10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended September 30, 2017

or

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

For the transition period from                                                  to                                

Commission File Number: 33-131110-NY

Regional Brands Inc.

(Exact name of registrant as specified in its charter)

DELAWARE	11-2831380
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
6060 Parkland Boulevard Cleveland, Ohio	44124
(Address of principal executive offices)	(Zip Code)

(216) 825-4000

(Registrant’s telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ¨ No x

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files) Yes ¨ No x

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

Large Accelerated Filer ¨     Accelerated Filer  ¨     Non-Accelerated Filer  ¨     Smaller Reporting Company  x

Emerging Growth Company  ¨

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨    No  x

The number of shares outstanding of the registrant’s Common Stock, $0.00001 par value per share, was 1,274,603 as of November 9, 2017.

Regional Brands Inc.

INDEX

		Page
PART I - FINANCIAL INFORMATION:
Item 1.	Financial Statements (unaudited)
	Condensed Consolidated Balance Sheets	3
	Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)	4
	Condensed Consolidated Statements of Cash Flows	5
	Notes to Interim Condensed Consolidated Financial Statements	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	13
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	17
Item 4.	Controls and Procedures	17
PART II - OTHER INFORMATION:		18
Item 1.	Legal Proceedings	18
Item 1A.	Risk Factors	18
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	18
Item 3.	Defaults Upon Senior Securities	18
Item 4.	Mine Safety Disclosures	19
Item 5.	Other Information	19
Item 6.	Exhibits	19
SIGNATURES		20

2

REGIONAL BRANDS INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

	As of
	September 30,			December 31,
	2017			2016
	(unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	4,022,442		$	4,752,462
Short-term investments		1,794,413			952,208
Accounts receivable, net of allowance for doubtful accounts of $100,000 ($150,000 - 2016)		6,309,149			5,717,369
Inventories, net		1,385,282			1,594,264
Costs and estimated earnings in excess of billings on uncompleted contracts		967,599			894,261
Prepaid expenses and other current assets		261,286			248,935
Total current assets		14,740,171			14,159,499
Equipment, net		516,837			461,828
Intangibles, net		4,900,000			6,316,666
Goodwill		3,013,287			3,013,287
Deferred tax asset		535,000			-
Other assets		144,728			96,667
Total assets	$	23,850,023		$	24,047,947
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	1,113,150		$	467,248
Accrued expenses and other current liabilities		997,804			618,844
Line of credit		1,592,757			2,272,710
Current portion of senior subordinated note		14,348			14,348
Working capital liability due to Seller		-			1,107,872
Billings in excess of costs and estimated earnings on uncompleted contracts		312,156			438,883
Total current liabilities		4,030,215			4,919,905
Senior subordinated note		241,668			222,809
Subordinated term note		2,500,000			2,500,000
Total liabilities		6,771,883			7,642,714
Commitments
Stockholders' equity
Preferred stock $.01 par value, authorized 50,000, issued and outstanding -none		-			-
Common stock $.00001 par value, 3,000,000 authorized and 1,274,603 shares issued and outstanding		13			13
Additional paid-in capital		20,357,826			20,311,645
Accumulated deficit		(3,288,434	)		(4,008,441	)
Accumulated other comprehensive loss		(7,040	)		(5,464	)
Total Regional Brands, Inc. stockholders' equity		17,062,365			16,297,753
Noncontrolling interest in consolidated subsidiary		15,775			107,480
Total stockholders’ equity		17,078,140			16,405,233
Total liabilities and stockholders' equity	$	23,850,023		$	24,047,947

The accompanying notes are an integral part of the condensed consolidated financial statements

3

REGIONAL BRANDS INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

(Unaudited)

							B.R. Johnson, Inc.									B.R. Johnson, Inc.
							(Predecessor to									(Predecessor to
							Regional Brands, Inc.)									Regional Brands, Inc.)
	For the			For the			For the			For the			For the			For the
	three months			three months			three months			nine months			nine months			nine
	ended			ended			ended			ended			ended			ended
	September 30, 2017			September 30, 2016			September 30, 2016			September 30, 2017			September 30, 2016			September 30, 2016
Net Sales	$	8,607,302		$	-		$	8,422,123		$	28,505,603		$	-		$	26,257,787
Cost of sales		5,800,256			-			5,700,538			19,774,595			-			18,387,649
Gross profit		2,807,046			-			2,721,585			8,731,008			-			7,870,138
Operating expenses:
Selling		1,170,035			-			1,109,174			3,491,780			-			3,125,914
General and administrative		932,517			26,684			581,969			2,901,843			84,969			1,979,844
Amortization of intangible assets		300,000			-			-			1,416,667			-			-
Total operating expenses		2,402,552			26,684			1,691,143			7,810,290			84,969			5,105,758
Operating income (loss)		404,494			(26,684	)		1,030,442			920,718			(84,969	)		2,764,380
Other income (expense):
Other income		29,339			6,900			5,373			69,972			17,666			12,955
Interest expense		(49,328	)		-			(1,340	)		(168,761	)		-			(1,340	)
Interest income		5,332			4,267			-			9,697			3,057			-
		(14,657	)		11,167			4,033			(89,092	)		20,723			11,615
Income (loss) before income taxes		389,837			(15,517	)		1,034,475			831,626			(64,246	)		2,775,995
Income tax benefit (expense)		337,000			-			-			(77,000	)		-			-
Net income (loss)		726,837			(15,517	)		1,034,475			754,626			(64,246	)		2,775,995
Less income to noncontrolling interest		15,922			-						34,619			-
Net income (loss) attributable to common shareholders		710,915			(15,517	)					720,007			(64,246	)
Other comprehensive income (loss):
Unrealized gain (loss) on investments		(100	)		5,150						(1,576	)		763
Comprehensive income (loss) attributable to common shareholders	$	710,815		$	(10,367	)				$	718,431		$	(63,483	)
Earnings (loss) per share per common share- basic and diluted	$	0.56		$	(0.04	)	$	5,172		$	0.56		$	(0.26	)	$	13,880
Weighted average common shares outstanding - basic and diluted		1,274,603			379,702			200			1,274,603			246,723			200

The accompanying notes are an integral part of the condensed consolidated financial statements

4

REGIONAL BRANDS INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

							B.R. Johnson, Inc.
							(Predecessor to
	For the			For the			Regional Brands, Inc.)
	nine months			nine months			For the nine months
	ended			ended			ended
	September 30, 2017			September 30, 2016			September 30, 2016
Cash flows from operating activities:
Net income (loss)	$	754,626		$	(64,246	)	$	2,775,995
Adjustments to reconcile net income (loss) to net cash provided (used) by operating activities:
Stock based compensation		46,181			23,212			-
Depreciation and amortization and gain on disposal of equipment		68,755			-			128,627
Amortization of debt issuance costs		18,859			-			-
Amortization of intangibles		1,416,667			-			-
Change in allowance for doubtful accounts		(50,000	)		-			-
Change in inventory obsolence reserve		43,000			-			-
Change in deferred tax benefit		(535,000	)		-			-
Changes in operating assets and liabilities
Accounts receivable		(541,780	)		-			134,959
Inventories		165,982			-			(270,813	)
Costs and estimated earnings in excess of billings on uncompleted contracts		(73,338	)		-			(1,365,626	)
Prepaid expenses and other assets		(60,412	)		-			(212,920	)
Accounts payable		645,902			-			(325,436	)
Accrued expenses and other current liabilities		378,960			(2,308	)		(135,491	)
Billings in excess of costs and estimated earnings on uncompleted contracts		(126,727	)		-			1,003,079
Net cash provided (used ) by operating activities		2,151,675			(43,342	)		1,732,374
Cash flows from investment activities:
Purchase of equipment		(123,765	)		-			(159,663	)
Business acquisition- payment of working capital liability to Seller		(1,107,872	)		-			-
Purchase of short-term investments		(843,781	)		(2,186,126	)		-
Net cash used by investment activities		(2,075,418	)		(2,186,126	)		(159,663	)
Cash flows from financing activities:
Repayment from line of credit		(679,953	)		-			-
Proceeds from related party note payable		-			4,100			-
Proceeds from sale of common stock					4,750,000			-
Distribution to noncontrolling interest		(126,324	)					-
Stockholders' distribution		-			-			(1,824,200	)
Net cash provided (used) by financing activities		(806,277	)		4,754,100			(1,824,200	)
Net increase (decrease) in cash		(730,020	)		2,524,632			(251,489	)
Cash at beginning of period		4,752,462			1,356			903,607
Cash at end of period	$	4,022,442		$	2,525,988		$	652,118
Cash paid for :
Income taxes	$	169,000		$	-		$	-
Interest	$	107,000		$	-		$	-
Non-cash investing and financing activities:
Repayment of related party note payable and accrued interest by issuance of common shares	$	-		$	250,000		$	-

