CMOT Curtiss Motorcycles Company Inc (PK)

 

UNITED STATES

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

 

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

 

CONFEDERATE MOTORS, INC.

 

DELAWARE		000-52500		26-4182621
(State or other jurisdiction of incorporation or organization)		(Commission File No.)		(IRS Employer Identification No.)

 

3029 2nd Avenue South

Birmingham, Alabama 35233

(Address of Principal Executive Offices)

 

(205) 324-9888

(Issuer’s Telephone number)

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for such shorter period that the issuer 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 definition of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act (Check one):

 

Large Accelerated Filer  o

Accelerated Filer  o

Non-Accelerated Filer  o

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 ☒

 

The number of shares outstanding of each of the issuer’s classes of common equity, as of May 20, 2015: 25,929,556 shares of Common Stock.

 

 

 

CONFEDERATE MOTORS, INC.

 

FORM 10-Q

March 31, 2015

TABLE OF CONTENTS 

 

PART I - FINANCIAL INFORMATION	3
ITEM 1.  FINANCIAL STATEMENTS	3
ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	14
ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	18
ITEM 4.  CONTROLS AND PROCEDURES	19
PART II - OTHER INFORMATION	19
ITEM 6.  EXHIBITS	19
SIGNATURES	20

 

 

PART I - FINANCIAL INFORMATION

 

ITEM 1.  FINANCIAL STATEMENTS

 

CONFEDERATE MOTORS, INC.

Condensed Consolidated Balance Sheets

 

		(Unaudited)
		March 31,				December 31,
		2015				2014
Assets
Current assets
Cash and cash equivalents		$	20,199			$	91,847
Other Receivables			3,793				3,793
Inventory			663,419				647,014
Prepaid inventory			232,128				200,259
Prepaid expenses			4,714				5,138
Total current assets			924,253				948,051
Property and equipment, net			75,811				37,917
Total assets		$	1,000,064			$	985,968
Liabilities and Stockholders' Deficit
Current liabilities
Accounts payable		$	186,213			$	240,830
Accrued interest payable			7,502				7,502
Accrued salaries			118,500				98,500
Accrued payroll tax liability			78,394				78,394
Notes Payable – short Term – related parties			37,777				37,777
Deferred revenue			713,835				651,636
Warranty reserve			943				1,438
Other accrued expenses			24,653				36,214
Registration rights liability			175,500				175,500
Payable to be settled in stock – Officer			210,000				210,000
Settlement Payable			150,000				160,000
Total current liabilities			1,703,317				1,697,791
Long term liabilities
Vehicle Note			40,910				-
Total Liabilities			1,744,227				1,697,791
Stockholders' deficit
Preferred Stock, $0.001 par value 20,000,000 shares authorized; -0- shares outstanding in 2014 and 2013			-				-
Common Stock, $0.001 par value 200,000,000 shares authorized; 25,929,556 shares outstanding March 31, 2015 and 25,629,556 shares outstanding December 31, 2014.			25,929				25,629
Additional paid-in capital			11,862,150				11,787,450
Stock Subscribed			500,000				525,000
Subscriptions Receivable			(113,238	)			(113,238	)
Accumulated deficit			(12,705,213	)			(12,622,714	)
Treasury Shares			(313,950	)			(313,950	)
Total stockholders’ deficit			(744,163	)			(711,823	)
Total liabilities and stockholders’ deficit		$	1,000,064			$	985,968

 

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

 

 

CONFEDERATE MOTORS, INC.

Condensed Consolidated Statements of Operations

(unaudited)

 

		Three Months Ended
		March 31,				March 31,
		2015				2014
Sales		$	513,514			$	349,474
Cost of goods sold			(319,709	)			(239,628	)
Gross profit			193,805				109,846
Operating Expenses
Research and Development			24,947				45,823
Selling, general and administrative expenses			256,198				193,976
Total operating expenses			281,145				239,799
Loss from operations			(87,340	)			(129,953	)
Other income (expense)
Other income			5,000				66,465
Interest (expense)			-				401
Total other income (expense)			5,000				66,866
Net income (loss) before income taxes			(82,340	)			(63,087	)
Income tax expense			-				-
Net income (loss)		$	(82,340	)		$	(63,087	)
Net income (loss) before income taxes per common share
Basic and diluted		$	(0.00	)		$	(0.00	)
Weighted average shares outstanding
Basic and diluted			25,722,333				15,745,622

 

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

 

 

CONFEDERATE MOTORS, INC.

Condensed Consolidated Statements of Cash Flows

(unaudited)

 

		Three Months Ended
		March 31,				March 31,
		2015				2014
Operating activities
Net income (loss)		$	(82,340	)		$	(63,087	)
Adjustments to reconcile net income (loss) to net cash provided (used) by operating activities
AR / Other Receivables			-				(67,940	)
Depreciation			5,016				344
Change in operating assets and liabilities
Inventory			(16,405	)			(2,223	)
Prepaid inventory			(31,869	)			(83,497	)
Prepaid expenses			424				1,581
Notes Receivable			-				(1,901	)
Accounts payable			(54,617	)			(20,509	)
Accrued Salaries			20,000				-
Accrued payroll tax liability			-				(6,400	)
Other accrued expenses			(11,561	)			2,673
Deferred revenue			62,199				35,430
Warranty Reserve			(495	)			-
Net cash provided (used) by operating activities			(109,648	)			(205,529	)
Investing activities
Leasehold Improvements – Construction in Progress			-				(554	)
Equipment – Construction in Progress			-				(10,666	)
Net cash provided (used) by investing activities			-				(11,220	)
Financing activities
Payments on vehicle note payable			(2,000	)			-
Payments on litigation settlement			(10,000	)			-
Proceeds from issuance of stock			50,000				500,000
Net cash provided (used) by financing activities			38,000				500,000
Net increase (decrease) in cash and cash equivalents			(71,648	)			283,251
Cash and cash equivalents at the beginning of period			91,847				3,113
Cash and cash equivalents at end of period		$	20,199			$	286,364
Supplemental disclosures of cash flow information:
Non cash investing & financing activities
Property and equipment acquired with note payable		$	42,910			$	-
Payable to be settled in stock		$	-			$	180,000
Cash paid during the period for:
Interest		$	-			$	-
Income taxes		$	-			$	-

  

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

 

 

Confederate Motors, Inc.

