GRAND HAVANA INC. - Quarter Report: 2014 December (Form 10-Q)

Mark One

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

For the quarterly period ended December 31, 2014

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

For the transition period from ______ to _______

Commission File No. 000-55037

JunkieDog.com, Inc. (F/K/A Unique Underwriters, Inc.)
(Exact name of registrant as specified in its charter)

121 North Commercial Drive,

Mooresville, NC 28815

(704) 902-5380 

 (Address and telephone number of principal executive offices)

Securities Registered Under Section 12(b) of the Exchange Act:  None

Securities Registered Under Section 12(g) of the Exchange Act:  Common Stock, $0.001 par value (Title of class)

Indicate by check mark if the registrant is a well-known seasoned issuer as defined by Rule 405 of the Securities Act Yes [   ]   No [X].

Indicate by check mark if the registrant is not required to file reports pursuant to Rule 13 or Section 15(d) of the Act

Yes [   ]   No [X].

Indicate by checkmark whether the issuer: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.   Yes [ ]   No [X]

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

Indicate by check mark if disclosure of delinquent filers in response to Item 405 of Regulation S-K (Section 229.405 of this chapter) is not contained herein, and will not be contained, to the best 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. [ ]

Indicate by check mark whether the registrant is a large accelerated filed, an accelerated filer, a non-accelerated filer, or a smaller reporting company.

Large accelerated filer [  ] Accelerated filer [   ] Non-accelerated filer [   ] Smaller reporting company [X]

Indicate by checkmark 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, or the average bid and asked price of such common equity, as of the last business day of the registrant’s most recently completed fiscal quarter: $828,435. For purposes of this computation, all directors and executive officers of the registrant are considered to be affiliates of the registrant).

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the most practicable date:

TABLE OF CONTENTS

Insert financial statements here
Junkiedog.com, Inc. (F/K/A Unique Underwriters, Inc.)

Notes to Financial Statements

As of December 31, 2014

NOTE 1 BUSINESS DESCRIPTION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Junkiedog.com, Inc. F/K/A Unique Underwriters, Inc. (the “Company”) was incorporated in the State of Texas in 2009 in the name of Unique Underwriters, Inc.

On June 9, 2014, the Board of Directors and consenting shareholders holding a majority of issued and outstanding Common Stock approved a change in domicile of the Company from Texas to Nevada.  The change of domicile, or reincorporation, will be effected by means of a merger between the Company and a newly formed wholly-owned Nevada subsidiary of the Company in name of JunkieDog.com Inc., in which the subsidiary will be the surviving entity.  This change of domicile will become effective upon the filing of articles of merger with the Secretary of State of the states of Texas and Nevada in accordance with applicable state laws.

On June 9, 2014, UUWR’s Board of Directors approved and recommended a change in corporate name to “JunkieDog.com, Inc.”, referred to as “Name Change Proposal”. Since it was contemplated that the Name Change Proposal would occur simultaneously with the Reincorporation, management determined that the objective and substantive effect of the Name Change Proposal would be accomplished under and pursuant to the Merger Agreement, which would feature that Unique Underwriters, Inc. would merge with and into JunkieDog.com, Inc., with JunkieDog.com, Inc. being the surviving corporation. The surviving corporation will retain the name of “JunkieDog.com, Inc.”. 

On September 19, 2014, JunkieDog.com, Inc. entered into a Plan of Exchange with First Choice Apparel, an online wholesale website for clothing and other quality items. Under the agreement JunkieDog.com, Inc. agreed to acquire certain assets and liabilities of First Choice Apparel for 40,000,000 restricted shares of common stock, valued at $3,000,000 on the date of the transaction. Subsequent to entering into this agreement, both parties agreed to amend the agreement from a Plan of Exchange to an Asset Acquisition Agreement and to account for the transaction, based on those terms. As reflected in our financial statements, JunkieDog.com, Inc. will report all revenue and expenses, as well as the agreed upon assets and liabilities, from the original date of the agreement dated September 19, 2014.

The stock exchange transaction has been accounted for as an asset acquisition of the Company whereby First Choice Apparel Company LLC is deemed to be the accounting acquirer (legal acquiree) and the Company to be the accounting acquiree (legal acquirer).  The accompanying consolidated financial statements are in substance those of First Choice Apparel Company LLC, with the assets, liabilities, revenues and expenses, of the Company being included effective from the date of stock exchange transaction. Accordingly, the financial position, results of operations, and cash flows of the accounting acquirer are included for all periods presented as if the recapitalization had occurred at the beginning of the earliest period presented and the operations of the accounting acquiree are included from the date of stock exchange transaction.

The Company recorded the purchase consideration and resulting goodwill as follows:

Basis of Presentation and Consolidation

The financial statements include the accounts of the Company and its wholly owned subsidiary, First Choice Apparel, under the accrual basis of accounting. All intercompany transactions and balances have been eliminated in consolidation.

Management’s Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. The financial statements above reflect all of the costs of doing business. The Company’s significant estimates include the valuation of stock-based compensation and embedded derivatives.

Reclassification

Certain amounts in the prior years' financial statements have been reclassified to conform with the current year presentation.

Cash and Cash Equivalents

For purposes of the Statements of Cash Flows, the Company considers highly liquid investments with an original maturity of three months or less to be cash equivalents.

