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Document and Entity Information

v2.4.0.8
Document and Entity Information
3 Months Ended
Mar. 31, 2015
May 14, 2015
Document And Entity Information    
Entity Registrant Name Sunstock, Inc.  
Entity Central Index Key 0001559157  
Document Type 10-Q  
Document Period End Date Mar. 31, 2015  
Amendment Flag false  
Current Fiscal Year End Date --12-31  
Entity Filer Category Smaller Reporting Company  
Entity Common Stock, Shares Outstanding   10,273,297
Document Fiscal Period Focus Q1  
Document Fiscal Year Focus 2015  

Balance Sheets

v2.4.0.8
Balance Sheets (USD $)
Mar. 31, 2015
Dec. 31, 2014
Current assets    
Cash $ 126,983 $ 1,567
Marketable securities 29,798   
Inventory - products 28,502 30,377
Inventory - silver 222,538   
Subscriptions receivable 27,700   
Prepaid expenses 2,378 4,064
Total Current Assets 437,899 36,008
Property and equipment-net 8,610 8,947
Security deposits 4,756 4,756
Total assets 451,265 49,711
Current liabilities    
Accounts payable 28,978 40,068
Accrued litigation 55,200 55,200
Securities sold - not yet purchased 50,100   
Deferred revenue 600   
Total Current Liabilities 134,878 95,268
Total liabilities 134,878 95,268
Commitments and contingencies      
Stockholders' equity (deficit)    
Preferred stock; $0.0001 par value, 20,000,000 shares authorized; zero shares issued and outstanding      
Common stock, $0.0001 par value, 100,000,000 shares authorized; 10,263,297 and 9,231,397 shares issued and outstanding as of December 31, 2014 and 2013, respectively 1,026 923
Additional paid - in capital 869,256 458,959
Accumulated deficit (553,895) (505,439)
Total stockholders' equity (deficit) 316,387 (45,557)
Total liabilities and stockholders' equity (deficit) $ 451,265 $ 49,711

Balance Sheets (Parenthetical)

v2.4.0.8
Balance Sheets (Parenthetical) (USD $)
Mar. 31, 2015
Dec. 31, 2014
Statement of Financial Position [Abstract]    
Preferred stock, par value $ 0.0001 $ 0.0001
Preferred stock, shares authorized 20,000,000 20,000,000
Preferred stock, shares issued 0 0
Preferred stock, shares outstanding 0 0
Common stock, par value $ 0.0001 $ 0.0001
Common stock, shares authorized 100,000,000 100,000,000
Common stock, shares issued 10,263,297 9,231,397
Common stock, shares outstanding 10,263,297 9,231,397

Statements of Operations (Unaudited)

v2.4.0.8
Statements of Operations (Unaudited) (USD $)
3 Months Ended
Mar. 31, 2015
Mar. 31, 2014
Income Statement [Abstract]    
Revenue $ 17,431 $ 20,076
Cost of revenue 7,968 14,001
Gross profit 9,463 6,075
Operating expenses 59,699 116,042
Operating loss (50,236) (109,967)
Other income:    
Realized gains on investments in marketable securities 1,780   
Loss before income tax (48,456) (109,967)
Income tax      
Net loss $ (48,456) $ (109,967)
Loss per share - basic and diluted $ (0.01) $ (0.01)
Weighted average shares - basic and diluted 9,469,781 8,302,130

Statements of Cash Flows (Unaudited)

v2.4.0.8
Statements of Cash Flows (Unaudited) (USD $)
3 Months Ended
Mar. 31, 2015
Mar. 31, 2014
OPERATING ACTIVITIES    
Net loss $ (48,456) $ (109,967)
Adjustments to reconcile net loss to net cash used in operating activities    
Gain on marketable securities (1,780)   
Depreciation 337 132
Estimated fair value of common stock issued for services 26,700   
Changes in operating assets and liabilities    
Inventories - products 1,875 (28,000)
Inventories - silver (222,538)   
Prepaid expenses 1,686 94,976
Deposits    2,413
Deferred revenue 600   
Accounts payable and accrued liabilities (11,090) 282
Net cash used in operating activities (252,666) (40,164)
INVESTING ACTIVITIES    
Purchases of marketable securities (173,747)   
Proceeds from the sale of marketable securities 195,829   
Purchase of property and equipment    (3,860)
Cash used in investing activities 22,082 (3,860)
FINANCING ACTIVITIES    
Loan from shareholder    (6,693)
Estimated fair value of common stock issued for services    30,244
Proceeds from issuance of common stock 356,000 27,588
Net cash provided by financing activities 356,000 51,139
Net change in cash 125,416 7,115
Cash, beginning of period 1,567 10,632
Cash, end of period 126,983 17,747
SUPPLEMENTAL DISCLOSURE OF NON-CASH    
Subscriptions receivable from the common stock 27,700 25,972
Securities sold - not yet purchased $ 50,100   

Nature of Operations and Summary of Significant Accounting Policies

v2.4.0.8
Nature of Operations and Summary of Significant Accounting Policies
3 Months Ended
Mar. 31, 2015
Accounting Policies [Abstract]  
Nature of Operations and Summary of Significant Accounting Policies

NOTE 1 – NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

NATURE OF OPERATIONS

 

