Attached files
| file | filename |
|---|---|
| EX-31.1 - Avangard Capital Group, Inc | ex31-1.htm |
| EX-31.2 - Avangard Capital Group, Inc | ex31-2.htm |
| EX-32.1 - Avangard Capital Group, Inc | ex32-1.htm |
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended June 30, 2015
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission file number: 333-184682
Avangard Capital Group, Inc.
(Exact name of registrant as specified in its charter)
| Nevada | 45-5507359 | |
| (State
or other jurisdiction of incorporation or organization) |
(I.R.S.
Employer Identification No.) |
| 2708 Commerce Way, Suite 300, Philadelphia, PA | 19154 | |
| (Address of principal executive offices) | (Zip Code) |
(215) 464-7300
(Registrant’s telephone number, including area code)
Not Applicable
(Former name, former address and former fiscal year, if changed since last report)
Securities registered under Section 12(b) of the Act: None
Securities registered under Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes [ ] No [X]
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes [ ] No [X]
Indicate by check mark whether the issuer (1) 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 [X] 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 [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [X]
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 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 [X] |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [X]
State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was sold as of the last business day of the registrant’s most recently completed second fiscal quarter. $0 on December 31, 2014.
The number of shares of the registrant’s common stock issued and outstanding was 10,781,466 shares as of September 30, 2015.
Table of Contents
| - 2 - |
FORWARD-LOOKING STATEMENTS
This report contains forward-looking statements, i.e. statements related to future, not past, events. The Securities and Exchange Commission (the “SEC”) encourages companies to disclose forward-looking information so that investors can better understand a company’s future prospects and make informed investment decisions. This report and other written and oral statements that we make from time to time contain such forward-looking statements that set out anticipated results based on management’s plans and assumptions regarding future events or performance. We have tried, wherever possible, to identify such statements by using words such as “anticipate,” “estimate,” “expect,” “project,” “intend,” “plan,” “believe,” “will” and similar expressions in connection with any discussion of future operating or financial performance. In particular, these include statements relating to future actions, future performance or results of current and anticipated sales efforts, expenses, the outcome of contingencies, such as legal proceedings, and financial results. Factors that could cause our actual results of operations and financial condition to differ materially are discussed in greater detail under Item 1A - “Risk Factors” of this report.
We caution that the factors described herein and other factors could cause our actual results of operations and financial condition to differ materially from those expressed in any forward-looking statements we make and that investors should not place undue reliance on any such forward-looking statements. Further, any forward-looking statement speaks only as of the date on which such statement is made, and we undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date on which such statement is made or to reflect the occurrence of anticipated or unanticipated events or circumstances. New factors emerge from time to time, and it is not possible for us to predict all of such factors. Further, we cannot assess the impact of each such factor on our results of operations or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements.
Company
Avangard Capital Group Inc. (“we,” “us,” the “Company,” or “Avangard”) was incorporated in Nevada on June 13, 2012, and is a provider of nonprime automobile floor plan financing for used car dealers. Our executive offices are located at 2708 Commerce Way, Philadelphia, Pennsylvania 19154.
We are an independent auto sales finance company that provides floor plan financing and auto financing for independent used car dealers. The loans made are based on the value of collateral (the car) as determined by us using the automobile industry’s nationally recognized valuation sources. We are licensed to operate in Pennsylvania, New Jersey and Florida. We have suspended financing new loans while management and the Board of Directors explore new opportunities and strategic alternatives including, but not limited to, possible sale of a controlling interest in the company to allow for our future growth.
In furtherance of our expansion into automotive consumer loans, we acquired certain retail installment contract receivables from our affiliates, AAF and AFG, on March 26, 2013 for $102,250. The receivables consisted of an aggregate principal balance of approximately $141,868 for current loan receivables and approximately $323,449 for non-current loan receivables. In 2014, we recovered our entire investment in the loan portfolio and collected 100% of the aggregate amount paid by the Company to acquire the loan portfolio. On February 19, 2014, we transferred all remaining loans receivable to AAF, as we determined that the outstanding balances were either uncollectible or difficult to collect and the Company did not believe that pursuing further collection efforts was a good use of the Company’s resources.
We are licensed as a sales finance company by the States of Florida, New Jersey and Pennsylvania. These licenses permit us to provide financing for auto sales by dealers.
Recent Developments
On June 30, 2014, we filed a certificate of change to our amended and restated articles of incorporation with the Secretary of State of the State of Nevada in order to effectuate a reverse stock split of our issued and outstanding common stock, par value $0.0001 per share on a 1-for-10 basis (the “Reverse Stock Split”). The Reverse Stock Split became effective with the FINRA at the open of business on June 30, 2014. We filed a correction to this certificate of change on September 18, 2014 to clarify the reverse stock split ratio. As a result of the Reverse Stock Split, every 10 shares of our pre-Reverse Split common stock was combined and reclassified into one share of our common stock. No fractional shares of common stock were issued as a result of the Reverse Split.
Throughout this annual report on Form 10-K, each instance that refers to a number of shares of our common stock, refers to the number of shares of common stock after giving effect to the Reverse Stock Split, unless otherwise indicated.
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Auto Dealer Floor Plan Financing
Historically, we have targeted the auto dealer financing market, which is comprised primarily of small, independent automotive dealers who purchase used cars at wholesale auctions. Floor plan financing supports independent used vehicle dealers who purchase vehicles from auctions and other non-auction methods and facilitate the growth of vehicle sales at auctions. A line of credit provided under these agreements enables the dealer to be more competitive in the acquisition of automobiles by providing immediate cash while reducing the amount of paperwork that could hinder their acquisition of automobiles they plan to resell. Larger, more established financial institutions and lenders require dealers to enter into borrowing agreements that often exceed their needs.
We entered into the auto dealer financing market with the purchase of floor plan receivables from Avangard Auto Finance, Inc., a related party (“AAF”), for $151,979, the face value of the receivables plus accrued interest as of June 13, 2012 when we completed the purchase. The floor plan receivables included a Floor Plan Agreement, Demand Promissory Note, Business Line of Credit Agreement, Surety Agreement and Confessions of Judgment entered into with Autosource Enterprises, Inc., an unaffiliated third party.
Our primary floor plan customer defaulted on its agreement in February 2014. The floor plan agreement carried personal guarantees and confessions of judgment, in addition to first lien on all vehicles subject to the floor plan agreement. In March 2014, the customer filed for bankruptcy protection under Chapter 11 of the Federal Bankruptcy Code. We repossessed 18 of the 21 vehicles subject to the floor plan agreement from the debtor prior to its Chapter 11 filing. Since we are unable to determine the exact amount of ultimate losses, on March 31, 2014 we recorded a reserve for uncollectible receivables of $115,000. As of June 30, 2015, we recovered $123,425 of floor plan receivables through the sale of repossessed autos.
Automotive Consumer Loans
Historically, we intended to expand our business by purchasing retail automotive installment sale and lease contracts and consumer installment loans secured by automobiles or other motor vehicles, through dealerships in our target markets. These products were expected to include financing for the purchase of new and used vehicles, as well as refinancing of existing motor vehicle loans. The dealer who originated a loan would be able to customize its product features, such as interest rate, loan amount, and loan terms, enabling it to lend to customers with a wide range of credit profiles. We planned to service, administer and make collections on our consumer loan receivables that we purchased from dealers, or to delegate some or all loan servicing duties to sub-contractors who are in the business of performing such duties.
On March 26, 2013, we acquired certain retail installment contract receivables from AAF and AFG for $102,250. The receivables consisted of an aggregate principal balance of approximately $141,868 for current loans receivables and approximately $323,449 for non-current loans receivables. The sellers guaranteed to us that we would recover no less than 70% of the aggregate amount of the current loans. We recovered our investment of $102,250, plus $27,267 of interest and fees from the acquisition, as of February 19, 2014, when we returned all uncollectable notes receivable to AAF.
Government Regulation
Our lending business operates in a highly regulated environment under various federal and state consumer protection and other laws, rules and regulations, including the federal Truth in Lending Act, the federal Equal Credit Opportunity Act, the federal Fair Credit Reporting Act, the federal Fair Debt Collection Practices Act, the federal Gramm-Leach-Bliley Act and the federal Telemarketing and Consumer Fraud and Abuse Prevention Act. This business is subject to laws relating to discrimination in extending credit, use of credit reports, privacy matters, disclosure of credit terms and correction of billing errors. It is also subject to certain regulations and legislation that limit its operations in certain jurisdictions. For example, limitations may be placed on the amount of interest or fees that a loan may bear, the amount that may be borrowed, the types of actions that may be taken to collect or foreclose upon delinquent loans, or the information about a customer that may be shared.
Some of the other more significant regulations that we are subject to include:
Privacy - The Gramm-Leach-Bliley Act imposes additional obligations on us to safeguard the information we maintain on our customers and permits customers to “opt-out” of information sharing with third parties. Regulations have been enacted by several agencies that establish obligations to safeguard information. In addition, several states have enacted even more stringent privacy legislation. If a variety of inconsistent state privacy rules or requirements are enacted, our compliance costs could increase substantially. In addition, we are required to manage, use, and store personally identifiable information, principally customers’ confidential personal and financial data, in the course of our business. We depend on our IT networks and systems, and those of third parties, to process, store, and transmit that information. In the past, consumer finance companies have been targeted for sophisticated cyber attacks. A security breach involving our files and infrastructure could lead to unauthorized disclosure of confidential information. We take numerous measures to ensure the security of our hardware and software systems as well as customer information.