The accompanying notes are an integral part of the condensed consolidated financial statements

5

Regional Brands Inc.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 1. NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Regional Brands Inc. (formerly 4net Software, Inc.) (“Regional Brands,” the “Company,” “we,” “our” and “us”) was incorporated under the laws of the State of Delaware in 1986. Regional Brands is a holding company formed to acquire regional companies with strong brand recognition, stable revenues and profitability. Regional Brands has been pursuing a business strategy whereby it seeks to engage in an acquisition, merger or other business combination transaction with undervalued businesses (each, a “Target Company”) with a history of operating revenues in markets that provide opportunities for growth. On November 1, 2016 (See Note 2) the Company's majority-owned subsidiary acquired substantially all of the assets (the “Acquisition”) of B.R. Johnson, Inc. (“BRJ Inc.”), a seller and distributor of windows, doors and related hardware as well as specialty products for use in commercial and residential buildings. After the acquisition of the business of BRJ Inc. by our majority-owned subsidiary, B.R. Johnson, LLC (“BRJ LLC”), we are currently focused on considering opportunities for growth of BRJ LLC through utilizing its balance sheet to provide capital for additional acquisitions of companies that would be complementary to BRJ LLC. Additionally, we may seek to acquire Target Companies that satisfy the following criteria: (1) established businesses with viable services or products; (2) an experienced and qualified management team; (3) opportunities for growth and/or expansion into other markets; (4) are accretive to earnings; (5) offer the opportunity to achieve and/or enhance profitability; and (6) increase shareholder value.

Basis of Presentation - The accompanying condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) for interim financial information. Accordingly, these statements do not include all of the information and footnotes required by U.S. GAAP. In the opinion of management, the accompanying condensed consolidated balance sheets and related condensed consolidated statements of operations and cash flows include all adjustments, consisting only of normal recurring items necessary for their fair presentation in accordance with U.S. GAAP. Interim results are not necessarily indicative of results expected for a full year. For further information regarding the Company’s accounting policies, please refer to the audited consolidated financial statements and footnotes for the year ended December 31, 2016 included in the Company’s annual report on Form 10-K filed with the Securities and Exchange Commission on March 31, 2017. The unaudited Condensed Statement of Operations and Statement of Cash Flows for the nine months ended September 30, 2016 of BRJ Inc., as predecessor to the Company, are included in this report as supplementary information.

Principles of Consolidation - The consolidated financial statements include the accounts of Regional Brands Inc. and its majority-owned subsidiary, BRJ LLC. All intercompany balances and transactions have been eliminated in consolidation.

Use of Estimates - The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect amounts reported in the financial statements and accompanying notes. Actual results could differ materially from those estimates and be based on events different from those assumptions. Future events and their effects cannot be predicted with certainty; estimating, therefore, requires the exercise of judgment. Thus, accounting estimates change as new events occur, as more experience is acquired or as additional information is obtained. We believe the most significant estimates and judgments are associated with revenue recognition for our customer contracts in process, including estimating costs and the recognition of unapproved change orders and claims.

Common Shares Issued and Earnings (Loss) Per Share - Common shares issued are recorded based on the value of the shares issued or consideration received, including cash, services rendered or other non-monetary assets, whichever is more readily determinable. The Company presents basic and diluted earnings (loss) per share. Basic earnings (loss) per share reflect the actual weighted average number of shares issued and outstanding during the period. Diluted earnings (loss) per share is computed including the number of additional shares that would have been outstanding if dilutive potential shares had been issued, such as those issuable upon exercise of outstanding stock options or conversion of convertible securities. In a loss period, the calculation for basic and diluted loss per share is considered to be the same, as the impact of the issuance of any potential common shares would be anti-dilutive. During the three and nine months ended September 30, 2017, since the exercise prices of the outstanding stock options were above the average market price of our common stock during the period, the outstanding stock options were considered anti-dilutive.

6

Fair Value of Financial Instruments - Financial instruments include cash, accounts receivable, accounts payable, accrued expenses, and line of credit. Fair values approximate carrying values for these financial instruments and the line of credit is stated at the carrying value as the stated interest rate approximates market rates currently available to the Company.

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The Fair Value Measurement Topic of the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) establishes a three-tier fair value hierarchy which prioritizes the inputs used in measuring fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). These tiers include:

● Level 1, defined as observable inputs such as quoted prices for identical instruments in active markets;

● Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable such as quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active; and

● Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions, such as valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.

The Company’s valuation techniques used to measure the fair value of money market funds, certificate of deposits, and certain marketable equity securities were derived from quoted prices in active markets for identical assets or liabilities.

In accordance with the fair value accounting requirements, companies may choose to measure eligible financial instruments and certain other items at fair value. The Company has not elected the fair value option for any eligible financial instruments.

The table below presents the Company's assets and liabilities measured at fair value on a recurring basis as of December 31, 2016, aggregated by the level in the fair value hierarchy within which those measurements fall.

Assets and Liabilities Measured at Fair Value on a Recurring Basis at December 31, 2016:

Assets	Level 1		Level 2		Level 3		Balance at December 31, 2016
Marketable Equity Securities	$	952,208	$	—	$	—	$	952,208
Money Market Funds	$	3,492,895	$	—	$	—	$	3,492,895
Certificates of Deposit	$	1,256,216	$	—	$	—	$	1,256,216

The table below presents the Company's assets and liabilities measured at fair value on a recurring basis as of September 30, 2017, aggregated by the level in the fair value hierarchy within which those measurements fall.

Assets and Liabilities Measured at Fair Value on a Recurring Basis at September 30, 2017:

Assets	Level 1		Level 2		Level 3		Balance at September 30, 2017
Marketable Equity Securities	$	1,794,413	$	—	$	—	$	1,794,413
Money Market Funds	$	4,019,092	$	—	$	—	$	4,019,092

7

Change in fiscal year end. On December 20, 2016, the Board of Directors of the Company approved a change in the Company’s fiscal year-end, moving from September 30 to December 31 of each year.

Comprehensive Income (Loss) - Comprehensive income (loss) is defined as the change in equity of the Company during a period from transactions and other events and circumstances from non-owner sources. It consists of net income (loss) and other income and losses affecting stockholders’ equity that, under U.S. GAAP, are excluded from net income (loss). The change in fair value of investments was the only item impacting other comprehensive income (loss) for the three and nine months ended September 30, 2017 and 2016.

1 for 1,000 stock split- On July 22, 2016, the Company filed a certificate of amendment (the “Amendment”) to the Company’s Certificate of Incorporation with the Delaware Secretary of State to effect a 1 for 1,000 reverse stock split (the “Reverse Split”) of the Company’s issued and outstanding Common Stock and to reduce the number of shares of Common Stock the Company is authorized to issue from 750,000,000 to 50,000,000 shares.  The Reverse Split became effective on July 26, 2016 (the “Effective Time”).  The Amendment, including the Reverse Split, was approved by the Board of Directors of the Company and the holders of a majority of the issued and outstanding shares of Common Stock by written consent in lieu of a meeting.

As a result of the Reverse Split, at the Effective Time, every 1,000 shares of the Company’s issued and outstanding Common Stock were automatically combined and reclassified into one (1) share of Common Stock.  The Company rounded up any fractional shares, on account of the Reverse Split, to the nearest whole share of Common Stock. The Company has prepared the financial, share and per share information included in this quarterly report on a post-split basis.

Recent Accounting Pronouncements –

FASB ASU 2015-11, Inventory (Topic 330): “Simplifying the Measurement of Inventory.” This ASU requires inventory within the scope of the guidance to be measured at the lower of cost or net realizable value. FASB ASU 2015-11 is effective for annual and interim periods beginning after December 15, 2016, with prospective application required. The Company adopted this guidance during the nine months ended September 30, 2017 and it has not had a material impact on the Company’s consolidated financial statements.

In May 2014, the FASB issued ASU 2014-9 “Revenue from Contracts with Customers” (“ASU 2014-9”). The guidance requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. Subsequently, the FASB has issued the following standards related to ASU 2014-09: ASU No. 2016-08, “Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations” (“ASU 2016-08”); ASU No. 2016-10, “Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing” (“ASU 2016-10”); and ASU No. 2016-12, “Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients” (“ASU 2016-12”). The Company must adopt ASU 2016-08, ASU 2016-10 and ASU 2016-12 with ASU 2014-09 (collectively, the “new revenue standards”). The new revenue standards will replace most existing revenue recognition guidance in U.S. GAAP when they become effective and permit the use of either a retrospective or cumulative effect transition method. We are currently evaluating the alternative methods of adoption and the effect of this guidance on our consolidated financial statements and related disclosures. We are also in the process of identifying material contracts and revenue streams that are potentially impacted by this guidance. This guidance is effective January 1, 2018 using a full or modified retrospective approach with early adoption permitted January 1, 2017.