Notes to Condensed Consolidated Financial Statements

March 31, 2015

(unaudited)

 

NOTE 1 – Summary of Significant Accounting Policies

 

Nature of Business

 

Confederate Motors, Inc., including its wholly-owned subsidiaries (the “Company”), is a manufacturer of American handcrafted street motorcycles. The Company currently offers one production model (the X132 Hellcat Speedster) and two preproduction models (the P51 Combat Fighter and the Wraith Tandem Lusso). The X132 Hellcat model started production in January 2012. The P51 Fighter Combat is scheduled to begin production in July 2015 with the formal launch occurring July 4, 2015. The Confederate Brand was founded in 1991. The Company has been operational since 2003 and is headquartered in Birmingham, Alabama.

 

Basis of Presentation

 

The accompanying unaudited interim financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules and regulations of the United States Securities and Exchange Commission for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all the information and footnotes necessary for a comprehensive presentation of financial position, results of operations, or cash flows. It is management's opinion, however, that all material adjustments (consisting of normal recurring adjustments) have been made which are necessary for a fair financial statement presentation.

 

The unaudited interim financial statements should be read in conjunction with the Company’s 2014 Annual Report on Form 10-K, which contains the audited financial statements and notes thereto, together with the Management’s Discussion and Analysis, for the years ended December 31, 2014 and 2013.  The interim results for the period ended March 31, 2015 are not necessarily indicative of results for the full fiscal year.

 

Use of Estimates

 

The preparation of financial statements in accordance with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting period. Management believes that the estimates utilized in preparing the Company’s financial statements are reasonable and prudent; however, actual results could differ from those estimates.

 

Principles of Consolidation

 

The consolidated financial statements include Confederate Motors, Inc., a Delaware corporation, Confederate Acquisitions Corp., a Delaware corporation (Inactive), and Confederate Garage, LLC, a Louisiana limited liability company (collectively, the “Company”). All intercompany accounts have been eliminated in consolidation.

 

Risks and Uncertainties

 

The Company operates in an industry that is subject to intense competition and rapid technological change and is in a state of fluctuation as a result of the recent economic downturn in the United States and around the world.  The Company's operations are subject to significant risk and uncertainties including financial, operational, technological, and regulatory risks including the potential risk of business failure.

 

See Note 6 for a full discussion of commitments, contingencies and other uncertainties.

 

 

Cash and Cash Equivalents

 

The Company considers all liquid investments with an original maturity of three months or less to be cash equivalents. The Company maintains cash depository accounts which at times, may exceed federally insured limits. The risk is managed by maintaining all deposits in high quality financial institutions. These amounts represent actual account balances held by the financial institution at the end of the period, and unlike the balance reported in the financial statements, the account balances do not reflect timing delays inherent in reconciling items such as outstanding checks and deposits in transit.

 

Inventory

 

Inventory is valued at the lower of cost or market using the first-in, first-out (FIFO) method.  Inventory consists of parts inventory, work in process (WIP), finished goods inventory, apparel inventory and manufacturing overhead associated with WIP and finished goods.

 

		3/31/2015				12/31/2014
Parts		$	485,300			$	415,388
Work in process			129,335				30,727
Motorcycle finished goods			-				149,904
Trade In Models			30,000				30,000
Apparel inventory			18,873				20,995
Total Inventory		$	663,508			$	647,014

 

Property and Equipment

 

Property and equipment are carried at cost less accumulated depreciation and include expenditures that substantially increase the useful lives of existing property and equipment. Maintenance, repairs, and minor renovations are expensed as incurred. Upon sale or retirement of property and equipment, the cost and related accumulated depreciation are eliminated from the respective accounts and the resulting gain or loss is included in the results of operations. The Company provides for depreciation of property and equipment using the straight-line method over the estimated useful lives or the term of the lease, as appropriate. The estimated useful lives are as follows: vehicles, five years; furniture and fixtures, three to five years; equipment, three to five years.

 

Revenue Recognition

 

Revenues from the sale of motorcycles and equipment are recognized when products are delivered or shipped. Advance payments from customers are typically required to secure the order and are shown as deferred revenue in the accompanying balance sheets and are non-refundable. The Company recognizes revenue from repair services in the same month the service is provided.  Cash payments received from customers prior to delivery of the motorcycle are recorded as deferred revenue on the balance sheet. Deferred revenue was $713,835 at March 31, 2015 and $651,636 at December 31, 2014.

 

Earnings per Share

 

In accordance with accounting guidance now codified as FASB ASC Topic 260, “Earnings per Share,” basic earnings (loss) per share is computed by dividing net income (loss) by weighted average number of shares of common stock outstanding during each period.  Diluted earnings (loss) per share is computed by dividing net income (loss) by the weighted average number of shares of common stock, common stock equivalents and potentially dilutive securities outstanding during the period.

 

The Company did not have any potential common stock equivalents at March 31, 2015 except $210,000 issuable to Matt Chambers which will be satisfied with 1,680,000 shares of stock.

 

 

Income Taxes

 

The Company accounts for income taxes in accordance with accounting guidance now codified as FASB ASC Topic 740, “Income Taxes,” which requires that the Company recognize deferred tax liabilities and assets based on the differences between the financial statement carrying amounts and the tax bases of assets and liabilities, using enacted tax rates in effect in the years the differences are expected to reverse. Deferred income tax benefit (expense) results from the change in net deferred tax assets or deferred tax liabilities. A valuation allowance is recorded when it is more likely than not that some or all deferred tax assets will not be realized.

