(Mark one) | |
þ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) |
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended June 30, 2014
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o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
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For the transition period from to
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New York | 13-3832215 |
(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer
Identification Number)
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PART I. FINANCIAL INFORMATION
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Item 1. Financial statements:
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Balance Sheets as of June 30, 2014 (unaudited) and
December 31, 2013
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1
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Statements of Operations for the six and three months
ended June 30, 2014 and 2013 (unaudited)
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2
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Statements of Cash Flows for the six months
ended June 30, 2014 and 2013 (unaudited)
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3
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Notes to Financial Statements (unaudited)
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4
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Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
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7
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Item 3. Quantitative and Qualitative Disclosures about Market Risk
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8
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Item 4. Controls and Procedures
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9
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PART II. OTHER INFORMATION
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Item 1. Legal Proceedings
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10
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Item 1A. Risk Factors
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10
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Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
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10
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Item 3. Defaults Upon Senior Securities
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10
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Item 4. Mine Safety Disclosure
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10
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Item 5. Other Information
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10
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Item 6. Exhibits
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11
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SIGNATURES
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12
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CERTIFICATIONS
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13
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June 30,
2014
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December 31,
2013
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(Unaudited)
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(1) | |||||||
ASSETS
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Current assets:
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Cash
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$ | 1,078 | $ | 1,078 | ||||
Accounts receivable – related party
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54,403 | 47,725 | ||||||
Total current assets
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55,481 | 48,803 | ||||||
Other assets:
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Trademark, net of amortization
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16,125 | 19,125 | ||||||
Total other assets
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16,125 | 19,125 | ||||||
Total assets
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$ | 71,606 | $ | 67,928 | ||||
LIABILITIES AND STOCKHOLDERS' (DEFICIENCY)
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Current liabilities:
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Accounts payable
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$ | 18,619 | $ | 17,495 | ||||
Accrued expense
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2,845 | 6,845 | ||||||
Advances payable – related party stockholder
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105,105 | 94,744 | ||||||
Total current liabilities
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126,569 | 119,084 | ||||||
Stockholders' (deficiency):
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Preferred stock $.001 par value, authorized 5,000,000 shares, none issued
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- | - | ||||||
Common stock, $.025 par value, authorized 75,000,000 shares, issued and outstanding 1,139,284 shares
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28,482 | 28,482 | ||||||
Additional paid in capital
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13,585,672 | 13,585,672 | ||||||
Accumulated deficit
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(13,669,117 | ) | (13,665,310 | ) | ||||
Total stockholders’ (deficiency)
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(54,963 | ) | (51,156 | ) | ||||
Total liabilities and stockholders’ (deficiency)
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$ | 71,606 | $ | 67,928 |
Six Months
Ended June 30
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Three Months
Ended June 30
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2014
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2013
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2014
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2013
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Licensing fees – related party
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$ | 6,678 | $ | 6,000 | $ | 3,000 | $ | 3,000 | ||||||||
Selling, general and administrative expenses
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10,485 | 17,421 | 5,425 | 7,829 | ||||||||||||
Net loss
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$ | (3,807 | ) | $ | (11,421 | ) | $ | ( 2,425 | ) | $ | (4,829 | ) | ||||
Earnings per common share:
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Basic and diluted:
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$ | (.00 | ) | $ | (.01 | ) | $ | (.00 | ) | $ | (.00 | ) | ||||
Weighted average number of
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common shares outstanding
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1,139,284 | 1,139,284 | 1,139,284 | 1,139,284 | ||||||||||||
Six Months
Ended June 30
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2014
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2013
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Operating activities:
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Net (loss)
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$ | (3,807 | ) | $ | (11,421 | ) | ||
Amortization
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3,000 | 3,000 | ||||||
Increase (decrease) in operating assets and liabilities:
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Accounts receivable – related party
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(6,678 | ) | (6000 | ) | ||||
Accounts payable
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1124 | 525 | ||||||
Accrued expenses
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(4,000 | ) | (4,250 | ) | ||||
Net cash used in operating activities
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(10,361 | ) | (18,146 | ) | ||||
Financing activities:
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Advances from stockholder
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10,361 | 18,146 | ||||||
Net cash provided by financing activities
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10,361 | 18,146 | ||||||
Net increase in cash and cash equivalents
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0 | 0 | ||||||
Cash and cash equivalents, beginning of period
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1,078 | 1,078 | ||||||
Cash and cash equivalents, end of period
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$ | 1,078 | $ | 1,078 | ||||
Supplemental disclosures:
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Cash paid during the year for:
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Taxes
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$ | - | $ | - | ||||
Interest
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$ | - | $ | - | ||||
1.
