10-Q

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 June 30, 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  o   No  x

The number of shares outstanding of each of the issuer’s classes of common equity, as of August 14, 2015: 29,229,556 shares of Common Stock.

CONFEDERATE MOTORS, INC.

FORM 10-Q

June 30, 2015

INDEX

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	19
ITEM 4. CONTROLS AND PROCEDURES	20
PART II - OTHER INFORMATION	20
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	20
ITEM 6. EXHIBITS	20
SIGNATURES	21

2

PART I - FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

CONFEDERATE MOTORS, INC.

Condensed Consolidated Balance Sheets

	(Unaudited)
	June 30,			December 31,
	2015			2014
Assets
Current assets
Cash and cash equivalents	$	127,928		$	91,847
Other receivables		4,054			3,793
Inventory		567,484			647,014
Prepaid inventory		47,385			200,259
Prepaid expenses		105,770			5,138
Total current assets		852,621			948,051
Property and equipment, net		70,796			37,917
Total assets	$	923,417		$	985,968
Liabilities and Stockholders' Deficit
Current liabilities
Accounts payable	$	185,135		$	240,830
Accrued interest payable		7,502			7,502
Accrued salaries		140,250			98,500
Accrued payroll tax liability		74,794			78,394
Notes Payable – short term – related parties		37,777			37,777
Deferred revenue		713,560			651,636
Warranty reserve		2,365			1,438
Other accrued expenses		44,610			36,214
Registration rights liability		175,500			175,500
Payable to be settled in stock – Officer		210,000			210,000
Settlement payable		120,000			160,000
Current portion of notes payable		11,664			-
Total current liabilities		1,723,157			1,697,791
Long term liabilities
Note payable		26,608			-
Total Liabilities		1,749,765			1,697,791
Stockholders' deficit
Preferred Stock, $0.001 par value 20,000,000 shares authorized; -0- shares outstanding as of June 30, 2015 and December 31, 2014, respectively		-			-
Common Stock, $0.001 par value 200,000,000 shares authorized; 29,229,556 shares outstanding as of June 30, 2015 and 25,629,556 shares outstanding as of December 31, 2014		29,229			25,629
Additional paid-in capital		12,296,350			11,787,450
Stock Subscribed		-			525,000
Subscriptions Receivable		-			(113,238	)
Accumulated deficit		(12,837,977	)		(12,622,714	)
Treasury Shares		(313,950	)		(313,950	)
Total stockholders’ deficit		(826,348	)		(711,823	)
Total liabilities and stockholders’ deficit	$	923,417		$	985,968

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

3

CONFEDERATE MOTORS, INC.

Condensed Consolidated Statements of Operations

(unaudited)

	Three Months Ended						Six Months Ended
	June 30,			June 30,			June 30,			June 30,
	2015			2014			2015			2014
Sales	$	511,732		$	589,044		$	1,025,245		$	938,518
Cost of goods sold		(331,144	)		(307,372	)		(650,852	)		(496,736	)
Gross profit		180,588			281,672			374,393			441,782
Operating Expenses
Research and Development		30,703			76,004			55,650			126,072
Selling, general and administrative expenses		282,838			283,695			538,977			468,194
Loss from operations		(132,953	)		(78,027	)		(220,234	)		(152,484	)
Other income		-			49,200			5,000			115,665
Interest (income / expense)		29			213			(29	)		613
		29			49,413			4,971			116,278
Net income (loss)	$	(132,924	)	$	(28,614	)	$	(215,263	)	$	(36,206	)
Net income (loss) per common share
Basic	$	(0.00	)	$	(0.00	)	$	(0.01	)	$	(0.00	)
Diluted	$	(0.00	)	$	(0.00	)	$	(0.01	)	$	(0.00	)
Weighted average shares outstanding
Basic		28,754,000			16,704,762			27,244,556			16,215,844
Diluted		28,754,000			16,704,762			27,244,556			16,215,844

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

4

CONFEDERATE MOTORS, INC.

Condensed Consolidated Statements of Cash Flows

(unaudited)

	Six Months Ended
	June 30,			June 30,
	2015			2014
Operating activities
Net income (loss)	$	(215,263	)	$	(36,206	)
Adjustments to reconcile net income (loss) to net cash provided (used) by operating activities
Depreciation		10,031			688
Change in operating assets and liabilities
A/R Other Receivables		(261	)		(107,867	)
Inventory		79,530			(302,406	)
Prepaid inventory		(47,385	)		(109,382	)
Prepaid expenses		99,627			1,014
Notes Receivable		–			(3,614	)
Accounts payable		(55,695	)		62,783
Accrued payroll		41,750			32,500
Accrued payroll tax liability		(3,600	)		(11,200	)
Other accrued expenses		8,396			13,454
Warranty reserve		927			–
Deferred revenue		61,924			(102,737	)
Deferred sales commission and royalty		–			(30,000	)
Net cash provided (used) by operating activities		(20,019	)		(592,973	)
Investing activities
Purchase of property and Equipment		–			(12,420	)
Net cash provided (used) by investing activities		–			(12,420	)
Financing activities
Repayment of notes payable		(4,638	)		–
Payments on litigation settlements		(40,000	)		–
Proceeds from issuance of stock		100,738			750,000
Net cash provided (used) by financing activities		56,100			750,000
Net increase (decrease) in cash and cash equivalents		36,081			(144,607	)
Cash and cash equivalents at the beginning of period		91,847			3,113
Cash and cash equivalents at end of period	$	127,928		$	147,720
Supplemental disclosures of cash flow information:
Non cash investing & financing activities
Stock issued to retire payable	$	42,910		$	–
Payable to be settled in stock		–			210,000
Cash paid during the period for:
Interest	$	–		$	–
Income taxes	$	–		$	–

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

5

Confederate Motors, Inc.

