Premier Beverage Group Corp - FORM 8-K/A - EX-99.1 - PREMIER BEVERAGE GROUP 8K/A, FINANCIAL STATEMENTS, OSO USA

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8-K/A - PREMIER BEVERAGE GROUP 8K AMENDMENT #2, 10.19.11 - Premier Beverage Group Corp	premierbev8ka2101911.htm
EX-99.2 - PREMIER BEVERAGE GROUP 8K/A, PRO FORMA BALANCE SHEET - Premier Beverage Group Corp	premierbevexh99_2.htm

Exhibit 99.1

Report of Independent Registered Public Accounting Firm

The Members

OSO USA LLC and Affiliate

We have audited the accompanying combined balance sheet of OSO USA LLC and Affiliate as of December 31, 2010, and the related combined statement of operations, changes in members’ deficit and cash flows for the year then ended. The Company’s management is responsible for these combined financial statements. Our responsibility is to express an opinion on these combined financial statements based on our audit.

We conducted our audit in accordance with the 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 combined 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 combined financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall combined financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the combined financial statements referred to above present fairly, in all material respects, the combined financial position of OSO USA LLC and Affiliate as of December 31, 2010, and the results of its operations and cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States of America.

Liebman Goldberg & Hymowitz, LLP

Garden City, New York

August 23, 2011

OSO USA LLC AND SUBSIDIARY

CONSOLIDATED BALANCE SHEETS

December 31,


	2010			2009
Assets

Current Assets:
Cash	$	2,521		$	8,486
Accounts receivable - net		29,226			30,338
Inventory		12,747			11,905
Prepaid expenses and other current assets		7,182			16,872

Total current assets		51,676			67,601

Total assets	$	51,676		$	67,601

Liabilities and Members' (Deficit)

Current Liabilities:
Notes payable	$	55,866			90,192
Accounts payable		33,647			6,944
Accrued expenses and sundry liabilities		67,749			27,052
Total current liabilities		157,262			124,188

Commitments and contingencies

Members' (deficit)		(105,586	)		(56,587	)

Total Members' (deficit)		(105,586	)		(56,587	)

Total liabilities and members' deficit	$	51,676		$	67,601

See independent auditors' report and accompanying notes.

OSO USA LLC AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF OPERATIONS

For the years ended December 31,

				April 28 (Inception),
	2010			2009

Sales - net	$	173,093		$	124,238

Cost of goods sold		57,224			78,002

Gross profit		115,869			46,236

Operating expenses:
Selling		49,086			15,931
Warehouse and shipping		3,386			5,705
General and administrative		112,396			81,465
Total operating expenses		164,868			103,101

(Loss) from operations		(48,999	)		(56,865	)

Other income		-			278

Net (loss)		(48,999	)		(56,587	)

Members' deficit - beginning of year		(56,587	)		-

Members' deficit - end of year	$	(105,586	)	$	(56,587	)

See independent auditors' report and accompanying notes.

OSO USA LLC AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the years ended December 31,

				April 28 (Inception),
	2010			2009
Cash Flows from Operating Activities:
Net (loss)	$	(48,999	)	$	(56,587	)
Adjustments to Reconcile Net (Loss) to Net Cash
Provided by (used in) Operating Activities:
Depreciation and amortization		24,901			18,750
Inventory in exchange for note		54,299			-
Decrease in allowance for doubtful accounts		(662	)		5,400
Change in Assets and Liabilities:
Accounts receivable		1,774			(7,738	)
Inventory		(842	)		(11,905	)
Prepaid expenses and other current assets		2,990			4,573
Accounts payable		26,703			6,944
Accrued expenses and sundry liabilities		40,697			27,052

Net cash provided by (used in) operating activities		100,861			(13,511	)

Cash Flows from Financing Activities:
Proceeds from notes		-			93,250
Principal repayments on debt		(106,826	)		(71,253	)

Net cash (used in) provided by financing activities		(106,826	)		21,997


Net (decrease) increase in cash		(5,965	)		8,486

Cash - beginning of year		8,486			-

Cash - end of year	$	2,521		$	8,486

See independent auditors' report and accompanying notes.

