NewAge, Inc. - Quarter Report: 2015 March (Form 10-Q)

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

For the Quarterly period ended March 31, 2015

[] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

Commission File No. 333-193725

AMERICAN BREWING COMPANY, INC.

(Exact Name of Small Business Issuer as specified in its charter)

Washington	27-2432263
(State or other jurisdiction incorporation or organization)	(IRS Employer File Number)

180 West Dayton Street
Warehouse 102
Edmonds, WA	98020
(Address of principal executive offices)	(zip code)

(425)-774-1717

(Registrant's telephone number, including area code)

Indicate by check mark whether the registrant: (1) 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 [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(Section 232.405 of this chapter) during the preceding 12 months(or such shorter period that the registrant was required to submit and post such files. Yes [X] No []

Indicate by check mark whether the registrant is a large accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer,” and “small 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]

As of May 14, 2015, registrant had outstanding 14,729,691 shares of the registrant's common stock.

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FORM 10-Q

AMERICAN BREWING COMPANY, INC.

TABLE OF CONTENTS

PART I FINANCIAL INFORMATION			PAGE

Item 1.	Financial Statements for the period ended March 31, 2015		3
		Balance Sheets (Unaudited)	3
		Statements of Operations (Unaudited)	4
		Statements of Cash Flows (Unaudited)	5
		Notes to Unaudited Financial Statements	6

Item 2.	Management’s Discussion and Analysis and Plan of Operation		12

Item 3.	Quantitative and Qualitative Disclosures About Market Risk		16

Item 4.	Controls and Procedures		16

Item 4T.	Controls and Procedures		16

PART II OTHER INFORMATION

Item 1.	Legal Proceedings		17

Item 1A.	Risk Factors		17

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		17

Item 3.	Defaults Upon Senior Securities		18

Item 4.	Mine Safety Disclosures		18

Item 5.	Other Information		18

Item 6.	Exhibits		18

Signatures			19

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AMERICAN BREWING COMPANY, INC.

BALANCE SHEETS

(UNAUDITED)

	March 31, 2015			December 31, 2014
ASSETS
Current Assets:
Cash and cash equivalents	$	458,135		$	98,898
Accounts receivable		50,032			43,779
Inventories		53,330			80,306
Prepaid expense		46,123			75,989
Total current assets		607,620			298,972
Property and equipment, net		983,509			992,139
Other assets		62,816			13,957
Total assets	$	1,653,945		$	1,305,068

LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable	$	38,032		$	69,667
Current portion of notes payable and capital leases, net of unamortized discounts		125,066			7,910
Current portion of related party debt, net of unamortized discounts		20,580			-
Accrued expenses and other current liabilities		680,428			677,928
Total current liabilities		864,106			755,505
Note payable and capital leases, less current portion, net of unamortized discounts		143,438			5,013
Related party debt, less current portion, net of unamortized discounts		17,258
Total liabilities		1,024,802			760,518
Stockholders' Equity:
Series A preferred stock, $0.001 par value: 770,193 authorized, 250,000 issued and outstanding		250			250
Series B convertible preferred stock, $0.001 par value: 229,807 authorized, 229,807 and none issued and outstanding, respectively		230			-
Common stock, $0.001 par value; 50,000,000 shares authorized; 13,045,220, and 12,715,220 shares issued and outstanding, respectively		13,046			12,716
Additional paid-in capital		2,916,184			2,656,728
Accumulated deficit		(2,300,567	)		(2,125,144	)
Total stockholders' equity		629,143			544,550
Total liabilities and stockholders' equity	$	1,653,945		$	1,305,068

The accompanying notes are an integral part of these unaudited condensed financial statements.

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AMERICAN BREWING COMPANY, INC.

STATEMENTS OF OPERATIONS

(UNAUDITED)


	March 31,
	2015			2014

Revenue	$	248,308		$	241,003
Less excise taxes		(4,909	)		(4,636	)
Net revenue		243,399			236,367
Cost of goods sold		228,806			184,862
Gross profit		14,593			51,505
Operating expenses:
Advertising, promotional and selling		30,789			24,147
Stock based compensation		66,266			560,917
General and administrative		88,569			124,486
Total operating expenses		185,624			709,550
Operating loss		(171,031	)		(658,045	)
Other (expense) income, net:
Interest, net		(4,392	)		(4,128	)
Gain on sale of property and equipment		-			6,053
Total other income (expense), net		(4,392	)		1,925
Net loss	$	(175,423	)	$	(656,120	)

Net loss per share, basic and diluted	$	(0.01	)	$	(0.06	)

Weighted average number of common shares outstanding, basic and diluted		12,760,220			11,571,298

The accompanying notes are an integral part of these unaudited condensed financial statements.

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AMERICAN BREWING COMPANY, INC.