Revenue Recognition

The Company applies paragraph 605-10-S99-1 of the FASB Accounting Standards Codification for revenue recognition. The Company recognizes revenue when services are realized or realizable and earned less estimated future doubtful accounts. The Company considers revenue realized or realizable and earned when all of the following criteria are met:

Our wholly owned subsidiary, First Choice Apparel recognizes revenue from product sales or services rendered when the following four criteria are met: persuasive evidence of an arrangement exists, delivery has occurred or services have been rendered, the selling price is fixed or determinable, and collectability is reasonably assured.

We evaluate whether it is appropriate to record the gross amount of product sales and related costs or the net amount earned as commissions. Generally, when we are primarily obligated in a transaction, are subject to inventory risk, have latitude in establishing prices and selecting suppliers, or have several but not all of these indicators, revenue is recorded at the gross sale price. We generally record the net amounts as commissions earned if we are not primarily obligated and do not have latitude in establishing prices. Such amounts earned are determined using a fixed percentage, a fixed-payment schedule, or a combination of the two.

Product sales represent revenue from the sale of products and related shipping fees where we are the seller of record. Product sales and shipping revenues, net of promotional discounts, rebates, and return allowances, are recorded when the products are shipped and title passes to customers. Retail sales to customers are made pursuant to a sales contract that provides for transfer of both title and risk of loss upon our delivery to the carrier.

Cost of Sales 

The Company’s policy is to recognize cost of sales in the same manner in conjunction with revenue recognition, when the costs are incurred. Cost of sales includes the costs directly attributable to revenue recognition and include marketing and leads generation costs and leads purchased costs.

Shipping and Handling 

Shipping and handling costs are treated as a cost of sales and are reflected on the statement of operations as a reduction of gross profit. For the three and six months periods ended December 31, 2014, we recorded $36,938 and $39,150 in shipping and handling expenses, included in our total cost of sales of $204,900 and $244,297 respectively.

Inventories 

Inventories, consisting of products available for sale, are primarily accounted for using the FIFO method, and are valued at the lower of cost or market value. This valuation requires us to make judgments, based on currently-available information, about the likely method of disposition, such as through sales to individual customers, returns to product vendors, or liquidations, and expected recoverable values of each disposition category. Currently, all of our inventory are finished goods purchased from other suppliers.

Property and Equipment

Property and equipment is recorded at cost, and depreciated over the estimated useful lives of the assets using principally the straight-line method. When items are retired, or otherwise disposed of, income is charged or credited for the difference between net book value and proceeds realized. Ordinary maintenance and repairs are charged to expense as incurred, and replacements and betterments are capitalized.

The range of estimated useful lives used to calculated depreciation for principal items of property and equipment are as follows:

Loss Per Share

Net loss per common share is computed pursuant to section 260-10-45 of the FASB Accounting Standards Codification. Basic net loss per share is computed by dividing net loss by the weighted average number of shares of common stock outstanding during the period. Diluted net loss per share is computed by dividing net loss by the weighted average number of shares of common stock and potentially outstanding shares of common stock during each period. For the three months periods ended December 31, 2014, 1,771,350 shares of common stock underlying convertible debt are not included in the calculations of diluted loss per share, as the impact of the potential common shares would be antidilutive.

Stock-Based Compensation

The Company accounts for stock-based compensation using the fair value method following the guidance set forth in section 718-10 of the FASB Accounting Standards Codification for disclosure about Stock-Based Compensation. This section requires a public entity to measure the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award (with limited exceptions). That cost will be recognized over the period during which an employee is required to provide service in exchange for the award- the requisite service period (usually the vesting period). No compensation cost is recognized for equity instruments for which employees do not render the requisite service.

Goodwill and Other Intangible Assets

The Company adopted Statement of Financial Accounting Standard (“FASB”) Accounting Standards Codification (“ASC”) Topic 350 Goodwill and Other Intangible Assets, effective July 1, 2002. In accordance with (“ASC Topic 350”) "Goodwill and Other Intangible Assets", goodwill represents the excess of the purchase price and related costs over the value assigned to net tangible and identifiable intangible assets of businesses acquired, and accounted for, under the purchase method acquired in business combinations is assigned to reporting units that are expected to benefit from the synergies of the combination as of the acquisition date. Under this standard, goodwill and intangibles with indefinite useful lives are no longer amortized. The Company assesses goodwill and indefinite-lived intangible assets for impairment annually during the fourth quarter; or more frequently if events and circumstances indicate impairment may have occurred in accordance with ASC Topic 350. If the carrying value of a reporting unit's goodwill exceeds its implied fair value, the Company records an impairment loss equal to the difference. ASC Topic 350 also requires that the fair value of indefinite-lived purchased intangible assets be estimated and compared to the carrying value. The Company recognizes an impairment loss when the estimated fair value of the indefinite-lived purchased intangible assets is less than the carrying value.