OSO USA LLC AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2010

Note 1 – The Company:

OSO USA LLC ("OSO") and its subsidiary, Fury Distribution Holdings, LLC ("Fury") (collectively the “Company”) market and distribute functional beverages, which are sold principally to clubs and restaurants on premise and select retail accounts located in the NYC Metropolitan area.

Note 2 – Summary of Significant Accounting Policies:

Principals of Consolidation:

The consolidated financial statements include the accounts of OSO and its wholly-owned subsidiary. All significant intercompany transactions and balances have been eliminated in consolidation.

Use of Estimates:

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent asses and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.

Cash:

The Company places its cash with financial institutions. Accounts at each institution are insured by the Federal Deposit Insurance Corporation up to $250,000.

Revenue Recognition:

The Company recognizes sales revenue upon shipment of goods to customers, net of discounts and allowances.

Accounts Receivable:

Accounts receivable from trade customers are generally due within thirty days. The Company controls credit risks through its credit evaluation process, credit limits and monitoring procedures. Allowance for doubtful accounts amounted to $4,738 in 2010.

Inventory:

Inventory consisting solely of finished goods is stated at the lower of cost (first-in, first-out method) or market.

Income Taxes:

OSO and Fury are limited liability companies. As such, they are not subject to federal or state income taxes. They may be subject to New York City unincorporated business tax. These financial statements contain no income tax provisions.

Advertising:

The Company expenses the costs of advertising as incurred advertising expense for the year ended December 31, 2010 was $2,700. For the period April 28, 2009 (Inception) through December 31, 2009 the Company had incurred advertising costs of $21,445.

Recent Accounting Pronouncements:

No new accounting pronouncements or issues for the two years ended December 31, 2010 has had or is expected to have a material impact on the financial statements.

OSO USA LLC AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2010

Note 3 – Notes Payable:

In May 2009, the Company entered into a one year senior secured promissory note (the "Secured Note") with a private lender to provide funds for production of its products. The Secured Note does not bear interest so long as no default is in occurrence. The face value of the Secured Note was originally $100,000. As of December 31, 2010, the note has been entirely paid. The Secured Note is subject to a mandatory monthly cash flow recapture provision whereby payments are made against the Secured Note pursuant to a formula. In accordance with the original issuance discount of the Secured Note, amortization expense of $18,750 has been charged.

In June 2009, we entered into a $49,444 demand note with Fury Distribution, Inc., a minority shareholder of the Company, primarily for the purchase of certain point of sale marketing materials and accounts receivable. The demand note does not bear interest and had an original maturity date of December 31, 2009. As of December 31, 2010, the balance of this note was $24,843.

In March of 2010 the Company entered into a $72,500 non-interest bearing note for the purchase of inventory. This note is secured by the Company's accounts receivable and inventory and precludes the issuance of any other indebtedness pari passu or senior to it. This note is subject to a mandatory monthly cash flow recapture provision whereby payments are made against this note pursuant to a formula. The funded amount under the note was $54,299, resulting in an original issuance discount of $18,201. In accordance with the original issuance discount of the secured note, amortization expense of $13,651 has been recorded in 2010. The note has a maturity date of March 11, 2011.

Notes payable - current	2010		2009
Fury Distribution Inc.	$	24,843	$	30,873
Sterling International Mercantile		31,023		-
Rubic Consultants		-		54,319
Core Equity Group		-		5,000
	$	55,866	$	90,192

Reconciliation to cash flows from financing activities	2010		2009
Unamortized original issuance discount	$	-	$	11,250
Note Repayments - Fury Distribution Inc.		(6,030)		(18,572)
Note Funding - Rubic Consultants		-		70,000
Note Repayments - Rubic Consultants		(54,319)		(45,681)
Note Funding - Core Equity Group		-		12,000
Note Repayments - Core Equity Group		(5,000)		(7,000)
Note Repayments - Sterling International Mercantile		(41,477)		-
	$	(106,826)	$	21,997

Note 4 – Commitments and Contingencies:

The Company rents its principal facilities on a month-to-month basis. Rental expense of $500 per month commenced in August 2010. Rental expense for the year ended December 31, 2010 was $2,500.

