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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

________________________

FORM 10-Q

________________________

 

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended March 31, 2015

 

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from

Commission File Number 333-193979

 ________________________

 

AMERICAN XANTHAN CORPORATION

(Exact name of registrant as specified in its charter)

 

________________________

 

Wyoming		46-4398264
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

1712 Pioneer Avenue, Suite 1749

Cheyenne, WY 82001

(Address of principal executive offices) (Zip Code)

Registrant’s telephone number, including area code: (307) 778-4713

________________________

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    
Yes ☒  No ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes☐ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐			Accelerated filer	☐
Non-accelerated filer	☐	(Do not check if a smaller reporting company)		Smaller reporting company	☒

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes ☐ No ☒ 

As of May 14, 2015, there were approximately 25,500,000 shares of common stock issued and outstanding.

 

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TABLE OF CONTENTS
PART I- Financial Information
	Description		Page
Item 1.	Financial Statements		3
	Condensed Consolidated Statements of Operations (Unaudited)		3
	Condensed Consolidated Statements of Stockholder’s Equity (Unaudited)		4
	Condensed Consolidated Balance Sheets (Unaudited)		5
	Condensed Consolidated Statements of Cash Flows (Unaudited)		6
	Notes to Condensed Consolidated Financial Statements (Unaudited)		7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		11
Item 3.	Quantitative and Qualitative Disclosures about Market Risk		12
Item 4.	Controls and Procedures		12
PART II- Other Information
Item 1.	Legal Proceedings		13
Item 1A.	Risk Factors		13
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		13
Item 3.	Defaults Upon Senior Securities		13
Item 4.	Mine Safety Disclosures		13
Item 5.	Other Information		13
Item 6.	Exhibits		14
	Signatures		15

 

 

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Part I. Financial Information

 

ITEM 1. FINANCIAL STATEMENTS 

 

The accompanying unaudited financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions for Form 10-Q and Article 210 8-03 of Regulation S-X.  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 considered necessary for a fair presentation have been included.  All such adjustments are of a normal recurring nature.  Operating results for the three month period ended March 31, 2015, are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2015.  

 

AMERICAN XANTHAN CORPORATION

Condensed Consolidated Statements of Operations (Unaudited)

 

			Cumulative from Inception (December 17, 2013) Through March 31, 2015				Three Months Ended March 31, 2015
Revenues		$	0			$	0
Expenses
General and administrative expenses:
Services contributed by officers			0				0
Professional fees			25,000				25,000
Organizational expenses			0				0
Other general and administrative expenses			0				0
total operating expenses			25,000				25,000
(Loss) from operations			(25,000	)			(25,000	)
Other income (expense):			0				0
(Loss) before taxes			(25,000	)			(25,000	)
Provision (credit) for taxes on income:			0				0
Net Loss		$	(25,000	)		$	(25,000	)
Basic earnings (loss) per common share		$	(0.00	)			(0.00	)
Weighted average number of shares outstanding			25,500,000				25,500,000

 

See Notes to Condensed Consolidated Financial Statements.

 

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AMERICAN XANTHAN CORPORATION

Condensed Consolidated Statements of Stockholder Equity (Unaudited)

 

		Common Stock							Additional Paid-In			Accumulated
		Shares				Amount			Capital			Deficit				Total
Balance, December 31, 2013		15,000,000			$	1,500		$	13,500		$	—			$	15,000
Shares issued for cash		10,000,000				1,000			78,950			—				79,950
Shares issued for IP Agreement		500,000				50			—			—				50
Net (loss)		—				—			—			(25,000)				(25,000	)
Balance, March 31, 2015		25,500,000			$	2,550		$	92,450		$	(25,000	)		$	70,000

  

See Notes to Condensed Consolidated Financial Statements.

 

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AMERICAN XANTHAN CORPORATION

Condensed Consolidated Balance Sheets (Unaudited)

		March 31, 2015				December 31, 2014
		(Unaudited)				(Audited)
ASSETS
Current assets:
Cash		$	70,000			$	70,000
Prepaid expenses			0				0
Total current assets			70,000				70,000
Total assets		$	70,000			$	70,000
LIABILITIES
Current liabilities:
Accounts payable, trade		$	0			$	0
Total current liabilities			0				0
STOCKHOLDERS' EQUITY
Common stock, $0.0001 par value, 500,000,000 authorized,
25,500,000 shares issued and outstanding			2,550				2,550
Capital in excess of par value			92,450				92,450
(Deficit) accumulated creating and filing the S-1		$	(25,000	)			(25,000	)
Total stockholders' equity			70,000				70,000
Total liabilities and stockholders' equity		$	70,000			$	70,000

 

See Notes to Condensed Consolidated Financial Statements.