Fair Value for Financial Assets and Financial Liabilities

The Company follows paragraph 825-10-50-10 of the FASB Accounting Standards Codification for disclosures about fair value of its financial instruments and paragraph 820-10-35-37 of the FASB Accounting Standards Codification (“Paragraph 820-10-35-37”) to measure the fair value of its financial instruments. Paragraph 820-10-35-37 establishes a framework for measuring fair value in accounting principles generally accepted in the United States of America (U.S. GAAP), and expands disclosures about fair value measurements. To increase consistency and comparability in fair value measurements and related disclosures, Paragraph 820-10-35-37 establishes a fair value hierarchy which prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The three levels of fair value hierarchy defined by Paragraph 820-10-35-37 are described below:

The carrying amounts of the Company’s financial assets and liabilities, such as cash, accounts payable, accrued expenses, customer deposits, obligations for factored receivables and convertible notes payable approximate their fair values because of the short maturity of these instruments.

The Company’s derivative liabilities related to convertible debt are measured at fair value on a recurring basis, using level 3 inputs. There were no assets or liabilities measured at fair value on a nonrecurring basis during the six months ended December 31, 2014.

Recent Accounting Pronouncements

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

NOTE 2 INCOME TAXES

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amount used for federal and state income tax purposes.

ASC 740-10 prescribes a recognition threshold that a tax position is required to meet before being recognized in the financial statements and provides guidance on recognition, measurement, classification, interest and penalties, accounting in interim periods, disclosure and transition issues. The Company classifies interest and penalties as a component of interest and other expenses. To date, the Company has not been assessed, nor has the Company paid, any interest or penalties.

The Company measures and records uncertain tax positions by establishing a threshold for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. Only tax positions meeting the more-likely-than-not recognition threshold at the effective date may be recognized or continue to be recognized. All of the Company's tax years are subject to examination.

At December 31, 2014, the Company had federal and state net operating loss carry forwards of approximately $11,767,035 that expire in various years through the year 2034.

NOTE 3 FIXED ASSETS

Fixed assets were comprised of the following as of December 31, 2014 and June 30, 2014:

Depreciation expense was $5,123 and $1,200 for the three months ended December 31, 2014 and 2013, respectively and $6,077 and $309 for the six months ended December 31, 2014 and 2013, respectively. During April 2014, the company disposed the fixed asset for $0 and record $3,717 loss on disposal of fixed assets.

NOTE 4 LONG TERM NOTES PAYABLE

On September 23, 2014, the Company entered into a profit sharing agreement for certain inventory being acquired. The unrelated party, loaned the Company $20,000 for sixty days. The loan agreement was not evidenced by any promissory notes, but rather verbal agreements between the unrelated party and the Company The loan will be repaid from the sale of the inventory acquired with these funds and the Company agreed to pay a profit share of the sale of this inventory up to $4,000, which will be recorded as interest on the financial statements, as the amounts above $20,000 are paid. There will be no additional interest on the loan. The Company repaid this loan on December 17, 2014, reducing the notes payable by $20,000 and incurring $4,000 in interest expense.

On October 2, 2014, the Company entered into a profit sharing agreement for certain inventory being acquired. The unrelated party, loaned the Company $15,000 for sixty days. The loan agreement was not evidenced by any promissory notes, but rather verbal agreements between the unrelated party and the Company The loan will be repaid from the sale of the inventory acquired with these funds and the Company agreed to pay a profit share of the sale of this inventory up to $3,000, which will be recorded as interest on the financial statements, as the amounts above $15,000 are paid. There will be no additional interest on the loan. The Company repaid this loan on November 10, 2014, reducing the notes payable by $15,000 and incurring $3,000 in interest expense.

On October 28, 2014, the Company entered into a profit sharing agreement for certain inventory being acquired. The unrelated party, loaned the Company $20,000 for sixty days. The loan agreement was not evidenced by any promissory notes, but rather verbal agreements between the unrelated party and the Company The loan will be repaid from the sale of the inventory acquired with these funds and the Company agreed to pay a profit share of the sale of this inventory up to $4,000, which will be recorded as interest on the financial statements, as the amounts above $20,000 are paid. There will be no additional interest on the loan.

On November 14, 2014, the Company entered into a profit sharing agreement for certain inventory being acquired. The unrelated party, loaned the Company $20,000 for sixty days. The loan agreement was not evidenced by any promissory notes, but rather verbal agreements between the unrelated party and the Company The loan will be repaid from the sale of the inventory acquired with these funds and the Company agreed to pay a profit share of the sale of this inventory up to $4,000, which will be recorded as interest on the financial statements, as the amounts above $20,000 are paid. There will be no additional interest on the loan.

NOTE 5 LOANS PAYABLE-RELATED PARTIES

Loans payable to related parties were $7,250 and $6,200 as of December 31, 2014 and June 30, 2014, respectively. The funds borrowed from the Company’s former officer and stockholder were to fund the Company’s daily operations. The loan agreements were not evidenced by any promissory notes, but rather verbal agreements between the related parties and the Company. These advances are non-interest bearing and due on demand.

NOTE 6 OBLIGATIONS FOR FACTORED RECEIVABLES

During the year ended June 30, 2014, the Company received proceeds of $45,073 pursuant to third party merchant agreements providing for the sale of future cash receipts at a discount of 15%. The Company repaid $34,755 and defaulted on remaining payments. The Company incurred factoring and interest charges totaling $28,887. These amounts are in default and total $39,205 as of December 31, 2014.