Note 5 – Subsequent Events:

On August 22, 2011, the Company entered into an agreement and plan of merger with International Development and Environmental Holdings ("IDEH"). Pursuant to the agreement, the Company will become a wholly-owned subsidiary of IDEH. As consideration for the merger the members will receive 500,000 newly-issued common shares of IDEH for each 1% of membership interest held.

Subsequent to August 22, 2011, and effective September 14, 2011, OSO had terminated the agreement and plan of merger with IDEH.

OSO USA LLC AND SUBSIDIARY


Consolidated Condensed Balance Sheet

As of September 30, 2011

	9/30/11				12/31/10
	UNAUDITED				AUDITED

Assets
Cash	$	-		$	2,521
Accounts Receivable (Net)		36,228			29,226
Inventory		26,192			12,747
Prepaid Expenses and Other Assets		15,961			7,182
Total Assets	$	78,381		$	51,676


Liabilities and Equity
Notes Payable	$	78,323		$	55,866
Accounts Payable		33,953			33,647
Accrued Expenses and Sundry		107,110			67,749
Total Liabilities		219,386			157,262

Members Equity		(141,005	)		(105,586	)

Total Liabilities and Member's Equity	$	78,381		$	51,676

See accompanying notes to financial statements.

OSO USA LLC AND SUBSIDIARY


Consolidated Condensed Income Statement
UNAUDITED
Quarter Ended

	Three Months Ended						Nine Months Ended
	9/30/11			9/30/10			9/30/11			9/30/10

Sales	$	24,227		$	48,315		$	78,321		$	147,297
Allowances		(1,925	)		(2,746	)		(5,936	)		(10,576	)
Net Sales		22,302			45,569			72,385			136,721

Cost of Goods Sold		8,071			13,458			26,557			42,303
Gross Profit		14,231			32,111			45,828			94,418

Operating Expenses
Warehouse and Shipping		-			-			-			3,383
Selling Expense		8,305			13,144			37,460			31,565
General and Administrative		20,220			24,803			43,787			72,785
Total Operating Expenses		28,525			37,947			81,247			107,733
Operating Income		(14,294	)		(5,836	)		(35,419	)		(13,315	)

Other Income/Expense		-			-			-			-
Provision for Taxes		-			-			-			-
Net Income	$	(14,294	)	$	(5,836	)	$	(35,419	)	$	(13,315	)

See accompanying notes to financial statements.

OSO USA LLC AND SUBSIDIARY


Consolidated Cash Flow Statement
UNAUDITED
Year to Date Ended

	9/30/11			9/30/10

Cash Flows From Operating Activities
Net (loss)	$	(35,419	)	$	(13,315	)
Adjustments to Reconcile Net (Loss) to Net Cash
Provided by (Used in) Operating Activities
Depreciation and Amortization		10,174			12,851
Inventory in Exchange for Note		40,003			54,299
Change in Assets and Liabilities
Accounts Receivable		(7,002)			(6,781	)
Inventory		(13,445	)		(15,402	)
Prepaid Expense and Other Current Assets		(5,456	)		13,186
Accounts Payable		306			28,905
Accrued Expenses and Sundry Liabilities		39,361			6,355
Net Cash Provided by (Used in) Operating Activities		(28,522	)		80,098

Cash Flows Provided by Financing Activities
Proceeds from (Repayments of) Notes		(31,043)			(85,247)
Net Cash (Used in) Provided by Financing Activities		(31,043)			(85,247)

Net (Decrease) Increase in Cash		(2,521)			(5,149	)

Cash - Beginning of Period		2,521			8,486

Cash - Ending of Period	$	-		$	3,337

See accompanying notes to financial statements.