STATEMENTS OF CASH FLOWS

(UNAUDITED)


	March 31,
	2015			2014
Cash flows from operating activities:
Net loss	$	(175,423	)	$	(656,120	)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
Depreciation and amortization		56,913			26,896
Amortization of stock based compensation		36,400			560,917
Gain on the disposition of property and equipment		-			(6,053	)
Changes in operating assets and liabilities:
Accounts receivable		(6,253	)		(21,015	)
Inventories		26,976			7,882
Prepaid expenses		29,866			-
Other assets		-			(7,755	)
Accounts payable		(31,635	)		60,191
Accrued expenses		2,500			42,469

Net cash (used in) provided by operating activities		(60,656	)		7,412

Cash flows from investing activities:
Purchases of property and equipment		(47,142	)		(319,434	)
Escrow deposit		(50,000	)		-
Proceeds from sale of property and equipment		-			22,000

Net cash used in investing activities		(97,142	)		(297,434	)

Cash flows from financing activities:
Proceeds from notes payable and capital leases, net of original issue discounts		424,322			-
Proceeds from related party debt, net of original issue discounts		110,000			-
Issuance of stock for cash, net of commissions paid		-			86,800
Repayment of notes payable and capital lease payments		(17,287	)		(9,723	)

Net cash provided by financing activities		517,035			77,077

Net change in cash and cash equivalents		359,237			(212,945	)
Cash and cash equivalents at beginning of period		98,898			428,574

Cash and cash equivalents at end of period	$	458,135		$	215,629

Supplemental disclosure of cash flow information:
Interest paid	$	4,392		$	4,100
Income taxes paid		-			-

Noncash transactions:
Debt discount due to preferred stock issued with notes payable and related party debt	$	185,176		$	-
Debt discount due to common stock issued with notes payable and related party debt		38,440			-
Issuance of common stock for prepaid consulting services		-			600,000
Transfer of deposit on equipment to property and equipment for equipment placed in service		-			223,000

The accompanying notes are an integral part of these unaudited condensed financial statements.

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AMERICAN BREWING COMPANY, INC.

NOTES TO UNAUDITED FINANCIAL STATEMENTS

NOTE A –Basis of Presentation

The accompanying unaudited interim financial statements as of March 31, 2015 of American Brewing Company, Inc. (the "Company"), have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission ("SEC"), and should be read in conjunction with the audited financial statements and notes thereto contained in the Company's Form 10-K filed with the SEC on April 15, 2015. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim periods presented have been reflected herein. The results of operations for interim periods are not necessarily indicative of the results to be expected for future quarters or for the full year. Notes to the financial statements which substantially duplicate the disclosure contained in the audited financial statements for fiscal 2014 as reported in the Form 10-K have been omitted.

Reclassifications

Certain prior year amounts have been reclassified to conform to the current year presentation.

Concentrations

As of March 31, 2015 there were four customers that represented 92% of Accounts Receivable. For the quarters ended March 31, 2015 and 2014, three customers represented approximately 56% and 57% of revenue, respectively. For the quarters ended March 31, 2015 and 2014, two suppliers of grain and bottling services represented approximately 36% and 51% of the cost of goods sold, respectively.

NOTE B – Going Concern

The accompanying financial statements have been prepared assuming the Company will continue as a going concern, which contemplates, among other things, the realization of assets and satisfaction of liabilities in the normal course of business. The Company had an accumulated deficit of approximately $2,300,000 and $2,125,000 as of March 31, 2015 and December 31, 2014, respectively, has a history of recurring net losses and negative working capital. These matters, among others, raise substantial doubt about our ability to continue as a going concern.

While the Company is attempting to increase sales and generate additional revenues, the Company's cash position may not be significant enough to support the Company's daily operations. Management intends to raise additional funds by way of a public or private offering. Management believes that the actions presently being taken to further implement its business plan and generate additional revenues provide the opportunity for the Company to continue as a going concern. While the Company believes in the viability of its strategy to generate additional revenues and in its ability to raise additional funds, there can be no assurances to that effect. The ability of the Company to continue as a going concern is dependent upon the Company's ability to further implement its business plan and generate additional revenues.

The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

NOTE C – Inventories

Inventories consist of raw materials, work in process and finished goods. Raw materials, which principally consist of hops, other brewing materials, are stated at the lower of cost, determined on the first-in, first-out basis, or market. Inventories are generally classified as current assets. The Company has yearly contracts with vendors to supply essential hop varieties on-hand in order to limit the risk of an unexpected reduction in supply or price fluctuations. The cost elements of work in process and finished goods inventory consist of raw materials, direct labor and direct overhead.

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AMERICAN BREWING COMPANY, INC.

NOTES TO UNAUDITED FINANCIAL STATEMENTS

Inventories consisted of the following as of:


	March 31, 2015			December 31, 2014

Raw materials		$	16,743		$	13,011
Work in progress			13,875			53,145
Finished goods			22,712			14,150

		$	53,330		$	80,306

NOTE D – Notes Payable and Capital Leases

Notes payable and capital leases consisted of the following as of:


	March 31, 2015			December 31, 2014

Notes payable, net of unamortized discounts of $152,954 and $0, respectively	$	261,251		$	-
Related party debt, net of unamortized discounts of $72,912 and $0, respectively		37,838			-
Capital leases		7,253			12,923
		306,342			12,923
Less current portion, net of unamortized discounts of $40,690 and $0, respectively		(145,646	)		(7,910	)

Long-term portion, net of unamortized discounts of $185,176 and $0, respectively	$	160,696		$	5,013

Related Party Debt

The Company received debt from a member of management used in the proposed purchase of B&R Liquid Adventure (See Note H Subsequent Events for more information). The amounts received total $110,000 and remain outstanding as of March 31, 2015. The two notes of $50,000 and $60,000 each bear interest of 8% and 10% per annum and are payable in 60 days and 5 years, respectively and are described in further detail in the following notes payable disclosure. There was no related party debt outstanding as of December 31, 2014.

