in securities subject to the "penny stock" rules. This may make it more difficult for investors to sell shares of our common stock and cause a decline in the market value of our stock.
Disclosure also has to be made about the risks of investing in penny stocks in both public offerings and in secondary trading and about the commissions payable to both the broker-dealer and the registered representative, current quotations for the securities and the rights and remedies available to an investor in cases of fraud in penny stock transactions. Finally, monthly statements have to be sent disclosing recent price information for the penny stock held in the account and information on the limited market in penny stocks.
Our common stock presently trades under $5 a share and is subject to the “penny stock” rules. The continued application of the “penny stock” rules to our common stock could limit the trading and liquidity of our common stock, adversely affect the market price of our common stock, or cause an increase the transaction costs related to of our common stock.
Shares eligible for future sale may adversely affect the market price of our common stock.
From time to time, certain of our stockholders may be eligible to sell some or all of their shares of our common stock by means of ordinary brokerage transactions in the open market pursuant to Rule 144, promulgated under the Securities Act, subject to certain limitations. In general, pursuant to Rule 144, non-affiliate stockholders may sell freely after six months subject only to the current public information requirement (which disappears after one year). Affiliates may sell after six months subject to the Rule 144 volume, manner of sale, current public information and notice requirements.
As of April 5, 2017 we had 22,794,500 shares of our common stock issued and outstanding. Of these shares currently issued and outstanding:
 15,234,500 are freely tradable without restrictions (commonly referred to as the “public float”); and
 7,560,000 are subject to the restrictions and sale limitations imposed by Rule 144.
The eventual availability for sale of substantial amounts of our common stock under Rule 144 could adversely affect prevailing market prices for our securities and cause you to lose most, if not all, of your investment in our business.
We expect volatility in the price of our common stock to continue, which may subject us to securities litigation and thereby divert our resources which may materially affect our profitability and results of operations or force us to cease operations.
Our common stock is thinly traded and can be characterized by significant price volatility when compared to seasoned issuers. We expect that our share price will be continue to be more volatile than a seasoned issuer for the indefinite future. In the past, plaintiffs have often initiated securities class action litigation against a company following periods of volatility in the market price of its securities. We may, in the future, be the target of similar litigation. Securities litigation could result in substantial costs and liabilities, could divert management's attention and resources, and could ultimately force us to cease operations whereby you could lose your entire investment.
We have identified deficiencies in our current internal controls over financial reporting. Failure to achieve and maintain effective internal controls in accordance with Section 404 of the Sarbanes-Oxley Act could have a material adverse effect on our business and operating results.
Our business is subject to the reporting requirements of the Securities Exchange Act of 1934, as amended (“Exchange Act”). We are also required to comply with the internal control evaluation and certification requirements of Section 404 of the Sarbanes-Oxley Act of 2002. We have, through the participation of our sole officer and director, J. Scott Sitra, assessed the current effectiveness of our internal control over financial reporting. In making this assessment, we used the criteria set forth by the Committee of Sponsoring Organizations of The Treadway Commission (COSO) in Internal Control-Integrated Framework. Based on that assessment under such criteria, management concluded that our current internal controls over financial reporting are not effective due to control deficiencies that constituted material weaknesses.
We have identified a lack of sufficient personnel in the accounting function due to the limited resources of Tiger Reef with appropriate skills, training, and experience to perform the review processes to ensure the complete and proper application of generally accepted accounting principles. To this extent, we have identified specific remedial actions we intend to undertake prior to the end of the current fiscal year ending December 31, 2017 to address the current material weaknesses described above:
 Improve the effectiveness of the accounting group by augmenting our existing resources with additional outside consultants to improve segregation procedures and to assist in the analysis and recording of complex accounting transactions and preparation of tax disclosures; and
 Improve segregation procedures by strengthening cross approval of various functions, particularly quarterly and annual internal audit procedures.
If we are unable to implement the above changes effectively or efficiently, it could harm our operations, financial reporting or financial results.
We are classified as an “emerging growth company” as well as a “smaller reporting company” and we cannot be certain if the reduced disclosure requirements applicable to emerging growth companies and smaller reporting companies will make our common stock less attractive to investors.
We are an "emerging growth company", as defined in the Jumpstart our Business Startups Act of 2012 (“JOBS Act”), and we may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies, including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved. We cannot predict if investors will find our common stock less attractive because we may rely on these exemptions. If some investors find our common stock less attractive as a result, there may be a less active trading market for our common stock and our stock price may be more volatile.
Section 107 of the JOBS Act provides that an “emerging growth company” can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words,
an “emerging growth company” can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies.
We could remain an “emerging growth company” for up to five years, or until the earliest of (i) the last day of the first fiscal year in which our annual gross revenues exceed $1 billion, (ii) the date that we become a “large accelerated filer” as defined in Rule 12b-2 under the Exchange Act, which would occur if the market value of our common stock that is held by non-affiliates exceeds $700 million as of the last business day of our most recently completed second fiscal quarter, or (iii) the date on which we have issued more than $1 billion in non-convertible debt during the preceding three-year period.
Notwithstanding the above, we are also currently a “smaller reporting company”, meaning that we are not an investment company, an asset-backed issuer, or a majority-owned subsidiary of a parent company that is not a smaller reporting company and have a public float of less than $75 million and annual revenues of less than $50 million during the most recently completed fiscal year. In the event that we are still considered a “smaller reporting company”, at such time are we cease being an “emerging growth company”, the disclosure we will be required to provide in our SEC filings will increase, but will still be less than it would be if we were not considered either an “emerging growth company” or a “smaller reporting company”. Specifically, similar to “emerging growth companies”, “smaller reporting companies” are able to provide simplified executive compensation disclosures in their filings; are exempt from the provisions of Section 404(b) of the Sarbanes-Oxley Act requiring that independent registered public accounting firms provide an attestation report on the effectiveness of internal control over financial reporting; and have certain other decreased disclosure obligations in their SEC filings, including, among other things, only being required to provide two years of audited financial statements in annual reports. Decreased disclosures in our SEC filings due to our status as an “emerging growth company” or “smaller reporting company” may make it harder for investors to analyze our results of operations and financial prospects.
We have elected to use the extended transition period for complying with the new or revised accounting standards under Section 102(b)(2)(B) of the JOBS Act.
We have elected to use the extended transition period for complying with new or revised accounting standards under Section 102(b)(2) of the JOBS Act, that allows us to delay the adoption of new or revised accounting standards that have different effective dates for public and private companies until those standards apply to private companies. As a result of this election, our financial statements may not be comparable to companies that comply with public company effective dates.
Item 1B.
Item 1B. Unresolved Staff Comments
None.
Item 2.
Item 2. Properties
Our principal executive office is located at Wellsburg Street #7, Cole Bay, St. Maarten, Dutch West Indies and our telephone number is (949) 264-1475.
Item 3.
Item 3. Legal Proceedings
During the past ten years no director, person nominated to become a director or executive officer, or promoter of Tiger Reef has been involved in any legal proceeding that would require disclosure hereunder.
From time to time, we may become subject to various legal proceedings and claims that arise in the ordinary course of our business activities. However, litigation is subject to inherent uncertainties for which the outcome cannot be predicted. Any adverse result in these or other legal matters could arise and cause harm to our business. We currently are not party to any claim or litigation the outcome of which, if determined adversely to us, would individually or in the aggregate be reasonably expected to have a material adverse effect on our business.
Item 4.
Item 4. Mine Safety Disclosures
Not applicable.
PART II
Item 5.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and
Issuer Purchases of Equity Securities
Our common stock trades on the OTCQB marketplace under the trading symbol “TGRR”. Currently there is only a limited, sporadic, and volatile market for our stock.
The following table sets forth the high and low sales prices of our common stock as reported by the OTCQB for the periods indicated. These prices represent prices between inter-dealer prices, do not include retail markups, markdowns, or commissions, and do not necessarily reflect actual transactions.
(1) Our common stock received clearance from FINRA to trade on the OTCQB on July 31, 2015.
On April 4, 2017 our common stock closed at $0.045 a share.
Holders of Record
As of April 5, 2017, we had 22,794,500 shares of our common stock issued and outstand held by approximately 50 stockholders of record; this figure does not include any shareholders electing to beneficially own their shares through nominees such their stock broker or other financial institution.
Dividend Policy
We have never declared or paid cash dividends. We currently intend to retain all future earnings for the operation and expansion of our business and do not anticipate paying cash dividends on the common stock in the foreseeable future. Any payment of cash dividends in the future will be at the discretion of our Board of Directors and will depend upon our results of operations, earnings, capital requirements, contractual restrictions and other factors deemed relevant by our directors.
Penny Stock Regulations and Restrictions on Marketability
The SEC has adopted rules that regulate broker-dealer practices in connection with transactions in penny stocks. Penny stocks are generally equity securities with a market price of less than $5.00, other than securities registered on certain national securities exchanges or quoted on the NASDAQ system, provided that current price and volume information with respect to transactions in such securities is provided by the exchange or system. The penny stock rules require a broker-dealer, prior to a transaction in a penny stock, to deliver a standardized risk disclosure document prepared by the SEC, that: (a) contains a description of the nature and level of risk in the market for penny stocks in both public offerings and secondary trading, (b) contains a description of the broker's or dealer's duties to the customer and of the rights and remedies available to the customer with respect to a violation of such duties or other requirements of the securities laws, (c) contains a brief, clear, narrative description of a dealer market, including bid and ask prices for penny stocks and the significance of the spread between the bid and ask price, (d) contains a toll-free telephone number for inquiries on disciplinary actions, (e) defines significant terms in the disclosure document or in the conduct of trading in penny stocks, and (f) contains such other information and is in such form, including language, type size and format, as the SEC shall require by rule or regulation.
The broker-dealer also must provide, prior to effecting any transaction in a penny stock, the customer with (a) bid and offer quotations for the penny stock, (b) the compensation of the broker-dealer and its salesperson in the transaction, (c) the number of shares to which such bid and ask prices apply, or other comparable information relating to the depth and liquidity of the market for such stock, and (d) a monthly account statement showing the market value of each penny stock held in the customer's account.
In addition, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from those rules, the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser's written acknowledgment of the receipt of a risk disclosure statement, a written agreement as to transactions involving penny stocks, and a signed and dated copy of a written suitability statement.