OSO USA LLC AND SUBSIDIARY

NOTES TO COMBINED FINANCIAL STATEMENTS

(UNAUDITED)

September 30, 2011

Note 1 – The Company:

OSO USA LLC ("OSO”) and its subsidiary, Fury Distribution Holdings LLC (“Fury”) (collectively, the “Company”) market and distribute functional beverages, which are sold principally to clubs, restaurants, on premise and select retail accounts located in the NYC Metropolitan area.

All significant intercompany accounts and transactions have been eliminated in the combined financial statements.

Note 2 – Summary of Significant Accounting Policies:

Use of Estimates:

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.

Cash:

The Company places its cash with financial institutions. Accounts at each institution are insured by the Federal Deposit Insurance Corporation up to $250,000.

Revenue Recognition:

The Company recognizes sales revenue upon shipment of goods to customers, net of discounts and allowances.

Accounts Receivable:

Inventory:

Inventory consisting solely of finished goods is stated at the lower of cost (first-in, first-out method) or market.

Income Taxes:

Recent Accounting Pronouncements:

No new accounting pronouncements or issues for period ended September 30, 2011 has had or is expected to have a material impact on the financial statements.

OSO USA LLC AND SUBSIDIARY

NOTES TO COMBINED FINANCIAL STATEMENTS

(UNAUDITED)

September 30, 2011

Note 3 – Notes Payable:

In June 2009, we entered into a $49,444 demand note with Fury Distribution, Inc., a minority shareholder of the Company, primarily for the purchase of certain point of sale marketing materials and accounts receivable. The demand note does not bear interest and had an original maturity date of December 31, 2009. As of September 30, 2011, the balance of this note was $25,823.

In March 2010, the Company entered into a $72,500 non-interest bearing note for the purchase of inventory. This note is secured by the Company's accounts receivable and inventory and precludes the issuance of any other indebtedness pari passu or senior to it. This note is subject to a mandatory monthly cash flow recapture provision whereby payments are made against this note pursuant to a formula. The funded amount under the note was $54,299, resulting in an original issuance discount of $18,201. In accordance with the original issuance discount of the secured note, amortization expense of $4,550 has been recorded for the nine month period ended September 30, 2011, representing full amortization of the discount. The note had a maturity date of March 11, 2011, and has been paid in full.

In May 2011, the Company entered into a $53,500 non-interest bearing note for the purchase of inventory. This note is secured by the Company's accounts receivable and inventory and precludes the issuance of any other indebtedness pari passu or senior to it. This note is subject to a mandatory monthly cash flow recapture provision whereby payments are made against this note pursuant to a formula. The funded amount under the note was $40,003, resulting in an original issuance discount of $13,497. In accordance with the original issuance discount of the secured note, amortization expense of $5,624 has been recorded for the nine month period ended September 30, 2011. The note has a maturity date of May 2, 2012.

	Sep 30		Dec 31
Notes payable - current	2011		2010
Fury Distribution Inc.	$	25,823	$	24,843
Sterling International Mercantile		52,500		31,023
	$	78,323	$	55,866

	Sep 30		Dec 31
Reconciliation to cash flows from financing activities	2011		2010
Credits - Fury Distribution Inc.	$	980	$	-
Note Repayments - Fury Distribution Inc.		-		(6,030)
Note Repayments - Rubic Consultants		-		(54,319)
Note Repayments - Core Equity Group		-		(5,000)
Note Repayments - Sterling International Mercantile		(32,023)		(41,477)
	$	(31,043)	$	(106,826)

Note 4 – Commitments and Contingencies:

The Company rents its principal facilities on a month-to-month basis. Rental expense of $500 per month commenced in August 2010, and was increased to $2,500 per month effective August 15, 2011. Rent expense for the first nine months of 2011 was $5,750.

Note 5 – Subsequent Events:

On October 19, 2011, the Company closed an agreement and plan of merger transaction with DAM Holdings, Inc. (“DAMH”). Pursuant to the agreement, the Company become a wholly-owned subsidiary of DAMH. As consideration for the merger the members will receive 500,000 newly-issued common shares of DAMH for each 1% of membership interest held.

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