 

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AMERICAN XANTHAN CORPORATION

Condensed Consolidated Statements of Cash Flows (Unaudited)

 

		Cumulative Inception December 17, 2013  Through March 31, 2015				Three Months Ended  March 31, 2015
Cash flows from operating activities:
Net (loss)		$	(25,000	)		$	(25,000	)
Adjustments to reconcile net (loss) to cash provided (used) by development stage activities:
Changes in current assets and liabilities:
Prepaid expenses			0				0
Net cash flows from operating activities			0				0
Cash flows from financing activities:
Proceeds from sale of common stock			115,000				0
Less, Applicable expenses			(14,000	)			0
Net cash flows from financing activities			101,000				0
Net cash flows			95,000				0
Cash and equivalents, beginning of period			0				70,000
Cash and equivalents, end of period		$	70,000			$	70,000
Supplemental cash flow disclosures:
Cash paid for interest		$	0			$	0
Cash paid for income taxes		$	0			$	0

 

 

See Notes to Condensed Consolidated Financial Statements.

 

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AMERICAN XANTHAN CORPORATION

Notes to Condensed Consolidated Financial Statements (Unaudited)

 

Note 1 - Organization and Description of Business

 

American Xanthan Corporation (identified in these footnotes as “we” or the Company) is a Wyoming corporation incorporated on December 17, 2013.  The Company is based in Cheyenne, Wyoming, USA.  

 

The Company was organized to operate a Xanthan gum manufacturing & licensing business.  

 

Notes 2 - Significant Accounting Policies

 

Basis of Presentation

These consolidated financial statements have been prepared in conformity with U.S. generally accepted accounting principles (“GAAP”) and in the opinion of management reflect all adjustments, consisting of only normal recurring adjustments, necessary for a fair statement of financial condition, results of operations, and cash flows for the periods presented.

 

Foreign Currency Translation

Assets and liabilities whose functional currency is not the U.S. dollar are translated based on the end of period exchange rates from local currency to U.S. dollars. Results of operations are translated at the average exchange rates in effect during the period.

 

Use of Estimates

The preparation of the Company’s consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the balance sheet dates and the reported amounts of revenues and expenses for the periods presented. Actual results could differ materially from those estimates.

 

Marketing and Advertising

Advertising costs, including media advertising and production costs are expensed when incurred.

 

Cash and Cash Equivalents

The Company considers all highly liquid investments with an original maturity of 90 days or less at the time of purchase to be classified as cash equivalents. Cash and cash equivalents are held primarily with one large financial institution.

 

Other Intangible and Long-Lived Assets

The Company's long-lived assets primarily consist of computer and office equipment and software, furniture and fixtures and leasehold improvements, which are subject to depreciation over the useful life of the asset.  Long-lived assets are evaluated for recoverability whenever events or changes in circumstances indicate that the carrying value of the asset may be impaired.  In evaluating an asset for recoverability, the Company estimates the future cash flow expected to result from the use of the asset and eventual disposition.  If the expected future undiscounted cash flow is less than the carrying amount of the asset, an impairment loss, equal to the excess of the carrying amount over the fair value of the asset, is recognized.  No impairments were recorded on long-lived assets for the periods presented in these consolidated financial statements.

 

 

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AMERICAN XANTHAN CORPORATION

Notes to Condensed Consolidated Financial Statements (Unaudited)—(Continued)

 

Fixed Assets 

Property and equipment are stated at cost less accumulated depreciation computed principally using accelerated methods over the estimated useful lives of the assets.  Repairs are charged to expense as incurred.  Impairment of long-lived assets is recognized when the fair value of a long-lived asset is less than its carrying value.  At the end of the current year, no impairment of long-lived assets had occurred, in management’s opinion.

 

Note 3 - Commitments and Contingencies

Contractual Obligations

The Company has not entered into obligations under non-cancelable terms. 

Notes 4 - Issuance of shares:

 

On August 1, 2014 the Company completed its initial public offering and issued a total of 10,000,000 common shares for total proceeds for $100,000.00.

 

On November 13, 2014, the Company issued 500,000 restricted shares of common stock in accordance with an intellectual property Purchase Agreement.