Notes to Condensed Consolidated Financial Statements

June 30, 2015

(unaudited)

NOTE 1 – Summary of Significant Accounting Policies

Nature of Business

Confederate Motors, Inc., a Delaware corporation, 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 one preproduction model (the P51 Combat Fighter). The X132 Hellcat model started production in January 2012. The P51 Fighter Combat is scheduled to begin production in September 2015 with the formal launch occurring August 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 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 June 30, 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), Confederate Garage, LLC, a Louisiana limited liability company, and Moto Confederacy, LLC a Louisiana limited liability 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.

6

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.

	6/30/2015		12/31/2014
Parts	$	362,905	$	415,388
Work in process		112,381		30,727
Motorcycle finished goods		77,504		149,904
Trade In Models		-		30,000
Apparel inventory		14,694		20,995
Total Inventory	$	567,484	$	647,014

Property and Equipment

Property and equipment are carried at cost less accumulated depreciation and includes 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 $713,560 at June 30, 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 June 30, 2015 except $210,000 issuable to Matt Chambers which will be satisfied with 1,680,000 shares of stock.  

7

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 June 30, 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 June 30, 2015 and 2014, advertising expense was $15,414 and $28,948, respectively. Year-to-date advertising expense totaled $16,474 and $31,267 for 2015 and 2014, 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 $30,703 and $76,004 for the quarters ended June 30, 2015 and 2014, respectively. Year-to-date R&D expense totaled $55,650 and $126,072 for 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 our 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 the Company has 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.

8

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 June 30, 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:

	June 30,			December 31,
	2015			2014
Vehicles	$	81,436		$	36,628
Furniture and fixtures		11,734			11,734
Equipment		92,407			92,407
Leasehold improvements		25,827			25,827
CIP - Auto		-			(1,898	)
Less accumulated depreciation		(140,608	)		(130,577	)
	$	70,796		$	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 $486,762, with a balance of $113,239 remaining unpaid by one investor.  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.

9

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. Two additional A Units were sold to one investor during the second quarter of 2015.

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 June 30, 2015 and June 30, 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

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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.  Ms. Miller also serves as the Company’s secretary. There is no formal contract between the Company and Pamela Miller.  Her compensation was $12,600 and $12,000 for the three months ended June 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 lawsuits 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 and an additional $30,000 was paid during the second quarter of 2015.  As of the date of this report the Company still has recorded a balance payable to Mr. Terny of $120,000.

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 one-time 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 commenced legal action 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.

11

The Company settled with South Coast Solar for $24,000 and Delta Staff Leasing for $61,000. The total of the two settlements was $85,000, which has been paid in full.

Operating Lease

The Company has engaged a new lease for a 24,179 square foot office and warehouse located in Birmingham, Alabama. The 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 new operating lease totaled $21,603 for the quarter ended June 30, 2015 and $21,179 for the quarter ended June 30, 2014. Future minimum payments due under the operating lease agreements are as follows:

July 1 through June 30, 2016	$	87,562
Future minimum lease payments
July - June
2016-2017		89,314
2017-2018		91,100
2018-2019		92,922
2019-2020		94,780
2020-2021		96,676
Remaining		232,939
	$	785,293

NOTE 7 – RECENT ACCOUNTING PRONOUNCEMENTS

Various ASU’s up through ASU No. 2015-12 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 June 30, 2015, the Company had funds in bank accounts not exceeding the federally insured limits.  The Federal Deposit Insurance Corporation (FDIC) insures deposit account balances to at least $250,000 per insured bank. 

12

NOTE 10 – GOING CONCERN

As shown in the accompanying financial statements, the Company had an accumulated deficit incurred through June 30, 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

Confederate Motors, Inc. v. Francois-Xavier Terny, et al. – The Company paid an additional $10,000 to Mr. Terny’s lawyers on July 1, 2015 and an additional $10,000 on August 7, 2015. As of August 14, 2015 the Company has a balance of $100,000 due Mr. Terny.

On July 24, 2015, the Board of Directors of Confederate Motors, Inc., a Delaware corporation (the “Company”), appointed Pamela Miller to serve as a class I director effective as of the date of her acceptance and, on July 24, 2015, Ms. Miller accepted the appointment. The term of Ms. Miller’s appointment is until the next annual meeting of shareholders or until her successor is duly elected and qualified. At this time, there are no plans to appoint Ms. Miller to any committees.

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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.

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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 its distributor network; (vii) manage changes and prepare for requirements in legislative and regulatory environments for its 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 our 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 our 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 our 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 June 30, 2015 was $511,732 compared to $589,044 for the quarterly period ended June 30, 2014. Net revenue is lower primarily because the launch of the Speedster was unsuccessful and proper funding was not received to launch and produce the P51 Fighter Combat in a timely manner. Year-to-date net revenue was $1,025,245 compared to $938,518 for the six months ended June 30, 2014. Net loss for the quarter ended June 30, 2015 was $132,924 compared to a net loss of $28,614 for the quarter ended June 30, 2014. Year-to-date net loss was $215,263 compared to net loss of $36,206 for the six months ended June 30, 2014. Net loss was greater due to the late launch of the P51 Combat Fighter.