In March 2016, the FASB issued ASU 2016-09, “Compensation — Stock Compensation: Improvements to Employee Share-Based Payment Accounting.” The standard is intended to simplify several areas of accounting for share-based compensation arrangements, including the income tax impact, classification on the statement of cash flows and forfeitures. This pronouncement is effective for fiscal years beginning after December 15, 2016, and interim periods within those years. The Company adopted this guidance during the nine months ended September 30, 2017 and it has not had a material impact on the Company’s consolidated financial statements.

8

In February 2016, the FASB issued an accounting standard update ASU 2016-02, “Leases" to replace existing lease accounting guidance. This pronouncement is intended to provide enhanced transparency and comparability by requiring lessees to record right-of-use assets and corresponding lease liabilities on the balance sheet for most leases. Expenses associated with leases will continue to be recognized in a manner similar to current accounting guidance. This pronouncement is effective for annual and interim periods beginning after December 15, 2018, with early adoption permitted. The adoption is required to be applied on a modified retrospective basis for each prior reporting period presented. The Company has not yet determined the effect that the adoption of this pronouncement may have on its financial position and/or results of operations.

NOTE 2. ACQUISITION OF B.R. JOHNSON, INC.

On November 1, 2016, the Company's majority-owned subsidiary, B.R. Johnson, LLC (“BRJ LLC”) acquired substantially all of the assets (the “Acquisition”) of B.R. Johnson, Inc. (“BRJ Inc.”), a seller and distributor of windows, doors and related hardware as well as specialty products for use in commercial and residential buildings (the “Business”). Following the Acquisition, BRJ LLC has carried on the Business.

The Acquisition was consummated pursuant to an Asset Purchase Agreement, dated as of November 1, 2016 (the “APA”). Total consideration for the Acquisition was approximately $16.5 million including delivery by BRJ LLC of a promissory note for $2,500,000 to BRJ Inc. (the “Note”), which is subordinate to the Company’s debt agreements, and working capital adjustments of approximately $1.1 million, which were paid during the six months ended June 30, 2017. The Note accrues interest at a rate of 5.25% per annum, payable quarterly, with the principal amount of the Note payable in equal quarterly installments of $62,500 commencing on November 1, 2018 and maturing on November 30, 2021.

The Company provided $10.95 million in debt and equity financing to complete the Acquisition, including $7.14 million of a subordinated loan to BRJ Inc. and $3.81 million in preferred equity of BRJ LLC (which is eliminated in consolidation), with the remainder from bank financing, the Note and entities affiliated with Lorraine Capital, LLC. The Company holds 76.17% of the common membership interests and 95.22% of the preferred membership interests of BRJ LLC, pursuant to the B.R. Johnson, LLC Limited Liability Company Agreement (the “LLC Agreement”) entered into by and among Lorraine Capital, LLC (which owns 20% of the common membership interests), Regional Brands and BRJ Acquisition Partners, LLC (which owns the remaining 3.83% of the common membership interests and 4.78% of the preferred membership interests).

To finance the Acquisition and potential future acquisitions, on November 1, 2016, we issued 894,393 shares of our Common Stock for aggregate proceeds to us of $12,074,306 in a private placement.

Unaudited Pro Forma Results – The unaudited pro forma supplemental information is based on estimates and assumptions which management believes are reasonable but are not necessarily indicative of the consolidated financial position or results of future periods or the results that actually would have been realized had the Acquisition occurred as of January 1, 2016. The unaudited pro forma supplemental information includes incremental interest costs and intangible asset amortization charges as a result of the Acquisition, net of the related tax effects.

Unaudited pro forma results for the three and nine months ended September 30, 2016:

	Three		Nine
	months		months
	ended		ended
	September 30, 2016		September 30, 2016
Net sales	$	8,422,123	$	26,257,787
Gross profit		2,721,585		7,780,138
Amortization of intangibles		729,167		1,416,667
Net income to common shareholders	$	119,164	$	558,546
Earnings per common share-basic and diluted	$	0.13	$	0.62

9

NOTE 3. CONTRACTS IN PROCESS

Cost of revenue for our contracts in process includes direct contract costs, such as materials and labor, and indirect costs that are attributable to contract activity. The timing of when we bill our customers is generally dependent upon advance billing terms, milestone billings based on the completion of certain phases of the work, or when services are provided. Projects with costs and estimated earnings recognized to date in excess of cumulative billings are reported on the accompanying balance sheet as an asset as costs and estimated earnings in excess of billings. Projects with cumulative billings in excess of costs and estimated earnings recognized to date are reported on the accompanying balance sheet as a liability as billings in excess of costs and estimated earnings. The following is information with respect to uncompleted contracts:

	September 30,			December 31,
	2017			2016
Costs incurred on uncompleted contracts	$	11,486,314		$	8,246,796
Estimated earnings		3,912,693			2,273,388
		15,399,007			10,520,184
Less: billings to date		(14,743,564	)		(10,064,806	)
	$	655,443		$	455,378
Included on the balance sheet as follows:
Under current assets
Costs and estimated earnings in excess of billings on uncompleted contracts	$	967,599		$	894,261
Under current liabilities
Billings in excess of costs and estimated earnings on uncompleted contracts		(312,156	)		(438,883	)
	$	655,443		$	455,378

Prior to the Acquisition on November 1, 2016 (See Note 2), the Company did not have any contracts in process.

NOTE 4. DEBT

In November 2016, BRJ LLC entered into a credit agreement with KeyBank, N.A. Under the credit agreement, BRJ LLC may borrow up to an aggregate amount of $6,000,000 (the “Credit Facility”) under revolving loans and letters of credit, with a sublimit of $500,000 for letters of credit. The Credit Facility is payable upon demand of KeyBank, N.A., or the lenders, or upon acceleration as a result of an event of default. At the closing of the Acquisition, approximately $1,900,000 was drawn under the Credit Facility to pay a portion of the purchase price and costs associated with the Acquisition, with the balance being available for general working capital of BRJ LLC.

Interest under the Credit Facility is payable monthly, starting on November 30, 2016, and accrues pursuant to the “base rate” of interest, which is equal to the highest of (a) KeyBank, N.A.’s prime rate, (b) one-half of one percent (0.50%) in excess of the Federal Funds Effective Rate of the Federal Reserve Bank of New York, and (c) one hundred (100) basis points in excess of the London Interbank Offered Rate for loans in Eurodollars with an interest period of one month, plus any applicable margin. The credit agreement also requires the payment of certain fees, including, but not limited to, letter of credit fees.

The Credit Facility is secured by substantially all of BRJ LLC’s assets. The Credit Facility contains customary financial and other covenant requirements, including, but not limited to, a covenant to not permit BRJ LLC’s consolidated fixed charge coverage ratio to exceed 1.15 to 1.00. The Credit Facility also contains customary events of default.

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The effective interest rate on borrowings under the Credit Facility at September 30, 2017 was 3.69%. The aggregate borrowings outstanding under the Credit Facility at September 30, 2017 were $1,592,757 and, in addition, the bank has issued a letter of credit on behalf of the Company in the amount of $250,000 that expires on December 1, 2017.

NOTE 5. STOCKHOLDERS’ EQUITY

The Company’s authorized capital consists of 3,000,000 shares of common stock, par value $0.00001 per share, and 50,000 shares of preferred stock, par value $0.01 per share.

On March 2, 2017, the Company filed a certificate of amendment (the “Amendment”) to the Company’s Certificate of Incorporation with the Delaware Secretary of State to reduce the number of shares of Common Stock the Company is authorized to issue from 50,000,000 to 3,000,000 shares and to reduce the number of shares of Preferred Stock the Company is authorized to issue from 5,000,000 to 50,000 shares. The Amendment was approved by the Board of Directors of the Company and the holders of a majority of the issued and outstanding shares of Common Stock by written consent in lieu of a meeting.

The Company recorded stock compensation expense for options vesting during the three and nine months ended September 30, 2017 of $15,181 and $46,181, respectively ($23,212 and $23,212, respectively, during the same periods in 2016).

On June 15, 2017, the Company’s stockholders approved and adopted the Company’s Amended and Restated 2016 Equity Incentive Plan (the “Amended and Restated Equity Incentive Plan”). The amendment modified the Company’s 2016 Equity Incentive Plan to, among other things, (1) provide the Board of Directors with the authority to grant awards in the form of restricted stock and restricted stock units, (2) set the maximum number of shares available for issuance under the Amended and Restated Equity Incentive Plan at 130,000 shares of the Company’s common stock, par value $0.00001 per share, and (3) adopt certain other technical amendments.