Notes Payable

On or about January 15, 2015 the Company entered into a security Equipment Financing Agreement with Pinnacle Capital Partners for $124,322. The note requires 48 monthly payments of $3,218 each of which include $628 in interest. The note cannot be prepaid. As of March 31, 2015 the remaining balance of this note is $112,705.

On or about March 26, 2015 the Company entered into three 60 day promissory notes for cash proceeds of $50,000 each (including one from a related party employee for $50,000 described above). Each note has a 1.5% loan fee and bears an interest rate of 8% per annum. The loan fees resulted in aggregate discounts to the notes of $2,250. The notes also included an equity payment totaling 230,000 shares of common stock that was issued with the debt. The Company has allocated the loan proceeds among the debt and the stock based upon relative fair value. The relative fair value of the stock was determined to be $38,440 and it was recorded as a debt discount. As of March 31, 2015 no payments have been made on these notes and with $111,560 outstanding, net of discounts. The discounts of $40,690 will be amortized over the life of the loans to interest expense.

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AMERICAN BREWING COMPANY, INC.

NOTES TO UNAUDITED FINANCIAL STATEMENTS

On or about March 31, 2015 the Company entered into two promissory notes totaling $260,000 (including one from a related party employee for $60,000 described above) with an interest rate of 10% per annum due and payable beginning June 30, 2015 maturing on March 31, 2020. Payments of interest are required quarterly. Should the Company be successful in raising $2,000,000 or more in funding the entire balance of the note will be due immediately. The notes were issued in conjunction with an equity payment totaling 229,807 shares of Series B preferred stock that was issued with the debt. The Company has allocated the loan proceeds among the debt and the stock based upon relative fair value. The relative fair value of the stock was determined to be $185,176 based upon the fair market value of the common stock on the dates of issuance at a ratio of 8 common shares of stock to every one share of preferred series B stock and it was recorded as a debt discount. As of March 31, 2015 no payments have been made on these notes and with $74,824 outstanding, net of discounts. The discounts of $185,176 will be amortized over the life of the loans to interest expense.

Capital Leases

The Company has entered into various capital lease agreements to obtain property and equipment for operations. These agreements range from 2 to 3 years with interest rates ranging from 5% to 6%. These leases are secured by the underlying leased property and equipment.

NOTE E – Stockholders' Equity

Common and Preferred Stock

The Company issued 100,000 shares of common stock to Institutional Analyst, Inc for services rendered on or about February 20, 2015. The Company estimated the fair market value to be $0.364 per share and as a result, recorded expenses of $36,400 under general and administrative expenses in the accompanying statements of operations as of March 31, 2015.

On or about March 26, 2015 the Company issued 230,000 shares of common stock in conjunction with three promissory notes. As discussed in Note D the shares were valued based on the fair market value of the common stock and discounted based on the relative value of these shares to the debt resulting in a recorded value of $38,440 recognized as a debt discount.

During the period ended March 31, 2015, the Company authorized and issued 229,807 shares of non-voting preferred Series B stock, not eligible for dividends, with a par value of $0.001 per share and a conversion rate of 8 shares of common stock per share of Series B preferred stock and a rank equal to common stock and below Series A preferred stock. As discussed in Note D the shares were sold in conjunction with two promissory notes and valued based on the fair market value of the common stock and discounted based on the relative value of these shares to the debt resulting in a recorded value of $185,176.

Warrants

As of March 31, 2015, the Company has warrants to purchase 1,025,000 shares of common stock outstanding, with exercise prices between $0.50 and $1.00, expiration dates between September 2016 and October 2019. The intrinsic value of the warrants is $0 as of March 31, 2015.

NOTE F – Commitments and Contingencies

Purchase Commitments

The Company entered into contracts for the supply of a portion of its hops requirements. These purchase contracts extend through crop year 2018 and specify both the quantities and prices to which the Company is committed. As of March 31, 2015, hops purchase commitments outstanding was approximately $873,000. As of March 31, 2015, projected cash outflows under hops purchase commitments for each of the remaining years under the contracts are as follows:

Remaining 2015	$	144,000
2016		230,000
2017		229,000
2018		270,000
	$	873,000

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AMERICAN BREWING COMPANY, INC.

NOTES TO UNAUDITED FINANCIAL STATEMENTS

These commitments are not accrued in the balance of the Company as of March 31, 2015. In addition, the Company has elected not to recognize the purchase contracts as cash flow hedges in accordance with ASC Topic 815, Derivatives and Hedges.