These disclosure requirements may have the effect of reducing the trading activity for our common stock. Therefore, stockholders may have difficulty selling their shares of our common stock.
Common Stock
Our Articles of Incorporation, as amended, authorizes us to issue up to 500,000,000 shares of common stock, $0.001 par value. Each holder of our common stock is entitled to one (1) vote for each share held of record on all voting matters we present for a vote of stockholders, including the election of directors. Holders of common stock have no cumulative voting rights or preemptive rights to purchase or subscribe for any stock or other securities, and there are no conversion rights or redemption or sinking fund provisions with respect to our common stock. All shares of our common stock are entitled to share equally in dividends from sources legally available when, and if, declared by our Board of Directors.
Our Board of Directors is authorized to issue additional shares of common stock not to exceed the amount authorized by the Articles of Incorporation, on such terms and conditions and for such consideration as the Board may deem appropriate without further stockholder action.
In the event of our liquidation or dissolution, all shares of our common stock are entitled to share equally in our assets available for distribution to stockholders. However, the rights, preferences and privileges of the holders of our common stock are subject to, and may be adversely affected by, the rights of the holders of shares of preferred stock that our Board of Directors may decide to issue in the future.
As of April 5, 2017 we had 22,794,500 shares of common stock issued and outstanding.
Preferred Stock
Our Articles of Incorporation, as amended, authorizes us to issue up to 1,000,000 shares of preferred stock, $0.001 par value. Our Board of Directors is authorized, without further action by the shareholders, to issue shares of preferred stock and to fix the designations, number, rights, preferences, privileges and restrictions thereof, including dividend rights, conversion rights, voting rights, terms of redemption, liquidation preferences and sinking fund terms. We believe that the Board of Directors’ power to set the terms of, and our ability to issue, preferred stock will provide flexibility in connection with possible financing or acquisition transactions in the future. The issuance of preferred stock, however, could adversely affect the voting power of holders of common stock and decrease the amount of any liquidation distribution to such holders. The presence of outstanding preferred stock could also have the effect of delaying, deterring or preventing a change in control of our company.
Series A Preferred Stock
On November 2, 2015 our Board of Directors authorized a class of preferred stock consisting of up to 250,000 shares and designated it Series A Preferred Stock. The Series A Preferred Stock has the following terms and rights:
Designation and Amount.
This class of preferred stock shall be designated Series A Preferred Stock (“Preferred Stock”), $0.001 par value. The Corporation’s Board of Directors may issue up to two-hundred fifty-thousand (250,000) shares of this Preferred Stock.
Rank.
The Preferred Stock shall rank superior to the Corporation’s common stock and all other classes (currently outstanding or future) of preferred stock.
Dividends.
The Preferred Stock is eligible for all legal dividends as may be approved by the Corporation’s Board of Directors. In the event a dividend is declared across multiple classes of stock, the amount of any dividend to be received by holders of the Preferred Stock shall be calculated on a fully-diluted, pro-rata basis with the other classes of stock participating in said dividend.
Voting Rights.
Holders of the Preferred Stock shall have the right to vote on any and all matters with holders of common stock (and other classes of preferred stock, if any) by aggregating votes into one (1) class of stock. Each share of Preferred Stock shall have five-thousand (5,000) votes for any election or other vote placed before the shareholders of the Corporation, regardless if the vote is taken with or without a shareholders’ meeting. Holders of the Preferred Stock may not cumulate their votes in any voting matter.
Conversion.
Holders of shares of Preferred Stock may, at their sole option, convert all or a portion of their holdings of Preferred Stock into shares of the Corporation’s common stock at a ratio of one (1) share of Preferred Stock for five-thousand (5,000) shares of common stock. Subject to a Redemption by Corporation there is no requirement for holders to convert their holdings into shares of common stock.
Redemption by Corporation.
The Corporation may, at its sole option and without notice, redeem some or all of the Preferred Stock in either cash, common stock (as per the conversion calculation herein), or a combination thereof.
As of April 5, 2017 we had 19,846 shares of preferred stock issued or outstanding.
Share Purchase Warrants
We have not issued and do not have outstanding any warrants to purchase shares of our stock.
Options
We have not issued and do not have outstanding any options to purchase shares of our stock.
Convertible Securities
As of December 31, 2016 we had not convertible or derivative securities issued or outstanding.
Subsequent to the fiscal year ended December 31, 2016 the Company concluded financing involving two investors that netted the Company $60,000 in bridge financing. The table below summarizes each investor and the amount of financing received in this round of bridge financing. A more comprehensive disclosure relating to this round of financing is hereby incorporated by reference to the Form 8-K filed with the SEC on March 3, 2017 and March 28, 2017.
Shares Eligible for Future Sale
From time to time, certain of our stockholders may be eligible to sell some or all of their shares of our common stock by means of ordinary brokerage transactions in the open market pursuant to Rule 144, promulgated under the Securities Act, subject to certain limitations. In general, pursuant to Rule 144, non-affiliate stockholders may sell freely after six months subject only to the current public information requirement (which disappears after one year). Affiliates may sell after six months subject to the Rule 144 volume, manner of sale, current public information and notice requirements.
As of April 5, 2017 we had 22,794,500 shares of our common stock issued and outstanding. Of these shares currently issued and outstanding:
 15,234,500 are freely tradable without restrictions (commonly referred to as the “public float”); and
 7,560,000 are subject to the restrictions and sale limitations imposed by Rule 144.
The eventual availability for sale of substantial amounts of our common stock under Rule 144 could adversely affect prevailing market prices for our securities and cause you to lose most, if not all, of your investment in our business.
Securities Authorized for Issuance Under Equity Compensation Plans
As of April 5, 2017 we did not have any authorized Equity Compensation Plans.
Transfer Agent
VStock Transfer, LLC
18 Lafayette Place
Woodmere, NY 11598
(212) 828-8436 Phone
(646) 599-1296 Fax
www.VStockTransfer.com
Recent Sales of Unregistered Securities
Set forth below is information regarding the issuance and sales of securities without registration since inception on June 27, 2013 through April 5, 2017.
On June 27, 2013, we issued 60,000,000 shares of common stock, $0.001 par value, to Gregory Galanis in consideration of his services to us as an officer and director. We issued these shares as Founder’s Shares. In connection with this issuance, we relied upon the exemption from the registration requirements pursuant to the provisions of Section 4(2) of the Securities Act as a transaction by an issuer not involving any public offering. By virtue of Mr. Galanis’s relationship with us he had access to all relevant information relating to our business and represented that they each had the required investment intent. In addition, the securities issued bore an appropriate restrictive legend.
On June 27, 2013, we issued an aggregate of 20,000,000 shares of common stock to four consultants in consideration of their services in lieu of cash. We valued these shares at $240,000, or $0.012 a share, based on the value of the services provided. These shares were issued without any type of clawback provision and, as such, Tiger Reef expensed the full value of these issuances during the fiscal year ended December 31, 2013. In connection with these issuances, we relied upon the exemption from the registration requirements pursuant to the provisions of Section 4(2) of the Securities Act as a transaction by an issuer not involving any public offering. By virtue of their relationship to us these consultants had access to all relevant information relating to our business and represented that it had the required investment intent. In addition, the securities issued bore an appropriate restrictive legend. The following table summarizes these share issuances:
On August 9, 2013, we issued 250,000 shares of common stock, $0.001 par value, to Michael Etheredge in consideration of his services to us as an executive officer. We valued these shares at $3,000, or $0.012 a share, based on the value of the services provided. These shares were issued without any type of clawback provision and, as such, Tiger Reef expensed the full value of this issuance during the fiscal year ended December 31, 2013. In connection with this issuance, we relied upon the exemption from the registration requirements pursuant to the provisions of Section 4(2) of the Securities Act as a transaction by an issuer not involving any public offering. By virtue of Mr. Etheredge’s relationship with us he had access to all relevant information
relating to our business and represented that they each had the required investment intent. In addition, the securities issued bore an appropriate restrictive legend.
On December 2, 2013, we issued 20,000,000 shares of common stock to Blue Water Global Group, Inc. in consideration of its services in lieu of cash. We valued these shares at $240,000, or $0.012 a share, based on the value of the services provided. These shares were issued without any type of clawback provision and, as such, Tiger Reef expensed the full value of this issuance during the fiscal year ended December 31, 2013. In connection with this issuance, we relied upon the exemption from the registration requirements pursuant to the provisions of Section 4(2) of the Securities Act as a transaction by an issuer not involving any public offering. By virtue of its relationship to us, Blue Water Global Group, Inc. had access to all relevant information relating to our business and represented that it had the required investment intent. In addition, the securities issued bore an appropriate restrictive legend.
On September 28, 2015, we issued an aggregate of 6,000,000 shares of common stock to three consultants in consideration of their services in lieu of cash. We valued these shares at $60,000, or $0.01 a share, based on the value of the services provided. These shares were issued without any type of clawback provision and, as such, Tiger Reef expensed the full value of these issuances during the fiscal year ended December 31, 2015. In connection with these issuances, we relied upon the exemption from the registration requirements pursuant to the provisions of Section 4(2) of the Securities Act as a transaction by an issuer not involving any public offering. By virtue of their relationship to us these consultants had access to all relevant information relating to our business and represented that it had the required investment intent. In addition, the securities issued bore an appropriate restrictive legend. The following table summarizes these share issuances:
On November 16, 2015, we issued an aggregate of 459,500 shares of common stock to six consultants in consideration of their services in lieu of cash. We valued these shares at $4,595, or $0.01 a share, based on the value of the services provided. These shares were issued without any type of clawback provision and, as such, Tiger Reef expensed the full value of these issuances during the fiscal year ended December 31, 2015. In connection with these issuances, we relied upon the exemption from the registration requirements pursuant to the provisions of Section 4(2) of the Securities Act as a transaction by an issuer not involving any public offering. By virtue of their relationship to us these consultants had access to all relevant information relating to our business and represented that it had the required investment intent. In addition, the securities issued bore an appropriate restrictive legend. The following table summarizes these share issuances:
On February 10, 2016, we issued 250,000 shares of restricted common stock to Blackbridge Capital, LLC (“Blackbridge”) in exchange for cash aggregating $25,000.00, or $0.10 a share. In connection with this issuance, we relied upon the exemption from the registration requirements pursuant to the provisions of Section 4(2) of the Securities Act as a transaction by an issuer not involving any public offering. By virtue of their relationship with us, Blackbridge had access to all relevant information relating to our business and represented that it had the required investment intent. In addition, the securities issued carried registration rights and bore an appropriate restrictive legend.