Sunstock, Inc. (formerly known as Sandgate Acquisition Corporation) (“Sunstock” or “the Company”) was incorporated on July 23, 2012 under the laws of the State of Delaware to engage in any lawful corporate undertaking, including, but not limited to, selected mergers and acquisitions. Sunstock operations to date have been limited to issuing shares of its common stock. Sunstock may attempt to locate and negotiate with a business entity for the combination of that target company with Sunstock. The combination will normally take the form of a merger, stock-for-stock exchange or stock-for-assets exchange. In most instances the target company will wish to structure the business combination to be within the definition of a tax-free reorganization under Section 351 or Section 368 of the Internal Revenue Code of 1986, as amended. No assurances can be given that Sunstock will be successful in locating or negotiating with any target company. Sunstock has been formed to provide a method for a foreign or domestic private company to become a reporting company with a class of securities registered under the Securities Exchange Act of 1934.

 

On July 18, 2013, the Company has changed its name from Sandgate Acquisition Corporation to Sunstock, Inc. and filed a Form 8-K with the Securities and Exchange Commission noticing such name change.

 

On July 18, 2013, Jason Chang and Dr. Ramnik S. Clair were named as the directors of the Company.

 

On October 30, 2013, the Company entered into a Purchase Agreement with Dollar Store Services, Inc. to develop, design and build out a retail store which the Company opened in February 2014. The Company opened its second retail store in May 2014. On August 21, 2014 the first store was forced to close due to below code electrical wiring the landlord had provided. Perishable inventory at this store was relocated to the second store as nonperishables were moved into storage along with fixed assets until a new location is expected to open in the first quarter of 2015. Related rents and associated costs have ceased with a final settlement pending.

 

In December 2014, the Company purchased 100 ounces of silver. In 2015, the Company anticipates purchasing additional precious metals and shifting more of its capital to the acquisition of precious metals. The Company holds physical coins and bullion rather than contracts for delivery of precious metals or certificates. In time of economic crisis, there may be no guarantee of the delivery of precious metals as contracts and certificates may exceed available stock.

 

Currently, the Company anticipates holding its precious metals as a long term investment. Depending on market conditions, the Company anticipates holding its silver holdings until the market price exceeds $50. Likewise, the Company does not plan to sell its gold holdings unless the market price exceeds $2,500.

 

BASIS OF PRESENTATION

 

The condensed consolidated balance sheet as of December 31, 2014, which has been derived from audited financial statements and the interim unaudited condensed consolidated financial statements as of March 31, 2015 and 2014 have been prepared in accordance with U.S. GAAP for interim financial information and with the instructions to Securities and Exchange Commission (“SEC”) Form 10-Q and Article 8 of SEC Regulation S-X. These condensed consolidated financial statements do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. Therefore, these unaudited condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and notes thereto for the year ended December 31, 2014, included in the Company’s Form 10-K.

 

The condensed consolidated financial statements included herein as of and for the three months ended March 31, 2015 and 2014 are unaudited; however, they contain all normal recurring accruals and adjustments that, in the opinion of the Company’s management, are necessary to present fairly the condensed consolidated financial position of the Company as of March 31, 2015, the condensed consolidated results of its operations and cash flows for the three months ended March 31, 2015 and 2014. The results of operations for the three months ended March 31, 2015 are not necessarily indicative of the results to be expected for the full year or any future interim periods.

 

USE OF ESTIMATES

 

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates made by the Company’s management include but are not limited to valuation of marketable securities, realizability of inventories and value of stock-based transactions.

 

Business Segments

 

The Company currently operates in one segment and in one geographic location in the United States of America. Although the Company has dollar store operations and holds quantities of silver, the Company considers itself to operate in one segment.

 

CONCENTRATION OF RISK

 

Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash. The Company places its cash with high quality banking institutions. The Company did not have cash balances in excess of the Federal Deposit Insurance Corporation limit as of March 31, 2015.

 

INVENTORIES

 

Inventories consist of merchandise for sale and are stated at the lower of cost or market determined on a first-in, first-out (FIFO) method. When a purchase contains multiple copies of the same item, they are stated at average cost.

 

Inventories – silver consists primarily of silver and small amounts of gold held for sale and are stated at cost. Currently, the Company anticipates holding its precious metals as a long term investment. Depending on market conditions, the Company anticipates holding its silver holdings until the market price exceeds $50. Likewise, the Company does not plan to sell its gold holdings unless the market price exceeds $2,500.

 

At each balance sheet date, the Company evaluates its ending inventory quantities on hand and on order and records a provision for excess quantities and obsolescence. Among other factors, the Company considers historical demand and forecasted demand in relation to the inventory on hand, competitiveness of product offerings, market conditions and product life cycles when determining obsolescence and net realizable value. In addition, the Company considers changes in the market value of components in determining the net realizable value of its inventory. Provisions are made to reduce excess or obsolete inventories to their estimated net realizable values. Once established, write-downs are considered permanent adjustments to the cost basis of the excess or obsolete inventories.

 

PROPERTY AND EQUIPMENT

 

Property and equipment are stated at cost. Depreciation is computed using the straight-line method over the estimated useful lives of 3 to 5 years. Any leasehold improvements are depreciated at the lesser of the useful life of the asset or the lease term.