Fair Credit Reporting Act - The Fair Credit Reporting Act provides a national legal standard for lenders to share information with affiliates and certain third parties and to provide firm offers of credit to consumers. In late 2003, the Fair and Accurate Credit Transactions Act was enacted, making this preemption of conflicting state and local laws permanent. The Fair Credit Reporting Act was also amended to place further restrictions on the use of information sharing between affiliates, to provide new disclosures to consumers when risk-based pricing is used in the credit decision, and to help protect consumers from identity theft. All of these new provisions impose additional regulatory and compliance costs on us.
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We presently believe that we are in substantial compliance with all governmental regulations applicable to our current business. We employ a number of external resources to assist us in complying with our regulatory obligations. These external resources include outside lawyers, law firms and consultants.
Competition
At the national level, competition for short-term dealer floor plan financing of vehicles to independent vehicle dealers in North America includes specialty lenders, banks and financial institutions such as Western Funding, Inc. At the local level, competition comes from banks and credit unions that may offer floor plan financing to local auction customers such as Manheim Auto Auction and American Credit Acceptance. Such entities typically service only one or a small number of auctions.
Some of our industry competitors who operate wholesale car auctions on a national scale may endeavor to capture a larger portion of the floor plan financing market. In all of our markets, we face direct competition from bank and non-bank lenders who provide non-prime financing for automobile dealers. Certain of these lenders are larger than we are and have greater financial resources than we do. We believe we can compete effectively with our competitors on the basis of favorable collateral valuations that enable dealers to purchaser a wider variety of inventory, higher quality of service, convenience of payment, scope of services offered and historical and consistent commitment to the sector. There is no assurance, however, that our ability to market products and services successfully will not be impacted by competition that now exists or may later develop.
Employees
We currently have one employees.
Research and Development
We do not currently have a budget specifically allocated for research and development purposes.
We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information under this item.
ITEM 1B. UNRESOLVED STAFF COMMENTS
None.
Our executive offices are 2708 Commerce Way, Philadelphia, PA 19154, where we rent approximately 2,000 square feet of office space from Commerce Way, LP, a related party. During the year ended June 30, 2015, we paid a flat annual fee of $10,000. We believe our current space is adequate for our operations at this time. We do not have a lease for fiscal year ending June 30, 2016. We currently occupy approximately 500 square feet primarily for records storage, computer systems and office space. The premises are owned by a related party and temporarily rented at no cost to the company. Future rent payments will be determined when the company requires additional space.
We are not presently a party to any material litigation, nor to the knowledge of management, is any litigation threatened against us that may materially affect us.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
(a) Market Information
Our common stock is quoted on the OTC Pink tier of the OTC Markets Group under the symbol “AVGC”. There have been no reported sales of our stock since approval of our quotation on the OTC Pink by the Financial Industry Regulatory Authority (“FINRA”). There can be no assurance that a liquid market for our common stock will ever develop. Consequently, investors may not be able to liquidate their investments and should be prepared to hold the common stock for an indefinite period of time.
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(b) Stockholders
As of September 30, 2015, there were 28 stockholders of record of our common stock and 1 record holders of our Series A Convertible Preferred Stock. None of our shares are held in street name.
(c) Dividends
The Company has not declared or paid, nor has it any present intention to pay, cash dividends on its common stock or Series A Convertible Preferred Stock. Accordingly, it is unlikely the Company will declare any cash dividends in the foreseeable future.
ITEM 6. SELECTED FINANCIAL DATA
Not applicable to a smaller reporting company.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
OVERVIEW
We are an independent auto sales finance company that provides floor plan financing and auto financing for independent used car dealers. The loans made are based on the value of collateral (the car) as determined by us using the automobile industry’s nationally-recognized valuation sources. We are currently licensed to operate in Pennsylvania, New Jersey and Florida. The Company has suspended financing new loans while Management and the Board of Directors explore new opportunities and strategic alternatives including, but not limited to, possible sale of a controlling interest in the company to allow for our future growth.
On March 26, 2013, we acquired certain retail installment contract receivables from our affiliates, AAF and AFG, for $102,250. The receivables consisted of an aggregate principal balance of approximately $141,868 for current loan receivables and approximately $323,449 for non-current loan receivables. The sellers guaranteed to us that we will recover no less than 70% of the aggregate amount of the current loans. If we recover less than 70% of that amount, the sellers agreed to pay the difference to us upon demand. In 2014, we recovered our entire investment in the loan portfolio and collected 100% of the aggregate amount paid by the Company to acquire the loan portfolio. On February 19, 2014, we transferred all remaining loans receivable to AAF, as we determined that the outstanding balances were either uncollectible or difficult to collect and the Company did not believe that pursuing further collection efforts was a good use of the Company’s resources. At that time, we had recovered our investment of $102,250, and earned an additional $27,627 in interest and fees.
Recent Developments
On June 30, 2014, we filed a certificate of change to our amended and restated articles of incorporation with the Secretary of State of the State of Nevada in order to effectuate a 1-for-10 Reverse Stock Split of our issued and outstanding common stock. We filed a correction to this certificate of change on September 18, 2014 to clarify the reverse stock split ratio. As a result of the Reverse Stock Split, every 10 shares of our pre-Reverse Stock Split common stock was combined and reclassified into one share of our common stock. No fractional shares of common stock were issued as a result of the Reverse Stock Split. Throughout this annual report on Form 10-K, each instance which refers to a number of shares of our common stock, refers to the number of shares of common stock after giving effect to the Reverse Stock Split, unless otherwise indicated.
The net result for the fiscal year ended June 30, 2015 was a loss of $214,406, compared to a loss of $488,299 for the prior fiscal year.
We define our accounting periods as follows:
| ● | “fiscal 2013” - July 1, 2012 through June 30, 2013 |
| ● | “fiscal 2014” - July 1, 2013 through June 30, 2014 |
| ● | “fiscal 2015” - July 1, 2014 through June 30, 2015 |
RESULTS OF OPERATIONS
Revenue
Total revenue decreased to $0 from $52,282 for the fiscal year ended June 30, 2015 as a result of a decrease in fee revenue derived from financing receivables as our sole customer ceased operations when it filed for bankruptcy protection.
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Operating Expenses
Total operating expenses decreased $357,521 to $248,414 for the fiscal year ended June 30, 2015 compared to the fiscal year ended June 30, 2014. This decrease is primarily a result of a reduction in selling, general and administrative expenses associated with our suspension of financing new loans.
For the fiscal year ended June 30, 2015, our operating expenses were comprised primarily of $119,703 related to legal, accounting and SEC compliance costs, $40,203 in write down expenses relating to repossessed inventory, $30,077 of repossession and related repairs costs, $14,941 for rent and other occupancy costs, consulting expenses of $9,344, wages and related expenses of $4,507, travel expense of $15,661, and other office expenses of $13,710.
Other Income
Other income is comprised of sale of repossessed inventory, interest, dividends and realized gains from the sale of marketable securities. Other income decreased to $34,008 for the fiscal year ended June 30, 2015 as compared to $64,744 for the fiscal year ended June 30, 2014. The Company liquidated all marketable securities during fiscal year ended June 30, 2014. The Company realized a gain of $0 and $58,091from the sale of the Company’s marketable securities during the fiscal years ended June 30, 2015 and June 30, 2014, respectively. The Company realized $33,680 from the sale of repossessed automobiles during the year ended June 30, 2015. Sale of repossessed automobiles during the year ended 2014 was charged to the allowance for bad debts. During the year ended June 30, 2015 total sales proceeds of repossessed vehicles was $123,425. The amount of principal outstanding related to the repossessed vehicles was $130,800. There were no sales of repossessed automobiles in the year ended June 30, 2014.
Net Loss
Our net loss decreased $273,893 to $214,406 for the fiscal year ended June 30, 2015 compared to $488,299 in the same period in 2014 as a result of a reduction in our operating expenses and revenue as discussed above.
LIQUIDITY AND CAPITAL RESOURCES
Liquidity is the ability of an enterprise to generate adequate amounts of cash to meet its cash requirements. As of June 30, 2015, our working capital amounted to $(44,543), a decrease of $536,409, as compared to $491,686 as of June 30, 2014. Current assets included primarily cash of $784 and a related party receivable of $5,024.
We financed operations through cash flows from cash generated from the sale of repossessed automobiles and a Line of Credit from our majority shareholder. Net cash used in operating activities for the fiscal year ended June 30, 2015 was $129,465, which primarily reflected a net loss, partially offset by a reduction of floor plan financing receivables. $114,939 was generated through the sale of repossessed cars during the fiscal year ended June 30, 2015 compared to $0 for the fiscal year ended June 30, 2014. Accounts payable and accrued expenses increased by $22,174 for the fiscal year ended June 30, 2015 compared to an increase of $182 for the fiscal year ended June 30, 2014. Operating cash flow increased by a decrease in related party receivables of $1,976.