NOTE 6. RELATED PARTY TRANSACTIONS

On April 8, 2016, the Company entered into a Management Services Agreement (the “MSA”) with Ancora Advisors, LLC, whereby Ancora Advisors, LLC agreed to provide specified services to the Company in exchange for a quarterly management fee in an amount equal to 0.14323% of the Company’s stockholders’ equity (excluding cash and cash equivalents) as shown on the Company’s balance sheet as of the end of each fiscal quarter of the Company. The management fee with respect to each fiscal quarter of the Company is paid no later than 10 days following the issuance of the Company’s financial statements for such fiscal quarter, and in any event no later than 60 days following the end of each fiscal quarter. For the nine months ended September 30, 2017, Ancora Advisors, LLC agreed to waive payment of the management fee, but reserves the right to institute payment of the management fee at its discretion.

The Company’s former president and principal executive officer had loaned the Company money to fund working capital needs to pay operating expenses. The loans were repayable upon demand and accrued interest at the rate of 10% per annum. As of March 31, 2016, the aggregate principal loan balance amounted to $186,196 and such loans had accrued interest of $63,804 through March 31, 2016. On April 8, 2016, the Company issued to its former president and principal executive officer 18,522 shares of the Company’s Common Stock in full satisfaction his loans to the Company.

Prior to May 12, 2016, the Company occupied a portion of the offices occupied by BKF Capital Group, Inc., 31248 Oak Crest Drive, Suite 110, Westlake Village, California 91361 on a month to month basis for a fee of $50 per month paid to BKF Capital Group, Inc. The Company’s former president and principal executive officer is also the Chairman, CEO and controlling shareholder of BKF Capital Group, Inc.

Effective May 12, 2016, the Company relocated its principal offices to 6060 Parkland Boulevard, Cleveland, OH 44124. The Company pays no rent for the use of the offices, which are located at the corporate headquarters of Ancora Advisors, LLC.

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On November 1, 2016, in connection with the Acquisition, BRJ LLC entered into a Management Services Agreement (the “BRJ MSA”) with Lorraine Capital, LLC, a member of BRJ LLC, whereby Lorraine Capital, LLC agreed to provide specified management, financial and reporting services to us in exchange for an annual management fee in an amount equal to the greater of (i) $75,000 or (ii) five percent (5%) of the annual EBITDA (as defined in the BRJ MSA) of BRJ LLC, payable quarterly in arrears and subject to certain adjustments and offsets set forth in the BRJ MSA. The BRJ MSA may be terminated by BRJ LLC, Lorraine Capital, LLC or Regional Brands at any time upon 60 days’ prior written notice and also terminates upon the consummation of a sale of BRJ LLC. For the nine months ended September 30, 2017, the fees payable to Lorraine Capital LLC were approximately $144,000.

BRJ LLC has a relationship with a union qualified commercial window subcontractor, Airways Door Service, Inc. (“ADSI”), which is advantageous to us in situations that require union installation and repair services. Regarding the Acquisition, individuals affiliated with Lorraine Capital, LLC acquired 57% of ADSI’s common stock; the remaining common stock is owned by three of BRJ LLC’s employees. BRJ LLC paid ADSI for its services approximately $400,000 and $1,298,000, respectively, during the three months and nine months ended September 30, 2017. In addition, we provide ADSI services utilizing an agreed-upon fee schedule. These services include accounting, warehousing, equipment use, employee benefit administration, risk management coordination and clerical functions. The fee for these services was $11,850 and $35,100 respectively, during the three months and nine months ended September 30, 2017.

NOTE 7. INCOME TAXES

We account for income taxes using the asset and liability method. Under this method, deferred tax assets and liabilities are determined based on differences between financial reporting and tax basis of assets and liabilities and are measured using the enacted tax rates and laws that may be in effect when the differences are expected to reverse.  The Company periodically evaluates the likelihood of realization of deferred tax assets, and provides for a valuation allowance when necessary. With recent consistency in earnings, a strong earnings history of B.R. Johnson, Inc., a recent acquisition, and favorable projections, the Company has reversed its valuation allowance on deferred tax assets associated with activity beginning with the acquisition of B.R. Johnson, Inc., but exclusive of pre-acquisition losses that are subject to limitations under Internal Revenue Code Section 382.

The Company has an effective income tax rate of 9.3% for the nine-months ended September 30, 2017.  This effective tax rate is substantially lower than the federal statutory rate of 34% due to the reversal of a portion of the valuation allowance during the quarter.

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ITEM 2 - MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

FORWARD-LOOKING STATEMENTS

Certain statements contained herein constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 (the “1995 Reform Act”).   The Company desires to avail itself of certain “safe harbor” provisions of the 1995 Reform Act and is therefore including this note to enable it to do so.  Except for the historical information contained herein, this report contains forward-looking statements (identified by the words “estimate,” “project,” “anticipate,” “plan,” “expect,” “intend,” “believe,” “hope,” “strategy” and similar expressions), which are based on our current expectations and speak only as of the date made. These forward-looking statements are subject to various risks, uncertainties and factors that could cause actual results to differ materially from the results anticipated in the forward-looking statements, including, without limitation, those discussed under Part I, Item 1A “Risk Factors” in our Annual Report on Form 10-K for the transition period ended December 31, 2016, as they may be updated or supplemented from time to time under Part II, Item 1A “Risk Factors” in our Quarterly Reports on Form 10-Q, and those described herein.

The following discussion and analysis provides information that our management believes is relevant to an assessment and understanding of our results of operations and financial condition and should be read in conjunction with the financial statements and footnotes that appear elsewhere in this report.

General

Regional Brands Inc. (formerly 4net Software, Inc.) (“Regional Brands,” the “Company,” “we,” “our” and “us”) was incorporated under the laws of the State of Delaware in 1986 and subsequently became a holding company. In April 2016, in connection with a change in control of the Company, we changed our name to Regional Brands Inc.

Nature of Business

Regional Brands is a holding company formed to acquire regional companies with strong brand recognition, stable revenues and profitability. In April 2016, we sold an aggregate of 370,441 shares of common stock for the aggregate purchase price of $5,000,000 (including the cancellation of certain indebtedness) and the transactions resulted in a change of control of the Company. Subsequent to the change in control, we have been pursuing a business strategy whereby we have been seeking to engage in an acquisition, merger or other business combination transaction with undervalued businesses (each, a “Target Company”) with a history of operating revenues in markets that provide opportunities for growth. Since the acquisition of the business of BRJ Inc. by Regional Brands’ majority-owned subsidiary, BRJ LLC, Regional Brands has focused on considering opportunities for growth of BRJ LLC through utilizing its balance sheet to provide capital for additional acquisitions of companies that would be complementary to BRJ LLC. Additionally, Regional Brands may seek to acquire Target Companies that satisfy the following criteria: (1) established businesses with viable services or products; (2) an experienced and qualified management team; (3) opportunities for growth and/or expansion into other markets; (4) are accretive to earnings; (5) offer the opportunity to achieve and/or enhance profitability; and (6) increase shareholder value.

On November 1, 2016, we acquired a majority interest in BRJ LLC by contributing $3,808,696 in exchange for 95.22% of BRJ LLC’s preferred membership interest and 76.17% of its common membership interest. In addition, we loaned to BRJ LLC $7,141,304 under a senior subordinated term note which bears interest at 6% per annum and has scheduled annual principal payments with the balance due at maturity in November 2021. The senior subordinated term note is secured by substantially all of BRJ LLC’s assets. BRJ LLC’s minority members contributed $191,304 for the remaining preferred and common membership interests and loaned to BRJ LLC $358,696 on the same terms as the Regional Brands senior subordinated loan pursuant to a participation agreement. The senior subordinated loan is subordinated to BRJ LLC’s Credit Facility.

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BRJ LLC, on November 1, 2016, acquired the business of BRJ Inc. in an asset purchase transaction in exchange for $14,000,000 in cash (including working capital adjustments of approximately $1,100,000) and a subordinated note of $2,500,000. BRJ LLC has continued to operate the business of BRJ Inc. as a consolidated subsidiary of Regional Brands.

The acquisition by BRJ LLC of the business of BRJ Inc. is being accounted for under the acquisition method of accounting. This results in BRJ LLC allocating the total consideration issued in the acquisition to the fair value of the assets acquired and liabilities assumed as of the acquisition date.

Following the acquisition of the business of BRJ Inc., all of our business operations are being conducted through our consolidated subsidiary BRJ LLC.