Lease Commitments

On or about December 1 2013, the Company entered into a facilities lease with a third party. The lease term is 25 months. The monthly base rent of $4,709 increases annually based on the Consumer Price Index All Urban Consumers U.S. City Average. Monthly rent payments also include common area maintenance charges, taxes, and other charges. On or about December 24, 2014 the company amended this lease to add an additional 2,016 square feet of warehouse space. As of March 31, 2015, the minimum monthly lease payment was $5,424. Rent expense was approximately $16,000 and $9,500 for quarter ended March 31, 2015 and 2014 respectively.

On or about September 28, 2011, the Company entered into a keg rental supply and services agreement with a third party. The initial rental period is a term of 36 months, and began on the date of delivery of the kegs. The agreement automatically extends on month-to-month basis for an additional 36 months, unless terminated by either party with a 30 day notice. Monthly keg rental fees are $512 and $476 for the initial and extended rental period, respectively. A deposit of $4,000 was made prior to delivery. On or about January 31, 2015 the Company exercised the buyout option on this lease and paid $11,600 for the 200 1/6 barrel kegs no further payments will be made.

On or about October 21, 2011, the Company entered into a keg rental supply and services agreement with a third party. The initial rental period is a term of 36 months, and began on the date of delivery of the kegs. The agreement automatically extends on month-to-month basis for an additional 36 months. After the 72nd month, the Company can elect to enter into a final 24 month rental period. At the conclusion of the final rental period the Company can purchase the kegs between $40 to $50 each. Monthly keg rental fees are $670, $622, and $500 for the initial, extended and final rental period. On or about January 31, 2015 the Company exercised the buyout option on this lease and paid $17,200 for the 200 ½ barrel kegs no further payments will be made.

On or about January 24, 2012, the Company entered into a keg rental supply and services agreement with a third party. The initial rental period is a term of 36 months, and began on the date of delivery of the kegs. The agreement automatically extends on month-to-month basis for an additional 36 months. After the 72nd month, the Company can elect to enter into a final 24 month rental period. At the conclusion of the final rental period the Company can purchase the kegs between $40 to $50 each. Monthly keg rental fees are $670, $622, and $500 for the initial, extended and final rental period. A deposit of $4,000 was made prior to delivery. On or about January 31, 2015 the Company exercised the buyout option on this lease and paid $17,200 for the 200 ½ barrel kegs no further payments will be made.

Aggregate minimum annual rental payments for all operating lease agreements as of March 31, 2015, are as follows:

Remaining 2015	$	49,000

	$	49,000

Keg lease expense was approximately $2,000 and $5,500 for the quarters ended March 31, 2015 and 2014 respectively.

Consulting Agreement

During the fiscal year ended December 31, 2014, the Company entered into various consulting agreements for services to be provided over terms from three to twelve months for a total of 1,302,500 shares of fully vested and non-forfeitable common stock. The Company valued these shares at $726,800 (based on the estimated fair market value of the Company's stock on the date of grant) and recorded a prepaid expense to be amortized to general and administrative expense over the term of the agreement. $28,569 was amortized during the three months ended March 31, 2015 with the remaining balance of $43,531 as a prepaid expense asset on the accompanying balance sheet as of March 31, 2015.

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AMERICAN BREWING COMPANY, INC.

NOTES TO UNAUDITED FINANCIAL STATEMENTS

On October 26, 2014, the Company entered into a consulting agreement in exchange for 25,000 warrants to purchase 25,000 shares of common stock. The Company valued the warrant at $0.06 per share (based on the Black-Scholes option pricing model on the date of grant) and recorded a prepaid expense to be amortized to general and administrative expense over the term of the agreement. $1,297 was amortized during the three months ended March 31, 2015 the remaining balance of $2,592 as a prepaid expense asset on the accompanying balance sheet as of March 31, 2015.

On or about March 2, 2015, the Company entered into consulting and professional services agreements with a third party for business consulting services. The agreements required the Company to issue to the third party 100,000 shares of common stock share for services to be performed or to be performed. The consulting agreement is for no stated duration and the shares vest immediately. The Company valued these shares at $0.364 per share and recorded a $36,400 expense to general and administrative expenses in the accompanying results of operations during the three months ended March 31, 2015.

NOTE G – Segment Information

The Company's operations are classified into the sale of alcohol to retail customers through the Company's tasting room, and wholesale sales to distributors. Our retail division is located in the greater Seattle, Washington area and serves walk-in customers seven days a week. Our wholesale division sells to distributors primarily in the greater Seattle, Washington area. Although both segments are involved in the sale and distribution of alcohol, they serve different customers and are managed separately, requiring specialized expertise. We determined our operating segments in accordance with FASB ASC Topic 280, Segment Reporting.

Results of the operating segments are as follows:

	Three Months Ended March 31, 2015
	Retail			Wholesale		Total

Sales		$	82,225	$	166,083	$	248,308
Less excise taxes			1,620		3,289		4,909
Net revenue			80,605		162,794		243,399
Cost of goods sold			75,506		153,300		228,806
Gross profit		$	5,099	$	9,494	$	14,593


	As of March 31, 2015
Accounts receivable		$	-	$	50,032	$	50,032

Property and equipment,
net of accumulated depreciation		$	46,575	$	936,934	$	983,509

	Three Months Ended March 31, 2014
	Retail		Wholesale		Total

Sales	$	69,834	$	171,169	$	241,003
Less excise taxes		1,343		3,293		4,636
Net revenue		68,491		167,876		236,367
Cost of goods sold		53,610		131,252		184,862
Gross profit	$	14,881	$	36,624	$	51,505

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AMERICAN BREWING COMPANY, INC.