Cash flow from operating activities was $(20,019) for the six months ended June 30, 2015 compared to $(592,973) for the six months ended June 30, 2014. Net cash flow required by investing activities was $0 and $(12,420) for the six months ended June 30, 2015 and 2014, respectively. Net cash flow from financing activities was $56,100 and $750,000 for the six months ended June 30, 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.

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Cost of Goods Sold

Cost of goods sold was $331,144 for the quarterly period ended June 30, 2015 compared to $307,372 for the quarterly period ended June 30, 2014. Cost of goods sold was higher mainly due to increased production of motorcycles. Year-to-date cost of goods sold totaled $650,852 for period ended June 30, 2015 compared to $496,736 for the period ended June 30, 2014.

Gross Profit

Gross profit was $180,588 for the quarterly period ended June 30, 2015, compared to $281,672 for the quarterly period ended June 30, 2014. Gross profit as a percentage of revenue was 35% and 48% for the quarterly periods ended June 30, 2015 and 2014, respectively. Year-to-date gross profit was $374,393 and $441,782 for 2015 and 2014, respectively. Year-to-date gross profit as a percentage of revenue was 37% and 47% for 2015 and 2014, respectively. The decrease in percent to revenue is due to fewer bikes being produced while maintaining the same fixed overhead.

Operating Expenses

Selling, General and Administrative Expenses

Selling, General and Administrative (SG&A) expenses were $282,838 for the quarterly period ended June 30, 2015, compared to $283,695 in 2014. SG&A expenses were $538,977 and $468,194 for the first six months of 2015 and 2014, respectively. The six month increase in SG&A expenses are attributed to higher legal and professional expenses, increased travel expense in an effort to manufacture off site, and general increases in fixed and variable operating overhead expenses.

Research and Development Costs

Research and development (R&D) costs are expensed as incurred and are included in operating expenses in the accompanying statements of operations. Research and development costs totaled $30,703 and $76,004 for the quarters ended June 30, 2015 and 2014, respectively. Research and development expenditures were $55,650 and $126,072 for the first six months of 2015 and 2014, respectively. R&D costs are expected to elevate as the Company continues to work on the all new fourth generation Hellcat.

Results of Operations for the quarter ended June 30, 2015 compared to the quarter ended June 30, 2014

	Three months ended						Six months ended
	June 30,			June 30,			June 30,			June 30,
(in whole dollars)	2015			2014			2015			2014
Revenue from motorcycles & related products	$	511,732		$	589,044		$	1,025,245		$	938,518
Gross Profit	$	180,588		$	281,672		$	650,852		$	441,782
Operating Expense	$	313,541		$	359,699		$	594,627		$	594,266
Other Income (Expense)	$	29		$	49,413		$	4,971		$	116,278
Net Income (Loss)	$	(132,924	)	$	(28,614	)	$	(215,263	)	$	(36,206	)
Earnings (Loss) per Share	$	(0.00	)	$	(0.00	)	$	(0.01	)	$	(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 introduced the Hellcat Speedster, which management believes is tougher, stronger, lighter and more efficient than our previous designs.

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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. Our plans for this year include the launch of a new motorcycle model every three months. 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 plan 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 will 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 20,919 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.

We are 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. Several times each year we receive requests to utilize our iconic motorcycles in media which provide an opportunity to be viewed by large numbers of people. 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”. Most recently our brand will be featured in an upcoming Warner Brothers movie and the AMC hit series, “The Walking Dead.”

Historically, we have been forced to decline many offers to feature our products in this way because of our physical location. The time and expense of moving a motorcycle from Birmingham to Los Angles for filming has been an obstacle. We plan to address this by placing a sales and PR office at one of our service center locations in Los Angeles. In this manner we can efficiently respond to all the many media requests we regularly receive. We plan to focus our PR effort in Los Angeles. It is full of high net worth and image conscious consumers. It enjoys a rich motorcycling culture. It is home to some of our most recognizable clientele.

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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.

Our minimalist industrial designs utilize aircraft grade billet aluminum throughout as a core competency and competitive advantage. We are in negotiations with a 3D printing pioneer and global CNC enterprise who can turn around our approximate 150 CNC parts per design from Solidworks file to our shop in kit form as one part in four weeks. They have over 70 programmers on staff. We believe this tier one chassis vendor, joined with S&S, our tier one engine vendor, provides us true rheostatic manufacturing growth capability.

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.

Off-site Manufacture

As the Confederate Motors brand grows, we anticipate interest from individuals who cannot readily afford a truly uncompromised best of the best motorcycle. However, we believe the excellence of our evolving design form language and reputation as the purveyor of the world’s finest motorcycles will be leveraged through offsite manufacture.

We plan to bifurcate our offerings. Our traditional, billet based products will be designated “Confederate Solid”. These examples we plan to hand craft in house. We plan to introduce “Confederate Cast” as an additional range of products, remaining true to our distinctive form language, while taking full advantage of industrialized scaled-up manufacturing. We believe these products provide us the opportunity to serve multiple market segments without diluting the image of our Confederate Solid series and without heavy capital investment in plant, equipment, and human resources. Our plan is to manufacture Confederate Cast products offsite in India, China, and/or Mexico. These opportunities may be developed as a joint venture, or, potentially through licensing and / or royalty agreements.