Net cash provided by investing activities for the fiscal year ended June 30, 2015 was $0 compared to $412,069 for the fiscal year ended June 30, 2014 primarily as a result of an absence of net proceeds of the sale of marketable securities which occurred in the prior period.
Net cash used in financing activities for the fiscal year ended June 30, 2015 was $ 294,023, of which $320,000 was used to redeem 320,000 shares of preferred stock, proceeds from a loan of $25,000 from a related party, and $977 was received from a subscription for additional 9,768,000 shares of common stock. Net cash provided by financing activities for the fiscal year ended June 30, 2014 was $135,996, primarily from subscriptions received in connection with the sale of common stock.
Cash Requirements
Our future capital requirements will depend on numerous factors related to management’s ability to develop new lines of business.
We do not currently have any contractual restrictions on our ability to incur debt and, accordingly we could incur significant amounts of indebtedness to finance operations. Any such indebtedness could contain covenants which may restrict our operations.
Since our revenues were negatively impacted as a result of the default and bankruptcy of our primary floor plan customer and our repurchase of our preferred stock, we do not have adequate resources to operate however, we continue to explore new opportunities and strategic alternatives.
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Going Concern Consideration
The Company’s financial statements are prepared using generally accepted accounting principles in the United States of America applicable to a going concern that contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company has not yet established an ongoing source of revenues sufficient to cover its operating costs and allow it to continue as a going concern. During the year ended June 30, 2015 the Company recognized sales revenue of $-0- and incurred a net loss of $214,406. As of June 30, 2015 the Company had an accumulated deficit of $830,716. The continuation of the Company as a going concern is dependent upon the continued financial support from its shareholders, the ability to raise equity or debt financing, and the attainment of profitable operations from the Company’s planned business. If the Company is unable to obtain adequate capital, it could be forced to cease operations. These financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. In order to continue as a going concern, the Company will need, among other things, additional capital resources. Management’s plan is to obtain such resources for the Company by obtaining capital from significant shareholders sufficient to meet its operating expenses and seeking equity and/or debt financing from third parties. However management cannot provide any assurances that the Company will be successful in accomplishing any of its plans. The accompanying financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.
Off-Balance Sheet Arrangements
Under SEC regulations, we are required to disclose our off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, such as changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors. As of June 30, 2015, we have no off-balance sheet arrangements.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
Not applicable to smaller reporting companies.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
See Index to Financial Statements and Financial Statement Schedules appearing on pages F-1 through F-11 of this annual report on Form 10-K.
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Index to Financial Statements
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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and
Stockholders of Avangard Capital Group, Inc.
We have audited the accompanying balance sheets of Avangard Capital Group, Inc. as of June 30, 2015 and 2014, and the related statements of operations, changes in stockholders’ equity (deficit) and cash flows for each of the years ended June 30, 2015 and 2014. Avangard Capital Group, Inc.’s management is responsible for these financial statements. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Avangard Capital Group, Inc. as of June 30, 2015 and 2014, and the results of its operations and its cash flows for each of the years ended June 30, 2015 and 2014, in conformity with accounting principles generally accepted in the United States of America.
The accompany 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’s operating losses raise substantial doubt about its ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 2. The financial statements do not include any adjustments that might result from the outcome of these uncertainties.
| /s/ Friedman LLP | |
| Marlton, New Jersey | |
| October 12, 2015 |
| F-1 |
BALANCE SHEETS
| June 30, 2015 | June 30, 2014 | |||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash | $ | 784 | $ | 424,272 | ||||
| Floor plan financing receivable | - | 196,259 | ||||||
| Allowance for uncollectable account | - | (115,000 | ) | |||||
| Due from related parties | 5,024 | 7,000 | ||||||
| Total current assets | 5,808 | 512,531 | ||||||
| Property and equipment, net | 2,799 | 3,331 | ||||||
| Total assets | $ | 8,607 | $ | 515,862 | ||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT) | ||||||||
| Current liabilities: | ||||||||
| Accounts payable and accrued expenses | $ | 25,350 | $ | 3,176 | ||||
| Other liabilities | - | 21,000 | ||||||
| Due to related party | 25,000 | - | ||||||
| Total current liabilities | $ | 50,350 | $ | 24,176 | ||||
| Stockholders’ equity | ||||||||
| Convertible Preferred Stock Series A, $0.0001 par value, 300,000,000 authorized, 585,000 and 905,000 issued and outstanding at June 30, 2015 and 2014 respectively; | 58 | 90 | ||||||
| Common stock, $0.0001 par value, 100,000,000 authorized; Class A, 10,781,466 and 1,013,466 shares issued and outstanding at June 30, 2015 and 2014 respectively; | 1,078 | 101 | ||||||
| Additional paid in capital | 787,837 | 1,107,805 | ||||||
| Accumulated (deficit) earnings | (830,716 | ) | (616,310 | ) | ||||
| Total stockholders’ equity (deficit) | (41,743 | ) | 491,686 | |||||
| Total liabilities and stockholders’ equity (deficit) | $ | 8,607 | $ | 515,862 | ||||
The accompanying notes are an integral part of these financial statements.
| F-2 |
STATEMENTS OF OPERATIONS
| For the Fiscal Year Ended June 30, | ||||||||
| 2015 | 2014 | |||||||
| REVENUE | ||||||||
| $ | - | $ | - | |||||
| Fee revenue | - | 25,709 | ||||||
| Interest revenue | - | 27,183 | ||||||
| Total revenue | - | 52,892 | ||||||
| OPERATING EXPENSES | ||||||||
| Selling, general and administrative | 248,414 | 605,935 | ||||||
| Total operating expenses | 248,414 | 605,935 | ||||||
| Loss from operations | (248,414 | ) | (553,043 | ) | ||||
| Other income | ||||||||
| Realized gain on marketable securities | - | 58,091 | ||||||
| Inventory recovery | 33,680 | |||||||
| Interest and dividend income | 328 | 6,653 | ||||||
| Total other income | 34,008 | 64,744 | ||||||
| Net loss | $ | (214,406 | ) | $ | (488,299 | ) | ||
| Net loss per share attributable to common shareholders - basic and diluted | $ | (0.02 | ) | $ | (0.48 | ) | ||
| Weighted average number of common shares used in computation - basic and diluted | 10,513,850 | 1,013,466 | ||||||
The accompanying notes are an integral part of these financial statements.
| F-3 |
STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
| Preferred Stock | Common Stock | Additional Paid in | Accumulated Other Comprehensive | Stock | Accumulated Retained Earnings | Total Stockholders’ | ||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Income | Subscriptions | (Deficit) | Equity | ||||||||||||||||||||||||||||
| Balance, June 30, 2013 | 905,000 | $ | 90 | 1,013,466 | $ | 101 | $ | 1,107,805 | $ | 24,225 | $ | (135,996 | ) | $ | (128,011 | ) | $ | 868,215 | ||||||||||||||||||
| Common stock subscription received | 135,996 | 135,996 | ||||||||||||||||||||||||||||||||||
| Net loss | (488,299 | ) | (488,299 | ) | ||||||||||||||||||||||||||||||||
| Unrealized gain on marketable securities | (24,225 | ) | - | (24,225 | ) | |||||||||||||||||||||||||||||||
| Balance June 30, 2014 | 905,000 | $ | 90 | 1,013,466 | $ | 101 | $ | 1,107,805 | - | - | $ | (616,310 | ) | $ | 491,686 | |||||||||||||||||||||
| Issue of common stock | 9,768,000 | $ | 977 | - | - | - | - | 977 | ||||||||||||||||||||||||||||
| Redemption of preferred stock | (320,000 | ) | (32 | ) | (319,968 | ) | (320,000 | ) | ||||||||||||||||||||||||||||
| Net loss | (214,406 | ) | (214,406 | ) | ||||||||||||||||||||||||||||||||
| Balance June 30, 2015 | 585,000 | $ | 58 | 10,781,466 | $ | 1,078 | $ | 787,837 | - | - | $ | (830,716 | ) | $ | (41,743 | ) | ||||||||||||||||||||
The accompanying notes are an integral part of these financial statements.
| F-4 |
STATEMENTS OF CASH FLOWS
| For the Years Ended June 30, | ||||||||
| 2015 | 2014 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||
| Net (loss) | $ | (214,406 | ) | $ | (488,299 | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Depreciation | 532 | 532 | ||||||
| Gain on sale of marketable securities | - | (58,091 | ) | |||||
| Other income (inventory recovery) | (33,680 | ) | ||||||
| Provision for doubtful accounts | - | 115,000 | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Floor plan financing receivable | - | 55,961 | ||||||
| Used car inventory | 114,939 | |||||||
| Used car auto financing portfolio | - | 48,868 | ||||||
| Fees receivable | - | 11,218 | ||||||
| Interest receivable | - | 9,807 | ||||||
| Due from related parties | 1,976 | (4,020 | ) | |||||
| Accounts payable and accrued expenses | 22,174 | 182 | ||||||
| Other liabilities | (21,000 | ) | 21,000 | |||||
| NET CASH USED IN OPERATING ACTIVITIES | (129,465 | ) | (287,842 | ) | ||||
| CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||
| Purchase of marketable securities | - | (34,369 | ) | |||||
| Proceeds from sales of marketable securities | - | 446,438 | ||||||
| NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITES | - | 412,069 | ||||||
| CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||
| Redemption of convertible preferred stock | (320,000 | ) | - | |||||
| Proceeds from related party loan | 25,000 | - | ||||||
| Common stock subscription received | 977 | 135,996 | ||||||
| NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES | (294,023 | ) | 135,996 | |||||
| Net increase (decrease) in cash | (423,488 | ) | 260,223 | |||||
| Cash, beginning of the year | 424,272 | 164,049 | ||||||
| Cash, at end of the year | $ | 784 | $ | 424,272 | ||||
The accompanying notes are an integral part of these financial statements.
| F-5 |
NOTES TO FINANCIAL STATEMENTS
June 30, 2015
NOTE 1 - NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization and Description of Business
Avangard Capital Group, Inc., a Nevada corporation is referred to in this report as “we”, “us”, “our”, “ACG”, the “Company” or “Avangard Capital Group.”