NOTES TO UNAUDITED FINANCIAL STATEMENTS

NOTE H – Subsequent Events

On April 1, 2015 the Company, entered into an Asset Purchase Agreement whereby the Company acquired substantially all of the operating assets of B&R Liquid Adventure, LLC a California Limited Liability Company ("B&R"), a company engaged in the manufacture of Bucha Live Kombucha, a gluten free, organic certified, sparkling kombucha tea. On April 1, 2015, the parties executed all documents related to the Acquisition. The Company has placed $50,000 in escrow as of March 31, 2015 related to the purchase.

Upon the closing of the Acquisition, the Company received substantially all of the operating assets of B&R, consisting of inventory, fixed assets and intellectual property valued at $275,000 in exchange for 1,479,290 shares of common stock valued at $500,000, a cash payment of $260,000, and a secured promissory note in an amount of $140,000. See Form 8-k filed with the SEC on April 2, 2015 for more detailed information.

On or about April 20, 2015 the Company and two officers agreed to forgive $500,000 of the $600,000 in accrued officer compensation included on the accompanying balance sheet for the period ending March 31, 2015 under accrued expenses and other current liabilities.

On or about April 22, 2015 the Company entered into a promissory note for $50,000 carrying an interest rate of 3% per month for a term of 90 days. Payment of the principle and accrued interest are due in 90 days from the date of issue with no payments made to date.

On or about April 27, 2015 the Company issued 120,181 common shares to three employees as bonus compensation. The Company estimated the fair market value of these shares at $0.44 per share totaling approximately $52,880 that will be recorded as compensation expense.

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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS AND PLAN OF OPERATION

The following discussion of our financial condition and results of operations should be read in conjunction with, and is qualified in its entirety by, the consolidated financial statements and notes thereto included in Item 1 in this Quarterly Report on Form 10-Q. This item contains forward-looking statements that involve risks and uncertainties. Actual results may differ materially from those indicated in such forward-looking statements.

Forward-Looking Statements

This Quarterly Report on Form 10-Q and the documents incorporated herein by reference contain forward-looking statements. Such forward-looking statements are based on current expectations, estimates, and projections about our industry, management beliefs, and certain assumptions made by our management. Words such as "anticipates", "expects", "intends", "plans", "believes", "seeks", "estimates", variations of such words, and similar expressions are intended to identify such forward-looking statements. These statements are not guarantees of future performance and are subject to certain risks, uncertainties, and assumptions that are difficult to predict; therefore, actual results may differ materially from those expressed or forecasted in any such forward-looking statements. Unless required by law, we undertake no obligation to update publicly any forward-looking statements, whether as a result of new information, future events, or otherwise. However, readers should carefully review the risk factors set forth herein and in other reports and documents that we file from time to time with the Securities and Exchange Commission, particularly the Report on Form 10-K, Form 10-Q and any Current Reports on Form 8-K.

Overview and History

American Brewing Company, Inc. was formed under the laws of the State of Washington on April 26, 2010. The Company amended its articles of incorporation on October 11, 2011, in order to change its capital structure and authorize 100,000 common shares of Voting Stock and 100,000 shares of Non-Voting Common Stock. The Company also amended its articles of incorporation on June 25, 2013, in order to change its capital structure, and now has authorized 50,000,000 shares of Common Stock and 1,000,000 shares of Preferred Stock, with 250,000 of the Preferred Shares being classified as Series A Preferred Stock, and 229,807 shares as Series B Preferred Stock. As part of the recapitalization and amendment to the Company's articles of incorporation on June 25, 2013, the Company also converted its corporate entity from an "S" Corporation to a "C" Corporation. The Company is a micro brewing company based out of Edmonds, Washington, and currently has four beers in its portfolio and continues to develop new flavors for distribution to its customers. American Brewing Company is currently conducting operations and generating revenue.

The Company operations are currently being conducted out of the Company brewery and office located at 180 West Dayton Street, Warehouse 102, Edmonds, WA 98020; (425) 774-1717. It considers that the current principal office space arrangement adequate and will reassess its needs based upon the future growth of the Company. Its fiscal year end is December 31st.

The Company practices the "Northwest Style" of brewing, which is a style that utilizes generous amounts of hops. Currently, the Company's four main beer products are: (1) Flying Monkey Dogfight Pale Ale, (2) Breakaway IPA, (3) American Blonde, and (4) Caboose Oatmeal Stout.

In addition to its beer brewing operations, the Company also is engaged in the production and sale of Bucha Live Kombucha, which is a gluten free, organic certified, sparkling kombucha tea. The company acquired the assets related to the production and sale of its kombucha product pursuant to an Asset Purchase Agreement dated April 1, 2015.