NOTE 7 CONVERTIBLE NOTES PAYABLE AND DERIVATIVE LIABILITIES

On August 15, 2013 Unique Underwriters, Inc. (the “Company”) issued an 8% convertible note in the principal amount of $47,500 (the "Note") to an Accredited Investor (the “Lender"). 

The Note bears interest at the rate of 8% per annum, and the interest rate will increase to 22% if the convertible debenture is default.  All interest and principal must was due on May 30, 2014 and is in default.  The Note is convertible any time during the period beginning on the date which is one hundred eighty (180) days following the date of the Note into common stock of the Company, at the Lender’s option, at a 42% discount to the average of the three lowest closing bid prices of the common stock during the 10 Trading Day period prior to conversion as Trading Day is defined in the Note.  In the event the Company prepays the Note in full, the Company is required to pay off all principal, interest and any other amounts owing multiplied by 135% if prepaid 121 days following the Issue Date through 180 days following the Issue Date.  After the expiration of 180 days following the date of the Note, the Company has no right of prepayment.   

The Lender has agreed to restrict its ability to convert the Note and receive shares of common stock such that the number of shares of common stock held by them in the aggregate and their affiliates after such conversion or exercise does not exceed 9.99% of the then issued and outstanding shares of common stock.   The total net proceeds the Company received were $45,000, net of attorney’s fees of $2,500.

At September 30, 2014, the Company revalued the embedded derivative liability. For the period from the grant date to December 31, 2014, the balance of derivative liability was decreased by $50 to $36,460.

The fair value of the embedded derivative liability was calculated at December 31, 2014 utilizing the following assumptions:

The carrying value of the Notes was $47,500 as of December 31, 2014, net of unamortized discount of $0. The Company recorded amortization of the debt discount in the amount of $6,125 during the period ended December 31, 2014. The accrued interest related to this note for the period ended December 31, 2014 is $3,732.

On November 19, 2013 Unique Underwriters, Inc. (the “Company”) issued an 8% convertible note in the principal amount of $18,000 (the "Note") to an Accredited Investor (the “Lender"). In December 2014, accrued interest of $3,920 was added to the principal balance of the note.

The Note bears interest at the rate of 8% per annum.  All interest and principal must be repaid on August 21, 2014.  The Note is convertible any time during the period beginning on the date which is one hundred eighty (180) days following the date of the Note into common stock of the Company, at the Lender’s option, at a 42% discount to the average of the three lowest closing bid prices of the common stock during the 10 Trading Day period prior to conversion as Trading Day is defined in the Note.  In the event the Company prepays the Note in full, the Company is required to pay off all principal, interest and any other amounts owing multiplied by 135% if prepaid 121 days following the Issue Date through 180 days following the Issue Date.  After the expiration of 180 days following the date of the Note, the Company has no right of prepayment.   

The Lender has agreed to restrict its ability to convert the Note and receive shares of common stock such that the number of shares of common stock held by them in the aggregate and their affiliates after such conversion or exercise does not exceed 9.99% of the then issued and outstanding shares of common stock.   

The Company has determined that the conversion feature of the Notes represent an embedded derivative since the Notes is convertible into a variable number of shares upon conversion. Accordingly, the Notes are not considered to be conventional debt under EITF 00-19 and the embedded conversion feature must be bifurcated from the debt host and accounted for as a derivative liability. Accordingly, the fair value of this derivative instrument has been recorded as a liability on the balance sheet with the corresponding amount recorded as a discount to the Notes. Such discount will be accreted from the grant date to the maturity date of the Notes. The change in the fair value of the derivative liability is recorded in other income or expenses in the statement of operations at the end of each period, with the offset to the derivative liability on the balance sheet. The embedded conversion feature included in the Notes resulted in an initial debt discount of $16,873 and initial fair value of the derivative liability of $16,873. The fair value of the embedded derivative liability was calculated at grant date utilizing the following assumptions:

At December 31, 2014, the Company revalued the embedded derivative liability. For the period from the grant date to December 31, 2014, the balance of derivative liability was decreased by $16 to $16,857.

The fair value of the embedded derivative liability was calculated at the period ended December 31, 2014 utilizing the following assumptions:

The carrying value of the Note was $18,730 as of December 31, 2014, net of unamortized discount of $0. The Company recorded amortization of the debt discount in the amount of $0 during the period ended December 31, 2014. The accrued interest related to this note for the period ended December 31, 2014 was $0.

In December 2014, all of the Company’s convertible debt was assigned to two stockholders.

From August 28, 2013 through August 27, 2014, First Choice Apparel, LLC. (the “Company”) issued ten 10% convertible, one year notes in the principal amount totaling $172,000 (the "Notes") to an Accredited Investor (the “Lender"). These notes were included in the Company’s acquisition of First Choice Apparel, by JunkieDog.com, Inc.

The Note bears interest at the rate of 10% per annum, and the interest rate will increase to 18% if the convertible promissory note is in default.  The Notes are convertible at any time following the date of the Note into common stock of the Company, at the Lender’s option, at a 50% discount to the closing bid price of the common stock on the day immediately prior to the Lender’s election to convert.  In the event the Company prepays the Note in full, the Company is required to pay off all principal, interest and any other amounts owing with no prepayment penalty.   

