AHII American Heritage International Inc (CE)

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

 FORM 10-Q

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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED: JUNE 30, 2014

OR

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

Commission File Number 000-55125

AMERICAN HERITAGE INTERNATIONAL INC

(Exact name of registrant as specified in its charter)

Tivoli Village, 410 South Rampart Blvd, Ste 390, Las Vegas, NV 89145

(Address of principal executive offices, including zip code)

(888) 745-4338

(Telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

YES x    NO o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

YES x    NO o

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

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

YES o  NO x

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: 99,866,250 shares of common stock, par value $0.001, as of August 14, 2014.

AMERICAN HERITAGE INTERNATIONAL INC.

FORM 10-Q

INDEX

FORWARD-LOOKING STATEMENTS

This Report on Form 10-Q contains forward-looking statements within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995.  Reference is made in particular to the description of our plans and objectives for future operations, assumptions underlying such plans and objectives, and other forward-looking statements included in this report.  Such statements may be identified by the use of forward-looking terminology such as “may,” “will,” “expect,” “believe,” “estimate,” “anticipate,” “intend,” “continue,” or similar terms, variations of such terms or the negative of such terms.  Such statements are based on management’s current expectations and are subject to a number of factors and uncertainties, which could cause actual results to differ materially from those described in the forward-looking statements.  Such statements address future events and conditions concerning, among others, capital expenditures, earnings, litigation, regulatory matters, liquidity and capital resources, and accounting matters.  Actual results in each case could differ materially from those anticipated in such statements by reason of factors such as future economic conditions, changes in consumer demand, legislative, regulatory and competitive developments in markets in which we operate, results of litigation, and other circumstances affecting anticipated revenues and costs, and the risk factors set forth under the heading “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2013 filed on March 31, 2014.

YOU SHOULD NOT PLACE UNDUE RELIANCE ON THESE FORWARD LOOKING STATEMENTS

The forward-looking statements made in this report on Form 10-Q relate only to events or information as of the date on which the statements are made in this report on Form 10-Q.  Except as required by law, we undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events, or otherwise, after the date on which the statements are made or to reflect the occurrence of unanticipated events.  You should read this report and the documents that we reference in this report, including documents referenced by incorporation, completely and with the understanding that our actual future results may be materially different from what we anticipate.

Unless otherwise indicated, in this Form 10-Q, references to “we,” “our,” “us,” the “Company,” “American Heritage” or the “Registrant” refer to American Heritage International Inc., a Nevada corporation.

(See Notes to Financial Statements)

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American Heritage International Inc.

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intangible assets exceeded their respective carrying values. We amortize intangible assets on a straight-line basis over a period of three years.

Revenue Recognition

Revenue is recognized in accordance with Staff Accounting Bulletin (“SAB”) No. 101, Revenue Recognition in Financial Statements, as revised by SAB No. 104. Revenue is derived from product sales and is recognized upon shipment to the customer, the sales price is fixed or determinable and collectability is reasonably assured. Ownership and title of our products pass to customers upon delivery of the products to customers. Returns are accepted, but are not significant to our overall operations. Net sales have been determined after deduction of discounts, slotting fees and other promotional allowances in accordance with ASC 605-50.   

Recent Pronouncements

We continually assess any new accounting pronouncements to determine their applicability to us. Where it is determined that a new accounting pronouncement affects our financial reporting, we undertake a study to determine the consequence of the change to our financial statements and assure that there are proper controls in place to ascertain that our financial statements properly reflect the change.

On June 10, 2014, the FASB published Accounting Standards Update No. 2014-10 “ASU No. 2014-10”, Development Stage Entities (Topic 915): Elimination of Certain Financial Reporting Requirements, Including an Amendment to Variable Interest Entities Guidance in Topic 810, Consolidation. ASU No. 2014-10 removes the definition of a development stage entity from the Master Glossary of the Accounting Standards Codification, thereby removing the financial reporting distinction between development stage entities and other reporting entities from U.S. GAAP. In addition, the amendments eliminate the requirements for development stage entities to (1) present inception-to-date information in the statements of income, cash flows, and shareholder equity, (2) label the financial statements as those of a development stage entity, (3) disclose a description of the development stage activities in which the entity is engaged, and (4) disclose in the first year in which the entity is no longer a development stage entity that in prior years it had been in the development stage. The amendments also clarify that the guidance in Topic 275, Risks and Uncertainties, is applicable to entities that have not commenced planned principal operations. ASU No. 2014-10 will be applied retrospectively and will be effective for public business entities in interim and annual periods beginning after December 15, 2014. The requirements will be effective for non-public business entities for annual periods beginning after December 15, 2014, and interim and annual periods thereafter. However, both public and non-public entities will have additional time to adopt the amendments to ASC 810. Early adoption is permitted in all cases. We have applied ASU No. 2014-10 retrospectively by eliminating the inception to date column in our statements of operations and cash flows.

3.