Revenue Model and Distribution methods of the products or services

Our revenue model is based on selling our current products, creating additional products and customer development. We produce our micro-brew and kombucha products and sell them to consumers through third party distributors. We also sell our products directly to consumers in our brewery tasting room. We generate revenue through the sale of our products to consumers at our onsite tasting room as well as through our distributors. Through the period ended March 31, 2015, we generated most of our revenue through the sale of our four main beer products. We plan on expanding our product line to additional long term beer products that we will create consistently, as well as beer products that we will make on a seasonal basis.

We are currently focusing our attention on the distribution of our beer products in Washington, North Carolina and Canada, but expect to expand to Idaho, Oregon, Michigan, Nevada, New Jersey and Montana, with a view to distribute nationwide in the near future.

Due to the acquisition of Bucha Live Kombucha on April 1, 2015, we have also begun selling our kombucha products.

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Results of Operations

For the Three Months Ended March 31, 2015 Compared to the Three Months Ended March 31, 2014, in Aggregate

The Company generated $248,308 in revenue for the three month period ended March 31, 2015, which compares to revenue of $241,003 for the three month period ended March 31, 2014. Our revenues increased during the three month period ended March 31, 2015 due to increased sales of our products. As our Company has now been in operation for several years, we have begun to generate new consumers that become aware of our products either through word of mouth, new restaurant or bar placements, advertising or self placements in grocery stores. While our overall capacity was fixed, we simply had more consumer demand, including more customers who purchased our beer products and merchandise in our tasting room. In addition, during the three months ended March 31, 2014, our brewery was shut down on several occasions during our expansion and remodel project, meaning that our sales and operations were limited to the periods in which the brewery was open and functioning during our remodel. Now that our remodel has been completed, we do not foresee any additional shut down periods.

Cost of goods sold for the three month period ended March 31, 2015 was $228,806, which compares to cost of goods sold of $184,862 for the three months ended March 31, 2014. Our revenue increased during the three month period ended March 31, 2015, and as our revenue increased, our cost of goods sold correspondingly increased.

Operating expenses, which consisted of advertising, promotional and selling costs, as well as amortization of stock based compensation and general and administrative expenses, for the three month period ended March 31, 2015, were $185,624. This compares with operating expenses for the three month period ended March 31, 2014 of $709,550. The decrease in our operating expenses is primarily related to a substantial decrease in our non-cash stock based consulting expenses.

For the Three Months Ended March 31, 2015 Compared to the Three Months Ended March 31, 2014, retail sales

The Company generated $82,225 in revenue related to retail sales for the three months ended March 31, 2015, which compares to revenue related to retail sales of $69,834 for the three months ended March 31, 2014. The increase was attributed to purchases in our tasting room, which was reopened upon completion of our remodel and expansion project.

Cost of Goods Sold for the three months ended March 31, 2015 related to our retail sales was $75,506, which compares with cost of goods sold related to our retail sales for the three months ended March 31, 2014 of $53,610. Our revenue related to retail sales increased during the period ended March 31, 2015, and as our revenue increased, our cost of goods sold correspondingly increased. Due to the increase in sales and revenue, we were required to purchase additional raw materials used in the production of our products, which had a direct effect on the increase in our cost of goods sold.

For the Three Months Ended March 31, 2015 Compared to the Three Months Ended March 31, 2014, wholesale sales

The Company generated $166,083 in revenue related to wholesale sales for the three months ended March 31, 2015, which compares to $171,169 in revenue related to wholesale sales for the three months ended March 31, 2014. During the three months ended March 31, 2015, our wholesale revenue decreased slightly, but remained similar to the prior period due to the fact that we did not increase our sales to wholesale accounts.

Cost of Goods Sold related to wholesale sales for the three months ended March 31, 2015 was $153,300, which compares with cost of goods sold related to wholesale sales for the three months ended March 31, 2014 of $131,252. The increase in cost of goods sold during the period ended March 31, 2015 is due to the Company having to dump several batches of beer during the three months ended March 31, 2015, and then repurchase the same materials used to brew the beer and brew replacement batches. Therefore, our Cost of Goods Sold related to wholesale sales has increased even though our revenue for wholesale sales decreased during the period.

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As a result of the foregoing, we had a net loss of $175,423 for the three month period ended March 31, 2015. This compares with a net loss for the three month period ended March 31, 2014 of $656,120.

Going Concern

In its audited financial statements as of December 31, 2014, the Company was issued an opinion by its auditors that raised substantial doubt about the ability to continue as a going concern based on the Company's current financial position. Our ability to achieve and maintain profitability and positive cash flow is dependent upon our ability to successfully develop and market our products and our ability to generate revenues.

Liquidity and Capital Resources

As of March 31, 2015 we had cash of $458,135. As of December 31, 2014, we had cash of $98,898.