 

Note 5 - Income Taxes:

 

Uncertainty in Income Taxes

 

Under ASC 740-10-25 recognition and measurement of uncertain income tax positions is required using a “more-likely-than-not" approach.  Management evaluates its tax positions on an annual basis and has determined that as of December 31, 2014 no additional accrual for income taxes is necessary. The federal and state income tax returns of the Company are subject to examination by the IRS and state taxing authorities, generally for three years after they were filed.  

 

The provision for refundable Federal income tax consists of the following:

 

		Inception, December 17, 2013 Through March 31, 2015
Refundable Federal income tax attributable to:
Current operations		$	0
Nondeductible expenses			0
Change in deferred tax valuation allowance			0
Net refundable amount			0

The cumulative tax effect at the expected rate of 34% of significant items comprising our net deferred tax amount is as follows:

 

		Inception, December 17, 2013 Through March 31, 2015
Deferred tax asset attributable to:
Net operating loss carryover		$	0
Less, Valuation allowance			(0	)
Net deferred tax asset			0

 

At March 31, 2015, we did not have any unused net operating loss carryover available to offset future taxable income.

 

 

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AMERICAN XANTHAN CORPORATION

Notes to Condensed Consolidated Financial Statements (Unaudited)—(Continued)

 

 

Note 6 - New accounting pronouncements:

 

The Company has reviewed all recently issued but not yet effective accounting pronouncements and does not believe the future adoption of any such pronouncements may be expected to cause a material impact on its financial condition or results of operations.

 

Note 7 - Subsequent Events:

 

The Company evaluates events and transactions after the balance sheet date but before the financial statements are issued. No reportable subsequent events were found.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

Forward-looking Statements

 

This Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A) contains forward-looking statements that involve known and unknown risks, significant uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed, or implied, by those forward-looking statements.  You can identify forward-looking statements by the use of the words may, will, should, could, expects, plans, anticipates, believes, estimates, predicts, intends, potential, proposed, or continue or the negative of those terms.  These statements are only predictions. In evaluating these statements, you should consider various factors which may cause our actual results to differ materially from any forward-looking statements. Although we believe that the exceptions reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Therefore, actual results may differ materially and adversely from those expressed in any forward-looking statements. We undertake no obligation to revise or update publicly any forward-looking statements for any reason.

 

The following review of operations are for the quarter ending March 31, 2015 should be read in conjunction with our Financial Statements and the Notes.

 

Financial Overview

 

Based upon our current resources, we believe we can maintain operations through the end of 2016. The offering terminated on August 1, 2014 all securities offered were sold. No underwriters were used in the offering. The securities offered were the Company’s common shares, this is the only class of securities the Company has. The securities are not convertible securities. The amount of securities registered was 10,000,000 common shares, the aggregate price of the offering amount registered was $100,000.00, the amount of securities sold was 10,000,000 and the aggregate offering price of the amount sold was $100,000.00. From the effective date of the Securities Act registration statement to the ending date of the reporting period, no expenses incurred for the issuer's account in connection with the issuance and distribution of the securities registered for underwriting discounts and commissions, no finders' fees were paid, no expenses were paid to or for underwriters, no other expenses were paid . The total expenses incurred and/or paid in connection with the issuance and distribution was $0.00. All aforementioned amounts of expenses incurred are the actual amount of expenses and not estimates. Such payments were: Not direct or indirect payments to directors, officers, general partners of the issuer or their associates; to persons owning ten (10) percent or more of any class of equity securities of the issuer; and to affiliates of the issuer; or direct or indirect payments to others.

 

From the effective date of the Securities Act registration statement to the ending date of the reporting period, none of the net offering proceeds to the issuer have been used for the construction of a plant, building and facilities; purchase and installation of machinery and equipment; purchases of real estate; acquisition of other business(es); repayment of indebtedness; working capital; temporary investments; and no other purposes for which at least five (5) percent of our total offering proceeds has been used. These are the actual amounts of net offering proceeds used and not estimates. Such payments were not direct or indirect payments to directors, officers, general partners of the issuer or their associates; to persons owning ten (10) percent or more of any class of equity securities of the issuer; and to affiliates of the issuer; or direct or indirect payments to others.

 

Results of Operations

 

Quarter Ended March 31, 2015

 

We were incorporated on December 17, 2013 and completed our public offering on August 1, 2014.