Change in fiscal year end.

On December 20, 2016, the Board of Directors of the Company approved a change in the Company’s fiscal year-end, moving from September 30 to December 31 of each year.

Results of Operations: For the three and nine months ended September 30, 2017 and September 30, 2016.

Certain of the results discussed below are presented both on an actual basis, and a pro forma basis as if the acquisition of the business of BRJ Inc. had occurred on January 1, 2016 (see Note 2 of the condensed consolidated financial statements included in this report). Comparisons presented in the discussion below are with respect to the same period of the prior year, unless otherwise noted.

Net Sales: During the three and nine months ended September 30, 2017, the Company had net sales of $8,607,302 and $28,505,603, respectively, due to inclusion of BRJ LLC's operations from November 1, 2016, the date of acquisition. Until the acquisition of BRJ Inc., the Company did not have any sales. On a pro forma basis, the Company’s net sales for the three months ended September 30, 2017 increased by $185,179, or 2.2%, to $8,607,302 from $8,422,123. For the nine months ended September 30, 2017, on a pro forma basis, the Company’s net sales increased by $2,247,816, or 8.6%, to $28,505,603 from $26,257,787. The increases in 2017 were primarily due to higher contract volume as a result of sharply increased construction activity in our primary market area – Upstate New York.

Cost of sales: The Company had cost of sales of $5,800,256 and $19,774,595, respectively, during the three and nine months ended September 30, 2017 due to inclusion of BRJ LLC's operations. On a pro forma basis, cost of sales for the three months ended September 30, 2017 increased by 1.7%, or $99,718. For the nine months ended September 30, 2017, on a pro forma basis, cost of sales increased by 7.5%, or $1,386,946. The increases in cost of sales in 2017 were primarily due to higher net sales in 2017. As a percentage of net sales, cost of sales during the three and nine months ended September 30, 2017 were 67.4% and 69.4%, respectively, compared to 67.7% and 70%, respectively, for the same periods in 2016.

Selling: As of result of the inclusion of BRJ LLC's operations during the three and nine months ended September 30, 2017, the Company had selling expenses of $1,170,035 and $3,491,780, respectively. There were no selling expenses during the three and nine months ended September 30, 2016. On a pro forma basis, the selling expenses during the three months ended September 30, 2017 were $1,170,035 compared to $1,109,174 in 2016. For the nine months ended September 30, 2017, on a pro forma basis, the selling expenses increased from $3,125,914 to $3,491,780. The increases in selling expenses in 2017 were due to additional compensation costs arising from increased net sales.

General and administrative: General and administrative expenses increased by $905,883 from $26,684 in the three months ended September 30, 2016 to $932,517 during the three months ended September 30, 2017. $866,303 of this increase was due to inclusion of BRJ LLC’s operations and the remainder of the increase was due to higher levels of activities subsequent to our change in control in April 2016. For the nine months ended September 30, 2017, the Company’s general and administrative expenses increased by $2,816,874. Of this increase, $2,645,730 was due to inclusion of BRJ LLC’s operations and the remainder was due to higher levels of activities subsequent to our change in control in April 2016. On a pro forma basis, the general and administrative expenses for BRJ LLC’s operations, during the three and nine months ended September 30, 2017 were, $932,517 and $2,901,843, respectively, compared to $581,969 and $1,979,844, respectively, for the same periods in 2016.

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Amortization of intangible assets: Amortization of intangibles arising from the BRJ Inc. acquisition amounted to $300,000 and $1,416,667, respectively, during the three and nine months ended September 30, 2017.

Interest Expense: The interest expense during the three and nine months ended September 30, 2017 increased by $49,828 and $168,761, respectively. The increases in interest expense were due to increased debt levels to fund the BRJ Inc. acquisition and operations.

Net income (loss): As a result of the foregoing, the net income for the three months ended September 30, 2017 increased by $742,354 to $726,837 compared to a net loss of $15,517 incurred during the three months ended September 30, 2016. For the nine months ended September 30, 2017, net income increased by $818,872 to $754,626 compared to a loss of $64,246 during the nine months ended September 30, 2016. During the three months ended September 30, 2017, we had an unrealized loss on investments of $100 resulting in comprehensive income of $710,815 to common stockholders, after income of $15,922 to noncontrolling interest. During the nine months ended September 30, 2017, we had an unrealized loss on investments of $1,576 resulting in comprehensive income of $718,431 to common stockholders, after income of $34,619 to noncontrolling interest.

Liquidity and Capital Resources

At September 30, 2017, we had working capital of $10,709,956 compared to working capital of $9,239,594 at December 31, 2016. The increase in working capital is primarily due to operational profits from BRJ LLC’s business. During the nine months ended September 30, 2017, our operating activities provided cash of approximately $2,152,000 compared to approximately $43,000 used during the nine months ended September 30, 2016.

During the nine months ended September 30, 2017, our operations, after adjusting for non-cash items, generated approximately $1,763,000 of cash. Changes in working capital items generated approximately $389,000 of cash during the nine months ended September 30, 2017. During the nine months ended September 30, 2016, our operations, after adjusting for non-cash items, used approximately $41,000 of cash, and working capital items used approximately $2,000 of cash.

During the nine months ended September 30, 2017, the Company paid approximately $1.1 million in settlement of working capital to the seller of BRJ Inc. and purchased short term investments for approximately $844,000.

In November 2016, BRJ LLC entered into a credit agreement with KeyBank, N.A. (the “Credit Facility”). Under the Credit Facility, BRJ LLC may borrow up to an aggregate amount of $6,000,000 under revolving loans and letters of credit, with a sublimit of $500,000 for letters of credit. The Credit Facility is payable upon demand of KeyBank, N.A., or the lenders, or upon acceleration as a result of an event of default. At the closing of the Acquisition, approximately $1,900,000 was drawn under the Credit Facility to pay a portion of the purchase price and costs associated with the Acquisition, with the balance being available for general working capital of BRJ LLC.

Interest under the Credit Facility is payable monthly and accrues pursuant to the “base rate” of interest, which is equal to the highest of (a) KeyBank, N.A.’s prime rate, (b) one-half of one percent (0.50%) in excess of the Federal Funds Effective Rate of the Federal Reserve Bank of New York, and (c) one hundred (100) basis points in excess of the London Interbank Offered Rate for loans in Eurodollars with an interest period of one month, plus any applicable margin. The Credit Facility also requires the payment of certain fees, including, but not limited to, letter of credit fees.

The Credit Facility is secured by substantially all of BRJ LLC’s assets. The Credit Facility contains customary financial and other covenant requirements, including, but not limited to, a covenant to not permit BRJ LLC’s consolidated fixed charge coverage ratio to exceed 1.15 to 1.00. The Credit Facility also contains customary events of default.

The effective interest rate on outstanding borrowings under the Credit Facility at September 30, 2017 was 3.69%. The aggregate borrowings outstanding under the Credit Facility at September 30, 2017 were $1,592,757 and, in addition, KeyBank, N.A. has issued a letter of credit on behalf of BRJ LLC in the amount of $250,000 that expires on December 1, 2017.

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Based on current plans, management anticipates that the cash on hand, the expected cash flows from our majority-owned subsidiary BRJ LLC, and the availability under the Credit Facility will satisfy our capital requirements and fund our operations for at least the next 12 months.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements that have, or are reasonably likely to have, an effect on our financial condition, financial statements, revenues or expenses.

Inflation

Although our operations are influenced by general economic conditions, we do not believe that inflation had a material effect on our results of operations during the last two years.

Critical Accounting Policies

The preparation of financial statements and related disclosures in conformity with U.S. GAAP requires management to make judgments, assumptions and estimates that affect the amounts reported in our financial statements and accompanying notes.  The financial statements as of December 31, 2016 describe the significant accounting policies and methods used in the preparation of the financial statements.  Actual results could differ materially from those estimates and be based on events different from those assumptions.  Future events and their effects cannot be predicted with certainty; estimating, therefore, requires the exercise of judgment. Thus, accounting estimates change as new events occur, as more experience is acquired or as additional information is obtained.  Critical accounting policies are impacted significantly by judgments, assumptions and estimates used in the preparation of our financial statements. A discussion of such critical accounting policies can be found in our Annual Report on Form 10-K for the transition period ended December 31, 2016. There have been no material changes to such critical accounting policies as of the Quarterly Report on Form 10-Q for the period ended September 30, 2017.

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ITEM 3 – QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable.