On February 29, 2016, we issued 150,000 shares of restricted common stock to Tri-Bridge Ventures, LLC (“Tri-Bridge”) in exchange for cash aggregating $15,000.00, or $0.10 a share. In connection with this issuance, we relied upon the exemption from the registration requirements pursuant to the provisions of Section 4(2) of the Securities Act as a transaction by an issuer not involving any public offering. By virtue of their relationship with us, Tri-Bridge had access to all relevant information
relating to our business and represented that it had the required investment intent. In addition, the securities issued carried registration rights and bore an appropriate restrictive legend.
On September 29, 2016, we issued 1,500,000 shares of restricted common stock to Sea Side Advisors, LLC (“Sea Side”). These shares at an aggregate of $52,350.00, or $0.0349 a share, which was the closing price of Tiger Reef’s common stock that day. These shares were issued without any type of clawback provision and, as such, Tiger Reef expensed the full value of this issuance during the fiscal year ended December 31, 2016. In connection with these issuances, we relied upon the exemption from the registration requirements pursuant to the provisions of Section 4(2) of the Securities Act as a transaction by an issuer not involving any public offering. By virtue of its relationship with us, the consultants had access to all relevant information relating to our business and represented that it had the required investment intent. In addition, the securities issued bore an appropriate restrictive legend.
On October 18, 2016, we issued an aggregate of 2,085,000 shares of restricted common stock to two consultants, Common Sense Holdings, LLC (1,085,000 shares) and Accredited Investor Preview, Inc. (1,000,000 shares). These shares at an aggregate of $62,758.50, or $0.0301 a share, which was the closing price of Tiger Reef’s common stock that day. These shares were issued without any type of clawback provision and, as such, Tiger Reef expensed the full value of this issuance during the fiscal year ended December 31, 2016. In connection with these issuances, we relied upon the exemption from the registration requirements pursuant to the provisions of Section 4(2) of the Securities Act as a transaction by an issuer not involving any public offering. By virtue of their relationship with us, the consultants had access to all relevant information relating to our business and represented that it had the required investment intent. In addition, the securities issued bore an appropriate restrictive legend.
On October 18, 2016, we issued 596 shares of restricted Series A Preferred Stock in exchange for the retirement of $44,700 in outstanding debt. In connection with these issuances, we relied upon the exemption from the registration requirements pursuant to the provisions of Section 4(2) of the Securities Act as a transaction by an issuer not involving any public offering. By virtue of its relationship with us, the debt holder had access to all relevant information relating to our business and represented that it had the required investment intent. In addition, the securities issued bore an appropriate restrictive legend.
On February 15, 2017, we issued an aggregate of 1,000,000 shares of restricted common stock to two consultants, Cornucopia Financial Group, Inc. (600,000 shares) and FNX Consulting, Inc. (400,000 shares). Tiger Reef valued these shares at an aggregate of $38,850.00, or $0.03885 a share, which was the closing price of Tiger Reef’s common stock that day as quoted by the OTCQB. In connection with these issuances, we relied upon the exemption from the registration requirements pursuant to the provisions of Section 4(2) of the Securities Act as a transaction by an issuer not involving any public offering. By virtue of its relationship with us, the consultants had access to all relevant information relating to our business and represented that it had the required investment intent. In addition, the securities issued bore an appropriate restrictive legend.
On February 15, 2017, we issued an aggregate of 1,200 shares of restricted Series A Preferred Stock to two consultants, Cornucopia Financial Group, Inc. (720 shares) and FNX Consulting, Inc. (480 shares). Tiger Reef valued these shares at an aggregate of $233,100.00, or $194.25 a share. In connection with these issuances, we relied upon the exemption from the registration requirements pursuant to the provisions of Section 4(2) of the Securities Act as a transaction by an issuer not involving any public offering. By virtue of its relationship with us, the consultants had access to all relevant information relating to our business and represented that it had the required investment intent. In addition, the securities issued bore an appropriate restrictive legend.
On March 27, 2017, we issued 18,050 shares of restricted Series A Preferred Stock in exchange for 90,250,000 shares of outstanding common stock. The ratio for this share exchange was 1 share of Series A Preferred Stock for every 5,000 shares of common stock offered. Tiger Reef’s Board of Directors subsequently cancelled the shares of common stock received in this transaction. In connection with these issuances, we relied upon the exemption from the registration requirements pursuant to the provisions of Section 4(2) of the Securities Act as a transaction by an issuer not involving any public offering. By virtue of its relationship with us, the shareholder had access to all relevant information relating to our business and represented that it had the required investment intent. In addition, the securities issued bore an appropriate restrictive legend.
Purchases of Equity Securities by the Issuer and Affiliated Purchases
During each month within the fourth quarter of the fiscal year ended December 31, 2016, neither we nor any “affiliated purchaser”, as that term is defined in Rule 10b-18(a)(3) under the Exchange Act, repurchased any of our common stock or other securities.
Item 6.
Item 6. Selected Financial Data
Not applicable.
Item 7.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Tiger Reef was incorporated under the laws of the State of Colorado on June 27, 2013 under the name Stream Flow Media, Inc. We amended our Articles of Incorporation on October 14, 2015 to change our name to Blue Water Bar & Grill, Inc. Subsequent to the name change, Tiger Reef acquired all of the issued and outstanding shares of Blue Water Bar & Grill, N.V., a St. Maarten, Dutch West Indies limited liability company, on December 15, 2015. Presently we are developing a chain of casual dining restaurants in popular tourist destinations throughout the Caribbean region under the Blue Water Bar & Grill™ brand name. The initial flagship location is presently under construction in St. Maarten, Dutch West Indies.
We are an emerging growth company. Our independent registered public accounting firm has issued a going concern opinion in their audit report included in the financial statements that are a part of this Annual Report on Form 10-K. This means that our auditors believe there is substantial doubt that we can continue as an ongoing business for the next 12 months. Although we are executing our business plan we are not presently generating any revenue and cannot meet our ongoing current financial obligations, particularly our ongoing reporting requirements with the SEC. Accordingly, we must raise additional cash from sources other than operations.
To meet our need for cash we presently are exploring other such sources of funding, including raising funds through an offering of our common stock and loans. If we are unable to raise this additional funding, we may have to suspend operations until we do raise the cash or cease operations entirely.
The following discussion should be read in conjunction with our financial statements and the notes thereto and the other information included in this Annual Report as filed with the SEC on Form 10-K.
Limited Operating History; Need for Additional Capital
There is limited historical financial information about us upon which to base an evaluation of our performance. We are an emerging growth business with limited operating history. We cannot guarantee that we will be successful in our business operations. Our business is subject to risks inherent in the establishment of a new business enterprise, including limited capital resources and possible cost overruns, such as increases in marketing costs, increases in administration expenditures associated with daily operations, increases in accounting and audit fees, and increases in legal fees related to filings and regulatory compliance.
To become profitable and competitive, we have to successfully open operating restaurant properties throughout the Caribbean region. We anticipate relying on equity sales of our common stock in order to continue to fund our business operations until we are able to generate sufficient revenues to cover our operating expenses, which may never happen. Issuances of additional shares will result in dilution to our then existing stockholders. There is no assurance that we will be able to make any additional sales of our equity securities or arrange for debt or other financing to fund our planned business activities.
We are continually exploring new sources of financing to meet our need for additional cash, including raising funds through sales of our equity securities and loans. We cannot provide any assurances that our efforts to secure additional financing will be successful. We have no assurance that future financing will be available to us on acceptable terms. If financing is not available on satisfactory terms, we may be unable to continue, develop, or expand our operations. Further, future equity financing could result in additional and substantial dilution to existing shareholders.
Results of Operations
For the ease of reference, we refer to the fiscal year ended December 31, 2016 as fiscal 2016 or the fiscal year ended December 31, 2016 and the fiscal year ended December 31, 2015 as fiscal 2015 or the fiscal year ended December 31, 2015.
Fiscal Years Ended December 31, 2016 and 2015
Revenues. We did not generate any revenue in fiscal 2016 or fiscal 2015.
Operating Expenses. Our total operating expenses for fiscal 2016 were $343,331, which is a $138,451, or 67.6%, increase compared to operating expenses of $204,880 for the same period a year ago. The increase in operating expenses are the result of (i) terminating operations and divesting ourselves of the Blue Water Bar & Grill, N.V. subsidiary, (ii) establishment of Tiger
Reef Spirits, Ltd. subsidiary and related development work on our forthcoming line of ultra premium rums to be sold under the Tiger Reef® brand, and (iii) continued cost increases related to our complying with our ongoing SEC reporting requirements, which have consisted primarily of legal, accounting and outside consulting fees.
(Loss) From Operations. Our loss from operations for fiscal 2016 was ($343,331), which is a $138,451, or 67.6%, increase compared to a loss from operations of ($204,880) for the same period a year ago. The increase in operating loss from operations are the result of (i) terminating operations and divesting ourselves of the Blue Water Bar & Grill, N.V. subsidiary, (ii) establishment of Tiger Reef Spirits, Ltd. subsidiary and related development work on our forthcoming line of ultra premium rums to be sold under the Tiger Reef® brand, and (iii) continued cost increases related to our complying with our ongoing SEC reporting requirements, which have consisted primarily of legal, accounting and outside consulting fees.
Other Income (Expenses). During fiscal 2016 we incurred an aggregate of ($128,036) in other expenses compared to ($8,694) for the same period a year ago. These other expenses for fiscal 2016 were comprised of a ($74,474) one-time loss on deconsolidation related to terminating operations and divesting ourselves of the Blue Water Bar & Grill, N.V. subsidiary, a one-time loss on conversion of outstanding debt ($44,998), and ($8,564) in imputed interest. These other expenses for fiscal 2015 were comprised solely of ($8,694) in imputed interest. The imputed interest was recorded in our financial statements under additional paid-in capital.