We were incorporated June 13, 2012 under the laws of the State of Nevada. Our executive offices are located at 2708 Commerce Way, Suite 300, Philadelphia, PA 19154.
We are an independent auto sales finance company that provides floor plan financing for independent used car dealers based on the value of collateral (the car) as determined by us using the automobile industry’s nationally-recognized valuation sources. We are licensed to operate in the states of New Jersey, Pennsylvania and Florida. We commenced business June 22, 2012 with the purchase of all floor plan receivables from Avangard Auto Finance, Inc. (“AAF”), an affiliate. Pursuant to an Assignment Agreement with AAF dated June 13, 2012, we acquired AAF’s floor plan financing portfolio for $151,979, the face value of the contracts plus accrued interest and fees at that time.
In January 2013 we received approval and were licensed by the States of Florida and New Jersey as a Sales Finance Company. In February 2013, we were licensed in the Commonwealth of Pennsylvania as a Sales Finance Company. These licenses permit us to expand our operations to providing financing for auto sales by dealers.
On March 26, 2013 we acquired certain retail installment contract receivables from AAF and Avangard Financial Group, Inc., a related party (“AFG”) for $102,250. The receivables consisted of an aggregate principal balance of approximately $141,868 for current loans receivables and approximately $323,449 for non-current loans receivables.
The Company has suspended financing new loans while Management and the Board of Directors explore new opportunities and strategic alternatives.
Basis of Presentation
The Company has recast the presentation of share and per share data in the financial statements to reflect the reverse stock split as described more fully in Note 5.
Use of Estimates
We use estimates and assumptions in preparing financial statements. Those estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and the reported revenues and expenses. Actual results could differ from those estimates.
Cash and Cash Equivalents
All cash and cash equivalents are invested in highly liquid money market accounts.
Fair Value of Financial Instruments
The fair value of a financial instrument represents the amount at which the instrument could be exchanged in a current transaction between willing parties, other than a forced sale or liquidation. Significant differences can arise between the fair value and carrying amount of financial instruments that are recognized at historical cost amounts. The carrying value of cash, floor plan financing receivable, and accounts payable approximate the fair value because of the short maturity of those instruments.
The accounting standards regarding fair value of financial instruments and related fair value measurements define fair value, establish a three-level valuation hierarchy for disclosures of fair value measurement, and enhance disclosure requirements for fair value measures.
| F-6 |
AVANGARD CAPITAL GROUP, INC.
NOTES TO FINANCIAL STATEMENTS
June 30, 2015
The three levels are defined as follows:
| Level 1: | inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets. |
| Level 2: | inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument. |
| Level 3: | inputs to the valuation methodology are unobservable and significant to the fair value measurement. |
Revenue Recognition
Interest income from floor plan financing receivable is recognized using the interest method. Accrual of income on finance receivables is suspended when a contract is contractually delinquent for ninety (90) days or more. The accrual is resumed when the contract becomes contractually current and past due interest is recognized at that time.
Origination Fees are recognized for services provided during the loan origination process at the point in time the loan is funded.
The Company accounts for its investment in floor plan financing receivables using the interest method, under ASC 310 pools of accounts are established based on certain common risk criteria. Each pool is recorded at cost and is accounted for as a single unit for the recognition of income, principal payments and loss provision.
The Company accounts for its investment in retail installment contract receivables it acquired on March 26, 2013 using the cost recovery method as the Company’s collections on this particular pool of accounts cannot be reasonably predicted. Under the cost recovery method, no income is recognized until the cost of the retail installment contract receivables portfolio has been fully recovered. This pool of accounts can become fully amortized (zero carrying balance on the balance sheet) while still generating cash collections. In this case, all cash collections are recognized as revenue when received.
Floor Plan Financing Receivable
Floor plan financing receivable consists of purchased automobiles, which were assigned to us upon acquisition. The titles to the automobiles, which serve as security for the payment of the purchased contracts, are held by us.
Floor plan financing receivable that we intend and have the ability to hold for the foreseeable future, or until maturities of payoff are reported at their outstanding gross contractual balances, net of allowance for losses and unearned finance revenue. Unearned finance revenue consists of unearned interest and discounts realized on contract purchases.
We perform periodic evaluations of the adequacy of the allowance for losses taking into consideration the past loss experience, known and inherent risks in the portfolio, adverse situations that may affect the borrower’s ability to repay, the estimated value of any underlying collateral, as well as recovery potential of any underlying collateral, personal guarantees and current economic conditions. Any increases in the allowance for losses subsequent to the acquisition of the contract are charged to earnings.
Our primary floor plan customer defaulted on their agreement in February 2014. The floor plan agreement carried personal guarantees and confessions of judgment, in addition to first lien on all vehicles subject to the floor plan agreement. In March 2014, the customer filed for bankruptcy protection under Chapter 11 of the Federal Bankruptcy Code. We repossessed 18 of the 21 vehicles subject to the floor plan agreement from the debtor prior to its Chapter 11 filing. Since we’re unable to determine the exact amount of ultimate losses, on March 31, 2014 we provided a reserve for uncollectible receivables of $115,000. As of June 30, 2015 we recovered $123,425 of floor plan receivables through the sale of repossessed autos.
Used Car Auto Financing
On March 26, 2013, we acquired a portfolio of consumer automobile loans from Avangard Auto Finance, Inc., (“AAF”), a related party.
The Company is an indirect lender from a legal perspective, meaning the loan is originated by the dealer and immediately assigned to the Company. Typically, the loan is purchased from the dealer. The disbursement to the dealer is calculated using our guidelines as to the value of the automobile. The amount advanced against the collateral is 85% of the “Black Book” liquidation value of the car. From time to time we will have automobiles in inventory as a result of repossessions due to non-payment. Our policy is to issue a repossession order after 15 days delinquency of the loan.
| F-7 |
AVANGARD CAPITAL GROUP, INC.
NOTES TO FINANCIAL STATEMENTS
June 30, 2015
As of the date of acquisition, the entire Used Car Auto Financing Portfolio’s collection could not be reasonably predicted by the Company; therefore the modified cost recovery method has been utilized to account for the pool of loans. As of June 30, 2014, we collected 100% of the aggregate amount of the Company paid to acquire this loan portfolio. On February 19, 2014 we transferred all remaining loans receivable to AAF as we determined that the outstanding balances were either uncollectible or difficult to collect and the Company did not believe that pursuing further collection efforts was a good use of the Company’s resources. We recovered our investment of $102,250, as well as $27,267 in interest and fees, from March 26, 2013, the date of acquisition, through February 19, 2014 when we returned all uncollectable notes receivable to AAF.
Stock-based Compensation
We account for stock-based compensation by applying a fair-value-based measurement method to account for share-based payment transactions with employees and directors. Stock-based compensation is a non-cash expense because we settle these obligations by issuing shares of our common stock instead of settling such obligations with cash payments.
Concentrations of Credit Risk
The Company maintains its cash balances in Federal Deposit Insurance Corporation (“FDIC”) insured financial institutions. At times, cash balances may exceed the maximum insurance offered by FDIC. The Company maintains cash not necessary for operating expenses in money market accounts and certificates of deposit.
Property and Equipment
Fixed assets are recorded at their historical cost upon acquisition or cost of construction. The assets are depreciated using the straight line method over their statutory lives. The fixed asset categories and their estimated lives are as follows:
Office Equipment 5 years.
Income Taxes
We account for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements. Under this method, deferred tax assets and liabilities are determined based on the differences between the financial statements and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. The Company has incurred net operating loss for financial-reporting and tax-reporting purposes. Accordingly, for Federal and state income tax purposes, the benefit for income taxes has been offset entirely by a valuation allowance against the related federal and state deferred tax asset for the fiscal year ended June 30, 2015.