Liquidity and Capital Resources

At June 30, 2015, we had cash of $127,928.

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 10 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 June 30, 2015, we owed a remaining balance of $120,000 in the Settlement Agreement with Mr. Terny. Although delinquent, we continue to make payments as funding becomes available.

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At June 30, 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 June 30, 2015, we maintained a backlog of orders represented by deferred revenue totaling $713,560. This account is a revolving account with funding added as new orders are placed and relieved to revenue as motorcycles are shipped. We have 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 September 2015. 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. 2015-12 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 us 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.

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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 our management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

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 June 30, 2015, 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 November 21, 2014, the Board of Directors approved a non-public unit offering. As part of the offering, we are 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 second quarter of 2015, we sold two A Units to Azwan Bin Hohd Noor Ariffin.

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(c) 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 and certification of status as an accredited investor 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

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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: August 19, 2015	By:	/s/ H. Matthew Chambers
		H. Matthew Chambers, CEO Principal Executive Officer

Date: August 19, 2015	By:	/s/ Jay Etheridge
		Jay Etheridge, Controller Principal Financial Officer

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EX-31.1

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 June 30, 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 August 19, 2015	By:	/s/ H. Matthew Chambers
		H. Matthew Chambers Chief Executive Officer

EX-31.2

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 June 30, 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: August 19, 2015	By:	/s/ Jay Etheridge
		Jay Etheridge, Controller Principal Financial Officer

EX-32.1

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 June 30, 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 June 30, 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 June 30, 2015 fairly presents, in all material respects, the financial condition and results of operations of Confederate Motors, Inc.

Date: August 19, 2015	By:	/s/ H. Matthew Chambers
		H. Matthew Chambers Chief Executive Officer

EX-32.2

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 ended June 30, 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 June 30, 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 June 30, 2015, fairly presents, in all material respects, the financial condition and results of operations of Confederate Motors, Inc.

Date: August 19, 2015	By:	/s/ Jay Etheridge
		Jay Etheridge, Controller Principal Financial Officer

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Stockholders' Equity

6 Months Ended

Jun. 30, 2015

Stockholders' Equity [Abstract]

STOCKHOLDERS' EQUITY

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 $486,762, with a balance of $113,239 remaining unpaid by one investor.  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 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. Two additional A Units were sold to one investor during the second quarter of 2015.

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 June 30, 2015 and June 30, 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

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Commitments, Contingencies and Uncertainties (Details)	Jun. 30, 2015 USD ($)
Future minimum payments due under the operating lease agreements
July 1 through June 30, 2016	$ 87,562
2016-2017	89,314
2017-2018	91,100
2018-2019	92,922
2019-2020	94,780
2020-2021	96,676
Remaining	232,939
Total	$ 785,293

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Related Party Transactions (Details) - USD ($)		1 Months Ended		6 Months Ended
	Oct. 10, 2014	Feb. 28, 2014	Jul. 31, 2013	Jun. 30, 2015	Jun. 30, 2014	Dec. 31, 2014
Related Party Transactions (Textual)
Shares issued		$ 500,000
Share issued, Shares		3,117,206	6,234,412
Notes Payable - short term - related parties				$ 37,777		$ 37,777
Pamela Miller [Member]
Related Party Transactions (Textual)
Compensation expenses				$ 12,600	$ 12,000
H Matthew Chambers [Member]
Related Party Transactions (Textual)
Shares issued			$ 261,250
Share issued, Shares			2,090,000
Description of related party			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.
Paolo Chiaia [Member]
Related Party Transactions (Textual)
Share issued, Shares	768,000
Patrick Aisher [Member]
Related Party Transactions (Textual)
Share issued, Shares	384,000
Rhiti Sports Management [Member]
Related Party Transactions (Textual)
Share issued, Shares	1,765,588

XML

Commitments, Contingencies and Uncertainties (Details Textual)						1 Months Ended		3 Months Ended		6 Months Ended		9 Months Ended	12 Months Ended
	May. 13, 2015 USD ($)	Oct. 14, 2014 USD ($)	Nov. 25, 2013 USD ($)	Jul. 17, 2013 USD ($)	Nov. 26, 2012 USD ($) shares	Sep. 30, 2013 USD ($)	Jul. 31, 2013 USD ($)	Jun. 30, 2015 USD ($) shares	Jun. 30, 2014 USD ($)	Jun. 30, 2015 USD ($) squarefoot shares	Jun. 30, 2014 USD ($)	Sep. 30, 2013 USD ($)	Dec. 31, 2013 USD ($)	Dec. 31, 2014 USD ($)
Commitments, Contingencies and Uncertainties (Textual)
Total amount to be paid to Mr.Terny under the settlement agreement	$ 5,000				$ 350,000
Shares purchased under the settlement agreement held by Mr. Terny | shares					805,000			150,000		150,000
Consideration to be paid on execution of the settlement agreement					$ 50,000
Payment of additional consideration to Mr.Terny					$ 25,000
Consideration to be paid to Mr. Terny						$ 275,000
Amount paid in Settlement Agreement to Mr.Terny		$ 40,000	$ 25,000	$ 50,000				$ 10,000		$ 30,000		$ 50,000	$ 25,000
Settlement payable								120,000		120,000				$ 160,000
Treasury shares								313,950		$ 313,950				$ 313,950
Total square foot of office and warehouse | squarefoot										24,179
Lease expiration date of former lease										Nov. 01, 2013
Description of sub-lease leasing arrangements										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.
Sublease base rent										$ 7,059.67
Percentage of increase in base rent for each year										2.00%
Leases and rent expense								21,603	$ 21,179	$ 21,603	$ 21,179
Minimum amount of equity financing							$ 1,000,000
Loan covered								750,000		750,000
Legal fees										68,402
Corporate owned amount								5,000		5,000
South Coast Solar [Member]
Commitments, Contingencies and Uncertainties (Textual)
Settlement payable								24,000		24,000
Delta Staff Leasing [Member]
Commitments, Contingencies and Uncertainties (Textual)
Settlement payable								$ 61,000		$ 61,000