The Lender has agreed to restrict its ability to convert the Notes and receive shares of common stock such that the number of shares of common stock held by them in the aggregate and their affiliates after such conversion or exercise does not exceed 9.99% of the then issued and outstanding shares of common stock.   The total net proceeds the Company received were $172,000.

The Company has determined that the conversion feature of the Notes represent an embedded derivative since the Notes is convertible into a variable number of shares upon conversion. Accordingly, the Notes are not considered to be conventional debt under EITF 00-19 and the embedded conversion feature must be bifurcated from the debt host and accounted for as a derivative liability. Accordingly, the fair value of this derivative instrument has been recorded as a liability on the balance sheet with the corresponding amount recorded as a discount to the Notes. Such discount was authorized from the grant date to the maturity date of the Notes. The change in the fair value of the derivative liability is recorded in other income or expenses in the statement of operations at the end of each period, with the offset to the derivative liability on the balance sheet. The embedded conversion feature included in the Notes resulted in an initial debt discount of $172, 000 based on the initial fair value of the derivative liability of $189,200. The fair value of the embedded derivative liability was calculated at grant date utilizing the following assumptions:

At December 31, 2014, the Company valued the embedded derivative liability. For the period from the grant dates to December 31, 2014, the balance of derivative liability was decreased by $0 to $189,200.

The carrying value of the Notes was $75,667 as of December 31, 2014, net of unamortized discount of $62,917. The Company recorded amortization of the debt discount in the amount of $39,542 during the period ended December 31, 2014. The accrued interest related to the notes for the period ended December 31, 2014 was $4,854.

NOTE 8 REVENUE CONCENTRATION

During the three months ended December 31, 2013, the Company’s revenue was concentrated in a few customers as follows:

NOTE 9 CAPITAL STOCK

The Company is currently authorized to issue 20,000,000 Class A preferred shares with $.001 par value per share with 10:1 conversion and voting rights. As of December 31, 2014, there was no Class A preferred shares issued and outstanding.

The Company is currently authorized to issue 10,000,000 Class B preferred shares with $.001 par value per share with 1:1 conversion and voting rights. As of December 31, 2014, there was no Class B preferred shares issued and outstanding.

The Company is currently authorized to issue 400,000,000 common shares with $.001 par value per share.

During the six months ended December 31, 2014, the Company issued 40,000,000 shares of common stock as consideration for the acquisition of First Choice Apparel. See Note 1.

NOTE 10 LEASE AND EMPLOYMENT COMMITMENTS AND RELATED PARTY TRANSACTION

The Company assumed and renewed its office lease with an unrelated party. The lease was for five years and expires on April 30, 2018.

Effective as of March 14, 2014, the control of registrant has been changed. The office location has been changed, and the Company abandoned the lease. The Company has accrued the remaining minimum payment under the lease, totaling $222,020, as of December 31, 2014. The Company recognized $-0- rent expense for the period ended December 31, 2014.

NOTE 11 GOING CONCERN AND UNCERTAINTY

The Company has suffered recurring losses from operations since inception and has a working capital deficit of $648,977, as of December 31, 2014. In addition, the Company has only recently began to generate an internal cash flow from its business operations. These factors raise substantial doubt as to the ability of the Company to continue as a going concern.

Management’s plans with regard to these matters encompass the following actions: 1) obtain funding from new investors to alleviate the Company’s working capital deficiency, and 2) implement a plan of exchange with First Choice Apparel Company LLC, which is an e-commerce company generating sales revenues through online trading. The Company’s continued existence is dependent upon its ability to resolve it liquidity problems and increase profitability in its current business operations. However, the outcome of management’s plans cannot be ascertained with any degree of certainty. The accompanying financial statements do not include any adjustments that might result from the outcome of these risks and uncertainties.

NOTE 12 SUBSEQUENT EVENTS

On January 15, 2015, an Asset Acquisition Agreement was signed to terminate the Plan of Exchange (the “Exchange”) executed on September 19, 2014, between the Company and the First Choice Apparel Company LLC, and the stockholders of First Choice Apparel Company LLC, pursuant to which 40,000,000 shares of the Company’s common stock were issued to the stockholders of First Choice Apparel Company LLC.  Upon completion of the Exchange, First Choice Apparel Company LLC became the Company’s wholly-owned subsidiary and the former stockholder of First Choice Apparel Company LLC then owned a ‘controlling interest’ in the Company representing 98.1% of the voting shares of the Company on a fully dilutive basis. See Note 1.

On October 2, 2014, the Company entered into a profit sharing agreement for certain inventory being acquired. The unrelated party, loaned the Company $15,000 for sixty days. The loan agreement was not evidenced by any promissory notes, but rather verbal agreements between the unrelated party and the Company The loan will be repaid from the sale of the inventory acquired with these funds and the Company agreed to pay a profit share of the sale of this inventory up to $3,000, which will be recorded as interest on the financial statements, as the amounts above $15,000 are paid. There will be no additional interest on the loan. The Company repaid this loan on November 10, 2014, reducing the notes payable by $15,000 and incurring $3,000 in interest expense.