ITEM 4 - CONTROLS AND PROCEDURES

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our principal executive and financial officer, as appropriate, to allow timely decisions regarding required disclosure. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

Our principal executive and financial officer, after evaluating the effectiveness of the Company’s “disclosure controls and procedures” (as defined in Rules 13a-15(e) or 15d-15(e) promulgated under the Exchange Act, as of the end of the period covered by this report, concluded that our disclosure controls and procedures were not effective, and further concluded that our disclosure controls and procedures were not effective as of the end of the period ended December 31, 2016 and quarters ended March 31, 2017 and June 30, 2017. Our management concluded that our disclosure controls and procedures were not effective due to material weaknesses in our internal controls over financial reporting that existed as of December 31, 2016, and continued to exist as of March 31, 2017, June 30, 2017 and September 30, 2017. As disclosed in our Annual Report on Form 10-K for the period ended December 31, 2016, the material weaknesses consist of an insufficient complement of qualified accounting personnel and controls associated with segregation of duties.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.

Changes in Internal Control Over Financial Reporting

As discussed above in this Item 4 and in our Annual Report on Form 10-K for the period ended December 31, 2016, our internal controls over financial reporting were not effective as of December 31, 2016, March 31, 2017, June 30, 2017 and September 30, 2017, as a result of material weaknesses related to an insufficient complement of qualified accounting personnel and controls associated with segregation of duties.

In response to the material weaknesses identified above, our Management, with assistance of an outside consultant and oversight from the Company’s audit committee, has continued to monitor and review our control environment and evaluate potential solutions intended to remedy the identified material weaknesses. The potential solutions being evaluated as of September 30, 2017 included steps that, if implemented, would expand the resources available and implement additional controls to the financial reporting process.

There were no other changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) promulgated under the Exchange Act) during the quarter ended September 30, 2017 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II - OTHER INFORMATION

Item 1. Legal Proceedings.

There are currently no pending or threatened material legal proceedings against us.

Item 1A. Risk Factors

There have been no material changes from the risk factors disclosed in Part 1, Item 1A, of our Annual Report on Form 10-K for the transition period ended December 31, 2016, as supplemented by the disclosure in Part II, Item 1A, of our Quarterly Report on Form 10-Q for the quarter ended June 30, 2017, except for the following which revises and supplements our previously disclosed risk factors:

Failure to maintain effective internal controls in accordance with Section 404 of the Sarbanes-Oxley Act and disclosure controls and procedures in accordance with Section 302 of the Sarbanes-Oxley Act could result in material misstatements in our financial statements, and cause stockholders to lose confidence in our financial reporting.

Section 404 of the Sarbanes-Oxley Act of 2002 requires the Company to evaluate the effectiveness of its internal controls, and Section 302 of the Sarbanes-Oxley Act of 2002 requires the Company to evaluate its disclosure controls and procedures, in each case as of the end of each fiscal year, and to include a management report assessing the effectiveness of the Company’s internal control over financial reporting in each Annual Report on Form 10-K.

Management evaluated the effectiveness of our internal control over financial reporting as of December 31, 2016 as required by paragraph (b) of Exchange Act Rules 13a-15 or 15d-15, and determined that our internal controls were not effective due to material weaknesses. The identified material weaknesses related to an insufficient complement of qualified accounting personnel and ineffective controls associated with segregation of duties. The material weaknesses continued to exist as of March 31, 2017, June 30, 2017 and September 30, 2017. Based on our Management’s evaluation of our disclosure controls and procedures and the continued existence of the material weaknesses as of September 30, 2017, our Management concluded that our disclosure controls and procedures were not effective as of December 31, 2016, March 31, 2017, June 30, 2017 and September 30, 2017.

In response to the material weaknesses identified above, our Management, with assistance of an outside consultant and oversight from the Company’s audit committee, has continued to monitor and review our control environment and evaluate potential solutions intended to remedy the identified material weaknesses. If the material weaknesses are not effectively remediated, or if additional material weaknesses or significant deficiencies in our internal controls, or in our disclosure controls and procedures, are discovered or occur in the future, our financial statements may contain material misstatements and we could be required to restate our financial results. This could result in stockholders losing confidence in our reported financial information or disclosure, which could negatively impact our stock price, or in securities litigation, and the diversion of significant management and financial resources.

We do not expect that our internal control over financial reporting will prevent all errors and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls. Over time, controls may become inadequate because changes in conditions or deterioration in the degree of compliance with policies or procedures may occur. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

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

None.

Item 3. Defaults Upon Senior Securities.

None.

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Item 4. Mine Safety Disclosures.

None.

Item 5. Other Information.

None.

ITEM 6 – EXHIBITS

31.1	Certification of Principal Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2	Certification of Principal Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1*	Certification of Principal Executive and Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
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

* This certification is deemed not filed for purposes of Section 18 of the Exchange Act or otherwise subject to the liability of that section, nor shall it be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act.

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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.

		REGIONAL BRANDS INC.
November 14, 2017	By:	/s/ Fred DiSanto
		Fred DiSanto
		Chief Executive Officer
		(Principal Executive, Financial and Accounting Officer)

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EX-31.1

Exhibit 31.1

Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
By Principal Executive Officer

I, Fred DiSanto, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Regional Brands Inc. ("Registrant") for the quarter ended September 30, 2017.

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 presented 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 13a-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 financial 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 involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated: November 14, 2017

/s/ Fred DiSanto

Fred DiSanto, Principal Executive Officer

EX-31.2

 Exhibit 31.2

 Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
By Principal Financial Officer

I, Fred DiSanto, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Regional Brands Inc. ("Registrant") for the quarter ended September 30, 2017.

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 presented 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 13a-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 financial 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 involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated: November 14, 2017

/s/ Fred DiSanto

Fred DiSanto, Principal Financial and Accounting Officer

EX-32.1

Exhibit 32.1

Written Certification
Pursuant to 18 U.S.C. Section 1350

Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned hereby certifies in his capacity as Principal Executive, Financial and Accounting Officer of Regional Brands Inc. (the “Company”) that

(a)  the Quarterly Report of the Company on Form 10-Q for the quarter ended September 30, 2017 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, and

(b)  the information contained in such report fairly presents, in all material respects, the financial condition of the Company at the end of such period and the results of operations of the Company for such period.

Dated: November 14, 2017

/s/ Fred DiSanto

Fred DiSanto, Principal Executive, Financial and Accounting Officer

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Document And Entity Information - shares	9 Months Ended
	Sep. 30, 2017	Nov. 09, 2017
Document Information [Line Items]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Sep. 30, 2017
Document Fiscal Year Focus	2017
Document Fiscal Period Focus	Q3
Entity Registrant Name	Regional Brands Inc.
Entity Central Index Key	0000812149
Current Fiscal Year End Date	--12-31
Entity Filer Category	Smaller Reporting Company
Trading Symbol	RGBD
Entity Common Stock, Shares Outstanding		1,274,603

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CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($)	Sep. 30, 2017	Dec. 31, 2016
Current assets:
Cash and cash equivalents	$ 4,022,442	$ 4,752,462
Short-term investments	1,794,413	952,208
Accounts receivable, net of allowance for doubtful accounts of $100,000 ($150,000 - 2016)	6,309,149	5,717,369
Inventories, net	1,385,282	1,594,264
Costs and estimated earnings in excess of billings on uncompleted contracts	967,599	894,261
Prepaid expenses and other current assets	261,286	248,935
Total current assets	14,740,171	14,159,499
Equipment, net	516,837	461,828
Intangibles, net	4,900,000	6,316,666
Goodwill	3,013,287	3,013,287
Deferred tax asset	535,000
Other assets	144,728	96,667
Total assets	23,850,023	24,047,947
Current liabilities:
Accounts payable	1,113,150	467,248
Accrued expenses and other current liabilities	997,804	618,844
Line of credit	1,592,757	2,272,710
Current portion of senior subordinated note	14,348	14,348
Working capital liability due to Seller	0	1,107,872
Billings in excess of costs and estimated earnings on uncompleted contracts	312,156	438,883
Total current liabilities	4,030,215	4,919,905
Senior subordinated note	241,668	222,809
Subordinated term note	2,500,000	2,500,000
Total liabilities	6,771,883	7,642,714
Commitments
Stockholders' equity
Preferred stock $.01 par value, authorized 50,000, issued and outstanding -none	0	0
Common stock $.00001 par value, 3,000,000 authorized and 1,274,603 shares issued and outstanding	13	13
Additional paid-in capital	20,357,826	20,311,645
Accumulated deficit	(3,288,434)	(4,008,441)
Accumulated other comprehensive loss	(7,040)	(5,464)
Total Regional Brands, Inc. stockholders' equity	17,062,365	16,297,753
Noncontrolling interest in consolidated subsidiary	15,775	107,480
Total stockholders’ equity	17,078,140	16,405,233
Total liabilities and stockholders' equity	$ 23,850,023	$ 24,047,947