 

Accounting guidance now codified as FASB ASC Topic 740-20, “Income Taxes – Intraperiod Tax Allocation,” clarifies the accounting for uncertainties in income taxes recognized in accordance with FASB ASC Topic 740-20 by prescribing guidance for the recognition, de-recognition and measurement in financial statements of income tax positions taken in previously filed tax returns or tax positions expected to be taken in tax returns, including a decision whether to file or not to file in a particular jurisdiction. FASB ASC Topic 740-20 requires that any liability created for unrecognized tax benefits is disclosed. The application of FASB ASC Topic 740-20 may also affect the tax bases of assets and liabilities and therefore may change or create deferred tax liabilities or assets. The Company would recognize interest and penalties related to unrecognized tax benefits in income tax expense. At March 31, 2015, the Company did not record any liabilities for uncertain tax positions.

 

Advertising Costs

 

Advertising costs relate to the Company’s efforts to promote its products and brands.  Advertising is expensed as incurred.  For the quarters ended March 31, 2015 and 2014, advertising expense was $1,060 and $2,319 respectively.

 

Research and Development Costs

 

Expenditures for research activities relating to product development and improvement are charged against income as incurred and included within operating expenses in the accompanying statements of operations. Research and development (R&D) costs totaled $24,947 and $45,823 for the quarters ended March 31, 2015 and 2014, respectively.

 

Shipping and Handling Costs

 

The Company records shipping and handling costs billed to the customer and shipping and handling expenses in cost of sales.

 

Fair Value Measurements

 

The Company has categorized its assets and liabilities recorded at fair value based upon the fair value hierarchy specified by GAAP.

 

The levels of fair value hierarchy are as follows:

 

·

Level 1 inputs utilize unadjusted quoted prices in active markets for identical assets or liabilities that we have the ability to access;

 

·

Level 2 inputs utilize other-than-quoted prices that are observable, either directly or indirectly. Level 2 inputs include quoted prices for similar assets and liabilities in active markets, and inputs such as interest rates and yield curves that are observable at commonly quoted intervals; and

 

·

Level 3 inputs are unobservable and are typically based on the Company’s own assumptions, including situations where there is little, if any, market activity.

 

In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, the Company categorizes such financial asset or liability based on the lowest level input that is significant to the fair value measurement in its entirety. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability.

 

Both observable and unobservable inputs may be used to determine the fair value of positions that are classified within the Level 3 category. As a result, the unrealized gains and losses for assets within the Level 3 category may include changes in fair value that were attributable to both observable and unobservable inputs.

 

There are no fair value measurements as of March 31, 2015.

 

Reclassification

 

Certain amounts in the prior period financial statements have been reclassified to conform to the current period presentation.  The results of these reclassifications did not materially affect financial position, results of operations or cash flows. 

 

NOTE 2 – PROPERTY AND EQUIPMENT

 

Property and equipment consisted of the following as of:

 

		March 31,				December 31,
		2015				2014
Vehicles		$	81,437			$	36,628
Furniture and fixtures			11,734				11,734
Equipment			92,407				92,407
Leasehold improvements			25,827				25,827
			211,405				166,596
Less accumulated depreciation			(135,593	)			(130,577	)
CIP - Auto			-				1,898
		$	75,812			$	37,917

 

NOTE 3 – NOTES PAYABLE

 

Notes payable consisted of:

 

A note in the amount of $37,777 is owed to Matthew Chambers, the Company’s principal executive officer and a director. The funds were used to initiate the settlement with former designer Pierre Tereblanche in the amount of $25,000 the remaining $12,777 was used to fund inventory requirements for production.

 

On January 5, 2015 the Company financed a Ford T250 van with Ford Motor Credit. The note bears a rate of approximately 1.9% and consists of 48 monthly payments of $927.62.

 

NOTE 4 – STOCKHOLDERS’ EQUITY

 

Sale of Common Stock

  

On May 31, 2013, the Company completed a prior nonpublic offering of its common stock commenced on or about February 22, 2013.  The Company received subscriptions from three investors, including H. Matthew Chambers, the Company’s Chief Executive Officer and a director, for $810,000 representing a total of 3,240,000 shares issuable at the original offering price of $0.25 per share.  On July 25, 2013, the Board retroactively reduced the purchase price in this offering to $0.125 per share for a total of 6,480,000 shares.  The Company received subscription payments of $486,761.50, with a balance of $113,238.50 remaining unpaid.  The balance of the subscription amount is currently due and payable from one investor.

 

 

On July 31, 2013 the Company offered for sale 6,234,412 shares of Common Stock at $0.1604 per share.  The Company received a subscription commitment for 6,234,412 shares. In February 2014, the Company received $500,000 and issued 3,117,206 shares.

 

The remaining subscription was paid in October 2014 and the remaining 3,117,206 shares were issued in October 2014.

 

Once the proceeds of the July 31, 2013 offering were received the Board authorized 5,007,588 shares to be issued to directors and officers as directors fees, past compensation, and as an incentive for Matthew Chambers to add an additional 2.5 years to his contract.

 

On November 21, 2014, the Board of Directors approved a non-public unit offering. As part of the offering, the Company is authorized to issue up to 8,000,000 units in four unit classes. Each A unit (the “A Unit”) costs $25,000 per A Unit. Each B unit (the “B Unit”) costs $50,000 per B Unit. Each C unit (the “C Unit”) costs $75,000 per C Unit. Each D unit (the “D Unit”) costs $100,000 per D Unit. Each unit consists of 100,000 shares of our common stock. A Unit shares are priced at $0.25 per share. B Unit shares are priced at $0.50 per share. C Unit shares are priced at $0.75 per share. D Unit shares are priced at $1.00 per share.

 

During the first quarter of 2015, the Company sold two A Units to one investor.

 

Warrants

 

During the year ended December 31, 2009, the Company issued 105,000 stock purchase warrants to purchase the Company’s common stock at an exercise price of $1.50 with an exercise term of five years. The Company valued these warrants utilizing a Black-Scholes option pricing model utilizing the following assumptions: fair market value per share -$1.50, exercise price -$1.50, expected volatility -115%, risk free interest rate -1.73%. The fair value of $127,050 was recorded to additional paid-in capital.