NOTE 2 - GOING CONCERN
The Company’s financial statements are prepared using generally accepted accounting principles in the United States of America applicable to a going concern that contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company has not yet established an ongoing source of revenues sufficient to cover its operating costs and allow it to continue as a going concern. During the year ended June 30, 2015 the Company recognized sales revenue of $-0- and incurred a net loss of $214,406. As of June 30, 2015 the Company had an accumulated deficit of $830,716. The continuation of the Company as a going concern is dependent upon the continued financial support from its shareholders, the ability to raise equity or debt financing, and the attainment of profitable operations from the Company’s planned business. If the Company is unable to obtain adequate capital, it could be forced to cease operations. These financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. In order to continue as a going concern, the Company will need, among other things, additional capital resources. Management’s plan is to obtain such resources for the Company by obtaining capital from significant shareholders sufficient to meet its operating expenses and seeking equity and/or debt financing from third parties. However management cannot provide any assurances that the Company will be successful in accomplishing any of its plans. The accompanying financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.
| F-8 |
AVANGARD CAPITAL GROUP, INC.
NOTES TO FINANCIAL STATEMENTS
June 30, 2015
NOTE 3 - MARKETABLE SECURITIES AND CHANGES IN ACCUMULATED OTHER COMPREHENSIVE INCOME
Marketable Securities
We recognized $58,091 in net realized gains during the year ended June 30, 2014. Realized gains on the sale of the securities are determined by specific identification of each security’s cost basis. The company had no marketable securities at June 30, 2015.
NOTE 4 - INCOME TAXES
The provision for income taxes consists of the following:
| June 30, 2015 | June 30, 2014 | |||||||
| Deferred Tax Asset | $ | 314,841 | $ | 250,181 | ||||
| Less: Valuation Allowance | (314,841 | ) | (250,181 | ) | ||||
| Net Deferred Tax Assets | $ | - | $ | - | ||||
As of June 30, 2015, the Company has net operating loss carry forwards of $830,716 that can be utilized to offset future taxable income for Federal and State income tax purposes through 2035, generating a maximum deferred tax benefit of $314,841 by applying Federal and State statutory tax rates. The Company applied a 100% valuation reserve against the deferred tax benefit, as the realization of the benefit is not certain.
The following tax years remain subject to examination by the respective tax jurisdictions.
Fiscal Years ending June 30, | ||||
| Internal Revenue Service | 2012 - 2015 | |||
| Commonwealth of Pennsylvania | 2012 - 2015 |
NOTE 5 - LOAN FROM SHAREHOLDER
On May 1, 2015, the Company entered into a loan agreement with a major shareholder to obtain financing up to $50,000. Loan under the agreement is non-interest bearing and is due on demand. At June 30, 2015, amount due to the shareholder was $25,000, and unused amount representing availability to borrow was $25,000. Debt is secured by common stock of Avangard Capital Group, Inc.
NOTE 6 - COMMON AND PREFERRED STOCK
On June 20, 2014 the Board of Directors authorized the Corporation to complete the Reverse Stock Split and that such Reverse Stock Split of 1 share of Common Stock for 10 share of outstanding Common Stock.
On July 10, 2014 the Board of Directors issued 9,768,000 unregistered shares of common stock to related parties and majority shareholder, Friedman Financial Group, in exchange for $977.
The terms of the Series A Convertible Preferred Stock provide that each share of Series A Convertible Preferred Stock is entitled to receive cumulative annual dividends at the rate of 4.5% per year. Each share of Series A Convertible Preferred Stock is convertible into three (3) shares of our Common Stock, and the holder thereof is entitled to vote shares of Series A Convertible Preferred Stock held as common stock in accordance with the number of shares of common stock into which such preferred shares are convertible. The shares of Series A Convertible Preferred Stock are entitled to receive prior and in preference to any distribution of any of the assets or surplus funds of the Company to the holders of common stock and any other series or class of preferred stock which is junior to the Series A Convertible Preferred Stock, the sum of $1.00 per share of Series A Convertible Preferred Stock, plus accrued dividends.
On January 10, 2015, the Company redeemed 320,000 shares of Convertible Preferred Stock Series A, in exchange for $320,000.
Offering of Securities
On February 13, 2013, our Registration Statement on Form S-1 was declared effective by the SEC whereby we offered 5,000,000 units (the “Offering”), each unit consisting of four tenths of one share of our common stock and one redeemable common stock warrant (a “Warrant”) at a public offering price of $6.00 per unit (a “Unit”). The Warrants became exercisable and separately transferable from the shares 30 calendar days after February 13, 2013. At any time thereafter until three years following February 13, 2013, subject to earlier redemption, each Warrant entitles the holder to purchase one tenth of a share of our common stock at an exercise price of $2.00 (133% of the per share price of the common stock included in the Units), subject to adjustment. The Warrants are subject to redemption for $0.0001 per Warrant upon 30 days prior written notice, provided that the last sale price of our common stock equals or exceeds $3.00 (150% of the Warrant exercise price), subject to adjustment, for 10 consecutive trading days. As of June 30, 2014, 28,666 units have been sold and no warrants have been exercised. The Offering expired on August 14, 2013.
| F-9 |
AVANGARD CAPITAL GROUP, INC.
NOTES TO FINANCIAL STATEMENTS
June 30, 2015
Common Stock Purchase Warrants
A summary of the status of our outstanding common stock purchase warrants outstanding as of June 30, 2015 and 2014 and changes during the period is as follows:
| Shares | Weighted | |||||||
| Underlying | Average | |||||||
| Warrants | exercise price | |||||||
| Outstanding and exercisable at June 30, 2014 | 2,867 | $ | 2.00 | |||||
| Additions | - | - | ||||||
| Outstanding and exercisable at June 30, 2015 | 2,867 | $ | 2.00 | |||||
The following information applies to all warrants outstanding and exercisable at June 30, 2015:
| Number of Warrants | ||||||||||
| outstanding and | Remaining contractual | |||||||||
| exercisable | Exercise Price | life (Years) | ||||||||
| 2,867 | $ | 2.00 | 0.58 | |||||||
NOTE 7 - LOSS PER SHARE
Basic net loss per share is computed by dividing net loss by the weighted average number of common shares outstanding for the period. The Company’s potential dilutive shares, which include convertible preferred shares and shares issuable upon exercise of the Warrants, have not been included in the computation of diluted net loss per share as the result would be antidilutive. Such potentially dilutive shares are excluded when the effect would be to reduce net loss per share. All potential common shares have been excluded from the computation of the dilutive net loss per share for the period presented because the effect would have been antidilutive. Such potential common shares consist of the following:
| June 30, 2015 | June 30, 2014 | |||||||
| Convertible preferred stock | 1,755,000 | 2,715,000 | ||||||
| Warrants attached to units sold | 2,867 | 2,867 | ||||||
NOTE 8 - RELATED PARTY TRANSACTIONS
We entered into a lease agreement for office space with Commerce Way, LLC (“CWL”). CWL is owned by DJS Investments, LLC and SELF, LP. SELF, LP is a shareholder of Friedman Financial Group, who is a principal shareholder of our company. The lease previously required monthly payments, commencing August 1, 2012, of $2,500 on a month to month basis. No security deposit was required. Beginning in 2015, the Company renegotiated the terms of the lease, and reduced the rent to $10,000 per year. Rent expense for the fiscal years ended June 30, 2015 and 2014 was $10,000 and $30,000 respectively. For fiscal year ending June 30, 2016 the company is occupying approximately 500 square feet rent free until the company requires additional space.
On March 26, 2013 we entered into an Retail Installment Contract Receivable Purchase Agreement (the “Purchase Agreement”) with Avangard Auto Finance, Inc. and Avangard Financial Group, Inc. (the “Sellers”), both of whom are our affiliates. Under the terms of the Purchase Agreement, we agreed to pay the Sellers $102,250 (the “Purchase Price”) to purchase certain of their retail installment contract receivables as of the date of the agreement. These amounts included an aggregate principal balance of approximately $141,868 for current loans receivables (the “Current Loans”) and an aggregate principal balance of approximately $323,449 for non-current loans receivables (the “Non-Current Loans”). The Sellers guaranteed to us that we will recover no less than 70% of the aggregate amount of the Current Loans. If we recover less than 70% of the aggregate amount of the Current Loans, the Sellers shall pay the difference to us upon demand. On February 19, 2014 we transferred all remaining loans receivable to AAF as we determined that the outstanding balances were either uncollectible or difficult to collect and the Company did not believe that pursuing further collection efforts was a good use of the Company’s resources.
During the fiscal year ended June 30, 2015 Friedman Financial Group, our majority shareholder received reimbursement of $25,129 for expenditures made on behalf of the company. In addition, Friedman Financial Group, has submitted requests for reimbursement of $14,941 for expenses related to the Company’s operations.
| F-10 |
AVANGARD CAPITAL GROUP, INC.
NOTES TO FINANCIAL STATEMENTS
June 30, 2015
During the year ended June 30, 2015, Joseph Friedman & Sons, Inc. received reimbursement of $18,842 for administrative, office and clerical support provided to the Company. At June 30, 2015 the Company had accounts payable to Friedman financial Group of $18,124 for reimbursable expenses incurred on behalf of the Company.
Officers and related parties of our company provide certain administrative expenses at no charge.
Due from related parties of $5,024 at June 30, 2015 represent amounts owed by Avangard Auto Finance and Commerce Way Office Complex for payments made by the Company on their behalf for legal expenses. Due from related parties of $7,000 at June 30, 2014, reflected a temporary loan to Avangard Auto Finance, a related party. The loan was fully repaid in July 2014.