Net Income (Loss). We had a net loss of ($471,367) for fiscal 2016 compared to a net loss of ($213,574) for the same period a year ago, which represented a $257,793, or 120.7%, increase in net loss. The increase in the net loss is the result of (i) terminating operations and divesting ourselves of the Blue Water Bar & Grill, N.V. subsidiary, (ii) establishment of Tiger Reef Spirits, Ltd. subsidiary and related development work on our forthcoming line of ultra premium rums to be sold under the Tiger Reef® brand, and (iii) continued cost increases related to our complying with our ongoing SEC reporting requirements, which have consisted primarily of legal, accounting and outside consulting fees.
Total Stockholders’ Deficit. Our stockholders’ deficit was ($241,652) as of December 31, 2016.
Liquidity and Capital Resources
As of December 31, 2016, we had no cash or other assets. In Management’s opinion, Tiger Reef’s cash position is insufficient to maintain our operations at the current level for the next 12 months without successfully obtaining additional financing.
As of December 31, 2016, we had total liabilities of ($241,652), which consisted of accounts payable of ($190,976), notes payable to a related party of ($50,473), and a bank overdraft of ($203).
In addition to the foregoing, we expect to incur continued losses through the fiscal year ending December 31, 2017, possibly even longer. We estimate that we will need to generate at least $1.5 million in additional financing in order to maintain our current level of operations and meet our planned fiscal 2017 capital expenditures. Further, in order to proceed with our long-term plans, we anticipate that we will need to generate at least between $4 and $5 million in additional long-term financing.
Without limiting our available options, future financings will most likely be through the sale of additional shares of our common stock. It is possible that we could also offer warrants, options and/or rights in conjunction with any future issuances of our common stock. However, we can give no assurance that financing will be available to us, and if available to us, in amounts or on terms acceptable to us. If we cannot secure adequate financing we may be forced to cease operations and you will lose your entire investment.
Going Concern Consideration
Our independent auditors included an explanatory paragraph in their report on the accompanying financial statements regarding concerns about our ability to continue as a going concern. Our financial statements contain additional note disclosures describing the circumstances that lead to this disclosure by our independent auditors.
Off-Balance Sheet Transactions
We do not engage in off-balance sheet transactions.
CRITICAL ACCOUNTING POLICIES
The accompanying financial statements have been prepared in accordance with United States Generally Accepted Accounting Principles (US GAAP) for financial information and in accordance with the Securities and Exchange Commission’s (SEC) Regulation S-X. They reflect all adjustments which are, in the opinion of Tiger Reef’s management, necessary for a fair presentation of the financial position and operating results as of and for the fiscal years ended December 31, 2016 and 2015.
Use of Estimates
The accompanying financial statements of Tiger Reef have been prepared in accordance with generally accepted accounting principles in the United States of America. Because a precise determination of many assets and liabilities is dependent upon future events, the preparation of financial statements for a period necessarily involves the use of estimates which have been made using careful judgment. Actual results may vary from these estimates.
Cash and Cash Equivalents
For purposes of the statement of cash flows, Tiger Reef considers highly liquid financial instruments purchased with a maturity of three months or less to be cash equivalents. As of December 31, 2016 and 2015, Tiger Reef had no cash equivalents.
Fair Value of Financial Instruments
ASC 820, “Fair Value Measurements” and ASC 825, Financial Instruments, requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. It establishes a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. It prioritizes the inputs into three levels that may be used to measure fair value:
The estimated fair values of Tiger Reef’s financial instruments as of December 31, 2016 are as follows:
The estimated fair values of Tiger Reef’s financial instruments as of December 31, 2015 are as follows:
Net Loss per Share Calculation
Basic net loss per common share is computed by dividing the net loss attributable to common stockholders by the weighted-average number of common shares outstanding for the period. Diluted earnings per shares is computed similar to basic loss per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive. As of December 31, 2016 and 2015, Tiger Reef had no dilutive financial instruments issued or outstanding.
Revenue Recognition
Tiger Reef follows the guidance of FASB ASC Topic 605 for revenue recognition. In general, Tiger Reef recognizes revenue on four basic criteria that must be met before revenue can be recognized: (1) persuasive evidence of an arrangement exists; (2) delivery has occurred or services have been rendered; (3) the fee is fixed or determinable; and (4) collectability is reasonably assured. Determination of criteria (3) and (4) are based on management’s judgments regarding the fixed nature of the fee
charged for services rendered and products delivered and the collectability of those fees. Revenue is generally recognized at the time of sale and is expected to consist of sales of food, beverages and general merchandise and souvenirs.
Income Taxes
Tiger Reef accounts for income taxes pursuant to FASB ASC 740, Income Taxes. Under FASB ASC 740-10-25, deferred tax assets and liabilities are determined based on temporary differences between the bases of certain assets and liabilities for income tax and financial reporting purposes. The deferred tax assets and liabilities are classified according to the financial statement classification of the assets and liabilities generating the differences.
Tiger Reef maintains a valuation allowance with respect to deferred tax assets. Tiger Reef establishes a valuation allowance based upon the potential likelihood of realizing the deferred tax asset and taking into consideration Tiger Reef’s financial position and results of operations for the current period. Future realization of the deferred tax benefit depends on the existence of sufficient taxable income within the carryforward period under the Federal tax laws.
Changes in circumstances, such as Tiger Reef generating taxable income, could cause a change in judgment about its ability to realize the related deferred tax asset. Any change in the valuation allowance will be included in income in the year of the change in estimate.
Item 7A.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Not applicable.
Item 8.
Item 8. Financial Statements and Supplementary Data
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors
Tiger Reef, Inc.
We have audited the accompanying balance sheets of Tiger Reef, Inc. as of December 31, 2016 and 2015, and the related statements of operations, changes in stockholder’s deficit, and cash flows for the period ended December 31, 2016 and 2015. 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 standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit 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 audit 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 includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes 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 Tiger Reef, Inc. as of December 31, 2016 and 2015, and the results of its operations and cash flows for the periods described above in conformity with accounting principles generally accepted in the United States of America.
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company suffered a net loss from operations and has a net capital deficiency, which raises substantial doubt about its ability to continue as a going concern. Management’s plans regarding those matters are also described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
/s/ M&K CPAS, PLLC
www.mkacpas.com
Houston, Texas
April 5, 2017
F - 2
TIGER REEF, INC.
(formerly Blue Water Bar & Grill, Inc.)
CONSOLIDATED BALANCE SHEETS
ASSETS
LIABILITIES AND STOCKHOLDERS’ (DEFICIT)
The accompanying notes to the financial statements are an integral part of these statements.
F - 3
TIGER REEF, INC.
(formerly Blue Water Bar & Grill, Inc.)
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
The accompanying notes to the financial statements are an integral part of these statements.
F - 4
TIGER REEF, INC.
(formerly Blue Water Bar & Grill, Inc.)
CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY
For the period from December 31, 2014 to December 31, 2016
(unaudited)
The accompanying notes to the consolidated financial statements are an integral part of these statements.
F - 5
TIGER REEF, INC.
(formerly Blue Water Bar & Grill, Inc.)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
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The accompanying notes to the financial statements are an integral part of these statements.TIGER REEF, INC.
(formerly Blue Water Bar & Grill, Inc.)
NOTES TO FINANCIAL STATEMENTS
December 31, 2016
NOTE 1 - Summary of Significant Accounting Policies
Organization
Tiger Reef, Inc. (“Company” or “Tiger Reef”) was incorporated under the laws of the State of Colorado on June 27, 2013 under the name Stream Flow Media, Inc. The Company amended its Articles of Incorporation on October 14, 2015 to change its name to Blue Water Bar & Grill, Inc. and further amended its Articles of Incorporation on October 24, 2016 to change its name to Tiger Reef, Inc. The Company is a diversified producer of ultra premium rums under the Tiger Reef® brand and a developer of Caribbean casual dining restaurant properties under the Mermaid Reef Ocean Grill & Lounge™ brand.
Basis of Presentation
The Company is a diversified producer of ultra premium rums under the Tiger Reef® brand and a developer of Caribbean casual dining restaurant properties under the Mermaid Reef Ocean Grill & Lounge™ brand.
The Company has experienced net losses and negative cash flows from operations since inception and expects these conditions to continue for the foreseeable future. In addition, there is no assurance that once open the Company’s restaurants will be well received or that the Company will be able to generate sufficient cash flow to fund continued operations.
The above factors raise substantial doubt as to the Company's ability to continue as a going concern. The accompanying condensed financial statements have been prepared assuming that the Company will continue as a going concern and do not include any adjustments that may result from the outcome of this uncertainty.
The consolidated financial statements include the accounts of Tiger Reef, Inc. and its wholly owned subsidiary Tiger Reef, Ltd. (hereafter referred collectively as the “Company” or “Tiger Reef”).
All significant intercompany balances and transactions have been eliminated in consolidation.
Use of Estimates
The accompanying financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States of America. Because a precise determination of many assets and liabilities is dependent upon future events, the preparation of financial statements for a period necessarily involves the use of estimates which have been made using careful judgment. Actual results may vary from these estimates.
Cash and Cash Equivalents
For purposes of the statement of cash flows, the Company considers highly liquid financial instruments purchased with a maturity of three months or less to be cash equivalents. As of December 31, 2016 and 2015, the Company had no cash equivalents.
Property, Plant and Equipment
Property, plant and equipment are recorded at cost. Depreciation and amortization are provided using the straight-line method over the estimated useful lives of the assets, generally 3 to 20 years. Leasehold improvements and leased equipment are amortized over the shorter of the term of the lease or the useful life of the improvement or equipment.
Fair Value of Financial Instruments
ASC 820, “Fair Value Measurements” and ASC 825, Financial Instruments, requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. It establishes a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure fair value. A financial
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instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. It prioritizes the inputs into three levels that may be used to measure fair value:
The estimated fair values of the Company’s financial instruments as of December 31, 2016 are as follows:
The estimated fair values of the Company’s financial instruments as of December 31, 2015 are as follows:
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Net Loss per Share Calculation
Basic net loss per common share is computed by dividing the net loss attributable to common stockholders by the weighted-average number of common shares outstanding for the period. Diluted earnings per shares is computed similar to basic loss per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive. As of December 31, 2016 and 2015, the Company had no dilutive financial instruments issued or outstanding.