 

The 105,000 warrants expired on January 20, 2014 and there are no outstanding or exercisable warrants as of March 31, 2015 and March 31, 2014 respectively.  

 

Registration Rights Penalty

 

In connection with the issuance of common stock and convertible debt, which converted into common stock in 2009, the equity holders were entitled to liquidated damages, which provide for a payment in cash equal to a maximum of 10% of the total offering price for all equity proceeds raised. The convertible note holders were entitled to liquidated damages which provide for a payment in cash equal to a maximum of 15% of the total offering price for all equity proceeds raised. The Company was required to file an S-1 registration statement 120 days after the offering closed. The closing date of the offering was February 12, 2009; therefore, the 120th day was June 12, 2009. Furthermore, the Company was required to have the S-1 registration declared effective within 150 days (July 12, 2009). The Company never filed a registration statement. In 2012, the Company entered into a settlement agreement with a shareholder for cash in exchange for shares, which reduced the equity subject to registration rights penalty. See Note 6 for disclosure of the settlement agreement.

 

Liquidated damages are as follows:

 

Equity subject to registration rights penalty		$	1,417,500
Maximum penalty			10	%
Convertible debt subject to registration rights penalty		$	225,000
Maximum penalty			15	%
Registration Rights Penalty		$	175,500

 

 

NOTE 5 – RELATED PARTY TRANSACTIONS

 

Pamela Miller (life partner of Matthew Chambers, Chairman, CEO), handles patent and trade name filings/renewals and administrative support for the Company.  There is no formal contract between the Company and Pamela Miller.  Her compensation was $14,200 and $15,000 for the three months ended March 31, 2015 and 2014, respectively.  Additionally, Pamela Miller is the guarantor for the majority of the loans and leases, vendor open accounts and the corporate credit card.

 

The Company has an employment agreement with its CEO.

 

Upon final receipt of the July 31, 2013 offering Matthew Chambers was issued 2,090,000 shares valued at $261,250 for past unpaid wages, past director fees, and as incentive to extend his contract an additional 2.5 years.

 

Matthew Chambers has provided short term notes to the Company totaling $37,777. See Notes Payable – short term on the accompanying balance sheet.

 

According to the terms of the July 2014 Stock Purchase Agreement, on October 10, 2014, the Company issued 768,000 shares to Paolo Chiaia, and 384,000 shares to Patrick Aisher for director fees. At the same time the Company issued 1,765,588 shares owed to Rhiti Sports Management, a company controlled by Arun Pandey.

 

NOTE 6 – COMMITMENTS, CONTINGENCIES AND UNCERTAINTIES

 

Contingencies and Uncertainties

 

From time to time, the Company may become involved in various lawsuits and legal proceedings, which arise in the ordinary course of business. However, litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm its business. With the exception of the lawsuit discussed in more detail below, the Company is currently not aware of any such legal proceedings or claims that it believes will have, individually or in the aggregate, a material adverse effect on its business, financial condition or operating results.

 

First legal action – Confederate Motors, Inc. v. Francois-Xavier Terny, et al.

 

On November 26, 2012, the Company entered into a Mutual Settlement Agreement & General Release (the “Settlement Agreement”) with Francois Xavier Terny.  The purpose of the Settlement Agreement was to settle the outstanding dispute and settle all claims between the parties.  Under the Settlement Agreement, the Company agreed to make scheduled payments to Mr. Terny totaling $350,000 in exchange for 805,000 shares held by Mr. Terny.  The Company agreed to pay Mr. Terny $50,000 upon the execution of the Settlement Agreement.  An additional $25,000 was paid to Mr. Terny on or before December 31, 2012 and the final payment of $275,000 was required to be paid on or before September 30, 2013. On April 4, 2013, counsel for Francois-Xavier Terny filed a stipulated judgment in connection with the final payment under the Mutual Settlement Agreement & General Release between the Company and Mr. Terny.

 

A payment of $275,000 on the settlement with Francois Xavier Terny was due on September 30, 2013. The Company paid $50,000 to Mr. Terny’s designee on July 17, 2013, $25,000 to Mr. Terny’s designee on November 25, 2013, and $40,000 to Mr. Terny’s designee on October 14, 2014. One payment of $10,000 was made in the first quarter 2015.  As of the date of this report the Company still has a balance due of $150,000 recorded in the books.

 

The Company’s basis in the treasury shares is $313,950.  The Company used the market value on November 26, 2012, the date of settlement, to value the shares.

 

Second Legal Action – South Coast Solar v. Delta Staff Leasing et al

 

The Company incurred several onetime expenses in 2014 related to Hurricane Katrina. The Company lost its ability to manufacture for six months or more. The City of New Orleans solicited the Company and closed a $750,000 loan with the Company. Subsequently, the city refused to pay out the proceeds of the loan. The Company sued to recover its considerable damages. However, the Company did not prevail at the trial court level. The case is currently on appeal. The Company incurred $68,402 in legal and related fees.

 

 

The Company settled with South Coast Solar for $24,000 and Delta Staff Leasing for $61,000. The total of the two settlements is $85,000. The Company owed $5,000 as of March 31, 2015. 

 

Operating Lease

 

The Company has engaged a new lease for a 24,179 square foot office and warehouse located in Birmingham, Alabama. The former lease expired on November 1, 2013. The new lease was executed on October 21, 2013 with commencement on November 1, 2013. The Company is sub-leasing the premise for the term of ten years with the option of an additional ten years provided 180 days prior written notice is given. The monthly base rental is $7,059.67 for the first year with a 2% increase each year after.