 

LONG-LIVED ASSETS

 

The Company reviews the carrying values of its long-lived assets for possible impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. If the expected future cash flow from the use of the asset and its eventual disposition is less than the carrying amount of the asset, a impairment loss is recognized and measured using the fair value of the related asset. No impairment charges were incurred as of March 31, 2015. There can be no assurance, however, that market conditions will not change or demand for the Company’s services will continue, which could result in impairment of long-lived assets in the future.

 

REVENUE RECOGNITION

 

The Company recognizes revenues in accordance with the FASB ASC Topic 605. Accordingly, the Company recognizes revenues when there is persuasive evidence that an arrangement exists, product delivery and acceptance have occurred, the sales price is fixed or determinable, and collectability of the transaction is assured.

 

INCOME TAXES

 

The Company accounts for income taxes and the related accounts under the liability method. Deferred tax assets and liabilities are determined based on the differences between the financial statement carrying amounts and the income tax bases of assets and liabilities. A valuation allowance is applied against any net deferred tax asset if, based on available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. Therefore, the Company has recorded a full valuation allowance against the net deferred tax assets. The Company’s income tax provision consists of state minimum taxes.

 

EARNINGS (LOSS) PER COMMON SHARE

 

Basic earnings (loss) per share represent income (loss) available to common stockholders divided by the weighted-average number of common shares outstanding during the period. Diluted earnings (loss) per share reflects additional common shares that would have been outstanding if dilutive potential common shares had been issued, as well as any adjustment to income (loss) that would result from the assumed issuance. The potential common shares that may be issued by the Company relate to outstanding stock options and have been excluded from the computation of diluted earnings (loss) per share because they would reduce the reported loss per share and therefore have an anti-dilutive effect.

 

As of March 31, 2015, there were no potentially dilutive shares that were excluded from the diluted earnings (loss) per share as their effect would have been antidilutive for the year then ended.

 

FAIR VALUE OF FINANCIAL INSTRUMENTS

 

The Company measures the fair value of certain of its financial assets on a recurring basis. A fair value hierarchy is used to rank the quality and reliability of the information used to determine fair values. Financial assets and liabilities carried at fair value will be classified and disclosed in one of the following three categories:

 

Level 1 – Quoted prices (unadjusted) in active markets for identical assets or liabilities;

 

Level 2 – Inputs other than Level 1 that are observable, either directly or indirectly, such as unadjusted quoted prices for similar assets and liabilities, unadjusted quoted prices in the markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities; and

 

Level 3 – Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

 

As of March 31, 2015, the Company’s financial instruments include cash, investments in marketable securities, accounts payable, securities sold – not yet purchased and accrued litigation. The carrying amount of cash, accounts payable, and accrued litigation approximates fair value due to the short-term maturities of these instruments. The fair value of the marketable securities as determined based on quoted prices in active markets for identicle assets or level 1 inputs.

Investments in Marketable Securities

v2.4.0.8
Investments in Marketable Securities
3 Months Ended
Mar. 31, 2015
Investments, Debt and Equity Securities [Abstract]  
Investments in Marketable Securities

NOTE 2 – INVESTMENTS IN MARKETABLE SECURITIES

 

The Company accounts for its investments in marketable securities in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 320. The Company determined the appropriate classification of its investments at the time of purchase and reevaluated such designation at each balance sheet date.

 

Marketable debt and equity securities that were bought and held principally for the purpose of selling them in the near term were classified as trading securities and are reported at fair value, with unrealized gains and losses recognized in earnings. Realized gains and losses and declines in value judged to be other than temporary are determined based on the specific identification method and were reported in earnings in the statements of operations. As of March 31, 2015, the Company classifies its securities as trading.

 

Changes in fair value of securities sold, not yet purchased are recognized in earnings currently and in the same caption as gains and losses on securities.

Going Concern

v2.4.0.8
Going Concern
3 Months Ended
Mar. 31, 2015
Going Concern [Abstract]  
Going Concern

NOTE 3 – GOING CONCERN

 

The Company has not posted operating income since inception. It has an accumulated deficit of approximately $527,000 as of March 31, 2015. These matters raise substantial doubt about the Company’s ability to continue as a going concern. The Company’s continuation as a going concern is dependent on its ability to generate sufficient cash flows from operations to meet its obligations, which it has not been able to accomplish to date, and /or obtain additional financing from its stockholders and/or other third parties.

 

These financial statements have been prepared on a going concern basis, which implies the Company will continue to meet its obligations and continue its operations for the next fiscal year. The continuation of the Company as a going concern is dependent upon financial support from its stockholders, the ability of the Company to obtain necessary equity financing to continue operations, successfully locating and negotiate with a business entity for the combination of that target company with the Company.

 

There is no assurance that the Company will ever be profitable. The financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classifications of liabilities that may result should the Company be unable to continue as a going concern.