On October 28, 2014, the Company entered into a profit sharing agreement for certain inventory being acquired. The unrelated party, loaned the Company $20,000 for sixty days. The loan agreement was not evidenced by any promissory notes, but rather verbal agreements between the unrelated party and the Company The loan will be repaid from the sale of the inventory acquired with these funds and the Company agreed to pay a profit share of the sale of this inventory up to $4,000, which will be recorded as interest on the financial statements, as the amounts above $20,000 are paid. There will be no additional interest on the loan.

On November 14, 2014, the Company entered into a profit sharing agreement for certain inventory being acquired. The unrelated party, loaned the Company $20,000 for sixty days. The loan agreement was not evidenced by any promissory notes, but rather verbal agreements between the unrelated party and the Company The loan will be repaid from the sale of the inventory acquired with these funds and the Company agreed to pay a profit share of the sale of this inventory up to $4,000, which will be recorded as interest on the financial statements, as the amounts above $20,000 are paid. There will be no additional interest on the loan.

On January 26, 2015, the Company received a notice of conversion from two unrelated parties to retire a convertible note originally issued November 19, 2013. The Company issued 2,000,000 shares each to the parties and retired $9,000 in convertible notes.

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

The following discussion should be read in conjunction with our financial statements and the notes thereto.

Forward-Looking Statements

This quarterly report contains forward-looking statements relating to us that are based on the beliefs of our management as well as assumptions made by, and information currently available to, our management. When used in this Report, the words “anticipate”, “believe”, “estimate”, “expect”, “intend”, “plan” and similar expressions, as they relate to us or our management, are intended to identify forward-looking statements. These statements reflect management’s current view of us concerning future events and are subject to certain risks, uncertainties and assumptions, including among many others: our potential inability to raise additional capital, the possibility that third parties hold proprietary rights that preclude us from marketing our products, the emergence of additional competing technologies, changes in domestic and foreign laws, regulations and taxes, changes in economic conditions, a general economic downturn, a downturn in the securities markets, Securities and Exchange Commission regulations which affect trading in the securities of “penny stocks,” and other risks and uncertainties. Should any of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those described in this Report as anticipated, estimated or expected.

Use of Certain Defined Terms

Except as otherwise indicated by the context, references in this report to " Unique Underwriters", "we," "us," or "our" , “UUI” and the "Company" are references to the business of Unique Underwriters, Inc.   

Use of GAAP Financial Measures

We use GAAP financial measures in the section of this quarterly report captioned “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” All of the GAAP financial measures used by us in this report relate to the inclusion of financial information.

Overview

This subsection of MD&A is an overview of the important factors that management focuses on in evaluating our businesses, financial condition and operating performance, our overall business strategy and our earnings for the periods covered.

General

Junkiedog.com, Inc. F/K/A Unique Underwriters, Inc. (the “Company”) was incorporated in the State of Texas in 2009 in the name of Unique Underwriters, Inc.

On June 9, 2014, the Board of Directors and consenting shareholders holding a majority of issued and outstanding Common Stock approved a change in domicile of the Company from Texas to Nevada.  The change of domicile, or reincorporation, will be effected by means of a merger between the Company and a newly formed wholly-owned Nevada subsidiary of the Company in name of JunkieDog.com Inc., in which the subsidiary will be the surviving entity.  This change of domicile will become effective upon the filing of articles of merger with the Secretary of State of the states of Texas and Nevada in accordance with applicable state laws.

On June 9, 2014, UUWR’s Board of Directors approved and recommended a change in corporate name to “JunkieDog.com, Inc.”, referred to as “Name Change Proposal”. Since it was contemplated that the Name Change Proposal would occur simultaneously with the Reincorporation, management determined that the objective and substantive effect of the Name Change Proposal would be accomplished under and pursuant to the Merger Agreement, which would feature that Unique Underwriters, Inc. would merge with and into JunkieDog.com, Inc., with JunkieDog.com, Inc. being the surviving corporation. The surviving corporation will retain the name of “JunkieDog.com, Inc.”. 

On September 19, 2014, JunkieDog.com, Inc. entered into a Plan of Exchange with First Choice Apparel, an online wholesale website for clothing and other quality items. Under the agreement JunkieDog.com, Inc. agreed to acquire certain assets and liabilities of First Choice Apparel for 40,000,000 restricted shares of common stock, valued at $3,000,000 on the date of the transaction. Subsequent to entering into this agreement, both parties agreed to amend the agreement from a Plan of Exchange to an Asset Acquisition Agreement and to account for the transaction, based on those terms. As reflected in our financial statements, JunkieDog.com, Inc. will report all revenue and expenses, as well as the agreed upon assets and liabilities, from the original date of the agreement dated September 19, 2014.

The stock exchange transaction has been accounted for as an asset acquisition of the Company whereby First Choice Apparel Company LLC is deemed to be the accounting acquirer (legal acquiree) and the Company to be the accounting acquiree (legal acquirer).  The accompanying consolidated financial statements are in substance those of First Choice Apparel Company LLC, with the assets, liabilities, revenues and expenses, of the Company being included effective from the date of stock exchange transaction. Accordingly, the financial position, results of operations, and cash flows of the accounting acquirer are included for all periods presented as if the recapitalization had occurred at the beginning of the earliest period presented and the operations of the accounting acquiree are included from the date of stock exchange transaction. 