Revenue Recognition
The Company follows the guidance of FASB ASC Topic 605 for revenue recognition. In general, the Company recognizes revenue on four basic criteria that must be met before revenue can be recognized: (1) persuasive evidence of an arrangement exists; (2) delivery has occurred or services have been rendered; (3) the fee is fixed or determinable; and (4) collectability is reasonably assured. Determination of criteria (3) and (4) are based on management’s judgments regarding the fixed nature of the fee charged for services rendered and products delivered and the collectability of those fees. Revenue is generally recognized at the time of sale and is expected to consist of sales of food, beverages and general merchandise and souvenirs.
Discontinued Operations
The Company follows the policy of segregating the assets and liabilities of subsidiaries or lines of business on its balance sheet from the assets and liabilities of continuing subsidiaries or lines of business when it is decided to close or dispose of a subsidiary or line of business. The Company also follows the policy of separately disclosing the assets and liabilities and the net operations of a subsidiary or line of business in its financial statements when it is decided to close or dispose of a subsidiary or line of business.
Income Taxes
The Company accounts for income taxes pursuant to FASB ASC 740, Income Taxes. Under FASB ASC 740-10-25, deferred tax assets and liabilities are determined based on temporary differences between the bases of certain assets and liabilities for income tax and financial reporting purposes. The deferred tax assets and liabilities are classified according to the financial statement classification of the assets and liabilities generating the differences.
The Company maintains a valuation allowance with respect to deferred tax assets. The Company establishes a valuation allowance based upon the potential likelihood of realizing the deferred tax asset and taking into consideration the Company’s financial position and results of operations for the current period. Future realization of the deferred tax benefit depends on the existence of sufficient taxable income within the carryforward period under the Federal tax laws.
Changes in circumstances, such as the Company generating taxable income, could cause a change in judgment about its ability to realize the related deferred tax asset. Any change in the valuation allowance will be included in income in the year of the change in estimate.
Fiscal Year
The Company elected December 31st for its fiscal year end.
Recent Accounting Pronouncements
There are various updates recently issued, most of which represented technical corrections to the accounting literature or application to specific industries and are not expected to a have a material impact on the Company's financial position, results of operations or cash flows.
NOTE 2 - GOING CONCERN
The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. As shown in the accompanying consolidated financial statements during fiscal year ended December 31, 2016, the Company has not established a source of revenues sufficient to cover its operating costs, and as such, has incurred an operating loss since its inception. Further, as of
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December 31, 2016, the Company had an accumulated deficit of ($1,227,108). These and other factors raise substantial doubt about the Company’s ability to continue as a going concern.
The Company’s existence is dependent upon management’s ability to develop profitable operations and to obtain additional sources of financing. There can be no assurance that the Company’s financing efforts will result in profitable operations or the resolution of the Company’s liquidity problems. The accompanying statements do not include any adjustments that might result should the Company be unable to continue as a going concern.
NOTE 3 - STOCKHOLDERS’ EQUITY
Preferred stock
The Company has authorized 1,000,000 shares of preferred stock, $0.001 par value. The Company’s Board of Directors is authorized, without further action by the shareholders, to issue shares of preferred stock and to fix the designations, number, rights, preferences, privileges and restrictions thereof, including dividend rights, conversion rights, voting rights, terms of redemption, liquidation preferences and sinking fund terms.
On November 2, 2015, the Company’s board of directors designated 250,000 shares of preferred stock as Series A Preferred Stock at $0.001 par value. Series A Preferred Stock ranks superior to all other classes of stock including common and other future classes of preferred in regard to liquidation, dissolution or winding up of the Company. The Series A Preferred Stock shall participate in all legal dividends declared by the board of directors, has 5,000 votes per share in all voting matters, and is convertible and redeemable by the Company into shares of common stock at a ratio of 5,000 shares of common stock for each share of Series A Preferred.
On November 2, 2015, the Company issued 97,625 shares of Series A Preferred Stock to Taurus Financial Partners, LLC (“Taurus”) as payment towards outstanding accounts payable to Taurus amounting to $97,625. This transaction was mutually rescinded retroactively by both parties on February 25, 2016 resulting in the reinstatement of $97,625 in accounts payable to Taurus. The accounts payable balance owed to Taurus was converted into and has been accounted for as a short-term note payable to a related party. As of December 31, 2016 and 2015, this short-term note payable had accrued $6,754 and $8,694, respectively, in imputed interest. This imputed interest has been recorded in the financial statements as additional paid-in capital. No shares of Series A Preferred Stock were issued hereunder.
On October 18, 2016, the Company issued 596 shares of its Series A Preferred Stock in exchange for the retirement of $44,700 in outstanding debt owed to an unrelated party. These shares of Series A Preferred stock were independently valued by Doty Scott Enterprises, Inc. at $89,698, or $150.50 a share, pursuant to the Statement of Financial Accounting Standard ASC 820-10-35-37, Fair Value in Financial Instruments. As such, the Company recorded a one-time loss of ($44,998) for the conversion of this debt into shares of Series A Preferred Stock.
As of December 31, 2016, the Company had 596 shares of Series A Preferred Stock issued and outstanding; there were no other shares or classes of preferred stock authorized or outstanding.
Common stock (Tiger Reef, Inc.)
The Company has authorized 500,000,000 shares of common stock, with a par value of $0.001 per share.
During the fiscal year ended December 31, 2015, the Company issued an aggregate of 6,459,500 shares of its common stock for services rendered at a fair value of $64,595, based on the price from NASDAQ of $0.01 a share for the Company’s common stock at the time of grant.
During the fiscal year ended December 31, 2016, the Company issued an aggregate of 3,585,000 shares of its common stock for services. These shares had an aggregate issue value of $115,109, or an average price of $0.032 per share.
During the fiscal year ended December 31, 2016, the Company issued an aggregate of 850,000 shares of its common stock for an aggregate of $152,500 in cash, or an average price of $0.179 per share.
As of December 31, 2016, the Company had 112,044,500 shares of its common stock issued and outstanding.
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Blue Water Bar & Grill, N.V. Common Stock
During the fiscal year ended December 31, 2015, the Company acquired 30 shares of the common stock, $100 par value, of Blue Water Bar & Grill, N.V., a St. Maarten, Dutch West Indies limited liability company. These shares represented 100% of the issued and outstanding capital stock of Blue Water Bar & Grill, N.V.
The Company sold and transferred its 30 shares of Blue Water Bar & Grill, N.V., including its business and director licenses, to an unrelated third party on July 1, 2016 in exchange for the assumption of $15,000 in outstanding accounts payable. The Company no longer has a vested interest or any affiliation with Blue Water Bar & Grill, N.V.
Imputed Interest and Expenses Paid by Related Party
During the fiscal years ended December 31, 2016 and 2015, Blue Water Global Group, Inc. paid $-0- and $42,371, respectively, in expenses on behalf of the Company. Since inception on July 27, 2013, Blue Water Global Group paid an aggregate of $621,003 in expenses on behalf of the Company before it went out of business. These expenses were included in the financial statements under Additional Paid-In Capital.
As of December 31, 2016 and December 31, 2015, the Company had outstanding notes payable to Taurus Financial Partners, LLC (“Taurus”) aggregating $50,473 and $102,749, respectively, for expenses paid on behalf of the Company which has been accounted for as a short-term note payable to a related party. During the fiscal year ended December 31, 2016, the Company reduced the aggregate amount owed to Taurus by ($52,276). Also during the fiscal year ended December 31, 2016 and 2015, the Company imputed $6,754 and $8,694 in interest, respectively, on the Taurus notes. The imputed interest has been recorded in the financial statements as additional paid-in capital.
During the fiscal year ended December 31, 2015, the Company had a note payable to a related party stockholder in the amount of $100. This note was paid in full on December 4, 2015. During the fiscal year ended December 31, 2015 this note accrued $11 in imputed interest that has been recorded in the financial statements as additional paid-in capital.
Imputed Interest and Outstanding Notes Payable to Unrelated Party
On October 18, 2016, the Company issued 596 shares of its Series A Preferred Stock in exchange for the retirement of $44,700 in outstanding debt owed to an unrelated party. As of December 31, 2016, the Company had no outstanding debts to any unrelated parties. During the fiscal year ended December 31, 2016, the Company imputed $1,810 in interest on this unrelated party note. The imputed interest has been recorded in the financial statements as additional paid-in capital.
NOTE 4 - ACQUISITION AND DIVESTURE OF BLUE WATER BAR & GRILL, N.V.
On December 15, 2015 we acquired all of the issued and outstanding shares (comprised of 30 common shares with a par value of $100 per share) of Blue Water Bar & Grill, N.V., a St. Maarten, Dutch West Indies limited liability company from Blue Water Global Group, Inc., a related party. These shares were valued at an aggregate of $3,000, or $100 per share, which was paid by Taurus Financial Partners, LLC (“Taurus”), a related party.
The Company accounted for this transaction as a common controlled acquisition.
J. Scott Sitra, our sole officer and director, was the control person of all entities prior to and subsequent to this acquisition. Hence, this acquisition did not result in a change of control with any of the parties involved.
This acquisition was completed in accordance to ASC 805-50-50-3 through 4 and ASC 805-10-5.
The Company sold and transferred its 30 shares of Blue Water Bar & Grill, N.V., including its business and director licenses, to an unrelated third party on July 1, 2016 in exchange for the assumption of $15,000 in outstanding accounts payable. The Company no longer has a vested interest or any affiliation with Blue Water Bar & Grill, N.V.
On June 30, 2016 the Company incurred a one-time write-off of $644,115 to reflect the full impairment of the unfinished St. Maarten Blue Water Bar & Grill™ in Indigo Bay. The Company no longer has a vested interest or affiliation with this project. Further, Indigo Bay intends to demolish the unfinished building and erect a 450-room all-inclusive hotel on this building site. The Company has no financial interest in or affiliation with this proposed hotel project.
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During the fiscal year ended December 31, 2016 the Company recorded a loss of ($74,474) for the deconsolidation of Blue Water Bar & Grill, N.V.