 

On November 13, 2014, American Xanthan Corporation, entered into an Intellectual Property Purchase Agreement ("Purchase Agreement").   Pursuant to which the Company acquired: (i) all Intellectual Property rights, title and interest in Canadian Patent pending # 2,808,286 'Solid State Fermentation of Xanthan from Potato Pulp' (ii) all Intellectual Property rights, title and interest in US Patent pending #61,923,357 'Solid State Fermentation of Xanthan from Potato Pulp'.  Pursuant to the Purchase Agreement, the Company agreed to issue 500,000 restricted shares of Company’s $0.001 par value common stock to FracFlow Biotechnologies LP.

 

Upon execution of the In Purchase agreement the Company ceased to be a shell Company as defined in Rule 12b-2 under the Exchange Act. The Company intends to pursue the development of operations through the acquisition and development of Xanthan production technologies.

 

TheAmerican Xanthan Corporation is in the business of acquiring, licensing and marketing patents and technology to manufacture Xanthan from potato waste.

 

Subsequent to the completion of our public offering on August 1^st, 2014, our cash assets increased by $86,000.00.

 

During the fiscal quarter ended March 31, 2015, we earned no revenues from operations.

 

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.

 

 

ITEM 4. CONTROLS AND PROCEDURES

 

Evaluation of Disclosure Controls and Procedures

Our management is responsible for establishing and maintaining a system of disclosure controls and procedures (as defined in Rule 13a-15(e)) under the Exchange Act) that is designed to ensure that information required to be disclosed by the Company in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time specified in the Commission's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is accumulated and communicated to the issuer's management, including its principal executive officer or officers and principal financial officer or officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

Pursuant to Rule 13a-15(b) under the Exchange Act, the Company carried out an evaluation with the participation of the Company's management, including the Company's Chief Executive Officer ("CEO") and the Company's Chief Financial Officer ("CFO"), of the effectiveness of the Company's disclosure controls and procedures (as defined under Rule 13a-15(e) under the Exchange Act) as of the quarter ended March 31, 2015. Based upon that evaluation, the Company's CEO and CFO concluded that the Company's disclosure controls and procedures were not effective as of March 31, 2015 due to the Company’s limited internal resources and lack of ability to have multiple levels of transaction review.

Management is in the process of determining how best to change our current system and implement a more effective system to insure that information required to be disclosed in this quarterly report on Form 10-Q has been recorded, processed, summarized and reported accurately. Our management acknowledges the existence of this issue, and intends to developed procedures to address them to the extent possible given limitations in financial and manpower resources. While management is working on a plan, no assurance can be made at this point that the implementation of such controls and procedures will be completed in a timely manner or that they will be adequate once implemented.

 

Changes in Internal Control over Financial Reporting

There have been no changes in our internal control over financial reporting that occurred during the three months ended March 31, 2015 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 

 

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Part II. Other Information

 

ITEM 1. LEGAL PROCEEDINGS 

 

From time to time, we may become involved in various lawsuits and legal proceedings that arise in the ordinary course of business. Litigation is, however, subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm our business.

 

We are not a party to any pending legal proceeding. We are not aware of any pending legal proceeding to which any of our officers, directors, or any beneficial holders of 5% or more of our voting securities are adverse to us or have a material interest adverse to us.

 

ITEM 1A. RISK FACTORS 

 

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.

 

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

 

Not applicable

 

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

 

None.

 

ITEM 4. MINE SAFETY DISCLOSURES

 

Not applicable.

 

ITEM 5. OTHER INFORMATION

 

None.

 

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ITEM 6. EXHIBITS

 

Number	Description
3.1	Articles of Incorporation	Incorporated by reference to the Exhibits filed with the Form S-1 filed with the SEC on February 14, 2014
3.2	Bylaws	Incorporated by reference to the Exhibits filed with the Form S-1 filed with the SEC on February 14, 2014
10.1	Intellectual Property Purchase Agreement with FracFlow Biotechnologies LP	Incorporated by reference to the Exhibits attached to the Company's 8-k filed with the SEC on November 14, 2014
31.1	Section 302 Certification - Principal Executive Officer	Filed herewith
31.2	Section 302 Certification - Principal Financial Officer	Filed herewith
32	Certification Pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002	Filed herewith

 

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

		AMERICAN XANTHAN CORPORATION
Date:	May 14, 2015	By:		MICHAEL WALDORF
				Michael Waldorf Vice President and Chief Financial Officer (Principal Financial and Accounting Officer)
Date:	May 14, 2015	By:		HENRY LUCE
				Henry Luce Chairman of the Board, Chief Executive Officer and President (Principal Executive Officer)

 

 

 

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