During the last quarter, current management continued its efforts to implement a new business model, through the acquisition of First Choice Apparel. Although future cash flow is always difficult to predict, by expanding the inventory of items being sold and increasing our marketing, lead generation and production efforts, management continues to believe that net profits should improve during the coming year due to the following factors:

(1) We have completed the acquisition of First Choice Apparel and expect significant revenue growth as a result;

(2) Our wholly owned subsidiary, First Choice Apparel has developed a successful marketing and sales strategy through its own website and those of other sites; such as Amazon and Ebay;

3) We have established financial partners to assist in acquiring more inventory, which may improve our margins and opportunities for additional product categories.

Results of Operations

Our financial statements have been prepared assuming that we will continue as a going concern and, accordingly, do not include adjustments relating to the recoverability and realization of assets and classification of liabilities that might be necessary should we be unable to continue in operation.

We expect we will require additional capital to meet our long term operating requirements. We expect to raise additional capital through, among other things, the sale of equity or debt securities.

Revenues

We had revenue of $336,906 and $358,370 for the three and six months ended December 31, 2014 respectively. Comparatively, we had revenue of $105,691 and $274,657 for the three and six months ended December 31, 2013.  The increase was due in large part to the change in the business model and results from our acquisition of First Choice Apparel, which included sales from September 19, 2014 (the date of acquisition) through December 31, 2014. Insurance sales were only accounted for $6,992 for six months ended December 2, 2014, when we ceased to offer insurance products.  

Cost of Sales

The cost of sales was $204,900, or 61% of revenues, for the three months ended and $244,297 or 68% for the six months ended December 31, 2014.  Comparatively, the cost of sales was $59,781, or 57% of revenues, for the three months ended and $155,893 or 57% for the six months ended December 31, 2013.

We recognized cost of sales in the same manner in conjunction with revenue recognition, when the costs were incurred. Contract labor expenses were not directly related to the generation of sales, rather were involved in the selling, general and administrative expenses of the business.

Expenses

We had operating expenses of $47,613 and $56,342 during the three and six months ended December 31, 2014, compared to operating expenses of $86,803 and $188,221 during the three and six months ended December 31, 2013. The decrease by was due primarily to the decrease in consulting fees, contract labor and payroll expense.

Expenses included in other administrative expenses in the accompanying statement of operations are miscellaneous and sundry expenses pertaining to office expenses and office supplies that are immaterial to be presented separately on the face of the statement of operations.

Liquidity and Capital Resources

Operating Activities

Net cash used in operating activities was $1,980 and $80,428 during the six months ended December 31, 2014 and 2013, respectively. Cash used in operations during the six months ended December 31, 2014 was due primarily to the net profit of $876 and increases in accrued interest in the amount of $15,343, accounts payable of $57,183 and amortization of debt discount of $39,542. Net cash used in operating activities for the six months ended December 31, 2013was due primarily to the net loss of $115,310 and the decrease in accounts payable in the amount of $14,053.

Investing Activities

Net cash provided by investing activities was $29,625 for the six months ended December 31, 2014. Comparatively, net cash used in investing activities was $1,315 for the six months ended December 31, 2013

Financing Activities

Net cash provided by financing activities was $13,335 for the six months ended December 31, 2014. Comparatively, net cash provided by financing activities was $71,536 for the six months ended December 31, 2013.

Critical Accounting Policies

Revenue Recognition – The Company applies paragraph 605-10-S99-1 of the FASB Accounting Standards Codification for revenue recognition. The Company recognizes revenue when services are realized or realizable and earned less estimated future doubtful accounts. The Company considers revenue realized or realizable and earned when all of the following criteria are met:

(i) persuasive evidence of an arrangement exists,

(ii) the services have been rendered and all required milestones achieved,

(iii) the sales price is fixed or determinable, and

(iv) Collectability is reasonably assured.

Our wholly owned subsidiary, First Choice Apparel recognizes revenue from product sales or services rendered when the following four criteria are met: persuasive evidence of an arrangement exists, delivery has occurred or services have been rendered, the selling price is fixed or determinable, and collectability is reasonably assured.

We evaluate whether it is appropriate to record the gross amount of product sales and related costs or the net amount earned as commissions. Generally, when we are primarily obligated in a transaction, are subject to inventory risk, have latitude in establishing prices and selecting suppliers, or have several but not all of these indicators, revenue is recorded at the gross sale price. We generally record the net amounts as commissions earned if we are not primarily obligated and do not have latitude in establishing prices. Such amounts earned are determined using a fixed percentage, a fixed-payment schedule, or a combination of the two.

Product sales represent revenue from the sale of products and related shipping fees where we are the seller of record. Product sales and shipping revenues, net of promotional discounts, rebates, and return allowances, are recorded when the products are shipped and title passes to customers. Retail sales to customers are made pursuant to a sales contract that provides for transfer of both title and risk of loss upon our delivery to the carrier.

Cost of Sales -The Company’s policy is to recognize cost of sales in the same manner in conjunction with revenue recognition, when the costs are incurred. Cost of sales includes the costs directly attributable to revenue recognition and include marketing and leads generation costs and leads purchased costs.

Shipping and Handling

Shipping and handling costs are treated as a cost of sales and are reflected on the statement of operations as a reduction of gross profit. For the six month period ended December 31, 2014, we recorded $39,150 in shipping and handling expenses, included in our total cost of sales of $244,297.