NOTE 5 - PROPERTY AND EQUIPMENT
Property and equipment as of December 31, 2016 and 2015 is summarized as follows:
Property and equipment are stated at cost and depreciated using the straight-line method over their estimated useful lives. Construction in process is comprised of the accumulated costs of construction of a Blue Water Bar & Grill™ restaurant in St. Maarten, Dutch West Indies.
When property and equipment is retired or otherwise disposed, the related carrying value and accumulated depreciation are removed from the respective accounts and the net difference less any amount realized from disposition, is reflected in earnings.
On June 30, 2016 the Company incurred a one-time write-off of $644,115 to reflect the full impairment of the unfinished St. Maarten Blue Water Bar & Grill™ in Indigo Bay. The Company no longer has a vested interest or affiliation with this project. Further, Indigo Bay intends to demolish the unfinished building and erect a 450-room all-inclusive hotel on this building site. The Company has no financial interest in or affiliation with this proposed hotel project.
Depreciation expense was $-0- and $-0- for the periods ended December 31, 2016 and 2015, respectively.
NOTE 6 - DISCONTINUED OPERATION AND DECONSOLIDATION OF HELD SUBSIDIARY
The Company follows the policy of segregating the assets and liabilities of subsidiaries or lines of business on its balance sheet from the assets and liabilities of continuing subsidiaries or lines of business when it is decided to close or dispose of a subsidiary or line of business. The Company also follows the policy of separately disclosing the assets and liabilities and the net operations of a subsidiary or line of business in its financial statements when it is decided to close or dispose of a subsidiary or line of business.
On July 1, 2016 the Company sold and transferred its 30 shares of Blue Water Bar & Grill, N.V., including its business and director licenses, to an unrelated third party in exchange for the assumption of $15,000 in outstanding accounts payable. The Company no longer has a vested interest or any affiliation with Blue Water Bar & Grill, N.V.
As a result of this action the operations of the Blue Water Bar & Grill, N.V. have been classified as Discontinued Operations on the Statement of Operations. The components of Discontinued Operations summarized on the Statement of Operations arising from the decision to separate from Blue Water Bar & Grill, N.V. are as follows:
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The components of Discontinued Operations summarized on the Balance Sheets arising from the decision to separate from Blue Water Bar & Grill, N.V. are as follows:
NOTE 7 - INCOME TAXES
The provision (benefit) for income taxes for the years ended December 31, 2016 and 2015 was as follows, assuming a 35% effective tax rate:
As of December 31, 2016, the Company had approximately $628,129 in tax loss carryforwards that can be utilized in future periods to reduce taxable income through 2036.
The Company provided a valuation allowance equal to the deferred income tax assets for the period from June 27, 2013 (inception) to December 31, 2016 because it is not presently known whether future taxable income will be sufficient to utilize the tax loss carryforwards. Further, the Company is evaluating whether to legally and physically redomicile itself during the fiscal year ending December 31, 2017 to Anguilla, British Virgin Islands where its wholly-owned subsidiary, Tiger Reef Spirits, Ltd., is based. Should the Company proceed with this corporate redomicile it would no longer be subject to corporate income taxes since as an Anguilla International Business Company (IBC) it would have an effective corporate tax rate of zero.
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The Company has no uncertain tax positions.
NOTE 8 - CONTINGENCY/LEGAL
As of December 31, 2016, and during the preceding ten years, no director, person nominated to become a director or executive officer, or promoter of the Company has been involved in any legal proceeding that would require disclosure hereunder.
From time to time, the Company may become subject to various legal proceedings and claims that arise in the ordinary course of our business activities. However, litigation is subject to inherent uncertainties for which the outcome cannot be predicted. Any adverse result in these or other legal matters could arise and cause harm to the Company’s business. The Company currently is not party to any claim or litigation the outcome of which, if determined adversely to the Company, would individually or in the aggregate be reasonably expected to have a material adverse effect on the Company’s business.
NOTE 9 - RELATED PARTY TRANSACTIONS
During the fiscal years ended December 31, 2016 and 2015, Blue Water Global Group, Inc. paid $-0- and $42,371, respectively, in expenses on behalf of the Company. Since inception on July 27, 2013, Blue Water Global Group paid an aggregate of $621,003 in expenses on behalf of the Company before it went out of business. These expenses were included in the financial statements under Additional Paid-In Capital.
On December 15, 2015 we acquired all of the issued and outstanding shares (comprised of 30 common shares with a par value of $100 per share) of Blue Water Bar & Grill, N.V., a St. Maarten, Dutch West Indies limited liability company from Blue Water Global Group, Inc., a related party. These shares were valued at an aggregate of $3,000, or $100 per share, which was paid by Taurus Financial Partners, LLC (“Taurus”), a related party. This transaction as a common controlled acquisition.
As of December 31, 2016 and December 31, 2015, the Company had outstanding notes payable to Taurus Financial Partners, LLC (“Taurus”) aggregating $50,473 and $102,749, respectively, for expenses paid on behalf of the Company which has been accounted for as a short-term note payable to a related party. During the fiscal year ended December 31, 2016, the Company reduced the aggregate amount owed to Taurus by ($52,276). Also during the fiscal year ended December 31, 2016 and 2015, the Company imputed $6,754 and $8,694 in interest, respectively, on the Taurus notes. The imputed interest has been recorded in the financial statements as additional paid-in capital.
The Company sold and transferred its 30 shares of Blue Water Bar & Grill, N.V., including its business and director licenses, to an unrelated third party on July 1, 2016 in exchange for the assumption of $15,000 in outstanding accounts payable. The Company no longer has a vested interest or any affiliation with Blue Water Bar & Grill, N.V.
During the fiscal year ended December 31, 2015, the Company had a note payable to a related party stockholder in the amount of $100. This note was paid in full on December 4, 2015. During the fiscal year ended December 31, 2015 this note accrued $11 in imputed interest that has been recorded in the financial statements as additional paid-in capital.
NOTE 10 - NOTES PAYABLE TO UNRELATED PARTY
On October 18, 2016, the Company issued 596 shares of its Series A Preferred Stock in exchange for the retirement of $44,700 in outstanding debt owed to an unrelated party. The Company recorded a loss of ($44,998) for converting this debt into shares of Series A Preferred Stock.
As of December 31, 2016, the Company had no outstanding debts to any unrelated parties. During the fiscal year ended December 31, 2016, the Company imputed $1,810 in interest on this unrelated party note. The imputed interest has been recorded in the financial statements as additional paid-in capital.
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NOTE 11 - SUBSEQUENT EVENTS
Issuance of Convertible Notes
Subsequent to the fiscal year ended December 31, 2016 the Company concluded financing involving two investors that netted the Company $60,000 in bridge financing. The table below summarizes each investor and the amount of financing received in this round of bridge financing. A more comprehensive disclosure relating to this round of financing is hereby incorporated by reference to the Form 8-K filed with the SEC on March 3, 2017 and March 28, 2017.
Common Share Issuances to Consultants
On February 15, 2017, the Company issued an aggregate of 1,000,000 shares of restricted common stock to two consultants. These shares were valued at an aggregate of $38,850.00, or $0.03885 a share, which was the closing price of the Company’s common stock that day as quoted by the OTCQB.
Series A Preferred Stock Issuance to Consultants
On February 15, 2017, the Company issued an aggregate of 1,200 shares of restricted Series A Preferred Stock to two consultants. These shares were valued at an aggregate of $233,100.00, or $194.25 a share.
Share Exchange Agreement and Subsequent Common Stock Cancellation
On March 27, 2017, the Company issued 18,050 shares of restricted Series A Preferred Stock in exchange for 90,250,000 shares of outstanding common stock. The ratio for this share exchange was 1 share of Series A Preferred Stock for every 5,000 shares of common stock offered. The Company’s Board of Directors subsequently cancelled the shares of common stock received in this transaction.
As of April 5, the Company had 22,794,500 shares of common stock issued and outstanding and 19,846 shares of Series A Preferred Stock issued and outstanding.
No other material events or transactions have occurred during this subsequent event reporting period which required recognition or disclosure in the financial statements.
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Item 9.
Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
None.
Item 9A.
Item 9A. Controls and Procedures
Disclosure Controls and Procedures
As of the end of the period covered by this report, we conducted an evaluation under the supervision and with the participation of principal executive officer and sole director, J. Scott Sitra, we evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) of the Exchange Act).
A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be presented or detected on a timely basis.
Based on management’s assessment, we have concluded that, as of December 31, 2016, our disclosure controls and procedures were not effective in timely alerting management to the material information relating to us required to be included in our annual and interim filings with the SEC.
Management has concluded that our disclosure controls and procedures had the following material weaknesses:
 We were unable to maintain any segregation of duties within our financial operations due to our reliance on limited personnel in the finance function. While this control deficiency has not resulted in any audit adjustments to our interim or annual financial statements, it could have resulted in a material misstatement that might have been prevented or detected by a segregation of duties;
 Tiger Reef lacks sufficient resources to perform the internal audit function and does not have an Audit Committee;
 We do not have an independent Board of Directors, nor do we have a board member designated as an independent financial expert to Tiger Reef. The Board of Directors is comprised of one (1) member who also serves as Tiger Reef’s principal executive officer. As a result, there is a lack of independent oversight of the management team, lack of independent review of our operating and financial results, and lack of independent review of disclosures made by Tiger Reef; and
 Documentation of all proper accounting procedures is not yet complete.
These weaknesses have existed since our inception on June 27, 2013 and, as of December 31, 2016, have not been remedied.
To the extent reasonably possible given our limited resources, we intend to take measures to cure the aforementioned material weaknesses, including, but not limited to, the following:
 Considering the engagement of consultants to assist in ensuring that accounting policies and procedures are consistent across the organization and that we have adequate control over financial statement disclosures;
 Hiring additional qualified financial personnel, including a Chief Financial Officer, on a full-time basis;
 Expanding our current board of directors to include additional independent individuals willing to perform directorial functions; and
 Increasing our workforce in preparation for exiting the development stage and commencing revenue producing operations.
Since the recited remedial actions will require that we hire or engage additional personnel, these material weaknesses may not be overcome in the near-term due to our limited financial resources. Until such remedial actions can be realized, we will continue to rely on the limited advice of outside professionals and consultants.