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Concentration of Credit Risk (Details)	Jun. 30, 2015 USD ($)
Concentration of Credit Risk (Textual)
Federal Deposit Insurance Corporation (FDIC) insures deposit balances, per insured bank	$ 250,000

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Notes Payable

6 Months Ended

Jun. 30, 2015

Notes Payable [Abstract]

NOTES PAYABLE

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.

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Subsequent Events (Details) - USD ($)	Aug. 14, 2015	Aug. 07, 2015	Jul. 01, 2015
Subsequent Events [Member]
Subsequent Event Textual [Abstract]
Final settlement payment	$ 100,000	$ 10,000	$ 10,000

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Condensed Consolidated Balance Sheets - USD ($)	Jun. 30, 2015	Dec. 31, 2014
Current assets
Cash and cash equivalents	$ 127,928	$ 91,847
Other receivables	4,054	3,793
Inventory	567,484	647,014
Prepaid inventory	47,385	200,259
Prepaid expenses	105,770	5,138
Total current assets	852,621	948,051
Property and equipment, net	70,796	37,917
Total assets	923,417	985,968
Current liabilities
Accounts payable	185,135	240,830
Accrued interest payable	7,502	7,502
Accrued salaries	140,250	98,500
Accrued payroll tax liability	74,794	78,394
Notes Payable - short term - related parties	37,777	37,777
Deferred revenue	713,560	651,636
Warranty reserve	2,365	1,438
Other accrued expenses	44,610	36,214
Registration rights liability	175,500	175,500
Payable to be settled in stock - Officer	210,000	210,000
Settlement payable	120,000	$ 160,000
Current portion of notes payable	11,664
Total current liabilities	1,723,157	$ 1,697,791
Long term liabilities
Note payable	26,608
Total Liabilities	$ 1,749,765	$ 1,697,791
Stockholders' deficit
Preferred Stock, $0.001 par value 20,000,000 shares authorized; -0- shares outstanding as of June 30, 2015 and December 31, 2014, respectively
Common Stock, $0.001 par value 200,000,000 shares authorized; 29,229,556 shares outstanding as of June 30, 2015 and 25,629,556 shares outstanding as of December 31, 2014	$ 29,229	$ 25,629
Additional paid-in capital	$ 12,296,350	11,787,450
Stock Subscribed		525,000
Subscriptions Receivable		(113,238)
Accumulated deficit	$ (12,837,977)	(12,622,714)
Treasury Shares	(313,950)	(313,950)
Total stockholders deficit	(826,348)	(711,823)
Total liabilities and stockholders deficit	$ 923,417	$ 985,968

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Summary of Significant Accounting Policies

6 Months Ended

Jun. 30, 2015

Summary of Significant Accounting Policies [Abstract]

Summary of Significant Accounting Policies

NOTE 1 – Summary of Significant Accounting Policies

Nature of Business

Confederate Motors, Inc., a Delaware corporation, 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 one preproduction model (the P51 Combat Fighter). The X132 Hellcat model started production in January 2012. The P51 Fighter Combat is scheduled to begin production in September 2015 with the formal launch occurring August 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 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 June 30, 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), Confederate Garage, LLC, a Louisiana limited liability company, and Moto Confederacy, LLC a Louisiana limited liability 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.

	6/30/2015		12/31/2014
Parts	$	362,905	$	415,388
Work in process		112,381		30,727
Motorcycle finished goods		77,504		149,904
Trade In Models		-		30,000
Apparel inventory		14,694		20,995
Total Inventory	$	567,484	$	647,014

Property and Equipment

Property and equipment are carried at cost less accumulated depreciation and includes 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 $713,560 at June 30, 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 June 30, 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 June 30, 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 June 30, 2015 and 2014, advertising expense was $15,414 and $28,948, respectively. Year-to-date advertising expense totaled $16,474 and $31,267 for 2015 and 2014, 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 $30,703 and $76,004 for the quarters ended June 30, 2015 and 2014, respectively. Year-to-date R&D expense totaled $55,650 and $126,072 for 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 our 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 the Company has 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 June 30, 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. 