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Basis of presentation:
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The accompanying unaudited financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and the instructions to Form 10-Q. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. For further information, refer to the financial statements and footnotes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2013 filed with the Securities and Exchange Commission on April 14, 2014.
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The results of operations for the three and six months ended June 30, 2014 are not necessarily indicative of the results for the full fiscal year ending December 31, 2014.
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Accounting standards have been issued or proposed by the FASB and other standards-setting bodies that are not expected to have a material impact on the financial statements for the period ending June 30, 2014 upon adoption.
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2.
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Description of business and going concern:
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The Company was a manufacturer of baking and confectionery products, which were sold to supermarkets, food distributors, educational institutions, restaurants, mail order and to the public. Although the Company sold its products throughout the United States, its main customer base was on the East Coast of the United States. As of March 2006 the Company has become a holder and licensor of intellectual property.
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The accompanying financial statements are prepared assuming the Company will continue as a going concern. At June 30, 2014, the Company had an accumulated deficit of $13,669,117, and a working capital deficiency of $ 71,088. Additionally, for the six months endedJune 30, 2014, the Company incurred a net loss from operations of $3,807 and had negative cash flows from operations in the amount of $10,361. The ability of the Company to continue as a going concern is dependent upon increasing licensing fees and obtaining additional capital and financing. While the Company believes in the viability of its strategy to increase licensing fees and in its ability to raise additional funds, there can be no assurances to that effect. The accompanying financial statements do not include any adjustments that might result from the outcome of this uncertainty.
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3.
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Summary of significant accounting policies:
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Cash and cash equivalents:
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For the purpose of the statement of cash flows, the Company considers all short-term debt securities purchased with a maturity of three months or less to be cash equivalents.
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Accounts receivable and allowances:
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Accounts receivable are reported at net realizable value. Management considers the need for an allowance for doubtful accounts related to its accounts receivable that are deemed to have potential collectability issues. Management reviews its accounts receivable on a quarterly basis. The Company includes any receivables balances determined to be uncollectible along with a general reserve for doubtful accounts. No allowance was considered necessary at June 30, 2014.
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Use of estimates:
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The process of preparing financial statements in conformity with generally accepted accounting principles requires the use of estimates and assumptions regarding certain types of assets, liabilities, revenues and expenses. Such estimates primarily relate to unsettled transactions and events as of the date of the financial statements, and includes revenues from licensing fees based on estimates of trademark products sold by our customer. Accordingly, upon settlement, actual results may differ from estimated amounts.
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3.
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Summary of significant accounting policies (continued):
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Net (Loss) Income per Share:
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The Company computes basic net (loss) income per share based on the weighted average common shares outstanding during the same period. Diluted net (loss) income per share adjusts the weighted average for potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock, which would then share in the earnings of the Company. At June 30, 2014, the Company had no such securities outstanding.
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Revenue Recognition:
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Income from licensing fees are recognized from the sale by our licensee of goods bearing the Brooklyn Cheesecake & Desserts Company, Inc. trademark. The Company records revenue when persuasive evidence of an arrangement exists, services have been rendered or product delivery has occurred, the sales price to the customer is fixed or determinable, and collectability is reasonably assured. Fees are computed at 1% of Trademark products sold by our customer.
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Income Taxes:
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Income taxes are accounted for using an asset and liability approach that requires the recognition of deferred tax asset and liabilities for the expected future tax consequences of events that have been recognized in the Company's financial statements or tax returns. In estimating future tax consequences, the Company generally considers all expected future events other than changes in the tax law or rates. A valuation allowance is recorded when it is deemed more likely than not that a deferred tax asset will not be realized.