 

Rent expense under the operating lease totaled $21,603 and $21,179 respectively for the quarter ended March 31, 2015 and 2014. Future minimum payments due under the operating lease agreements are as follows:

 

Future minimum lease payments

 

April through December 2015		$	65,097
2016		$	88,434
2017		$	90,204
2018		$	92,006
2019		$	93,824
2020		$	95,700
Thereafter		$	281,546
		$	828,414

 

Liquidity

 

Over the long-term, the Company expects that its business model will continue to generate cash that will allow it to invest in the business, fund future growth opportunities and return value to shareholders. The Company believes the motorcycle operations will continue to be primarily funded through the sale of equity until operations are sustainable through cash flows generated by operations.

 

NOTE 7 – RECENT ACCOUNTING PRONOUNCEMENTS

 

Various ASU’s up through ASU No. 2015-07 that contain technical corrections to existing guidance or affect guidance to specialized industries or entities were recently issued. These updates have no current applicability to the Company or their effect on the financial statements would not have been significant.

 

NOTE 8 – EARNINGS (LOSS) PER SHARE

 

Basic earnings (loss) per share is computed by dividing net income (loss) by the weighted-average number of common shares outstanding for the period. Diluted earnings (loss) per share is computed giving effect to all potential dilutive common stock, including common stock options and common stock warrants. The common stock warrants and common stock options were not included in the computation of the per share loss for the current periods because the effect would be anti-dilutive. These items could be dilutive in the future.

 

NOTE 9 – CONCENTRATION OF CREDIT RISK

 

At March 31, 2015, the Company did not have monies in bank accounts exceeding the federally insured limits.  The Federal Deposit Insurance Corporation (FDIC) insures deposit account balances to at least $250,000 per insured bank. 

 

 

NOTE 10 – GOING CONCERN

 

As shown in the accompanying financial statements, the Company had an accumulated deficit incurred through March 31, 2015, which raises substantial doubt about the Company’s ability to continue as a going concern. The financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts and classification of liabilities that might be necessary in the event the Company cannot continue in existence.

 

The Company will need significant funding to continue operations and increase development through the next fiscal year. The timing and amount of capital requirements will depend on a number of factors, including demand for products and services and the availability of opportunities for expansion through affiliations and other business relationships. Management intends to continue to seek new capital from equity securities issuances to provide funds needed to increase liquidity, fund internal growth, and fully implement its business plan.

 

If the going concern assumption were not appropriate for these consolidated financial statements, then adjustments would be necessary to the carrying values of the assets and liabilities, the reported revenues and expenses, and the balance sheet classifications used.

 

NOTE 11 – SUBSEQUENT EVENTS

 

On May 31, 2013, the Company completed a prior nonpublic offering of its common stock commenced on or about February 22, 2013. The Company received subscriptions from three investors, including H. Matthew Chambers, the Company’s Chief Executive Officer and a director, for $810,000 representing a total of 3,240,000 shares issuable at the original offering price of $0.25 per share. On July 25, 2013, the Board retroactively reduced the purchase price in this offering to $0.125 per share for a total of 6,480,000 shares. The Company received subscription payments of $486,761.50, with a balance of $113,238.50 remaining unpaid. On April 7, 2015, the Company agreed to an amendment to the subscription agreement with one investor from whom the outstanding balance had not been received. Pursuant to the amendment, the subscription amount was reduced to $387,500 for a total of 3,100,000 shares. Subsequent to the amendment, the Company received the full subscription and the investor received 3,100,000 shares.

 

On May 13, 2015, the Company paid the final settlement payment of $5,000 to finalize the Delta Staff Leasing, LLC v South Coast Solar, LLC matter.

 

 

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

 

Forward-Looking Statements

 

This report contains forward-looking statements. The forward-looking statements are contained principally in, but not limited to, the section entitled “Management’s Discussion and Analysis of Financial Conditions and Results of Operations.” Forward-looking statements provide our current expectations or forecasts of future events. Forward-looking statements include statements about our expectations, beliefs, plans, objectives, intentions, assumptions and other statements that are not historical facts. Words or phrases such as “anticipate,” “believe,” “continue,” “ongoing,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “predict,” “project” or similar words or phrases, or the negatives of those words or phrases, may identify forward-looking statements, but the absence of these words does not necessarily mean that a statement is not forward-looking.

 

Forward-looking statements are subject to known and unknown risks and uncertainties and are based on potentially inaccurate assumptions that could cause actual results to differ materially from those expected or implied by the forward-looking statements. Our actual results could differ materially from those anticipated in forward-looking statements for many reasons. Accordingly, you should not unduly rely on these forward-looking statements, which speak only as of the date of this report.

 

Unless required by law, we undertake no obligation to publicly revise any forward-looking statement to reflect circumstances or events after the date of this report or to reflect the occurrence of unanticipated events.  You should, however, review the factors and risks we describe in the reports we will file from time to time with the SEC after the date of this report.

 

Management cautions that these statements are qualified by their terms and/or important factors, many of which are outside of our control, and involve a number of risks, uncertainties and other factors that could cause actual results and events to differ materially from the statements made, including, but not limited to, the following:

 

●	actual or anticipated fluctuations in our quarterly and annual operating results;
●	decreased demand for our products resulting from changes in consumer preferences;
●	product and services announcements by us or our competitors;
●	loss of any of our key executives;
●	regulatory announcements, proceedings, or changes;
●	competitive product developments;
●	intellectual property and legal developments;
●	mergers or strategic alliances in the motorcycle industry;
●	any business combination we may propose or complete;
●	any financing transactions we may propose or complete; or
●	broader industry and market trends unrelated to our performance.

 

Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance, or achievements.

 

Our ability to meet the targets and expectations noted depends upon, among other factors, our ability to (i) continue to realize production efficiencies and manage operating costs including materials, labor and overhead; (ii) manage production capacity and production changes; (iii) manage supply chain issues; (iv) provide products, services and experiences that are successful in the marketplace; (v) develop and implement sales and marketing plans that retain existing retail customers and attract new retail customers in an increasingly competitive marketplace; (vi) continue to develop the capabilities of our distributor network; (vii) manage changes and prepare for requirements in legislative and regulatory environments for our products, services and operations; (viii) manage access to reliable sources of capital and adjust to fluctuations in the cost of capital; (ix) anticipate consumer confidence in the economy; (x) retain and attract talented employees; and (xi) detect any issues with our motorcycles or manufacturing processes to avoid delays in new model launches, increased warranty costs or litigation.