Recent Accounting Pronouncements

v2.4.0.8
Recent Accounting Pronouncements
3 Months Ended
Mar. 31, 2015
New Accounting Pronouncements and Changes in Accounting Principles [Abstract]  
Recent Accounting Pronouncements

NOTE 4 – RECENT ACCOUNTING PRONOUNCEMENTS

 

In May 2014, the Financial Accounting Standards Board issued Accounting Standards Update (“ASU”) No. 2014-09, “Revenue from Contracts with Customers (Topic 606)” (“ASU 2014-09”). ASU 2014-09 amends the guidance for revenue recognition to replace numerous, industry-specific requirements and converges areas under this topic with those of the International Financial Reporting Standards. The ASU implements a five-step process for customer contract revenue recognition that focuses on transfer of control, as opposed to transfer of risk and rewards. The amendment also requires enhanced disclosures regarding the nature, amount, timing and uncertainty of revenues and cash flows from contracts with customers. Other major provisions include the capitalization and amortization of certain contract costs, ensuring the time value of money is considered in the transaction price, and allowing estimates of variable consideration to be recognized before contingencies are resolved in certain circumstances. The amendments in this ASU are effective for reporting periods beginning after December 15, 2016, and early adoption is prohibited. Entities can transition to the standard either retrospectively or as a cumulative-effect adjustment as of the date of adoption. Management is currently assessing the impact the adoption of ASU 2014-09 will have on our Condensed Consolidated Financial Statements.

 

In August 2014, the FASB issued ASU No. 2014-15, “Presentation of Financial Statements - Going Concern.” The amendments in this update provide guidance in U.S. GAAP about management’s responsibilities to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern and to provide related footnote disclosures. The main provision of the amendments are for an entity’s management, in connection with the preparation of financial statements, to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the entity’s ability to continue as a going concern within one year after the date that the financial statements are issued. Management’s evaluation should be based on relevant conditions and events that are known or reasonably knowable at the date the consolidated financial statements are issued. When management identifies conditions or events that raise substantial doubt about an entity’s ability to continue as a going concern, the entity should disclose information that enables users of the consolidated financial statements to understand all of the following: (1) principal conditions or events that raised substantial doubt about the entity’s ability to continue as a going concern (before consideration of management’s plans); (2) management’s evaluation of the significance of those conditions or events in relation to the entity’s ability to meet its obligations; and (3) management’s plans that alleviated substantial doubt about the entity’s ability to continue as a going concern or management’s plans that are intended to mitigate the conditions or events that raise substantial doubt about the entity’s ability to continue as a going concern. The amendments in this update are effective for interim and annual reporting periods after December 15, 2016 and early application is permitted. The Company is currently assessing this guidance for future implementation.

 

In April 2015, the FASB issued Accounting Standard Update (“ASU”) 2015-03, Simplifying the Presentation of Debt Issuance Costs. This update requires capitalized debt issuance costs to be classified as a reduction to the carrying value of debt rather than a deferred charge, as is currently required. This update will be effective for the Company for all annual and interim periods beginning after December 15, 2015 and is required to be adopted retroactively for all periods presented, and early adoption is permitted. The Company is currently evaluating the expected impact of this new accounting standard on its financial statements.

Fair Value Disclosure

v2.4.0.8
Fair Value Disclosure
3 Months Ended
Mar. 31, 2015
Fair Value Disclosures [Abstract]  
Fair Value Disclosure

NOTE 5 – FAIR VALUE DISCLOSURE

 

The following table presents fair values for those assets and liabilities measured at fair value on a recurring basis and the level within the fair value hierarchy in which the measurements fall. No transfers among the levels within the fair value hierarchy occurred during the three months ended March 31, 2015.

 

    Fair Value  
             
Investments in marketable securities     Level 1     $ 29,798  
Securities sold, not yet purchased     Level 1     $ (50,100 )

 

For the three months ended March 31, 2015, the Company recorded a realized loss of $1,780.

Property and Equipment

v2.4.0.8
Property and Equipment
3 Months Ended
Mar. 31, 2015
Property, Plant and Equipment [Abstract]  
Property and Equipment

NOTE 6 – PROPERTY AND EQUPMENT

 

    March 31, 2015     December 31, 2014  
Furniture and equipment   $ 9,781     $ 9,781  
Less - accumulated depreciation     (1,171 )     (834 )
    $ 8,610     $ 8,947  

 

Depreciation expense as of March 31, 2015 was $1,171.

Related Party Balances

v2.4.0.8
Related Party Balances
3 Months Ended
Mar. 31, 2015
Related Party Transactions [Abstract]  
Related Party Balances

NOTE 7 – RELATED PARTY BALANCES

 

During the year ended December 31, 2014, the Company’s chief executive officer was granted 1,846,012 shares of common stock for the conversion of approximately $18,000 of amounts due. Based on the estimated fair value of the common shares, the Company recorded approximately $166,000 of compensation expense to the officer; as such shares were considered compensatory for services provided.

 

In August 2014, the Company entered into a note receivable agreement of approximately $33,000 with the Company’s CEO and chairman of the board of directors. At September 30, 2014, the entire balance was due. In November 2014, such amount was reclassified to compensation expense. Effective July 30, 2002, Section 402 of the Sarbanes-Oxley Act of 2002 amended the Securities Exchange Act of 1934 to prohibit U.S. and foreign companies with securities traded in the United States of America from making, or arranging for third parties to make, nearly any type of personal loan to their directors and executive officers. Violations of the Sarbanes-Oxley loan prohibition are subject to the civil and criminal penalties applicable to violations of the Exchange Act.

 

During the year ended December 31, 2013, the Company’s Chief Executive Officer received $16,000 directly from an investor in connection with the issuance of 75,000 shares of the Company’s common stock. During the year ended December 31, 2014, the Company recorded compensation of $16,000; as such amounts were not remitted to the Company by the officer.