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CONDENSED CONSOLIDATED BALANCE SHEETS [Parenthetical] - USD ($)	Sep. 30, 2017	Dec. 31, 2016
Accounts receivable, net of allowance for doubtful accounts	$ 100,000	$ 150,000
Preferred stock, par value (in dollars per share)	$ 0.01	$ 0.01
Preferred stock, shares authorized	50,000	50,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common stock, par value (in dollars per share)	$ 0.00001	$ 0.00001
Common stock, shares authorized	3,000,000	3,000,000
Common stock, shares issued	1,274,603	1,274,603
Common stock, shares, outstanding	1,274,603	1,274,603

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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Net Sales	$ 8,607,302	$ 0	$ 28,505,603	$ 0
Cost of sales	5,800,256	0	19,774,595	0
Gross profit	2,807,046	0	8,731,008	0
Operating expenses:
Selling	1,170,035	0	3,491,780	0
General and administrative	932,517	26,684	2,901,843	84,969
Amortization of intangible assets	300,000	0	1,416,667	0
Total operating expenses	2,402,552	26,684	7,810,290	84,969
Operating income (loss)	404,494	(26,684)	920,718	(84,969)
Other income (expense):
Other income	29,339	6,900	69,972	17,666
Interest expense	(49,328)		(168,761)	0
Interest income	5,332	4,267	9,697	3,057
Interest income (expense) net	(14,657)	11,167	(89,092)	20,723
Income (loss) before income taxes	389,837	(15,517)	831,626	(64,246)
Income tax benefit (expense)	337,000	0	(77,000)	0
Net income (loss)	726,837	(15,517)	754,626	(64,246)
Less income to noncontrolling interest	15,922	0	34,619	0
Net income (loss) attributable to common shareholders	710,915	(15,517)	720,007	(64,246)
Other comprehensive income (loss):
Unrealized gain (loss) on investments	(100)	5,150	(1,576)	763
Comprehensive income (loss) attributable to common shareholders	$ 710,815	$ (10,367)	$ 718,431	$ (63,483)
Earnings (loss) per share per common share- basic and diluted	$ 0.56	$ (0.04)	$ 0.56	$ (0.26)
Weighted average common shares outstanding - basic and diluted	1,274,603	379,702	1,274,603	246,723
B.R. Johnson, Inc. [Member]
Net Sales		$ 8,422,123		$ 26,257,787
Cost of sales		5,700,538		18,387,649
Gross profit		2,721,585		7,870,138
Operating expenses:
Selling		1,109,174		3,125,914
General and administrative		581,969		1,979,844
Amortization of intangible assets				0
Total operating expenses		1,691,143		5,105,758
Operating income (loss)		1,030,442		2,764,380
Other income (expense):
Other income		5,373		12,955
Interest expense		(1,340)		(1,340)
Interest income		0		0
Interest income (expense) net		4,033		11,615
Income (loss) before income taxes		1,034,475		2,775,995
Income tax benefit (expense)		0		0
Net income (loss)		$ 1,034,475		$ 2,775,995
Other comprehensive income (loss):
Earnings (loss) per share per common share- basic and diluted		$ 5,172		$ 13,880
Weighted average common shares outstanding - basic and diluted		200		200

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($)	9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016
Cash flows from operating activities:
Net income (loss)	$ 754,626	$ (64,246)
Adjustments to reconcile net income (loss) to net cash provided (used) by operating activities:
Stock based compensation	46,181	23,212
Depreciation and amortization and gain on disposal of equipment	68,755	0
Amortization of debt issuance costs	18,859	0
Amortization of intangibles	1,416,667	0
Change in allowance for doubtful accounts	(50,000)	0
Change in inventory obsolence reserve	43,000	0
Change in deferred tax benefit	(535,000)	0
Changes in operating assets and liabilities
Accounts receivable	(541,780)	0
Inventories	165,982	0
Costs and estimated earnings in excess of billings on uncompleted contracts	(73,338)	0
Prepaid expenses and other assets	(60,412)	0
Accounts payable	645,902	0
Accrued expenses and other current liabilities	378,960	(2,308)
Billings in excess of costs and estimated earnings on uncompleted contracts	(126,727)	0
Net cash provided (used ) by operating activities	2,151,675	(43,342)
Cash flows from investment activities:
Purchase of equipment	(123,765)	0
Business acquisition- payment of working capital liability to Seller	(1,107,872)	0
Purchase of short- term investments	(843,781)	(2,186,126)
Net cash used by investment activities	(2,075,418)	(2,186,126)
Cash flows from financing activities:
Repayment from line of credit	(679,953)	0
Proceeds from related party note payable	0	4,100
Proceeds from sale of common stock		4,750,000
Distribution to noncontrolling interest	(126,324)
Stockholders' distribution	0	0
Net cash provided (used) by financing activities	(806,277)	4,754,100
Net increase (decrease) in cash	(730,020)	2,524,632
Cash at beginning of period	4,752,462	1,356
Cash at end of period	4,022,442	2,525,988
Cash paid for :
Income taxes	169,000	0
Interest	107,000	0
Non-cash investing and financing activities:
Repayment of related party note payable and accrued interest by issuance of common shares	$ 0	250,000
B.R. Johnson, Inc. [Member]
Cash flows from operating activities:
Net income (loss)		2,775,995
Adjustments to reconcile net income (loss) to net cash provided (used) by operating activities:
Stock based compensation		0
Depreciation and amortization and gain on disposal of equipment		128,627
Amortization of debt issuance costs		0
Amortization of intangibles		0
Change in allowance for doubtful accounts		0
Change in inventory obsolence reserve		0
Change in deferred tax benefit		0
Changes in operating assets and liabilities
Accounts receivable		134,959
Inventories		(270,813)
Costs and estimated earnings in excess of billings on uncompleted contracts		(1,365,626)
Prepaid expenses and other assets		(212,920)
Accounts payable		(325,436)
Accrued expenses and other current liabilities		(135,491)
Billings in excess of costs and estimated earnings on uncompleted contracts		1,003,079
Net cash provided (used ) by operating activities		1,732,374
Cash flows from investment activities:
Purchase of equipment		(159,663)
Business acquisition- payment of working capital liability to Seller		0
Purchase of short- term investments		0
Net cash used by investment activities		(159,663)
Cash flows from financing activities:
Repayment from line of credit		0
Proceeds from related party note payable		0
Proceeds from sale of common stock		0
Distribution to noncontrolling interest		0
Stockholders' distribution		(1,824,200)
Net cash provided (used) by financing activities		(1,824,200)
Net increase (decrease) in cash		(251,489)
Cash at beginning of period		903,607
Cash at end of period		652,118
Cash paid for :
Income taxes		0
Interest		0
Non-cash investing and financing activities:
Repayment of related party note payable and accrued interest by issuance of common shares		$ 0

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NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

9 Months Ended

Sep. 30, 2017

Accounting Policies [Abstract]

Significant Accounting Policies [Text Block]

NOTE 1. NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Regional Brands Inc. (formerly 4net Software, Inc.) (“Regional Brands,” the “Company,” “we,” “our” and “us”) was incorporated under the laws of the State of Delaware in 1986. Regional Brands is a holding company formed to acquire regional companies with strong brand recognition, stable revenues and profitability. Regional Brands has been pursuing a business strategy whereby it seeks to engage in an acquisition, merger or other business combination transaction with undervalued businesses (each, a “Target Company”) with a history of operating revenues in markets that provide opportunities for growth. On November 1, 2016 (See Note 2) the Company's majority-owned subsidiary acquired substantially all of the assets (the “Acquisition”) of B.R. Johnson, Inc. (“BRJ Inc.”), a seller and distributor of windows, doors and related hardware as well as specialty products for use in commercial and residential buildings. After the acquisition of the business of BRJ Inc. by our majority-owned subsidiary, B.R. Johnson, LLC (“BRJ LLC”), we are currently focused on considering opportunities for growth of BRJ LLC through utilizing its balance sheet to provide capital for additional acquisitions of companies that would be complementary to BRJ LLC. Additionally, we may seek to acquire Target Companies that satisfy the following criteria: (1) established businesses with viable services or products; (2) an experienced and qualified management team; (3) opportunities for growth and/or expansion into other markets; (4) are accretive to earnings; (5) offer the opportunity to achieve and/or enhance profitability; and (6) increase shareholder value.