 

 

Our ability to sell motorcycles and related products and services and to meet our financial expectations also depends on the ability of our independent distributors to sell our motorcycles and related products and services to retail customers. We depend on the capability and financial capacity of its independent distributors to develop and implement effective retail sales plans to create demand for the motorcycles and related products and services they purchase from us.

 

In addition, our independent distributors may experience difficulties in operating their businesses and selling our products.

 

Throughout this report, unless otherwise designated, the terms “we,” “us,” “our,” “the Company”, “CM” and “our company” refer to Confederate Motors, Inc., a Delaware corporation, and its wholly-owned subsidiaries.

 

Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

We produce premium, heavyweight (651+cc) motorcycles. We currently manufacture the third generation Hellcat (“X132”).  

 

Overview and Outlook

 

Net revenue for the quarterly period ended March 31, 2015 was $513,317 compared to $109,846 for the quarterly period ended March 31, 2014. Net revenue is higher due to bike deliveries for the quarter. Net loss for the quarter ended March 31, 2015 was $82,470 compared to a net loss of $63,087 for the quarter ended March 31, 2014. Net loss was greater due to increased professional fees and legal matters.

 

Cash flow from operating activities was $(124,664) for the three months ended March 31, 2015 compared to $(205,528) for the three months ended March 31, 2014. Net cash flow required by investing activities was $(37,895) and $11,220 for the three months ended March 31, 2015 and 2014, respectively. Net cash flow from financing activities was $90,910 and $500,000 for the three months ended March 31, 2015 and 2014, respectively.

 

We believe that the near-term global economic environment is improving for our business. We are optimistic about our long-term business prospects and plans to continue to expand production and global distribution. The operational focus for the first quarter 2015 was spent on liquidating the remaining Hellcat Speedsters and preparing for inventory growth for the P51 Fighter.

 

Cost of Goods Sold

 

Cost of goods sold was $319,642 for the quarterly period ended March 31, 2015 compared to $239,628 for the quarterly period ended March 31, 2014.  Cost of goods sold was higher mainly due to increased production of motorcycles.

 

Gross Profit

 

Gross profit was $193,675 for the quarterly period ended March 31, 2015, compared to $20,136 for the quarterly period ended March 31, 2014. Gross profit as a percentage of revenue was 38% and 31% for the quarterly periods ended March 31, 2015 and 2014, respectively.  Gross profit was higher due to increased production on the remaining X132 Hellcat Speedster models. 

 

Operating Expenses

 

Selling, General and Administrative Expenses

 

SG and A expenses were $256,198 for the quarterly period ended March 31, 2015, compared to $193,976 in 2014.

 

Research and Development Costs

 

Research and development costs are expensed as incurred and are included in operating expenses in the accompanying statements of operations. Research and development costs totaled $24,947 and $45,823 for the quarters ended March 31, 2015 and 2014, respectively.

 

 

Results of Operations for the quarter ended March 31, 2015 compared to the quarter ended March 31, 2014

 

		Quarter ended
		March 31,				March 31,
(in whole dollars)		2015				2014
Revenue from motorcycles & related products		$	513,317			$	349,474
Gross Profit		$	193,675			$	109,628
Operating Expense		$	281,145			$	239,799
Other Income (Expense)		$	5,000			$	66,866
Net Income (Loss)		$	(82,470	)		$	(63,087	)
Earnings (Loss) per Share		$	(0.00	)		$	(0.00	)

 

Plan of Operation

 

Strengthen our Position in our Core Market

 

We intend to strengthen and grow our niche position in our target market of high net worth customers. To this end we are introducing the Hellcat Speedster, which management believes is tougher, stronger, lighter and more efficient than our previous designs.

 

We intend to develop and introduce new products to appeal to the changing needs of our target clients and to bring new clients to the Confederate brand. We believe we can expand our traditional market niche by combining hot rod street credibility, avant-garde American design and quality hand craftsmanship. We believe that the aesthetics of our new third generation architecture simplified to a slightly more conventional level will both solidify and grow our present target audience and open our Confederate brand to high net worth individuals.

 

Strengthen our Distribution Network

 

We believe our U.S. sales deployment strategy will create the most proximate relationship between our target client and our Confederate team. We intend to open a small servicing center, retail environment, and design boutique in a large metropolitan market but no definitive plans have been made. This facility, if opened, would serve as a template for expansion as demand for our motorcycles increases.

 

Develop our Internet Business

 

As our current and only web presence, www.confederate.com, encompasses a wealth of information on our brand and products. Activity on our website has increased from approximately 14,000 unique visitors per month in 2005 to approximately 21,644 per month in 2015. Management believes these statistics point to an improvement in quality and relevance of referrals to our site. Going forward, our plan is to spread and better organize and classify information about our products and brand by separating information across a total of three web presences, in order to pull in more web traffic and widen our sales demographic. The goal of this diversification is not just intended to increase motorcycle sales but specifically to create an entirely new revenue stream in apparel, parts, and accessory sales.

 

We anticipate that www.confederate.com will be a more streamlined and informative site where the motorcycle consumer will be able to review specs, details, and product photos. This site will be intended to serve as a “nuts and bolts” information source on Confederate motorcycles.

 

 

Marketing Activities and Brand Development

 

We believe the Confederate motorcycle brand is perceived to be one of the most authentic in the motoring industry. This belief is predicated upon the absolute consistency of the brand message since its launch in the December issue of Motorcyclist Magazine in 1993. The brand exists to communicate a cerebral and spiritual rebel initiative inspired by fierce American pure objective individuality through the creation of uncompromised handcrafted motoring works of art.