NOTE 9 - COMMITMENTS AND CONTINGENCIES
From time to time, the Company is a defendant in various lawsuits incident to the ordinary course of business. It is not possible to determine, with any precision, the probable outcome of the amount of any liability not covered by commercial insurance policies. Additionally, on September 1, 2015, the major shareholder entered into an indemnity agreement with the Company to indemnity the Company of any liability arising from judgments related to repossessed vehicles.
NOTE 10 - SUBSEQUENT EVENTS
On July 22, 2015, in a matter before the courts of Pennsylvania unrelated to Avangard Capital Group, Mr. Gulko, former officer and director of the company agreed to a Stipulation and Consent Order with Avangard Auto Finance, Inc., a related party. The order settled claims by Avangard Auto Finance, Inc. against Mr. Gulko and his companies. In settlement of all claims Mr. Gulko agreed to relinquish all ownership of 490,000 shares of Common and 48,237 shares of Series A Convertible Preferred Stock. Avangard Auto Finance assigned the shares received in settlement to Friedman Financial Group, LLC on August 21, 2015.
| F-11 |
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
ITEM 9A. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
Our management conducted an evaluation, with the participation of our Chief Executive Officer, who is our principal executive officer and our principal financial officer, of the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this annual report on Form 10-K. Based upon that evaluation, our Chief Executive Officer concluded that as a result of the material weakness and significant deficiencies in our internal control over financial reporting described below, our disclosure controls and procedures were not effective, as of June 30, 2015.
Management’s Annual Report on Internal Control over Financial Reporting
Management is responsible for the preparation of our financial statements and related information. Management uses its best judgment to ensure that the financial statements present fairly, in material respects, our financial position and results of operations in conformity with generally accepted accounting principles.
Management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in the Exchange Act. These internal controls are designed to provide reasonable assurance that the reported financial information is presented fairly, that disclosures are adequate and that the judgments inherent in the preparation of financial statements are reasonable. There are inherent limitations in the effectiveness of any system of internal controls including the possibility of human error and overriding of controls. Consequently, an ineffective internal control system can only provide reasonable, not absolute, assurance with respect to reporting financial information.
Our internal control over financial reporting includes policies and procedures that: (i) pertain to maintaining records that, in reasonable detail, accurately and fairly reflect our transactions; (ii) provide reasonable assurance that transactions are recorded as necessary for preparation of our financial statements in accordance with generally accepted accounting principles and that the receipts and expenditures of Company assets are made in accordance with our management and directors authorization; and (iii) provide reasonable assurance regarding the prevention of or timely detection of unauthorized acquisition, use or disposition of assets that could have a material effect on our financial statements.
Under the supervision of management, including our Chief Executive Officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) published in 1992 and subsequent guidance prepared by COSO specifically for smaller public companies. Based on that evaluation, our management concluded that our internal control over financial reporting was not effective as of June 30, 2015 for the reasons discussed below.
A significant deficiency is a deficiency, or combination of deficiencies in internal control over financial reporting, that adversely affects the entity’s ability to initiate, authorize, record, process, or report financial data reliably in accordance with generally accepted accounting principles such that there is more than a remote likelihood that a misstatement of the entity’s financial statements that is more than inconsequential will not be prevented or detected by the entity’s internal control. 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 the annual or interim consolidated financial statements will not be prevented or detected on a timely basis.
Management identified the following material weakness and significant deficiencies in its assessment of the effectiveness of internal control over financial reporting as of June 30, 2015:
| ● | Material Weakness - The Company did not maintain effective controls over certain aspects of the financial reporting process because we lacked a sufficient complement of personnel with a level of accounting expertise and an adequate supervisory review structure that is commensurate with the Company’s financial reporting requirements. |
| ● | Significant Deficiencies - Inadequate segregation of duties. |
We expect to be materially dependent upon a third party to provide us with accounting consulting services for the foreseeable future. Until such time as we have a chief financial officer with the requisite expertise in U.S. generally accepted accounting principles, there are no assurances that the material weaknesses and significant deficiencies in our disclosure controls and procedures and internal control over financial reporting will not result in errors in our financial statements which could lead to a restatement of those financial statements.
| - 10 - |
Our management, including our Chief Executive Officer, does not expect that our disclosure controls and procedures or our internal controls will prevent all error and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints and the benefits of controls must be considered relative to their costs. Due to the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within our Company have been detected.
This annual report on Form 10-K does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management’s report on internal control over financial reporting is not subject to attestation by our registered public accounting firm pursuant to rules of the SEC that permit us to provide only management’s report in this annual report on Form 10-K.
Changes in Internal Controls over Financial Reporting
There have been no changes in our internal control over financial reporting during the three month period ended June 30, 2015 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
None.
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Set forth below are the names and ages of our directors and executive officers, as well as certain biographical information.
| Name | Age | Positions and Offices Held | ||
| Simon Friedman | 68 | Chief Executive Officer, Secretary and Director | ||
| Arkady “Eric” Rayz | 39 | Director | ||
| Robert A. Cornaglia, CPA | 48 | Director |
Our directors are appointed for a one-year term to hold office until the next annual meeting of our stockholders and until their successors have been duly elected and qualified, or until removed from office in accordance with our bylaws. There are no agreements with respect to the election of directors. Our Board of Directors appoints officers annually and each executive officer serves at the discretion of our Board of Directors. We have a standing audit committee comprised of Robert Cornaglia and Eric Rayz.
Simon Friedman
Mr. Friedman has served as our Chief Executive Officer since December 2013, and as our corporate secretary and a director since our inception in June 2012. From 1983 to 1992 and since 1999, Mr. Friedman has been the President of Joseph Friedman & Sons, a family run cigarette distribution business and the founder and general manager of Friedman Financial Group, LLC (“Friedman Financial”), which provides business consulting and advisory services related to the former Soviet Union. From 1992 to 1998 Mr. Friedman was the general manager of operations in Ukraine for British American Tobacco, an importer and wholesale distributor of cigarettes and other tobacco products. From 1979 to 1982, Mr. Friedman was a Manager of Estimating and Planning for Lavelle Aircraft Company in Philadelphia, Pennsylvania. In 1979, Mr. Friedman immigrated to the United States. Mr. Friedman holds degrees in civil and aeronautical engineering from the College of Construction Engineering of Arvno, Ukraine. His entrepreneurial business activities began in 1983, with the purchase of his first cigarette business. In 2006, Mr. Friedman entered into the automobile financing business.
As a co-founder, officer and director of our Company, Mr. Friedman brings our Board his considerable experience in operating a variety of businesses, which qualifies him to continue to serve as a director of our Company.
| - 11 - |
Arkady “Eric” Rayz
Mr. Rayz is a summa cum laude and Phi Beta Kappa graduate of Temple University. As an undergraduate, Mr. Rayz was a recipient of the H. Thomas and Dorothy Willits Hallowell Scholarship and Temple University President’s Scholar Award. Mr. Rayz obtained his Juris Doctorate from the James E. Beasley School of Law of Temple University, where he was a staff member and editor of the Temple International and Comparative Law Journal. Mr. Rayz served a two-year term as a Staff Attorney for Justice Sandra Schultz Newman of the Supreme Court of Pennsylvania and has co-authored an article entitled “Capital Sentencing: The Effect of Adding Aggravators to Death Penalty Statutes in Pennsylvania” that appeared in the University of Pittsburgh Law Review. Mr. Rayz has broad experience in handling matters in federal and state courts. He is admitted to practice in the Commonwealth of Pennsylvania and the State of New York, before the U.S. District Court for the Eastern District of Pennsylvania, the U.S. Court of Appeals for the Third Judicial Circuit, and the United States Supreme Court. Since 2005, Mr. Rayz has been a co-managing member of Kalikhman & Rayz, LLC, where he advises clients on transactional and litigation matters, involving corporate governance, business financing, commercial disputes, and real estate transfers. In 2012, Mr. Rayz was appointed judge pro tempore by the Philadelphia County Court of Common Pleas. In the same year, Mr. Rayz received the honor of being named a “Top Lawyer” by Main Line Today Magazine. In 2012 and 2013, Mr. Rayz was named a Pennsylvania Super Lawyer Rising Star® by the Super Lawyers Magazine and Philadelphia Magazine.
We believe that the experience of Mr. Rayz as a lawyer qualifies him to serve as a director of our Company.
Robert A. Cornaglia, CPA
Mr. Cornaglia, is a partner in the accounting firm, Raible, Cornaglia, Wenstrom & Raible, LLC located in Mt. Laurel, NJ. Mr. Cornaglia’s practice mainly consists of advising closely-held businesses on financial reporting and tax compliance. Prior to joining the Firm as a partner in 2005, Mr. Cornaglia was the Chief Financial Officer for a privately held 65-unit Philadelphia-based retail financial services company. Mr. Cornaglia earned his Bachelor of Science in Business Administration from Drexel University in 1989 and was licensed as a certified public accountant in 1995.
We believe that the experience of Mr. Cornaglia as an accountant and former chief financial officer qualifies him to serve as a director of our Company and a member of the audit committee.