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Summary of Significant Accounting Policies (Details) - USD ($)	Jun. 30, 2015	Dec. 31, 2014
Schedule of inventory
Parts	$ 362,905	$ 415,388
Work in process	112,381	30,727
Motorcycle finished goods	$ 77,504	149,904
Trade In Models		30,000
Apparel Inventory	$ 14,694	20,995
Total Inventory	$ 567,484	$ 647,014

XML

Property and Equipment (Details) - USD ($)	Jun. 30, 2015	Dec. 31, 2014
Summary of property and equipment
Less accumulated depreciation	$ (140,608)	$ (130,577)
Property and equipment, net	70,796	37,917
Vehicles [Member]
Summary of property and equipment
Property and equipment, gross	81,436	36,628
Furniture and fixtures [Member]
Summary of property and equipment
Property and equipment, gross	11,734	11,734
Equipment [Member]
Summary of property and equipment
Property and equipment, gross	92,407	92,407
Leasehold improvements [Member]
Summary of property and equipment
Property and equipment, gross	$ 25,827	25,827
CIP - Auto [Member]
Summary of property and equipment
Property and equipment, gross		$ (1,898)

XML

Property and Equipment

6 Months Ended

Jun. 30, 2015

Property and Equipment [Abstract]

PROPERTY AND EQUIPMENT

NOTE 2 – PROPERTY AND EQUIPMENT

Property and equipment consisted of the following as of:

	June 30,			December 31,
	2015			2014
Vehicles	$	81,436		$	36,628
Furniture and fixtures		11,734			11,734
Equipment		92,407			92,407
Leasehold improvements		25,827			25,827
CIP - Auto		-			(1,898	)
Less accumulated depreciation		(140,608	)		(130,577	)
	$	70,796		$	37,917

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Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares	Jun. 30, 2015	Dec. 31, 2014
Balance Sheets [Abstract]
Preferred Stock, par value	$ 0.001	$ 0.001
Preferred Stock, shares authorized	20,000,000	20,000,000
Preferred Stock, shares outstanding	0	0
Common Stock, par value	$ 0.001	$ 0.001
Common Stock, shares authorized	200,000,000	200,000,000
Common Stock, shares outstanding	29,229,556	25,629,556

XML

Summary of Significant Accounting Policies (Policies)

6 Months Ended

Jun. 30, 2015

Summary of Significant Accounting Policies [Abstract]

Nature of Business

Nature of Business

Confederate Motors, Inc., a Delaware corporation, 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 one preproduction model (the P51 Combat Fighter). The X132 Hellcat model started production in January 2012. The P51 Fighter Combat is scheduled to begin production in September 2015 with the formal launch occurring August 2015. The Confederate brand was founded in 1991. The Company has been operational since 2003 and is headquartered in Birmingham, Alabama.

Basis of Presentation

Basis of Presentation

The accompanying unaudited interim financial statements have been prepared in accordance with accounting principles generally accepted in the United States 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 June 30, 2015 are not necessarily indicative of results for the full fiscal year.

Use of Estimates

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

Principles of Consolidation

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

Risks and Uncertainties

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

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

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.

	6/30/2015		12/31/2014
Parts	$	362,905	$	415,388
Work in process		112,381		30,727
Motorcycle finished goods		77,504		149,904
Trade In Models		-		30,000
Apparel inventory		14,694		20,995
Total Inventory	$	567,484	$	647,014

Property and Equipment

Property and Equipment

Property and equipment are carried at cost less accumulated depreciation and includes 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

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 $713,560 at June 30, 2015 and $651,636 at December 31, 2014.

Earnings per Share

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 June 30, 2015 except $210,000 issuable to Matt Chambers which will be satisfied with 1,680,000 shares of stock.

Income Taxes

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 June 30, 2015, the Company did not record any liabilities for uncertain tax positions.

Advertising Costs

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 June 30, 2015 and 2014, advertising expense was $15,414 and $28,948, respectively. Year-to-date advertising expense totaled $16,474 and $31,267 for 2015 and 2014, respectively.

Research and Development Costs

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 $30,703 and $76,004 for the quarters ended June 30, 2015 and 2014, respectively. Year-to-date R&D expense totaled $55,650 and $126,072 for 2015 and 2014, respectively.

Shipping and Handling Costs

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

Fair Value Measurements

The Company has categorized our 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 the Company has 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 June 30, 2015.

Reclassification

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. 

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Document and Entity Information - shares	6 Months Ended
	Jun. 30, 2015	Aug. 14, 2015
Document and Entity Information [Abstract]
Entity Registrant Name	Confederate Motors, Inc.
Entity Central Index Key	0001346346
Document Type	10-Q
Document Period End Date	Jun. 30, 2015
Amendment Flag	false
Document Fiscal Year Focus	2015
Document Fiscal Period Focus	Q2
Current Fiscal Year End Date	--12-31
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		29,229,556

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Summary of Significant Accounting Policies (Tables)

6 Months Ended

Jun. 30, 2015

Summary of Significant Accounting Policies [Abstract]

Schedule of inventory

	6/30/2015		12/31/2014
Parts	$	362,905	$	415,388
Work in process		112,381		30,727
Motorcycle finished goods		77,504		149,904
Trade In Models		-		30,000
Apparel inventory		14,694		20,995
Total Inventory	$	567,484	$	647,014