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Internal Control over Financial Reporting
(a) Management’s Annual Report on Internal Control Over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.
A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the registrant’s annual or interim financial statements will not be prevented or detected on a timely basis.
Management has conducted an assessment, including testing of the effectiveness, of our internal control over financial reporting as of Evaluation Date. Management's assessment of internal control over financial reporting was conducted using the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control - Integrated Framework (2013 Framework). Based on that assessment under such criteria, management concluded that our internal controls over financial reporting were not effective as of December 31, 2016 due to control deficiencies that constituted material weaknesses.
Management has identified a lack of sufficient personnel in the accounting function due to the limited resources of Tiger Reef with appropriate skills, training and experience to perform the review processes to ensure the complete and proper application of generally accepted accounting principles.
We are in the process of developing and implementing remediation plans to address our material weaknesses in our internal controls.
Management has identified specific remedial actions to address the material weaknesses described above:
 Improve the effectiveness of the accounting group by augmenting our existing resources with additional consultants or employees to improve segregation procedures and to assist in the analysis and recording of complex accounting transactions and preparation of tax disclosures. We plan to mitigate the segregation of duties issue by hiring additional personnel in the accounting department once we have achieved positive cash flow from operations and/or have raised significant additional working capital; and
 Improve segregation procedures by strengthening cross approval of various functions including cash disbursements and quarterly internal audit procedures where appropriate.
Due to its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.
(b) Attestation Report of the Registered Public Accounting Firm
This Annual Report does not include an attestation report of our independent registered public accounting firm regarding internal control over financial reporting. Management's report was not subject to attestation by Tiger Reef’s independent registered public accounting firm pursuant to rules of the Securities and Exchange Commission that permit Tiger Reef to provide only management's report in this Annual Report. We were not required to have, nor have we, engaged our independent registered public accounting firm to perform an audit of internal control over financial reporting pursuant to the rules of the Commission that permit us to provide only management’s report in this Annual Report.
(c) Changes in Controls and Procedures
There were no significant changes made in our internal controls over financial reporting during the year ended December 31, 2015 that have materially affected or are reasonably likely to materially affect these controls. Thus, no corrective actions with regard to significant deficiencies or material weaknesses were necessary.
Item 9B.
Item 9B. Other Information
None.
PART III
Item 10.
Item 10. Directors, Executive Officers and Corporate Governance
Our executive officers and directors and their respective ages as of the date of this Annual Report are as follows:
Our Board of Directors is comprised of only one class of director. Each director is elected to hold office until the next annual meeting of shareholders and until his successor has been elected and qualified. Officers are elected annually by the Board of Directors and hold office until successors are duly elected and qualified. There are no arrangements, agreements, or understandings between non-management shareholders and management under which non-management shareholders may, directly or indirectly, participate in or influence the management of our business affairs. The following is a brief account of the business experience of each of our directors and executive officers. There is no family relationship between any director or executive officer.
J. Scott Sitra, has served as our President, Chief Executive Officer, Chief Financial Officer, Treasurer, Secretary, and member of our Board of Directors since October 2015. He has various outside business interests and concurrently serves as the President and Chief Executive Officer of Taurus Financial Partners (“Taurus”) (since 2010), an international management and financial consulting firm specializing in assisting small and promising businesses with obtaining and maintaining a public listing on the OTC Bulletin Board and related markets. Additionally, Mr. Sitra served as a part-time principal executive officer to Blue Water Global Group, Inc., a Taurus client, from June 2013 through November 2015.
Before founding Taurus, Mr. Sitra worked as an independent consultant advising early stage businesses on various matters relating to business finance and how to obtain a public listing on a US exchange. Prior to being an independent consultant, Mr. Sitra served in varying capacities, including as an executive officer and a member of the board of directors, to several private and public entities. He has actively participated in the successful growth and development of several private and public entities within a multitude of industries, including high technology, oil and gas exploration, marketing and retailing, food and beverage, and publishing.
In addition to the foregoing, Mr. Sitra serves on the Board of Directors of African Resource Group, Inc.
Mr. Sitra presently devotes approximately 50%, or 20 to 25 hours per week, of his business time to our affairs.
Committees of the Board of Directors
We do not presently have a separately constituted audit committee, compensation committee, nominating committee, executive committee or any other committee of our Board of Directors. As such, our entire Board of Directors acts as our audit committee.
Audit Committee Financial Expert
Our Board of Directors does not currently have any member who qualifies as an audit committee financial expert. We believe that the cost of retaining such a financial expert at this time is prohibitive. Further, because we are a development stage business, we believe the services of an audit committee financial expert are not necessary at this time.
Involvement in Legal Proceedings
None of our officers or directors - past or present - have appeared as a party during the past ten (10) years in any legal proceedings that may bear on their ability or integrity to serve as an officer or director of Tiger Reef.
Code of Ethics
We do not currently have a Code of Ethics applicable to our principal executive, financial and accounting officers.
Potential Conflict of Interest
Since we do not have an audit or compensation committee comprised of independent directors, the functions that would have been performed by such committees are performed by our Board of Directors. Thus, there is a potential conflict of interest in that our sole director has the authority to determine issues concerning management compensation, including his own, and audit issues that may affect management decisions. We are not aware of any other conflicts of interest with our sole officer and director.
Board of Director’s Role in Risk Oversight
The Board of Directors assesses on an ongoing basis the risks faced by Tiger Reef. These risks include financial, technological, competitive and operational risks. The Board of Directors dedicates time at each of its meetings to review and consider the relevant risks faced at that time. In addition, since Tiger Reef does not have an Audit Committee, the Board of Directors is also responsible for the assessment and oversight of Tiger Reef’s financial risk exposures.
Compliance with Section 16(A) of the Securities Exchange Act of 1934
Section 16(a) of the Securities Exchange Act of 1934, as amended, require Tiger Reef’s executive officers, directors and persons who own more than 10% of a registered class of Tiger Reef's equity securities, to file with the SEC initial statements of beneficial ownership, reports of changes in ownership, and annual reports concerning their ownership of common stock and other equity securities of Tiger Reef on Form(s) 3, 4, and 5, respectively. Executive officers, directors and greater than 10% shareholders are required by SEC regulations to furnish Tiger Reef with copies of all Section 16(a) reports they file.
Based solely on our review of the copies of such forms received by us, or written representations from certain reporting persons, we believe that for the fiscal year ended December 31, 2016, all filing requirements applicable to our officers, directors and greater than 10% percent beneficial owners were complied with and that there were no deficiencies.
Item 11.
Item 11. Executive Compensation
The following table sets forth information with respect to compensation paid by us to our current officers from inception on June 27, 2013 through December 31, 2016. Our fiscal year end is December 31. No cash compensation has been paid to our officers from inception on June 27, 2013 through December 31, 2016.
Summary Compensation Table
The following table sets forth information with respect to compensation paid by us to our current directors from inception on
June 27, 2013 through December 31, 2016. Our fiscal year end is December 31.
Director Compensation Table
(1) Mr. Sitra joined Tiger Reef’s Board of Directors in October 2015. As of December 31, 2016 Mr. Sitra has not received any form of compensation for serving on the Board of Directors.
All compensation received by our officers and directors has been disclosed. There are no stock option, retirement, pension or profit sharing plans for the benefit of our officers and directors.
Employment Agreements
We have not entered into any employment agreements with any of our officers or directors. As of the date of this Annual Report we had no employees other than those listed above. All future employment arrangements are subject to the discretion of our Board of Directors.
Long-Term Incentive Plan Awards
We do not have any long-term incentive plans that provide compensation intended to serve as incentive for performance.
Officer Compensation
Our wholly owned subsidiary, Tiger Reef Spirits, Ltd., is planning on paying our President and CEO, J. Scott Sitra, cash compensation of $102,000 for the current fiscal year ending December 31, 2017.
Director Compensation
We have no plans to begin paying our directors any cash compensation until our business becomes operationally profitable. We may, however, reimburse our directors for any out-of-pocket travel and lodging expenses associated with their attendance of Board meetings.
Item 12.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
The following table sets forth information regarding beneficial ownership as of December 31, 2016 by (i) each named executive officer, (ii) each member of our Board of Directors, (iii) each person deemed to be the beneficial owner of more than five percent (5%) of any class of our common stock, and (iv) all of our executive officers and directors as a group. Unless otherwise indicated, each person named in the following table is assumed to have sole voting power and investment power with respect to all shares of our common stock listed as owned by such person.
As of December 31, 2016, we had 112,044,500 shares of common stock issued and outstanding and 596 shares of Series A Preferred Stock issued and outstanding (no other shares or classes of preferred stock were authorized or outstanding).
(1) Mr. Sitra does not directly own any Tiger Reef securities. As of December 31, 2016, Mr. Sitra had sole voting and dispositive power over 90,250,000 shares of our common stock through BWG Investments & Development, Ltd. On March 27, 2017 these shares were exchanged for 18,500 shares of Series A Preferred Stock and subsequently cancelled by Tiger Reef.
Securities Authorized for Issuance Under Equity Compensation Plans
As of December 31, 2016 we did not have any authorized Equity Compensation Plans. Further, we have no plans to create any such plan or plans during the fiscal year ending December 31, 2017.
Changes in Control
We are unaware of any contract or other arrangement that could result in a change of control of Tiger Reef.
Item 13.
Item 13. Certain Relationships and Related Transactions, and Director Independence
Acquisition and Divesture of Blue Water Bar & Grill, N.V.
On December 15, 2015 we acquired all of the issued and outstanding shares (comprised of 30 common shares with a par value of $100 per share) of Blue Water Bar & Grill, N.V., a St. Maarten, Dutch West Indies limited liability company from Blue Water Global Group, Inc., a related party. These shares were valued at an aggregate of $3,000, or $100 per share, which was paid by Taurus Financial Partners, LLC (“Taurus”), a related party.
Tiger Reef accounted for this transaction as a common controlled acquisition.
J. Scott Sitra, our sole officer and director, was the control person of all entities prior to and subsequent to this acquisition. Hence, this acquisition did not result in a change of control with any of the parties involved.
This acquisition was completed in accordance to ASC 805-50-50-3 through 4 and ASC 805-10-5.