Committees of our Board of Directors
Our securities are not quoted on an exchange that has requirements that a majority of our Board members be independent and we are not currently otherwise subject to any law, rule or regulation requiring that all or any portion of our Board of Directors include “independent” directors, nor are we required to establish or maintain an audit committee or other committee of our Board of Directors.
We have established an audit committee, however. The audit committee reviews our accounting, auditing, financial reporting, and internal control functions and selects our independent auditors. The audit committee is comprised of Robert Cornaglia, CPA and Eric Rayz, Esq. We have not made a determination as to whether Messrs. Cornaglia or Rayz is considered independent.
The Board does not have standing compensation or nominating committees. The Board does not believe a compensation or nominating committee is necessary based on the size of our Company, the current levels of compensation to corporate officers and the beneficial ownership by two stockholders of more than 90% of our outstanding common stock. The Board will consider establishing compensation and nominating committees at the appropriate time.
The entire Board of Directors participates in the consideration of compensation issues and of director nominees. Candidates for director nominees are reviewed in the context of the current composition of the Board and the Company’s operating requirements and the long-term interests of its stockholders. In conducting this assessment, the Board of Directors considers skills, diversity, age, and such other factors as it deems appropriate given the current needs of the Board and the Company, to maintain a balance of knowledge, experience and capability.
The Board’s process for identifying and evaluating nominees for director, including nominees recommended by stockholders, will involve compiling names of potentially eligible candidates, conducting background and reference checks, conducting interviews with the candidate and others (as schedules permit), meeting to consider and approve the final candidates and, as appropriate, preparing an analysis with regard to particular recommended candidates.
Through their own business activities and experiences each of directors have come to understand that in today’s business environment, providing floor plan financing for independent used car dealers and consumer auto financing, along with other related efforts, are the keys to building an auto sales finance company. The directors will seek out individuals with relevant experience to operate and build our current and proposed business activities.
Compensation Committee Interlocks and Insider Participation
Our Board of Directors does not have, and has not had, a compensation committee. None of our executive officers serves as a member of the board of directors or compensation committee of any entity which has one or more executive officers serving as a member of our Board of Directors.
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Director Compensation
Mr. Friedman performed director services without compensation during the fiscal year ended June 30, 2015.
Compliance with Section 16(a) of the Exchange Act
Since none of our securities has been registered pursuant to Section 12(b) or 12(g) of the Exchange Act, our officers and directors and persons who own more than 10% of our common stock are not required to file Section 16(a) beneficial ownership reports.
ITEM 11. EXECUTIVE COMPENSATION
The following table sets forth certain compensation information for each person who served as our principal executive officer during the fiscal year ended June 30, 2015, regardless of the compensation level. Compensation information is shown for the fiscal years ended June 30, 2015 and 2014:
2015 SUMMARY COMPENSATION TABLE
| Name and Principal Position | Fiscal Year | Salary ($) | Option Awards | All
Other Compensation ($) | Total
($) | |||||||||||||||
| Simon Friedman, | 2015 | - | - | - | - | |||||||||||||||
| Chief Executive Officer (1) | 2014 | - | - | - | - |
(1) Mr. Friedman was appointed Chief Executive Officer on December 11, 2013.
Employment Agreements with Executive Officers
None.
Outstanding Equity Awards at Fiscal Year-End
No executive officer received any equity awards, or holds exercisable or unexercisable options, as of June 30, 2015.
Long-Term Incentive Plans
There are no arrangements or plans in which the Company would provide pension, retirement or similar benefits for directors or executive officers.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
The following tables set forth certain information, as of September 30, 2015, with respect to the beneficial ownership of our common stock and our Series A Convertible Preferred Stock by (i) any holder of more than 5% of our common stock, (ii) each of our executive officers and directors, and (iii) our directors and executive officers as a group. The percentage of shares beneficially owned is based upon (a) 10,781,466 shares of common stock outstanding, (b) 585,000 shares of Series A Convertible Preferred Stock outstanding as of September 30, 2015, and (c) 2,867 outstanding warrants to purchase shares of common stock. Holders of Series A Convertible Preferred Stock are entitled to vote on all matters with the common stockholders, voting together as one class. Each share of Series A Convertible Preferred Stock is entitled to three votes.
Unless otherwise indicated, the business address of each person listed is in care of Avangard Capital Group, Inc. 2708 Commerce Way, Philadelphia, PA 19154. A person is a “beneficial owner” of a security if that person has or shares voting or investment power over the security or if he or she has the right to acquire beneficial ownership within 60 days. All outstanding shares of Series A Convertible Preferred Stock are convertible within 60 days, and all outstanding warrants are exercisable within 60 days. Unless otherwise noted, these persons, to our knowledge, have sole voting and investment power over the shares listed.
| Convertible Preferred Stock Series A | ||||||||
| Amount and Nature | ||||||||
| of Beneficial | Percent of Class | |||||||
| Name of Beneficial Owner | Ownership | (1) | ||||||
| Simon Friedman (2) | 585,000 | 100.00 | % | |||||
| All Officers and Directors as a Group (1 person) | 585,000 | 100.00 | % | |||||
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| (1) | Based on 585,000 shares of Series A Convertible Preferred Stock outstanding. |
| (2) | The number of shares beneficially owned by Mr. Friedman, our interim Chief Executive Officer and a Director, represents 585,000 shares of Series A Convertible Preferred Stock owned by Friedman Financial Group, LLC (“Friedman Financial”). Mr. Friedman has voting and dispositive control over securities held by Friedman Financial. |
| Common Stock | ||||||||
| Amount and Nature | ||||||||
| of Beneficial | Percent of Class | |||||||
| Name of Beneficial Owner | Ownership | (1) | ||||||
| Simon Friedman (2) | 12,005,000 | 95.8 | % | |||||
| Arkady Rayz | 10,000 | * | ||||||
| Robert A. Cornaglia, CPA | 10,000 | * | ||||||
| All Executive Officers and Directors as a Group (3 persons) | 12,025,000 | 95.9 | % | |||||
* Less than 1%
| (1) | Based on 10,781,466 shares outstanding of common stock outstanding and 1,755,000 shares of our common stock giving effect to the conversion of the 585,000 shares of Series A Convertible Preferred Stock currently outstanding. |
| (2) | The number of shares owned by Mr. Friedman, our interim Chief Executive Officer and a Director, includes 10,250,000 shares of common stock held of record by Friedman Financial Group, LLC and 1,755,000 shares of common stock giving effect to the conversion of the 585,000 shares of Series A Convertible Preferred Stock currently outstanding and owned by Freidman Financial Group, LLC as such shares have voting rights. Mr. Friedman has voting and dispositive control over securities held by Friedman Financial Group, LLC. |
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE
List of Related Parties
We have specified the following persons and entities as related parties:
| ● | Avangard Auto Finance, Inc., a Pennsylvania corporation company (“AAF”), is owned 60% by Friedman Financial. |
| ● | Avangard Financial Group, Inc., a Nevada corporation (“AFG”) is owned by 51% by Friedman Financial. Friedman Financial is a principal stockholder of our Company of which 3% is owned by Simon Friedman. |
| ● | Simon Friedman owns 3% of Friedman Financial, a principal stockholder of our Company. |
| ● | Commerce Way, LLC, a PA limited liability company, (“Commerce Way”), is owned 70% by SELF, LP. SELF, LP is a shareholder of Friedman Financial Group. |
| ● | Friedman Financial Group, LLC, a Delaware limited liability company (“Friedman Financial”), is a principal shareholder of our company of which 3% is owned by Simon Friedman. |
Related Party Transactions
We lease approximately 2,000 square feet of office space from Commerce Way, LLC. During the year ended June 30, 2014, we paid a monthly rental fee of $2,500 on a month-to-month basis. During the year ended June 30, 2015, we paid a flat annual fee of $10,000. We do not have a lease, but are occupying approximately 500 square feet rent free until the company requires additional space.
Officers of our Company provide certain administrative services at no charge.
| - 14 - |
On March 26, 2013, we acquired a portfolio of consumer automobile loans from AAF and AFG for $102,250. The receivables included an aggregate principal balance of approximately $141,868 as of the date of acquisition (the “Current Loans”) and an aggregate principal balance of approximately $323,449 for non-current loans receivables (the “Non-Current Loans”). The sellers guaranteed to us that we will recover no less than 70% of the aggregate amount of the Current Loans. If we recover less than 70% of the aggregate amount of the Current Loans, the sellers agreed to pay the difference to us upon demand. In 2014, we recovered our entire investment in the loan portfolio and collected 100% of the aggregate amount paid by the Company to acquire the loan portfolio. On February 19, 2014, we transferred all remaining loans receivable to AAF.
Other current assets of $5,024 at June 30, 2015 represent amounts owed by Avangard Auto Finance and Commerce Way Office Complex for payments made the Company on their behalf for legal expenses. Other current assets of $7,000 at June 30, 2014 reflected a temporary loan to Avangard Auto Finance, a related party. The loan was fully repaid in July 2014.
On July 10, 2014, the Company agreed to issue to Friedman Financial Group, LLC, a related party, 9,768,000 shares of the Company’s Common Stock in exchange for $925. Simon Friedman, the Company’s CEO and Chairman of the Board, has voting and dispositive control over securities held by Friedman Financial Group, LLC.