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Condensed Consolidated Statements of Operations - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Statements Of Operations [Abstract]
Sales	$ 511,732	$ 589,044	$ 1,025,245	$ 938,518
Cost of goods sold	(331,144)	(307,372)	(650,852)	(496,736)
Gross profit	180,588	281,672	374,393	441,782
Operating Expenses
Research and Development	30,703	76,004	55,650	126,072
Selling, general and administrative expenses	282,838	283,695	538,977	468,194
Loss from operations	$ (132,953)	(78,027)	(220,234)	(152,484)
Other income		49,200	5,000	115,665
Interest (income / expense)	$ 29	213	(29)	613
Total other income (expense)	29	49,413	4,971	116,278
Net income (loss)	$ (132,924)	$ (28,614)	$ (215,263)	$ (36,206)
Net income (loss) per common share
Basic	$ 0	$ 0	$ (0.01)	$ 0
Diluted	$ 0	$ 0	$ (0.01)	$ 0
Weighted average shares outstanding
Basic	28,754,000	16,704,762	27,244,556	16,215,844
Diluted	28,754,000	16,704,762	27,244,556	16,215,844

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Recent Accounting Pronouncements

6 Months Ended

Jun. 30, 2015

Recent Accounting Pronouncements [Abstract]

RECENT ACCOUNTING PRONOUNCEMENTS

NOTE 7 – RECENT ACCOUNTING PRONOUNCEMENTS

Various ASU’s up through ASU No. 2015-12 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.

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Commitments, Contingencies and Uncertainties

6 Months Ended

Jun. 30, 2015

Commitments, Contingencies and Uncertainties [Abstract]

COMMITMENTS, CONTINGENCIES AND UNCERTAINTIES:

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 lawsuits 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 and an additional $30,000 was paid during the second quarter of 2015.  As of the date of this report the Company still has recorded a balance payable to Mr. Terny of $120,000.

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 one-time 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 commenced legal action 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 was $85,000, which has been paid in full.

Operating Lease

The Company has engaged a new lease for a 24,179 square foot office and warehouse located in Birmingham, Alabama. The 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 new operating lease totaled $21,603 for the quarter ended June 30, 2015 and $21,179 for the quarter ended June 30, 2014. Future minimum payments due under the operating lease agreements are as follows:

July 1 through June 30, 2016	$	87,562
Future minimum lease payments
July - June
2016-2017		89,314
2017-2018		91,100
2018-2019		92,922
2019-2020		94,780
2020-2021		96,676
Remaining		232,939
	$	785,293

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Summary of Significant Accounting Policies (Details Textual) - USD ($)	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014	Dec. 31, 2014
Summary of significant accounting policies (Textual)
Deferred revenue	$ 713,560		$ 713,560		$ 651,636
Liabilities for uncertain tax positions
Advertising expense	$ 15,414	$ 28,948	$ 16,474		$ 31,267
Research and development costs	$ 30,703	$ 76,004	$ 55,650	$ 126,072
Stock issued for settlement payable, Shares			1,680,000
Stock issued for settlement payable			$ 210,000
Vehicles [Member]
Summary of significant accounting policies (Textual)
Estimated useful lives			5 years
Furniture and fixtures [Member] | Minimum [Member]
Summary of significant accounting policies (Textual)
Estimated useful lives			3 years
Furniture and fixtures [Member] | Maximum [Member]
Summary of significant accounting policies (Textual)
Estimated useful lives			5 years
Equipment [Member] | Minimum [Member]
Summary of significant accounting policies (Textual)
Estimated useful lives			3 years
Equipment [Member] | Maximum [Member]
Summary of significant accounting policies (Textual)
Estimated useful lives			5 years

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Property and Equipment (Tables)

6 Months Ended

Jun. 30, 2015

Property and Equipment [Abstract]

Summary of property and equipment

	June 30,			December 31,
	2015			2014
Vehicles	$	81,436		$	36,628
Furniture and fixtures		11,734			11,734
Equipment		92,407			92,407
Leasehold improvements		25,827			25,827
CIP - Auto		-			(1,898	)
Less accumulated depreciation		(140,608	)		(130,577	)
	$	70,796		$	37,917

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Going Concern

6 Months Ended

Jun. 30, 2015

Going Concern [Abstract]

GOING CONCERN

NOTE 10 – GOING CONCERN

As shown in the accompanying financial statements, the Company had an accumulated deficit incurred through June 30, 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.

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Earnings (Loss) Per Share

6 Months Ended

Jun. 30, 2015

Earnings (Loss) Per Share [Abstract]

EARNINGS (LOSS) PER SHARE

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.

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Concentration of Credit Risk

6 Months Ended

Jun. 30, 2015

Concentration of Credit Risk [Abstract]

CONCENTRATION OF CREDIT RISK

NOTE 9 – CONCENTRATION OF CREDIT RISK

At June 30, 2015, the Company had funds in bank accounts not exceeding the federally insured limits.  The Federal Deposit Insurance Corporation (FDIC) insures deposit account balances to at least $250,000 per insured bank. 

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Subsequent Events

6 Months Ended

Jun. 30, 2015

Subsequent Events [Abstract]

SUBSEQUENT EVENTS

NOTE 11 – SUBSEQUENT EVENTS

Confederate Motors, Inc. v. Francois-Xavier Terny, et al. – The Company paid an additional $10,000 to Mr. Terny’s lawyers on July 1, 2015 and an additional $10,000 on August 7, 2015. As of August 14, 2015 the Company has a balance of $100,000 due Mr. Terny.

On July 24, 2015, the Board of Directors of Confederate Motors, Inc., a Delaware corporation (the “Company”), appointed Pamela Miller to serve as a class I director effective as of the date of her acceptance and, on July 24, 2015, Ms. Miller accepted the appointment. The term of Ms. Miller’s appointment is until the next annual meeting of shareholders or until her successor is duly elected and qualified. At this time, there are no plans to appoint Ms. Miller to any committees.