Tiger Reef sold and transferred its 30 shares of Blue Water Bar & Grill, N.V., including its business and director licenses, to an unrelated third party on July 1, 2016 in exchange for the assumption of $15,000 in outstanding accounts payable. Tiger Reef no longer has a vested interest or any affiliation with Blue Water Bar & Grill, N.V.
On June 30, 2016 we incurred a one-time write-off of $644,115 to reflect the full impairment of the unfinished St. Maarten Blue Water Bar & Grill™ in Indigo Bay. Tiger Reef no longer has a vested interest or affiliation with this project. Further, Indigo Bay intends to demolish the unfinished building and erect a 450-room all-inclusive hotel on this building site. Tiger Reef has no financial interest in or affiliation with this proposed hotel project.
During the fiscal year ended December 31, 2016 we recorded a loss of ($74,474) for the deconsolidation of Blue Water Bar & Grill, N.V.
Notes Payable and Accounts Payable
During the fiscal years ended December 31, 2016 and 2015, Blue Water Global Group, Inc. paid $-0- and $42,371, respectively, in expenses on behalf of the Company. Since inception on July 27, 2013, Blue Water Global Group paid an aggregate of $621,003 in expenses on behalf of the Company before it went out of business. These expenses were included in the financial statements under Additional Paid-In Capital.
As of December 31, 2016 and December 31, 2015, the Company had outstanding notes payable to Taurus aggregating $50,473 and $102,749, respectively, for expenses paid on behalf of the Company which has been accounted for as a short-term note payable to a related party. During the fiscal year ended December 31, 2016, the Company reduced the aggregate amount owed to Taurus by ($52,276). Also during the fiscal year ended December 31, 2016 and 2015, the Company imputed $6,754 and $8,694 in interest, respectively, on the Taurus notes. The imputed interest has been recorded in the financial statements as additional paid-in capital.
During the fiscal year ended December 31, 2015, Tiger Reef had a note payable to a related party stockholder in the amount of $100. This note was paid in full on December 4, 2015. During the fiscal year ended December 31, 2015 this note accrued $11 in imputed interest that has been recorded in the financial statements as additional paid-in capital.
Indemnification
Our Articles of Incorporation and Bylaws (Article VIII) allow us to indemnify our officers, directors, employees and agents against reasonably incurred expenses (including legal fees), judgments, penalties, fines and amounts incurred in the settlement of any action, suit or proceeding if it is determined that such person conducted himself in good faith and that he reasonably believed (i) in the case of conduct in his official capacity, that his conduct was in Tiger Reef’s best interest, (ii) in all other cases (except criminal proceedings) that his conduct was at least not opposed to Tiger Reef’s best interests, or (iii) in the case of any criminal proceeding, that he has not reasonable cause to believe that his conduct was unlawful.
This determination shall be made by a majority vote of directors at a meeting at which a quorum is present, provided however that the quorum can only consist of directors not parties to the proceeding. If a quorum cannot be obtained, the determination may be made by a majority vote of a committee of the board, consisting of two or more directors who are not parties to the
proceeding. Directors who are parties to the proceeding may participate in the designation of members to serve on the committee. If a quorum of the board or a committee cannot be established, the determination may be made (i) by independent legal counsel selected by a vote of the board of directors or committee in the manner described in this paragraph or, if a quorum cannot be obtained or a committee cannot be established, by independent legal counsel selected by a majority of the full board (including directors who are parties to the proceeding) or (ii) by a vote of the shareholders. Any officer, director, employee or agent may seek court-ordered indemnification from the court conducting the proceeding. The court may then determine whether such person should be entitled to indemnification.
Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of us pursuant to the foregoing provisions, or otherwise, we have been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by us of expenses incurred or paid by a director, officer or controlling person of Tiger Reef in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, we will, unless in the opinion of our counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by Tiger Reef is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.
Section 7-108-402 of the Colorado Business Corporation Act (“Act”) provides, generally, that the articles of incorporation may contain a provision eliminating or limiting the personal liability of a director to the corporation or its shareholders for monetary damages for breach of fiduciary duty as a director, except that any such provision shall not eliminate or limit the liability of a director (i) for any breach of the director’s duty of loyalty to the corporation or its shareholders, (ii) acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) acts specified in Section 7-108-403 of the Act (unlawful distributions), or (iv) any transaction from which the director directly or indirectly derived an improper personal benefit. Such provision may not eliminate or limit the liability of a director for any act or omission occurring prior to the date on which such provision becomes effective. Tiger Reef’s articles of incorporation contain such a provision.
Section 7-109-103 of the Act provides, that a corporation organized under Colorado law shall be required to indemnify a person who is or was a director of the corporation or an individual who, while serving as a director of the corporation, is or was serving at the corporation’s request as a director, an officer, an agent, an associate, an employee, a fiduciary, a manager, a member, a partner, a promoter, or a trustee of, or to hold any similar position with, another domestic or foreign corporation or other person or of an employee benefit plan (a “Director”) of the corporation and who was wholly successful, on the merits or otherwise, in the defense of any threatened, pending, or completed action, suit, or proceeding, whether civil, criminal, administrative, or investigative and whether formal or informal (a “Proceeding”), in which he was a party, against reasonable expenses incurred by him in connection with the Proceeding, unless such indemnity is limited by the corporation’s articles of incorporation.
Section 7-109-102 of the Act provides, generally, that a corporation may indemnify a person made a party to a Proceeding because the person is or was a Director against any obligation incurred with respect to a Proceeding to pay a judgment, settlement, penalty, fine (including an excise tax assessed with respect to an employee benefit plan) or reasonable expenses incurred in the Proceeding if the person conducted himself or herself in good faith and the person reasonably believed, in the case of conduct in an official capacity with the corporation, the person’s conduct was in the corporation’s best interests and, in all other cases, his or her conduct was at least not opposed to the corporation’s best interests and, with respect to any criminal proceedings, the person had no reasonable cause to believe that his or her conduct was unlawful. A corporation may not indemnify a Director in connection with any Proceeding by or in the right of the corporation in which the Director was adjudged liable to the corporation or, in connection with any other Proceeding charging that the Director derived an improper personal benefit, whether or not involving actions in an official capacity, in which Proceeding the Director was judged liable on the basis that he or she derived an improper personal benefit. Any indemnification permitted in connection with a Proceeding by or in the right of the corporation is limited to reasonable expenses incurred in connection with such Proceeding.
Under Section 7-109-107 of the Act, unless otherwise provided in the articles of incorporation, a corporation may indemnify an officer, employee, fiduciary, or agent of the corporation to the same extent as a Director and may indemnify an officer, employee, fiduciary, or agent who is not a Director to a greater extent, if not inconsistent with public policy and if provided for by its bylaws, general or specific action of its board of directors or shareholders, or contract.
Director Independence
The OTCQB, which is the exchange where our common stock trades, does not have any director independence requirements. In determining whether our directors are independent, we refer to NASDAQ Stock Market Rule 4200(a)(15). Based on these widely-accepted criteria, we have determined that none of our directors are independent at this time.
No member of management is or will be required by us to work on a full time basis. Accordingly, certain conflicts of interest may arise between us and our officer(s) and director(s) in that they may have other business interests in the future to which they devote their attention, and they may be expected to continue to do so although management time must also be devoted to our business. As a result, conflicts of interest may arise that can be resolved only through their exercise of such judgment as is consistent with each officer's understanding of his/her fiduciary duties to us.
The Sarbanes-Oxley Act of 2002, as well as rule changes proposed and enacted by the SEC, New York Stock Exchange (NYSE), American Stock Exchange (AMEX), and NASDAQ Stock Market, as a result of Sarbanes-Oxley, require the implementation of various measures relating to corporate governance. These measures are designed to enhance the integrity of corporate management and the securities markets and apply to securities that are listed on those exchanges or the NASDAQ Stock Market. Because we are not presently required to comply with many of the corporate governance provisions and because we chose to avoid incurring the substantial additional costs associated with such compliance any sooner than legally required, we have not yet adopted these measures.
Because none of our directors are independent directors, we do not currently have independent audit or compensation committees. As a result, these directors have the ability, among other things, to determine their own level of compensation. Until we comply with such corporate governance measures, regardless of whether such compliance is required, the absence of such standards of corporate governance may leave our stockholders without protections against interested director transactions, conflicts of interest, if any, and similar matters and investors may be reluctant to provide us with funds necessary to expand our operations.
We intend to comply with all corporate governance measures relating to director independence as and when required. However, we may find it very difficult or be unable to attract and retain qualified officers, directors and members of board committees required to provide for our effective management as a result of Sarbanes-Oxley Act of 2002. The enactment of the Sarbanes-Oxley Act of 2002 has resulted in a series of rules and regulations by the SEC that increase responsibilities and liabilities of directors and executive officers. The perceived increased personal risk associated with these recent changes may make it more costly or deter qualified individuals from accepting these roles.
Item 14.
Item 14. Principal Accounting Fees and Services
Audit Fees
The aggregate fees billed for each of the last two fiscal years for professional services rendered by the principal accountant for the annual audit of our financial statements and review of financial statements included in our quarterly reports and services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for these fiscal periods were as follows:
Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services of Independent Auditors
Given the small size of our Board of Directors, as well as the limited financial resources and minimal operations of Tiger Reef, our Board acts as our Audit Committee. Our Board pre-approves all audit and permissible non-audit services. These services
may include audit services, audit-related services, tax services and other services. Our Board approves these services on a case-by-case basis.
PART IV
Item 15.
Item 15. Exhibits, Financial Statements Schedules
The following documents are filed as a part of this Annual Report:
(1) Financial Statements
The financial statements required to be filed as part of this report are set forth in Item 8 of Part II of this Annual Report.
(2) Financial Statement Schedules
All schedules are omitted for the reason that the information is included in the financial statements or the notes thereto or that they are not required or are not applicable.
(3) Exhibits
SIGNATURES
Pursuant to the requirements of Section 13 or 15 (d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on behalf by the undersigned, thereto duly authorized on this 5th day of April, 2017.
TIGER REEF, INC.
By: /s/ J. Scott Sitra
J. Scott Sitra
President, Chief Executive Officer,
Secretary, Treasurer, Chief Financial Officer,
Principal Executive Officer,
Principal Financial Officer,
Principal Accounting Officer, and Sole Director