Going Concern

The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. We have begun operations but have not generated significant revenue to date. These conditions give rise to doubt about our ability to continue as a going concern. These financial statements do not include adjustments relating to the recoverability and classification of reported asset amounts or the amount and classification of liabilities that might be necessary should we be unable to continue as a going concern. Our continuation as a going concern is dependent upon our ability to obtain additional financing and to generate profits and positive cash flow. We will require a cash injection of $1,000,000 over the remainder of 2014 to achieve our business goals for fiscal 2014. We need these funds to purchase inventory and support accounts receivable and sustain planned operating losses.

4.     Intangible Assets

On August 28, 2013, we entered into an Asset Purchase Agreement (the “Purchase Agreement”) with American Heritage LLC and its principals. Under the Purchase Agreement, we acquired certain intellectual property related to the electronic cigarette business in exchange for 15,300 shares of our Series “A” Convertible

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Preferred Stock valued at $25,000. In addition, we capitalized an additional $5,500 related to our website development and package design. As of June 30, our intellectual property totaled $22,875, which is net of accumulated amortization of $7,625.

5.     Related Party Debt and Transactions

We were charged management fees by our former officer/director of $5,000 per month on a month-to-month basis. Total management fees are $nil and $30,000 for the six months ended June 30, 2014 and 2013, respectively.

During the year ended December 31, 2013 our current officers/directors loaned us $61,964. During the three months ended June 30, 2014 we received further loans of $2,259 and we repaid $910 of loans outstanding. As at June 30, 2014 we owe our officers/directors a total of $14,623. These loans are unsecured, non-interest bearing and due on demand.

Pursuant to two Executive Services Agreements effective October 1, 2013 with our current officers/directors we have accrued management fees of $5,000 per month for each of our two senior officers. As at June 30, 2014 we owe these senior officers a total of $90,000.

6.    Common Stock

a)

On January 31, 2014 we closed our $0.25 Unit non-brokered private placement and on March 20, 2014 we issued a total of 443,000 Units at $0.25 per Unit for total proceeds of $110,750. Each Unit contained one common share and one common share purchase warrant to acquire one additional common share at $0.40 per share expiring March 20, 2016.

b)

On February 1, 2014 we opened a non-brokered private placement offering of 2,000,000 Units at $1.00 per Unit. On March 20, 2014, having received $403,250 towards this offering, we issued a total of 403,250 Units at $1.00 per Unit. Each Unit contained one common share and one common share purchase warrant to acquire one additional common share at $1.50 per share expiring March 20, 2016. This offering closed on March 31, 2014.

c)

On March 20, 2014 we issued 20,000 common shares having a fair value of $30,000 pursuant to an Advisory Board Agreement. This amount is included in prepaid expense. This advisory board member is due advisory fees of $5,000 per month to be paid through issuance of common shares. As at June 30, 2014 a total of $15,000 was owed to an advisory board member to be paid by issuing 51,886 common shares. These shares have not yet been issued.

7.     Subsequent Events

We have evaluated all subsequent events through the date these financial statements were issued and determined that there were no subsequent events to disclose.

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Item 2.

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LIQUIDITY AND CAPITAL RESOURCES

As of June 30, 2014, we had working capital of $100,116 consisting of: cash - $95,039; accounts receivable –

$29,901; inventory - $72,531 (30,720 ‘sticks’ on hand); prepaid expense - $22,500; deposits - $18,520 and current liabilities of - $138,375 (including related party loans of $14,623 owing to our two senior executive officers, $90,000 of related party accounts payable and $33,752 of accounts payable). During 2014, our cash position increased by $79,293 to $95,039.

The following table sets forth the major sources and uses of cash for the six months ended June 30, 2014 and 2013:

Cash Used in Operating Activities

During 2014 our operating activities used cash of $361,616 in operating activities (2013 - $19,770). The use of cash was primarily attributable to funding our net loss of $330,913 offset by a non-cash charge of $5,083 for amortization of intangibles. We used $29,901 due to an increase in accounts receivable; we used $39,311 acquiring inventory from our manufacturer and we financed operations through: an increase in supplier financing of $14,445 (2013 - $1,318) and related party management fees owing of $60,000 (2013 - $24,000).

Cash Used in Investing Activities

We did not use any cash in investing activities during 2014 and 2013.

Cash from Financing Investing Activities

During 2014 financing activities provided $440,909 (2013 - $17,900) in cash consisting of $6,069 of non-interest bearing demand loans from related parties and $500,250 received from non-brokered Unit private placements of our equity securities, offset by the repayment of related party debts of $65,410.

Need for Additional Capital

In addition to the cash on hand as at June 30, 2014 of $95,039 we will require a cash injection of an additional $1,000,000 during the remainder of fiscal 2014 to achieve our 2014 operating plan. We plan to seek additional financing in a private equity offering to secure funding for operations. There can be no assurance that we will be successful in raising additional funding. If we are not able to secure additional funding, the implementation of our business plan will be impaired. There can be no assurance that such additional financing will be available to us on acceptable terms or at all. We do not have any firm commitments to raise capital at this time.

Off-Balance Sheet Arrangements

We have not engaged in any off-balance sheet arrangements.

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