On July 10, 2014, the Company agreed to issue to Jerry Kindrachuk 500,000 shares of the Company’s Common Stock in exchange for $50.
On July 10, 2014, the Company agreed to issue to Arkady “Eric” Rayz, a member of the Company’s Board of Directors, 9,000 shares of its Common Stock in exchange for services which were valued at $1.
On July 10, 2014, the Company agreed to issue to Robert Cornaglia, a member of the Company’s Board of Directors, 9,000 shares of its Common Stock in exchange for services which were valued at $1.
On January 10, 2015, the Company redeemed 320,000 shares of Series A convertible preferred stock held by Friedman Financial for a total redemption price of $320,000.
During the fiscal year ended June 30, 2015 Friedman Financial Group, our majority shareholder received reimbursement of $25,129 for expenditures made on behalf of the company. In addition, Friedman Financial Group, has submitted requests for reimbursement of $14,941 for expenses related to the Company’s operations.
During the year ended June 30, 2015, Joseph Friedman & Sons, Inc. received reimbursement of $18,842 for administrative, office and clerical support provided to the Company. At June 30, 2015 the Company had accounts payable to Friedman financial Group of $18,124 for reimbursable expenses incurred on behalf of the Company.
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
The following table shows the fees that were billed for the audit and other services provided by Friedman LLP for the fiscal years ended June 30, 2015 and 2014.
| 2015 | 2014 | |||||||
| Audit Fees | $ | 34,274 | $ | 40,000 | ||||
| Audit-Related Fees | - | 4,000 | ||||||
| Tax Fees | - | 1,500 | ||||||
| All Other Fees | - | 1,000 | ||||||
| Total | $ | 34,274 | $ | 46,500 | ||||
Audit Fees - This category includes the audit of our annual financial statements, review of financial statements included in our quarterly reports on Form 10-Q and services that are normally provided by the independent registered public accounting firm in connection with engagements for those fiscal years. This category also includes advice on audit and accounting matters that arose during, or as a result of, the audit or the review of interim financial statements.
Audit-Related Fees - This category consists of assurance and related services by the independent registered public accounting firm that are reasonably related to the performance of the audit or review of our financial statements and are not reported above under “Audit Fees.” The services for the fees disclosed under this category include consultation regarding our correspondence with the SEC and other accounting consulting.
Tax Fees - This category consists of professional services rendered by our independent registered public accounting firm for tax compliance and tax advice. The services for the fees disclosed under this category include tax return preparation and technical tax advice.
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All Other Fees - This category consists of fees for other miscellaneous items.
Our Board of Directors has adopted a procedure for pre-approval of all fees charged by our independent registered public accounting firm. Under the procedure, the Board approves the engagement letter with respect to audit, tax and review services. Other fees are subject to pre-approval by the Board, or, in the period between meetings, by a designated member of Board. Any such approval by the designated member is disclosed to the entire Board at the next meeting.
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
| (a) | 1. | Financial Statements |
| The financial statements and report of independent registered public accounting firm are included on pages F-1 through F-11. | ||
| 2. | Financial Statement Schedules | |
| All schedules for which provision is made in the applicable accounting regulations of the SEC are either not required under the related instructions, are not applicable (and therefore have been omitted), or the required disclosures are contained in the financial statements included herein. | ||
| 3. | Exhibits (including those incorporated by reference). |
Exhibit No. |
Description | |
| 3.1(a) | Articles of Incorporation, filed June 13, 2012 (Incorporated by reference to Exhibit 3.1 of the Registration Statement on Form S-1 filed on November 11, 2012). | |
| 3.1(b) | Amended and Restated Articles of Incorporation including Series A preferred stock designation (Incorporated by reference to Exhibit 3.1(a) of the Registration Statement on Form S-1 filed on November 11, 2012). | |
| 3.1(c) | Certificate of Change filed on June 26, 2014 (Incorporated by reference to Exhibit 3.1(c) of the Annual Report on Form 10-K filed on September 30, 2014). | |
| 3.1(d) | Certificate of Correction filed on September 18, 2014 (Incorporated by reference to Exhibit 3.1(d) of the Annual Report on Form 10-K filed on September 30, 2014). | |
| 3.2 | Bylaws of Avangard Capital Group Inc. (Incorporated by reference to Exhibit 3.2 of the Registration Statement on Form S-1 filed on November 11, 2012). | |
| 4.1 | Specimen Common Stock Certificate (Incorporated by reference to Exhibit 4.1 of the Registration Statement on Form S-1 filed on November 11, 2012). | |
| 4.1(a) | Specimen Preferred Stock Certificate (Incorporated by reference to Exhibit 4.1(a) of the Registration Statement on Form S-1 filed on November 11, 2012). | |
| 4.2 | Form of Warrant Agreement (Incorporated by reference to Exhibit 4.3 of the Registration Statement on Form S-1/A (Amendment No. 1) filed on December 31, 2012). | |
| 4.3 | Form of Unit Certificate (Incorporated by reference to Exhibit 4.4 of the Registration Statement on Form S-1 filed on November 11, 2012). | |
| 4.4 | Series A Preferred Stock Subscription Agreement (Incorporated by reference to Exhibit 4.5 of the Registration Statement on Form S-1/A (Amendment No. 1) filed on December 31, 2012). |
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| 4.5 | Unit Subscription Agreement (Incorporated by reference to Exhibit 4.6 of the Registration Statement on Form S-1/A (Amendment No. 3) filed on February 11, 2012). | |
| 10.1 | Assignment Agreement between Avangard Capital Group Inc. and Avangard Auto Finance, Inc. dated June 13, 2012 (Incorporated by reference to Exhibit 10.1 of the Registration Statement on Form S-1/A (Amendment No. 1) filed on December 31, 2012). | |
| 10.2 | Floor Plan Agreement with Autosource Enterprises, Inc. (Incorporated by reference to Exhibit 10.2 of the Registration Statement on Form S-1/A (Amendment No. 1) filed on December 31, 2012). | |
| 10.3 | Demand Promissory Note with Autosource Enterprises, Inc. (Incorporated by reference to Exhibit 10.3 of the Registration Statement on Form S-1 filed on November 11, 2012). | |
| 10.4 | Business Line of Credit Agreement with Autosource Enterprises, Inc. (Incorporated by reference to Exhibit 10.4 of the Registration Statement on Form S-1 filed on November 11, 2012). | |
| 10.5 | Surety Agreement with Autosource Enterprises, Inc. (Incorporated by reference to Exhibit 10.5 of the Registration Statement on Form S-1 filed on November 11, 2012). | |
| 10.6 | Confessions of Judgment with Autosource Enterprises, Inc. (Incorporated by reference to Exhibit 10.6 of the Registration Statement on Form S-1 filed on November 11, 2012). | |
| 10.7 | Lease Agreement between Avangard Capital Group, Inc. and Commerce Way, LP, dated June 15, 2012 (Incorporated by reference to Exhibit 10.7 of the Registration Statement on Form S-1/A (Amendment No. 1) filed on December 31, 2012). | |
| 14.1 | Avangard Auto Finance, Inc. Code of Business Conduct and Ethics (Incorporated by reference to Exhibit 99.1 of the Registration Statement on Form S-1 filed on November 11, 2012). | |
| 24.1* | Power of Attorney (included on signature page). | |
| 31.1* | Section 302 Certificate of Chief Executive Officer. | |
| 31.2* | Section 302 Certificate of Principal Financial and Accounting Officer. | |
| 32.1* | Section 906 Certificate of Chief Executive Officer and Principal Financial and Accounting Officer. | |
| 101.INS* | XBRL Instance Document | |
| 101.SCH* | XBRL Taxonomy Extension Schema Document | |
| 101.CAL* | XBRL Taxonomy Extension Calculation Linkbase Document | |
| 101.DEF* | XBRL Taxonomy Extension Definition Linkbase Document | |
| 101.LAB* | XBRL Taxonomy Extension Label Linkbase Document | |
| 101.PRE* | XBRL Taxonomy Extension Presentation Linkbase Document |
| * | Filed herewith. |
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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 its behalf by the undersigned, thereunto duly authorized.
| Avangard Capital Group, Inc. | ||
| Date: October 13, 2015 | By: | /s/ Simon Friedman |
| Simon Friedman, Chief Executive Officer | ||
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Simon Friedman as his true and lawful attorney-in-fact and agent, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign any and all amendments to the annual report, which amendments may make such changes in the annual report as the attorney-in-fact deems appropriate and to file the same, with all exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorney-in-fact and agent, full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that such attorney-in-fact and agent or his substitutes or substitute, may lawfully do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
| Signature | Title | Date | ||
| Chief Executive Officer and Director | ||||
| /s/ Simon Friedman | (principal executive officer and principal financial | |||
| Simon Friedman | and accounting officer) | October 13, 2015 | ||
| /s/ Arkady “Eric” Rayz | ||||
| Arkady “Eric” Rayz | Director | October 13, 2015 | ||
| /s/ Robert A. Cornaglia | ||||
| Robert A. Cornaglia | Director | October 13, 2015 |
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