We believe that with our existing cash flows, and assuming our current level of operations, we have sufficient cash to meet our operating requirements for the next twelve months due to the fact that our revenues are increasing, and due to our expansion, we believe our revenues will continue to increase. While our expansion product has affected our liquidity in the past, due to the fact that we used revenue generated by our sales to fund a majority of the expansion, we believe that as our revenue increases, we will be able to fund our operations without the need for additional capital, other than our future revenue and sales of our common stock. Our current source of liquidity is the revenue generated by our operations, as well as any proceeds received from the sale of our common stock. We believe that the amount of revenue we are generating will allow us to meet our operating requirements during the next twelve months, again due to the fact that our revenues have increased during the period described in this report. If our revenue is not sufficient to allow us to meet our cash requirements during the next twelve months, the Company may need to raise additional funds through the sale of its equity securities. Our principal source of liquidity on a long term (greater than 12 months) basis will continue to be the revenue generated from our operations. If our revenue is not sufficient for us to continue business operations on a long term basis, we may need to sell our common stock in order to continue operations and reach our expansion goals.

Net cash used in operating activities was $60,656 for the three months ended March 31, 2015. This compares to net cash provided by operating activities of $7,412 for the three months ended March 31, 2014.

Cash flows used in investing activities was $97,142 for the three months ended March 31, 2015. This compares to net cash used in investing activities of $297,434 for the three months ended March 31, 2014. We anticipate significant cash outlays for investing activities over the next twelve months due to geographical expansion and additional acquisitions. We plan to use our revenue and the proceeds from the sale of our common stock to pay for costs associated with our geographical and operational expansion plans and additional acquisitions.

Cash flows provided by financing activities was $517,035 for the three months ended March 31, 2015, which compares to cash flows provided by financing activities of $77,077 for the three months ended March 31, 2014.

As of March 31, 2015, our total assets were $1,653,945 and our total liabilities were $1,024,802. As of December 31, 2014, our total assets were $1,305,068 and our total liabilities were $760,518.

Off-Balance Sheet Arrangements

Remaining 2015	$	144,000
2016		230,000
2017		229,000
2018		270,000
	$	873,000

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The Company entered into keg rental supply and services agreements with third parties. Aggregate minimum annual rental payments for all operating lease agreements as of March 31, 2015, are as follows:

Remaining 2015	$	49,000

	$	49,000

These commitments are not accrued in the balance sheet of the Company at March 31, 2015 or December 31, 2014.

Revenue Recognition

The Company records revenue on the accrual basis when all goods and services have been performed and delivered, the amounts are readily determinable, and collection is reasonably assured.

Immediate Plan of Operation:

At present management will concentrate on the continued expansion of its customer base through new geographical sales regions, create its current products and develop additional products. As of the date of this filing, our business expansion project has been completed, with the final two fermentors and one brite tank having been installed. Also, all of the installation of the equipment in the brewery, consisting of the new cold storage box, chiller and coolfit piping was completed. The remodel of the tasting room has been completed. Finally, the new Brew House has also been installed.

The remodel of our facility was undertaken primarily to create additional space for the expansion of our operations. The seating capacity of the tasting room did not change and we preserved the customer's ability to drink outdoors in our beer garden. The secondary purpose was to add an element of food for customers visiting the brewery. We added pre-made sandwiches and pizzas. The effect of this has been growth to our revenues originating from sales made in the tasting room. We attribute this to customer retention due to the customer having the ability to order food on site, which has extended the average visit time resulting in higher sales.

The expansion replaced and upgraded the entire infrastructure within the brewery itself. This increased both efficiencies and total brewing capacity. We now have the ability to brew 6 times faster than before with the same amount of labor. Our total capacity will increase to 4 times the previous total barrels per year, now that we have installed the final 2 fermentors and 1 brite tank. It is difficult to determine the exact impact on revenues, however, we now have the capacity to increase our revenues by one or more multiples.

Continuing Plan of Operation (0-12 months):

The Company will continue to develop its current products and add new seasonal and permanent products. The Company will begin marketing and advertising its services, and will continue to participate in conventions and contests around the United States in order to increase awareness of its products. The goal for the Company in the next twelve months is to market its new facility to create more tasting room purchases, develop additional beer products, and increase its customer base through brand recognition, advertising, marketing, and increased public awareness through events held in its brewery location, as well as national contests and competitions.

With regard to the expanded product line, we have begun selling of our first 12 ounce cans. We are also continuing to develop, evaluate and release new beer types and packaging styles.

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With regard to expanding the Company's geographic customer base, the Company is waiting to see the effect the brewery additions and product additions will have on our current customer base. If the Company has excess capacity at that point, then it will consider the additions of Idaho, Western Montana and Oregon. Prior to expanding to the new states, the Company will increase its customer base in Canada and send more product types to North Carolina.

The Company also plans to begin acquiring additional assets and business related to the brewing industry, in order to increase its asset base and revenue generating potential.

Finally, due to the acquisition of Bucha Live Kombucha, the Company also plans to increase its sales related to its kombucha product, as the production and sale of the kombucha product have already begun.

Recently Issued Accounting Pronouncements

We have reviewed all recently issued, but not yet effective, accounting pronouncements and do not believe the future adoption of any such pronouncements may be expected to cause a material impact on our financial condition or the results of our operations.