 

The Company has not incurred any salaries and related expenses during 2014 or 2015. The parents of the Company’s officer have contributed their time without compensation, nor any amounts due. They assist with operating the Company’s store (two stores through August 2014). In addition, the Company receives consulting services from a shareholder without any compensation, nor any amounts due. The Company approximates the quarterly expense would total $15,000 to hire and pay for comparable services. No such amounts have been recorded for the three months ended March 31, 2015 or 2014. 

 

The Company has a non-interest bearing, non-secured line of credit by a shareholder. The line is due on demand. During the three months ended March 31, 2015, the Company had no borrowings and no amounts due.

 

In January 2015, the Company’s CEO has provided the Company with a revolving line of credit of up to $120,000. All principal and interest (5%) shall be due and payable in January 2016. There were no borrowings under the revolving line during the three months ended March 31, 2015.

Commitments and Contingencies

v2.4.0.8
Commitments and Contingencies
3 Months Ended
Mar. 31, 2015
Commitments and Contingencies Disclosure [Abstract]  
Commitments and Contingencies

NOTE 8 – COMMITMENTS AND CONTINGIENCIES

 

The Company entered into a lease agreement on October 30, 2013 for 2,239 square feet of retail shop space for this store. The lease requires combined monthly payments of base rent of $3,733 for thirty six months beginning February 2014. On April 8, 2014 the Company entered into a sixty-seven month lease agreement for its second retail store. The lease requires monthly payments of base rent of $4,756, with free rent for months one through four, month seven, month nine and month eleven. The base rent increases gradually over the term of the lease. The company has recorded deferred rent related to this lease, which approximated $29,000 and was included in accounts payable in the accompanying balance sheet of March 31, 2015. This store began operations on May 8, 2014.

 

On August 21, 2014 the first store was forced to close due to below code electrical wiring the landlord had provided. Perishable inventory at this store was relocated to the second store as nonperishables were moved into storage along with fixed assets until a new location is expected to open in the first quarter of 2015. Related rents and associated costs have ceased with a final settlement pending. On January 27, 2015 the Company filed a lawsuit to recover these costs either through insurance proceeds or landlord settlement.

 

In December 2013, the Company issued 75,000 shares of common stock to a third party (the “Shareholder”) for consideration of $16,000. Such consideration was received directly by Jason Chang, CEO, and was not deposited into the Company’s bank account. As the funds had not been received by the Company, such amounts have been recorded as compensation to Mr. Chang as of December 31, 2014 (see Note 5). In April 2014, the Company received notice from the Shareholder that he had filed a lawsuit against the Company and its CEO relating to the delay in the complainants’ stock reaching public listing services. The Company had made efforts to settle this issue, without an agreement being reached. As such, the Company has recorded a loss contingency based on its best estimate of all costs to be incurred for the ultimate settlement of this matter. The Company estimates its exposure to be $55,200, and has reflected this amount in accrued litigation on the accompanying balance sheet as of March 31, 2015.

 

LITIGATION

 

In December 2013, the Company issued 75,000 shares of common stock to a third party (the “Shareholder”) for consideration of $16,000. Such consideration was received directly by Jason Chang, CEO, and was not deposited into the Company’s bank account. As the funds had not been received by the Company, such amounts have been recorded as compensation to Mr. Chang as of December 31, 2014 (see Note 5). In April 2014, the Company received notice from the Shareholder that he had filed a lawsuit against the Company and its CEO relating to the delay in the complainants’ stock reaching public listing services. The Company had made efforts to settle this issue, without an agreement being reached. As such, the Company has recorded a loss contingency based on its best estimate of all costs to be incurred for the ultimate settlement of this matter. The Company estimates its exposure to be $55,200, and has reflected this amount in accrued litigation on the accompanying balance sheet as of March 31, 2015.

 

INDEMNITIES AND GUARANTEES

 

The Company has made certain indemnities and guarantees, under which it may be required to make payments to a guaranteed or indemnified party, in relation to certain actions or transactions. The Company indemnifies its directors, officers, employees and agents, as permitted under the laws of the State of Delaware. In connection with its facility leases, the Company has agreed to indemnify its lessors for certain claims arising from the use of the facilities. The duration of the guarantees and indemnities varies, and is generally tied to the life of the agreement. These guarantees and indemnities do not provide for any limitation of the maximum potential future payments the Company could be obligated to make. Historically, the Company has not been obligated nor incurred any payments for these obligations and, therefore, no liabilities have been recorded for these indemnities and guarantees in the accompanying balance sheet.

Stockholder's Equity (Deficit)

v2.4.0.8
Stockholder's Equity (Deficit)
3 Months Ended
Mar. 31, 2015
Equity [Abstract]  
Stockholders' Equity (Deficit)

NOTE 9 – STOCKHOLDER’S EQUITY (DEFICIT)

 

The Company is authorized to issue 100,000,000 shares of common stock and 20,000,000 shares of preferred stock. As of December 31, 2014, 9,231,397 shares of common stock and no preferred stock were issued and outstanding.

 

During the three months ended March 31, 2015, the Company issued 966,900 shares of common stock for aggregate proceeds of $356,000 and $27,700 as a stock subscription receivable, subsequently received in April 2015 and 65,000 shares for services provided valued at approximately $27,000.