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Commitments, Contingencies and Uncertainties (Tables)

6 Months Ended

Jun. 30, 2015

Commitments, Contingencies and Uncertainties [Abstract]

Future minimum payments due under the operating lease agreements

July 1 through June 30, 2016	$	87,562
Future minimum lease payments
July - June
2016-2017		89,314
2017-2018		91,100
2018-2019		92,922
2019-2020		94,780
2020-2021		96,676
Remaining		232,939
	$	785,293

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Stockholders' Equity (Details) - 6 months ended Jun. 30, 2015 - USD ($)	Total
Summary of liquidated damages
Equity subject to registration rights penalty	$ 1,417,500
Maximum penalty	10.00%
Convertible debt subject to registration rights penalty	$ 225,000
Maximum penalty	15.00%
Registration Rights Penalty	$ 175,500

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Condensed Consolidated Statements of Cash Flows - USD ($)	6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014
Operating activities
Net income (loss)	$ (215,263)	$ (36,206)
Adjustments to reconcile net income (loss) to net cash provided (used) by operating activities
Depreciation	10,031	688
Change in operating assets and liabilities
A/R Other Receivables	(261)	(107,867)
Inventory	79,530	(302,406)
Prepaid inventory	(47,385)	(109,382)
Prepaid expenses	$ 99,627	1,014
Notes Receivable		(3,614)
Accounts payable	$ (55,695)	62,783
Accrued payroll	41,750	32,500
Accrued payroll tax liability	(3,600)	(11,200)
Other accrued expenses	8,396	$ 13,454
Warranty Reserve	927
Deferred revenue	61,924	$ (102,737)
Deferred sales commission and royalty	0	(30,000)
Net cash provided (used) by operating activities	$ (20,019)	(592,973)
Investing activities
Purchase of property and Equipment		(12,420)
Net cash provided (used) by investing activities		(12,420)
Financing activities
Repayment of notes payable	$ (4,638)
Payments on litigation settlements	(40,000)
Proceeds from issuance of stock	100,738	750,000
Net cash provided (used) by financing activities	56,100	750,000
Net increase (decrease) in cash and cash equivalents	36,081	(144,607)
Cash and cash equivalents at the beginning of period	91,847	3,113
Cash and cash equivalents at end of period	127,928	$ 147,720
Non cash investing & financing activities
Stock issued to retire payable	$ 42,910
Payable to be settled in stock		$ 210,000
Cash paid during the period for:
Interest
Income taxes

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Related Party Transactions

6 Months Ended

Jun. 30, 2015

Related Party Transactions [Abstract]

RELATED PARTY TRANSACTIONS

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.  Ms. Miller also serves as the Company’s secretary. There is no formal contract between the Company and Pamela Miller.  Her compensation was $12,600 and $12,000 for the three months ended June 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.

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Stockholders' Equity (Details Textual) - USD ($)		1 Months Ended		12 Months Ended
	Nov. 21, 2014	Feb. 28, 2014	Jul. 31, 2013	Dec. 31, 2009	Jun. 30, 2015	Dec. 31, 2014	Oct. 31, 2014	Jul. 25, 2013	May. 31, 2013	Feb. 22, 2013
Stockholders Equity (Textual)
Additional paid-in capital					$ 12,296,350	$ 11,787,450
Maximum payment for liquidated damages in cash by equity holders, Percentage				10.00%
Maximum payment for liquidated damages in cash by convertible note holders, Percentage				15.00%
Period to file registration statement				120 days
Period to declare registration effective				150 days
Common stock shares offered for sale, Shares		3,117,206	6,234,412
Common stock shares offered for sale, Value		$ 500,000
Sale of stock, per share			$ 0.1604					$ 0.125		$ 0.25
Stock subscriptions from investors, amount						525,000		$ 486,762	$ 387,500	$ 810,000
Number of shares subscribed by investors			5,007,588				3,117,206	6,480,000	3,100,000	3,240,000
Unpaid subscription amount						$ 113,238				$ 113,239
Description of sale of common stock			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.
Non public offering	8,000,000
Units A [Member]
Stockholders Equity (Textual)
Capital units, value	$ 25,000
Unit shares price per share	$ 0.25
Each unit consists of shares of common stock	100,000
Units B [Member]
Stockholders Equity (Textual)
Capital units, value	$ 50,000
Unit shares price per share	$ 0.50
Each unit consists of shares of common stock	100,000
Units C [Member]
Stockholders Equity (Textual)
Capital units, value	$ 75,000
Unit shares price per share	$ 0.75
Each unit consists of shares of common stock	100,000
Units D [Member]
Stockholders Equity (Textual)
Capital units, value	$ 100,000
Unit shares price per share	$ 1.00
Each unit consists of shares of common stock	100,000
Warrant [Member]
Stockholders Equity (Textual)
Fair market value per share				$ 1.50
Additional paid-in capital				$ 127,050
Granted				105,000
Common stock exercise price				$ 1.50
Exercise price				$ 1.50
Expected volatility				115.00%
Risk free interest rate				1.73%
Common Stock [Member]
Stockholders Equity (Textual)
Number of shares subscribed by investors									3,100,000

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Stockholders' Equity (Tables)

6 Months Ended

Jun. 30, 2015

Stockholders' Equity [Abstract]

Summary of liquidated damages

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