Seasonality

The Company's business is subject to substantial seasonal fluctuations. Historically, a significant portion of the Company's net sales and net earnings have been realized during the period from April through December, and levels of net sales and net earnings have generally been significantly lower during the period from January through March.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

As a "smaller reporting company" as defined by Item 10 of Regulation S-K, the Company is not required to provide information required by this Item.

ITEM 4. CONTROLS AND PROCEDURES

Not applicable.

ITEM 4T. CONTROLS AND PROCEDURES

The Company's management conducted an evaluation of the effectiveness of the Company's disclosure controls and procedures (as such term is defined in Rule 13a-15(e) and Rule 15d-15(e) under the 1934 Act) pursuant to Rule 13a-15 under the 1934 Act. The Company's disclosure controls and procedures are designed to ensure that information required to be disclosed in the reports it files or submits under the 1934 Act is recorded, processed, summarized and reported on a timely basis and that such information is communicated to management and the Company's board of directors to allow timely decisions regarding required disclosure.

Based on this evaluation, it has been concluded that the design and operation of our disclosure controls and procedures are not effective since the following material weaknesses exist:

·	Since inception our chief executive officer also functions as our chief financial officer. As a result, our officers may not be able to identify errors and irregularities in the financial statements and reports.

We were unable to maintain full segregation of duties within our financial operations due to our reliance on limited personnel in the finance function. While this control deficiency did not result in any material adjustments to our financial statements, it could have resulted in a material misstatement that might have been prevented or detected by a segregation of duties.

·	Documentation of all proper accounting procedures is not yet complete.

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To the extent reasonably possible given our limited resources, as financial resources become available we intend to take measures to cure the aforementioned weaknesses, including, but not limited to, the following:

·	Increasing the capacity of our qualified financial personnel to ensure that accounting policies and procedures are consistent across the organization and that we have adequate control over financial statement disclosures.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting that occurred during the last fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

There are no legal proceedings, to which we are a party, which could have a material adverse effect on our business, financial condition or operating results.

ITEM 1A. RISK FACTORS

There have been no changes to our Risk Factors included in our Registration Statement on Form S-1 that became effective with the Securities and Exchange Commission on April 18, 2014.

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

On March 2, 2015, the Company issued 100,000 shares of Common Stock to an unaffiliated third party as compensation for consulting services.

On March 25, 2015, the Company entered into a Preferred Stock Purchase Agreement with an unaffiliated third party, whereby the Company sold 176,734 shares of its Series B Preferred Stock for a purchase price of $200,000. In addition to the shares of Preferred Stock, the purchaser also received a Promissory Note in an amount of $200,000.

On March 31, 2015, the Company entered into a Preferred Stock Purchase Agreement with an unaffiliated third party, whereby the Company sold 53,073 shares of its Series B Preferred Stock for a purchase price of $60,000. In addition to the shares of Preferred Stock, the purchaser also received a Promissory Note in an amount of $60,000.

The shares of Series B Preferred Stock rank even to the Company's Common Stock, are not eligible for dividends, have equal liquidation preference with our Common Stock, and have no voting rights. The Series B Preferred Shares are convertible into eight shares of Common Stock for each share of Series B Preferred Stock held, with the limitation that no shares of Series B Preferred Stock may be converted in an amount that would result in the beneficial ownership of greater than 9.99% of the outstanding Common Stock of the Company.

Upon the closing of the Acquisition of B&R Liquid Adventure, LLC, the Company received substantially all of the operating assets of B&R, consisting of inventory, fixed assets and intellectual property valued at $275,000 in exchange for 1,479,290 shares of common stock valued at $500,000, a cash payment of $260,000, and a secured promissory note in an amount of $140,000. See Form 8-k filed with the SEC on April 2, 2015 for more detailed information.

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ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS

EXHIBITS. The following exhibits required by Item 601 to be filed herewith are incorporated by reference to previously filed documents:

Exhibit Number		Description

31.1		Certification of Chief Executive Officer pursuant to Section 302

31.2		Certification of Chief Financial Officer pursuant to Section 302

32.1		Certification of Chief Executive Officer pursuant to Section 906

32.2		Certification of Chief Financial Officer pursuant to Section 906

101.INS**		XBRL Instance Document

101.SCH**		XBRL Taxonomy Schema

101.CAL**		XBRL Taxonomy Calculation Linkbase

101.DEF**		XBRL Taxonomy Definition Linkbase

101.LAB**		XBRL Taxonomy Label Linkbase

101.PRE**		XBRL Taxonomy Presentation Linkbase

Furnished herewith. XBRL (eXtensible Business Reporting Language) information is furnished and not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.

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SIGNATURES

In accordance with Section 12 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 on May 14, 2015.

	American Brewing Company, Inc.

	By: /s/ Neil Fallon

	Neil Fallon, Chief Executive Officer


	By: /s/ Julie Anderson

	Julie Anderson, Vice President

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following person on behalf of the Registrant and in the capacity and on the date indicated.

/s/ Neil Fallon	Chief Executive Officer, Chief Financial Officer and Director	May 14, 2015
Neil Fallon	Title	Date

/s/ Julie Anderson	Vice President and Director	May 14, 2015
Julie Anderson	Title	Date

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