Subsequent Events

v2.4.0.8
Subsequent Events
3 Months Ended
Mar. 31, 2015
Subsequent Events [Abstract]  
Subsequent Events

NOTE 10 – SUBSEQUENT EVENTS

 

In April 2015, the Company issued 10,000 shares of common stock for $5,000 in cash.

Nature of Operations and Summary of Significant Accounting Policies (Policies)

v2.4.0.8
Nature of Operations and Summary of Significant Accounting Policies (Policies)
3 Months Ended
Mar. 31, 2015
Accounting Policies [Abstract]  
Nature of Operations

NATURE OF OPERATIONS

 

Sunstock, Inc. (formerly known as Sandgate Acquisition Corporation) (“Sunstock” or “the Company”) was incorporated on July 23, 2012 under the laws of the State of Delaware to engage in any lawful corporate undertaking, including, but not limited to, selected mergers and acquisitions. Sunstock operations to date have been limited to issuing shares of its common stock. Sunstock may attempt to locate and negotiate with a business entity for the combination of that target company with Sunstock. The combination will normally take the form of a merger, stock-for-stock exchange or stock-for-assets exchange. In most instances the target company will wish to structure the business combination to be within the definition of a tax-free reorganization under Section 351 or Section 368 of the Internal Revenue Code of 1986, as amended. No assurances can be given that Sunstock will be successful in locating or negotiating with any target company. Sunstock has been formed to provide a method for a foreign or domestic private company to become a reporting company with a class of securities registered under the Securities Exchange Act of 1934.

 

On July 18, 2013, the Company has changed its name from Sandgate Acquisition Corporation to Sunstock, Inc. and filed a Form 8-K with the Securities and Exchange Commission noticing such name change.

 

On July 18, 2013, Jason Chang and Dr. Ramnik S. Clair were named as the directors of the Company.

 

On October 30, 2013, the Company entered into a Purchase Agreement with Dollar Store Services, Inc. to develop, design and build out a retail store which the Company opened in February 2014. The Company opened its second retail store in May 2014. On August 21, 2014 the first store was forced to close due to below code electrical wiring the landlord had provided. Perishable inventory at this store was relocated to the second store as nonperishables were moved into storage along with fixed assets until a new location is expected to open in the first quarter of 2015. Related rents and associated costs have ceased with a final settlement pending.

 

In December 2014, the Company purchased 100 ounces of silver. In 2015, the Company anticipates purchasing additional precious metals and shifting more of its capital to the acquisition of precious metals. The Company holds physical coins and bullion rather than contracts for delivery of precious metals or certificates. In time of economic crisis, there may be no guarantee of the delivery of precious metals as contracts and certificates may exceed available stock.

 

Currently, the Company anticipates holding its precious metals as a long term investment. Depending on market conditions, the Company anticipates holding its silver holdings until the market price exceeds $50. Likewise, the Company does not plan to sell its gold holdings unless the market price exceeds $2,500.

Basis of Presentation

BASIS OF PRESENTATION

 

The condensed consolidated balance sheet as of December 31, 2014, which has been derived from audited financial statements and the interim unaudited condensed consolidated financial statements as of March 31, 2015 and 2014 have been prepared in accordance with U.S. GAAP for interim financial information and with the instructions to Securities and Exchange Commission (“SEC”) Form 10-Q and Article 8 of SEC Regulation S-X. These condensed consolidated financial statements do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. Therefore, these unaudited condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and notes thereto for the year ended December 31, 2014, included in the Company’s Form 10-K.

 

The condensed consolidated financial statements included herein as of and for the three months ended March 31, 2015 and 2014 are unaudited; however, they contain all normal recurring accruals and adjustments that, in the opinion of the Company’s management, are necessary to present fairly the condensed consolidated financial position of the Company as of March 31, 2015, the condensed consolidated results of its operations and cash flows for the three months ended March 31, 2015 and 2014. The results of operations for the three months ended March 31, 2015 are not necessarily indicative of the results to be expected for the full year or any future interim periods.

Use of Estimates

USE OF ESTIMATES

 

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates made by the Company’s management include but are not limited to valuation of marketable securities, realizability of inventories and value of stock-based transactions.

Business Segments

Business Segments

 

The Company currently operates in one segment and in one geographic location in the United States of America. Although the Company has dollar store operations and holds quantities of silver, the Company considers itself to operate in one segment.

Concentration of Risk

CONCENTRATION OF RISK

 

Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash. The Company places its cash with high quality banking institutions. The Company did not have cash balances in excess of the Federal Deposit Insurance Corporation limit as of March 31, 2015.

Inventories

INVENTORIES

 

Inventories consist of merchandise for sale and are stated at the lower of cost or market determined on a first-in, first-out (FIFO) method. When a purchase contains multiple copies of the same item, they are stated at average cost.

 

Inventories – silver consists primarily of silver and small amounts of gold held for sale and are stated at cost. Currently, the Company anticipates holding its precious metals as a long term investment. Depending on market conditions, the Company anticipates holding its silver holdings until the market price exceeds $50. Likewise, the Company does not plan to sell its gold holdings unless the market price exceeds $2,500.