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Impairment of Long-Lived Assets:
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The Company reviews long-lived assets for impairment whenever circumstances and situations change such that there is an indication that the carrying amounts may not be recovered. The recoverability of assets held and used in operations is measured by a comparison of the carrying amount of the assets to the future net cash flows expected to be generated by the assets. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets.
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Fair Value of Financial Instruments:
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The Company’s financial instruments consist of accounts receivable, accounts payable, accrued expenses, and advances payable. The carrying amounts of the financial instruments reported in the balance sheet approximate fair value based on the short-term maturities of these instruments.
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Recent accounting pronouncements:
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The Company has adopted all recently issued accounting pronouncements. The adoption of the accounting pronouncements, including those not yet effective, is not anticipated to have a material effect on the financial position or results of operations of the Company.
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4.
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Trademark and licensing agreements:
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On March 7, 2002, the Company purchased the rights to the trademark Brooklyn Cheesecake Company, Inc. and Brooklyn Cheesecake and Desserts Company, Inc. and the related corporate logo in exchange for 300,000 shares of the Company's common stock, valued on the purchase date at $90,000. The trademark rights are being amortized on the straight-line basis over a fifteen-year term. Amortization expense was $3,000 and $3,000 for the six months ending June 30, 2014 and 2013, respectively.
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On March 28, 2006, the Company entered into a licensing agreement with its former Chairman and CEO, whereby a one percent of sales fee would be charged for the use of the Brooklyn Cheesecake & Desserts Company, Inc. trademark. Licensing fees were $6,678 and $6,000 for the six months ended June 30, 2014 and 2013, respectively.
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June 30
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December 31
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2014
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2013
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Trademark
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$ | 90,000 | $ | 90,000 | ||||
Less: Accumulated Amortization
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(73,875 | ) | (70,875 | ) | ||||
Trademark, Net
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$ | 16,125 | $ | 19,125 |
2014
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3,000 | |||
2015
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6,000 | |||
2016
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6,000 | |||
2017
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1,125 | |||
$ | 16,125 |
5.
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Advances payable - stockholder:
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During the period ended June 30, 2014, Ronald L. Schutt the former Chairman and CEO advanced $10,361 to the Company. The advances were used for operating expenses. Total advances through June 30, 2014 were $105,105. Total advances through December 31, 2013 totaled $94,744. These advances bear no interest and are payable on demand.
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6.
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Business Concentrations:
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During the 6 months ended June 30, 2014 and 2013, the Company derived 100% of its revenues from a single customer. At June 30, 2014 and December 31, 2013, 100% of accounts receivable are due from a single customer. The customer is a related party (Note 7.)
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7.
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Related Party Transactions:
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During the six months ended June 30, 2014 and 2013, Ronald Schutte, a former Chairman and Chief Executive Officer of theCompany, who is also a Stockholder of the Company, advanced to the Company $10,361 and $18,146, respectively, for working capital. At June 30, 2014 and December 31, 2013, the Company owed Mr. Schutt $105,105 and $94,744 respectively. Also see Note 5.
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The Company licenses its trademark to a company controlled by Mr. Schutte and earns licensing fees equal to 1% of sales of products bearing the Brooklyn Cheesecake & Desserts Company, Inc. trademark. During the six months ended June 30, 2014 and 2013, the Company earned license fees from this related party of $6,678 and $6,000 respectively. At June 30, 2014 and December 31, 2013, the Company had accounts receivable from this related party of $54,403 and $47,725, respectively. Also see Note 6.
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Certification dated August 1, 2014 pursuant to Exchange Act Rule 13a-14(a) or 15d-14(a) as adopted pursuant to Section 302 of the Sarbanes Oxley-Act of 2002 by Anthony J. Merante, Chairman, President, Chief Executive Officer, and Chief Financial Officer.
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Certification dated August 1, 2014 pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 made by Anthony J. Merante, Chairman, President, Chief Executive Officer, and Chief Financial Officer.
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