 

The Company is also utilizing social media sites such as Facebook, Twitter, and Instagram to keep current and potential customers up to date with company events or promotions as well as share some of the day to day workings and current philosophies.

 

Media

 

We do not invest substantially in paid advertising. We believe that our motorcycles are aspirational products that create a significant demand “pull”. The primary source of publicity comes from articles written about Confederate in a broad range of motorcycle publications and the luxury goods press. Articles and broadcast segments featuring Confederate have appeared in The Wall Street Journal, Forbes, The New York Times, Fast Company, The Robb Report, The Men’s Journal, DuPont Registry, GQ, Maxim, Popular Science, Ralph Lauren Magazine, I.D.(which deemed the Wraith the “Worlds Sexiest Motorcycle”) and have recently been featured in the Discovery Network’s series “World’s Most Expensive Rides”. In addition, management believes that Confederate enthusiasts, including Hollywood celebrities, music stars and international athletes add to the overall brand exposure.

 

Manufacturing and Suppliers

 

Our manufacturing operations consist of in-house production of certain components and parts, assembly of motorcycle components and conducting quality control of finished motorcycles. Certain motorcycle components specific to our bikes are outsourced for production to our specifications to various vendors, including engines, machined frame components, transmission gears, belt drives, fenders, fuel tanks and seats. Other key components are purchased off-the-shelf from various independent suppliers mostly located in the United States, including brake and suspension systems, drive belts, ignition starters, wheels, tires, lights and batteries. Components manufactured by us in-house include welded motorcycle frames and exhausts.

 

We have designed our quality control procedures and standards to include inspection of incoming components and adherence to specific work-in-process standards during motorcycle assembly. Finished motorcycles are subjected to performance testing under running conditions and to final quality inspection.

 

Liquidity and Capital Resources

 

At March 31, 2015, we had cash of $20,199.

 

To the extent we are successful in rolling out our product line and increasing demand for our motorcycles, we plan to use our working capital to fund continued operations.  Our opinion concerning our liquidity is based on current information. If this information proves to be inaccurate, or if circumstances change, we may not be able to meet our liquidity needs.

 

As disclosed in Note 11 of our financial statements, management has evaluated our ability to continue as a going concern. The following considerations suggest that we will continue in business for the foreseeable future. We have debt obligations, as set forth below, and we are currently not engaged in any discussions that could result in additional borrowings.

 

At March 31, 2015, we owed a remaining balance of $160,000 in the Settlement Agreement with Mr. Terny. Although delinquent, we continue to make payments as funding becomes available.

 

At March 31, 2015, we had a remaining registration rights’ liability of $175,500. We have received no demands for repayment of this penalty. In the event demands for payment are made in the future, management intends to seek a negotiated settlement with the holders of the penalty rights and to satisfy the obligation through the issuance of equity shares or an installment payment plan from operating revenues or equity offerings.

 

 

At March 31, 2015, the Company maintained a backlog of orders represented by deferred revenue totaling $713,835. This account is a revolving account with funding added as new orders are placed and relieved to revenue as motorcycles are shipped. The Company has the needed inventory to begin relieving these funds as revenue; however, P51 Fighter prepayments are currently being accepted increasing our deferred revenue.

 

Additionally, management is planning diligently in an effort to begin producing two P51 Fighters per week beginning in July 2014. We expect to produce up to 60 motorcycles this year which would represent approximately $1.5 million in gross profit.

 

Recent Accounting Pronouncements

 

Various ASU’s up through ASU No. 2015-08 that contain technical corrections to existing guidance or affect guidance to specialized industries or entities were recently issued. These updates have no current applicability to the Company or their effect on the financial statements would not have been significant.

 

Critical Accounting Policies

 

Our financial statements and related public financial information are based on the application of accounting principles generally accepted in the United States (“GAAP”). GAAP requires the use of estimates; assumptions, judgments and subjective interpretations of accounting principles that have an impact on the assets, liabilities, revenues and expense amounts reported. These estimates can also affect supplemental information contained in our external disclosures including information regarding contingencies, risk and financial condition. We believe our use of estimates and underlying accounting assumptions adhere to GAAP and are consistently and conservatively applied. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Actual results may differ materially from these estimates. We continue to monitor significant estimates made during the preparation of our financial statements.

 

Our significant accounting policies are summarized in Note 1 of our financial statements. While all these significant accounting policies impact our financial condition and results of operations, we view certain of these policies as critical. Policies determined to be critical are those policies that have the most significant impact on our financial statements and require management to use a greater degree of judgment and estimates. Actual results may differ from those estimates. Our management believes that given current facts and circumstances, it is unlikely that applying any other reasonable judgments or estimate methodologies would affect consolidated results of operations, financial position or liquidity for the periods presented in this report.

 

Significant amounts of our shares of common stock have been issued as payment to employees and non-employees for services. These are non-cash transactions that require management to make judgments related to the fair value of the shares issued, which affects the amounts reported in our consolidated financial statements for certain of our assets and expenses. For historic fiscal years when there was not an observable active, liquid market for our common stock, the valuation of the shares issued in a non-cash share payment transaction relies on observation of arms-length transactions where cash was received for our shares, before and after the non-cash share payment date.

 

Off-Balance Sheet Arrangements

 

None.

 

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

As a smaller reporting company, we have elected not to provide the disclosure required by this item.

 

 

ITEM 4. CONTROLS AND PROCEDURES

 

Disclosure Controls and Procedures

 

Our principal executive officer, H. Matthew Chambers, and our principal financial officer, Jay Etheridge, have concluded, based on their evaluation, that our disclosure controls and procedures (as defined in Rule 13a-15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of the end of the period covered by this report were effective in ensuring that information required to be disclosed by us in reports that we file or submit under the Exchange Act (i) is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and (ii) is accumulated and communicated to the Company’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

 

The Company is currently undertaking measures including software upgrades and individual accountability to ensure timely and accurate reporting. 