 

At each balance sheet date, the Company evaluates its ending inventory quantities on hand and on order and records a provision for excess quantities and obsolescence. Among other factors, the Company considers historical demand and forecasted demand in relation to the inventory on hand, competitiveness of product offerings, market conditions and product life cycles when determining obsolescence and net realizable value. In addition, the Company considers changes in the market value of components in determining the net realizable value of its inventory. Provisions are made to reduce excess or obsolete inventories to their estimated net realizable values. Once established, write-downs are considered permanent adjustments to the cost basis of the excess or obsolete inventories.

Property and Equipment

PROPERTY AND EQUIPMENT

 

Property and equipment are stated at cost. Depreciation is computed using the straight-line method over the estimated useful lives of 3 to 5 years. Any leasehold improvements are depreciated at the lesser of the useful life of the asset or the lease term.

Long-Lived Assets

LONG-LIVED ASSETS

 

The Company reviews the carrying values of its long-lived assets for possible impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. If the expected future cash flow from the use of the asset and its eventual disposition is less than the carrying amount of the asset, a impairment loss is recognized and measured using the fair value of the related asset. No impairment charges were incurred as of March 31, 2015. There can be no assurance, however, that market conditions will not change or demand for the Company’s services will continue, which could result in impairment of long-lived assets in the future.

Revenue Recognition

REVENUE RECOGNITION

 

The Company recognizes revenues in accordance with the FASB ASC Topic 605. Accordingly, the Company recognizes revenues when there is persuasive evidence that an arrangement exists, product delivery and acceptance have occurred, the sales price is fixed or determinable, and collectability of the transaction is assured.

Income Taxes

INCOME TAXES

 

The Company accounts for income taxes and the related accounts under the liability method. Deferred tax assets and liabilities are determined based on the differences between the financial statement carrying amounts and the income tax bases of assets and liabilities. A valuation allowance is applied against any net deferred tax asset if, based on available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. Therefore, the Company has recorded a full valuation allowance against the net deferred tax assets. The Company’s income tax provision consists of state minimum taxes.

Earnings (Loss) Per Common Share

EARNINGS (LOSS) PER COMMON SHARE

 

Basic earnings (loss) per share represent income (loss) available to common stockholders divided by the weighted-average number of common shares outstanding during the period. Diluted earnings (loss) per share reflects additional common shares that would have been outstanding if dilutive potential common shares had been issued, as well as any adjustment to income (loss) that would result from the assumed issuance. The potential common shares that may be issued by the Company relate to outstanding stock options and have been excluded from the computation of diluted earnings (loss) per share because they would reduce the reported loss per share and therefore have an anti-dilutive effect.

 

As of March 31, 2015, there were no potentially dilutive shares that were excluded from the diluted earnings (loss) per share as their effect would have been antidilutive for the year then ended.

Fair Value of Financial Instruments

FAIR VALUE OF FINANCIAL INSTRUMENTS

 

The Company measures the fair value of certain of its financial assets on a recurring basis. A fair value hierarchy is used to rank the quality and reliability of the information used to determine fair values. Financial assets and liabilities carried at fair value will be classified and disclosed in one of the following three categories:

 

Level 1 – Quoted prices (unadjusted) in active markets for identical assets or liabilities;

 

Level 2 – Inputs other than Level 1 that are observable, either directly or indirectly, such as unadjusted quoted prices for similar assets and liabilities, unadjusted quoted prices in the markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities; and

 

Level 3 – Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

 

As of March 31, 2015, the Company’s financial instruments include cash, investments in marketable securities, accounts payable, securities sold – not yet purchased and accrued litigation. The carrying amount of cash, accounts payable, and accrued litigation approximates fair value due to the short-term maturities of these instruments. The fair value of the marketable securities as determined based on quoted prices in active markets for identicle assets or level 1 inputs.

Fair Value Disclosure (Tables)

v2.4.0.8
Fair Value Disclosure (Tables)
3 Months Ended
Mar. 31, 2015
Fair Value Disclosures [Abstract]  
Fair Value of Assets and Liabilities Measured at Fair Value on Recurring Basis

The following table presents fair values for those assets and liabilities measured at fair value on a recurring basis and the level within the fair value hierarchy in which the measurements fall. No transfers among the levels within the fair value hierarchy occurred during the three months ended March 31, 2015.

 

    Fair Value  
             
Investments in marketable securities     Level 1     $ 29,798  
Securities sold, not yet purchased     Level 1     $ (50,100 )

Property and Equipment (Tables)

v2.4.0.8
Property and Equipment (Tables)
3 Months Ended
Mar. 31, 2015
Property, Plant and Equipment [Abstract]  
Components of Property and Equipment

    March 31, 2015     December 31, 2014  
Furniture and equipment   $ 9,781     $ 9,781  
Less - accumulated depreciation     (1,171 )     (834 )
    $ 8,610     $ 8,947  

Nature of Operations and Summary of Significant Accounting Policies (Details Narrative)

v2.4.0.8
Nature of Operations and Summary of Significant Accounting Policies (Details Narrative) (USD $)
3 Months Ended
Mar. 31, 2015
Impairment charges of long-lived assets $ 0
Outstanding dilutive securities 0
Minimum [Member]
 
Property and equipment, useful life 3 years
Maximum [Member]
 
Property and equipment, useful life 5 years
Silver [Member]
 