Inventories - Inventories, consisting of products available for sale, are primarily accounted for using the FIFO method, and are valued at the lower of cost or market value. This valuation requires us to make judgments, based on currently-available information, about the likely method of disposition, such as through sales to individual customers, returns to product vendors, or liquidations, and expected recoverable values of each disposition category. Currently, all of our inventory are finished goods purchased from other suppliers.

Plan of Operation and Funding

We expect that working capital requirements will continue to be funded through a combination of our existing funds and further issuances of securities. Our working capital requirements are expected to increase in line with the growth of our business. In connection with our business plan, management anticipates additional increases in operating expenses and capital expenditures relating to: (i) inventory cost; (ii) advertisement expenses; and (iii) marketing expenses. We intend to finance these expenses with further issuances of securities, and potentially debt issuances. Thereafter, we expect we will need to raise additional capital and generate revenues to meet long-term operating requirements. Additional issuances of equity or debt securities could potentially result in dilution to our current shareholders. Further, such securities might have rights, preferences or privileges senior to our common stock. Additional financing may not be available upon acceptable terms, or at all. If adequate funds are not available or are not available on acceptable terms, we may not be able to take advantage of prospective new business endeavors or opportunities, which could significantly and materially restrict our business operations. We will have to raise additional funds in the next twelve months in order to sustain and expand our operations. We currently do not have a specific plan of how we will obtain such funding; however, we anticipate that additional funding will be in the form of equity financing from the sale of our common stock.

A large portion of the funds raised will be invested in inventory, advertising, marketing, and consulting fees. Our success is contingent upon having enough capital to build enough customers to support the business.  

We had cash of $40,980 on hand as of December 31, 2014, the most readily available recent date. The accumulated deficit as of December 31, 2014 was $11,767,035.

The Company’s current cash on hand is not sufficient to meet our working capital requirements for the next twelve month period. Completion of our plan of operations is subject to attaining adequate revenue. We cannot assure investors that adequate revenues will be generated. Even without adequate revenues within the next twelve months, we still anticipate being able to continue with our present activities, but we may require financing to achieve operation and growth goals and to meet our working capital requirements . We will not receive any proceeds from the sale of common stock in this offering. If we are able to conduct an equity offering, there will be dilution to the current stockholders of the Company and to the investors that acquire shares in the offering; and if we are able to conduct a debt offering, we will likely be subject to various covenants on our business operations and may be required to make payments during the term of the securities.

We anticipate that our operational, and general and administrative expenses for the next 12 months will total approximately $1,500,000. We also do not expect any significant additions to the number of employees, unless financing is raised. The foregoing represents our best estimate of our cash needs based on current planning and business conditions. The exact allocation, purposes and timing of any monies raised in subsequent private financings may vary significantly depending upon the exact amount of funds raised and our progress with the execution of our business plan.

Off-Balance Sheet Arrangements

As of the date of this Quarterly Report, we do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors.

Going Concern

The Company has suffered recurring losses from operations since inception and has a negative working capital. In addition, the Company has yet to generate an internal cash flow from its business operations. These factors raise substantial doubt as to the ability of the Company to continue as a going concern.

Management’s plans with regard to these matters encompass the following actions: 1) obtain funding from new investors to alleviate the Company’s working deficiency, and 2) implement a plan to generate sales. The Company’s continued existence is dependent upon its ability to resolve it liquidity problems and increase profitability in its current business operations. However, the outcome of management’s plans cannot be ascertained with any degree of certainty. The accompanying financial statements do not include any adjustments that might result from the outcome of these risks and uncertainties.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

No report required.

ITEM 4. CONTROLS AND PROCEDURES

Our management is responsible for establishing and maintaining a system of disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Exchange Act) that is designed to ensure that information required to be disclosed by us in the reports that we file or submit under the

Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is accumulated and communicated to the issuer’s management, including its principal executive officer or officers and principal financial officer or officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

On April 2, 2013, the Company was served with the Original Petition of Crimson Gray LLC, a vendor that had provided web site hosting services to the Company until the Company discovered that Crimson Gray LLC had, without the Company’s permission, set up a link on the Company’s web site designed to divert the Company’s agents to a web site owned by Crimson Gray LLC for the purpose of selling products to the Company’s customers. The actions of Crimson Gray LLC constituted breach of contract and fraud. Crimson Gray LLC is seeking payment for unpaid fees in the total amount of $9,593.41. On April 22, 2013, the Company filed its answer by denying each and every allegation in the Original Petition of Crimson Gray LLC and has filed a counterclaim against Crimson Gray LLC seeking damages for breach of contract and fraud.

On May 9, 2013, the Company was served with the Original Petition of Tonya Copeland, a former employee of the Company that had been terminated for cause. Tonya Copeland is seeking payment for severance pay and other damages in the total amount of $10,425.27. The Company has filed its answer by denying and each and every allegation in the Original Petition of Tonya Copeland.

As of the date of this report, Company Management is not aware of any other legal proceedings filed by any governmental authority or any other party involving our Company.

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

No report required.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

No report required.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

No report required.

ITEM 6. EXHIBITS

Exhibits:

SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.