 

Changes in Internal Control Over Financial Reporting

 

There were no changes in our internal control over financial reporting that occurred during the fiscal quarter ended March 31, 2014, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 

PART II - OTHER INFORMATION

 

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

 

On May 31, 2013, we completed a prior nonpublic offering of our common stock commenced on or about February 22, 2013. We received subscriptions from three investors representing a total of 3,240,000 shares issuable at the original offering price of $0.25 per share. On July 25, 2013, we retroactively reduced the purchase price in this offering to $0.125 per share for a total of 6,480,000 shares. We received subscription payments of $486,761.50, with a balance of $113,238.50 remaining unpaid. On April 7, 2015, we agreed to an amendment to the subscription agreement with one investor from whom the outstanding balance remained unpaid. Pursuant to the amendment, the subscription amount was reduced to $387,500 for a total of 3,100,000 shares. Subsequent to the amendment, we received the full subscription and the investor received 3,100,000 shares. The securities above were sold without registration under the Securities Act by reason of the exemption from registration afforded by the provisions of Section 4(a)(5) and Section 4(a)(2) thereof, and Rule 506(b) promulgated thereunder, as a transaction by an issuer not involving any public offering. The investor was an “accredited investor” as defined in Rule 501(a) of Regulation D promulgated by the Commission. The investor delivered appropriate investment representations with respect to the transaction and consented to the imposition of restrictive legends upon the share certificate representing the securities. The investor was afforded the opportunity to ask questions of our management and to receive answers concerning the terms and conditions of the transaction. No selling commissions or other remuneration was paid in connection with the sale of the securities.

 

ITEM 6. EXHIBITS

 

31.1		Rule 13a-14 Certification by Principal Executive Officer
31.2		Rule 13a-14 Certification by Principal Financial Officer
32.1		Section 1350 Certification of Principal Executive Officer
32.2		Section 1350 Certification of Principal Financial Officer
101.INS		XBRL Instance Document
101.SCH		XBRL Taxonomy Extension Schema Document
101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF		XBRL Taxonomy Extension Definition Linkbase Document
101.LAB		XBRL Taxonomy Extension Label Linkbase Document
101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document

 

 

SIGNATURES

 

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

 

	CONFEDERATE MOTORS, INC.
Date:  May 20, 2015	By:
		H. Matthew Chambers, CEO Principal Executive Officer

 

Date:  May 20, 2015	By:
		Jay Etheridge, Controller Principal Financial Officer

 

 

20

 

Exhibit 31.1

 

CERTIFICATION OF

PRINCIPAL EXECUTIVE OFFICER

PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 302 OF

THE SARBANES-OXLEY ACT OF 2002

  

I, H. Matthew Chambers, certify that:

 

1.	I have reviewed this quarterly report on Form 10-Q of Confederate Motors, Inc. for the quarter ended March 31, 2015;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods present in this report;
4.	The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13-a-15(f) and 15d-15(f)) for the registrant and have:
	a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
	b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
	c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
	d)	Disclosed in this report any change in the registrant’s internal control over financing reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.	The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
	a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
	b)	Any fraud, whether or not material, that involved management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

Date May 20, 2015	By:
		H. Matthew Chambers Chief Executive Officer

 

Exhibit 31.2

 

CERTIFICATION OF

PRINCIPAL FINANCIAL OFFICER

PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 302 OF

THE SARBANES-OXLEY ACT OF 2002

 

I, Jay Etheridge, certify that:

 

1.	I have reviewed this quarterly report on Form 10-Q of Confederate Motors, Inc. for the quarter ended March 31, 2015;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods present in this report;
4.	The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13-a-15(f) and 15d-15(f)) for the registrant and have:
	a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
	b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
	c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
	d)	Disclosed in this report any change in the registrant’s internal control over financing reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.	The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
	a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
	b)	Any fraud, whether or not material, that involved management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

Date: May 20, 2015	By:
		Jay Etheridge, Controller Principal Financial Officer

 

Exhibit 32.1

 

CERTIFICATION OF

CHIEF EXECUTIVE OFFICER

PURSUANT TO 18 U.S.C. SECTION 1350

 

In connection with this Quarterly Report of Confederate Motors, Inc. (the “Company”) on Form 10-Q for the period ended March 31, 2015, as filed with the Securities and Exchange Commission on the date hereof (the “Quarterly Report”), I, H. Matthew Chambers, Chief Executive Officer of the Company, certify to the best of my knowledge, pursuant to 18 U.S.C. Sec. 1350, as adopted pursuant to Sec. 906 of the Sarbanes-Oxley Act of 2002, that:

 

1.	Such Quarterly Report on Form 10-Q for the period ended March 31, 2015, fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

 

2.	The information contained in such Quarterly Report on Form 10-Q for the period ended March 31, 2015 fairly presents, in all material respects, the financial condition and results of operations of Confederate Motors, Inc.

 

Date: May 20, 2015	By:
		H. Matthew Chambers Chief Executive Officer

 

 

Exhibit 32.2

 

CERTIFICATION OF

PRINCIPAL FINANCIAL OFFICER

PURSUANT TO 18 U.S.C. SECTION 1350

  

In connection with this Quarterly Report of Confederate Motors, Inc. (the “Company”) on Form 10-Q for the period March 31, 2015, as filed with the Securities and Exchange Commission on the date hereof (the “Quarterly Report”), I, Jay Etheridge, Controller and Principal Financial Officer of the Company, certify to the best of my knowledge, pursuant to 18 U.S.C. Sec. 1350, as adopted pursuant to Sec. 906 of the Sarbanes-Oxley Act of 2002, that:

 

1.	Such Quarterly Report on Form 10-Q for the period ended March 31, 2015, fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

 

2.	The information contained in such  Quarterly Report on Form 10-Q for the period ended March 31, 2015, fairly presents, in all material respects, the financial condition and results of operations of Confederate Motors, Inc.

 

Date: May 20, 2015	By:
		Jay Etheridge, Controller Principal Financial Officer