Purchased ounces of silver 100
Anticipates holding of metals until market price exceeds 50
Gold [Member]
 
Anticipates holding of metals until market price exceeds $ 2,500

Going Concern (Details Narrative)

v2.4.0.8
Going Concern (Details Narrative) (USD $)
Mar. 31, 2015
Dec. 31, 2014
Going Concern [Abstract]    
Accumulated deficit $ 553,895 $ 505,439

Fair Value Disclosure (Details Narrative)

v2.4.0.8
Fair Value Disclosure (Details Narrative) (USD $)
3 Months Ended
Mar. 31, 2015
Mar. 31, 2014
Fair Value Disclosures [Abstract]    
Realized loss on investments in marketable securities $ 1,780   

Fair Value Disclosure - Fair Value of Assets and Liabilities Measured at Fair Value on Recurring Basis (Details)

v2.4.0.8
Fair Value Disclosure - Fair Value of Assets and Liabilities Measured at Fair Value on Recurring Basis (Details) (USD $)
Mar. 31, 2015
Dec. 31, 2014
Investments in marketable securities $ 29,798   
Securities sold, not yet purchased 50,100   
Level 1 [Member]
   
Investments in marketable securities 29,798  
Securities sold, not yet purchased $ (50,100)  

Property and Equipment (Details Narrative)

v2.4.0.8
Property and Equipment (Details Narrative) (USD $)
3 Months Ended
Mar. 31, 2015
Property, Plant and Equipment [Abstract]  
Depreciation expense $ 1,171

Property and Equipment - Components of Property and Equipment (Details)

v2.4.0.8
Property and Equipment - Components of Property and Equipment (Details) (USD $)
Mar. 31, 2015
Dec. 31, 2014
Property, Plant and Equipment [Abstract]    
Furniture and equipment $ 9,781 $ 9,781
Less - accumulated depreciation (1,171) (834)
Property and equipment, net $ 8,610 $ 8,947

Related Party Balances (Details Narrative)

v2.4.0.8
Related Party Balances (Details Narrative) (USD $)
3 Months Ended 12 Months Ended 1 Months Ended 12 Months Ended 12 Months Ended
Mar. 31, 2015
Dec. 31, 2014
Aug. 31, 2014
Integer
Jan. 31, 2015
Chief Executive Officer [Member]
Dec. 31, 2014
Chief Executive Officer [Member]
Dec. 31, 2013
Chief Executive Officer [Member]
Aug. 31, 2014
Chief Executive Officer [Member]
Dec. 31, 2014
Chief Executive Officer One [Member]
Related Party Transaction [Line Items]                
Stock issued during period, shares 966,900       1,846,012 75,000    
Stock issued during period, aggregate price         $ 18,000 $ 16,000    
Officer compensantion         166,000     16,000
Note Receivable from Shareholder             33,000  
Salaries and related expenses                  
Number of stores     2          
Quarterly expense 15,000              
Revolving line of credit maximum       $ 120,000        
Line of credits interest rate percentage       5.00%        
Line of credit due and payable date       January 2016        

Commitments and Contingencies (Details Narrative)

v2.4.0.8
Commitments and Contingencies (Details Narrative) (USD $)
3 Months Ended 1 Months Ended 3 Months Ended 0 Months Ended
Mar. 31, 2015
Dec. 31, 2014
Dec. 31, 2013
Shareholder [Member]
Mar. 31, 2015
Monthly Rentals and Maintenance Fees [Member]
Apr. 08, 2014
Monthly Rentals and Maintenance Fees [Member]
Oct. 30, 2013
Monthly Rentals and Maintenance Fees [Member]
acre
CommitmentsAndContingenciesLineItems [Line Items]            
Area of real estate property           2,239
Operating rent expense, minimum rentals       $ 3,733 $ 4,756  
Operating leases, term of contract       36 months 67 months  
Description of operating leases, payment      

The lease requires monthly payments of base rent of $4,756, with free rent for months one through four, month seven, month nine and month eleven.

   
Deferred rent related to lease 29,000          
Common stock issued to third party 966,900   75,000      
Common stock consideration     16,000      
Accrued litigation $ 55,200 $ 55,200        

Stockholder's Equity (Deficit) (Details Narrative)

v2.4.0.8
Stockholder's Equity (Deficit) (Details Narrative) (USD $)
3 Months Ended
Mar. 31, 2015
Mar. 31, 2014
Dec. 31, 2014
Equity [Abstract]      
Common stock, shares authorized 100,000,000   100,000,000
Preferred stock, shares authorized 20,000,000   20,000,000
Common stock, shares issued 10,263,297   9,231,397
Common stock, shares outstanding 10,263,297   9,231,397
Preferred stock, shares issued 0   0
Preferred stock, shares outstanding 0   0
Number of common stock issued, shares 966,900    
Proceeds from issuance of common stock $ 356,000 $ 27,588  
Subscriptions receivable 27,700     
Issuance of common stock for services $ 27,000    
Issuance of common stock for services, shares 65,000    

Subsequent Events (Details Narrative)

v2.4.0.8
Subsequent Events (Details Narrative) (USD $)
3 Months Ended 1 Months Ended
Mar. 31, 2015
Apr. 30, 2015
Subsequent Event [Member]
Number of common stock issued, shares 966,900 10,000
Proceeds from issuance of common stock   $ 5,000