Basis of Presentation - The accompanying condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) for interim financial information. Accordingly, these statements do not include all of the information and footnotes required by U.S. GAAP. In the opinion of management, the accompanying condensed consolidated balance sheets and related condensed consolidated statements of operations and cash flows include all adjustments, consisting only of normal recurring items necessary for their fair presentation in accordance with U.S. GAAP. Interim results are not necessarily indicative of results expected for a full year. For further information regarding the Company’s accounting policies, please refer to the audited consolidated financial statements and footnotes for the year ended December 31, 2016 included in the Company’s annual report on Form 10-K filed with the Securities and Exchange Commission on March 31, 2017. The unaudited Condensed Statement of Operations and Statement of Cash Flows for the nine months ended September 30, 2016 of BRJ Inc., as predecessor to the Company, are included in this report as supplementary information.

Principles of Consolidation - The consolidated financial statements include the accounts of Regional Brands Inc. and its majority-owned subsidiary, BRJ LLC. All intercompany balances and transactions have been eliminated in consolidation.

Use of Estimates - The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect amounts reported in the financial statements and accompanying notes. Actual results could differ materially from those estimates and be based on events different from those assumptions. Future events and their effects cannot be predicted with certainty; estimating, therefore, requires the exercise of judgment. Thus, accounting estimates change as new events occur, as more experience is acquired or as additional information is obtained. We believe the most significant estimates and judgments are associated with revenue recognition for our customer contracts in process, including estimating costs and the recognition of unapproved change orders and claims.

Common Shares Issued and Earnings (Loss) Per Share - Common shares issued are recorded based on the value of the shares issued or consideration received, including cash, services rendered or other non-monetary assets, whichever is more readily determinable. The Company presents basic and diluted earnings (loss) per share. Basic earnings (loss) per share reflect the actual weighted average number of shares issued and outstanding during the period. Diluted earnings (loss) per share is computed including the number of additional shares that would have been outstanding if dilutive potential shares had been issued, such as those issuable upon exercise of outstanding stock options or conversion of convertible securities. In a loss period, the calculation for basic and diluted loss per share is considered to be the same, as the impact of the issuance of any potential common shares would be anti-dilutive. During the three and nine months ended September 30, 2017, since the exercise prices of the outstanding stock options were above the average market price of our common stock during the period, the outstanding stock options were considered anti-dilutive.

Fair Value of Financial Instruments - Financial instruments include cash, accounts receivable, accounts payable, accrued expenses, and line of credit. Fair values approximate carrying values for these financial instruments and the line of credit is stated at the carrying value as the stated interest rate approximates market rates currently available to the Company.

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The Fair Value Measurement Topic of the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) establishes a three-tier fair value hierarchy which prioritizes the inputs used in measuring fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). These tiers include: 

⋅ Level 1, defined as observable inputs such as quoted prices for identical instruments in active markets;

⋅ Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable such as quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active; and

⋅ Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions, such as valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.

The Company’s valuation techniques used to measure the fair value of money market funds, certificate of deposits, and certain marketable equity securities were derived from quoted prices in active markets for identical assets or liabilities.

In accordance with the fair value accounting requirements, companies may choose to measure eligible financial instruments and certain other items at fair value. The Company has not elected the fair value option for any eligible financial instruments.

The table below presents the Company's assets and liabilities measured at fair value on a recurring basis as of December 31, 2016, aggregated by the level in the fair value hierarchy within which those measurements fall.

Assets and Liabilities Measured at Fair Value on a Recurring Basis at December 31, 2016:

Assets	Level 1		Level 2		Level 3		Balance at December 31, 2016
Marketable Equity Securities	$	952,208	$	—	$	—	$	952,208
Money Market Funds	$	3,492,895	$	—	$	—	$	3,492,895
Certificates of Deposit	$	1,256,216	$	—	$	—	$	1,256,216

The table below presents the Company's assets and liabilities measured at fair value on a recurring basis as of September 30, 2017, aggregated by the level in the fair value hierarchy within which those measurements fall.

Assets and Liabilities Measured at Fair Value on a Recurring Basis at September 30, 2017:

Assets	Level 1		Level 2		Level 3		Balance at September 30, 2017
Marketable Equity Securities	$	1,794,413	$	—	$	—	$	1,794,413
Money Market Funds	$	4,019,092	$	—	$	—	$	4,019,092

Change in fiscal year end. On December 20, 2016, the Board of Directors of the Company approved a change in the Company’s fiscal year-end, moving from September 30 to December 31 of each year.

Comprehensive Income (Loss) - Comprehensive income (loss) is defined as the change in equity of the Company during a period from transactions and other events and circumstances from non-owner sources. It consists of net income (loss) and other income and losses affecting stockholders’ equity that, under U.S. GAAP, are excluded from net income (loss). The change in fair value of investments was the only item impacting other comprehensive income (loss) for the three and nine months ended September 30, 2017 and 2016.

1 for 1,000 stock split- On July 22, 2016, the Company filed a certificate of amendment (the “Amendment”) to the Company’s Certificate of Incorporation with the Delaware Secretary of State to effect a 1 for 1,000 reverse stock split (the “Reverse Split”) of the Company’s issued and outstanding Common Stock and to reduce the number of shares of Common Stock the Company is authorized to issue from 750,000,000 to 50,000,000 shares.  The Reverse Split became effective on July 26, 2016 (the “Effective Time”).  The Amendment, including the Reverse Split, was approved by the Board of Directors of the Company and the holders of a majority of the issued and outstanding shares of Common Stock by written consent in lieu of a meeting.

 

As a result of the Reverse Split, at the Effective Time, every 1,000 shares of the Company’s issued and outstanding Common Stock were automatically combined and reclassified into one (1) share of Common Stock.  The Company rounded up any fractional shares, on account of the Reverse Split, to the nearest whole share of Common Stock. The Company has prepared the financial, share and per share information included in this quarterly report on a post-split basis.

Recent Accounting Pronouncements –

FASB ASU 2015-11, Inventory (Topic 330): “Simplifying the Measurement of Inventory.” This ASU requires inventory within the scope of the guidance to be measured at the lower of cost or net realizable value. FASB ASU 2015-11 is effective for annual and interim periods beginning after December 15, 2016, with prospective application required. The Company adopted this guidance during the nine months ended September 30, 2017 and it has not had a material impact on the Company’s consolidated financial statements.

In May 2014, the FASB issued ASU 2014-9 “Revenue from Contracts with Customers” (“ASU 2014-9”). The guidance requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. Subsequently, the FASB has issued the following standards related to ASU 2014-09: ASU No. 2016-08, “Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations” (“ASU 2016-08”); ASU No. 2016-10, “Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing” (“ASU 2016-10”); and ASU No. 2016-12, “Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients” (“ASU 2016-12”). The Company must adopt ASU 2016-08, ASU 2016-10 and ASU 2016-12 with ASU 2014-09 (collectively, the “new revenue standards”). The new revenue standards will replace most existing revenue recognition guidance in U.S. GAAP when they become effective and permit the use of either a retrospective or cumulative effect transition method. We are currently evaluating the alternative methods of adoption and the effect of this guidance on our consolidated financial statements and related disclosures. We are also in the process of identifying material contracts and revenue streams that are potentially impacted by this guidance. This guidance is effective January 1, 2018 using a full or modified retrospective approach with early adoption permitted January 1, 2017.

In March 2016, the FASB issued ASU 2016-09, “Compensation — Stock Compensation: Improvements to Employee Share-Based Payment Accounting.” The standard is intended to simplify several areas of accounting for share-based compensation arrangements, including the income tax impact, classification on the statement of cash flows and forfeitures. This pronouncement is effective for fiscal years beginning after December 15, 2016, and interim periods within those years. The Company adopted this guidance during the nine months ended September 30, 2017 and it has not had a material impact on the Company’s consolidated financial statements.

In February 2016, the FASB issued an accounting standard update ASU 2016-02, “Leases" to replace existing lease accounting guidance. This pronouncement is intended to provide enhanced transparency and comparability by requiring lessees to record right-of-use assets and corresponding lease liabilities on the balance sheet for most leases. Expenses associated with leases will continue to be recognized in a manner similar to current accounting guidance. This pronouncement is effective for annual and interim periods beginning after December 15, 2018, with early adoption permitted. The adoption is required to be applied on a modified retrospective basis for each prior reporting period presented. The Company has not yet determined the effect that the adoption of this pronouncement may have on its financial position and/or results of operations.

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ACQUISITION OF B.R. JOHNSON, INC.

9 Months Ended

Sep. 30, 2017

Business Combinations [Abstract]

Business Combination Disclosure [Text Block]

NOTE 2. ACQUISITION OF B.R. JOHNSON, INC.

On November 1, 2016, the Company's majority-owned subsidiary, B.R. Johnson, LLC (“BRJ LLC”) acquired substantially all of the assets (the “Acquisition”) of B.R. Johnson, Inc. (“BRJ Inc.”), a seller and distributor of windows, doors and related hardware as well as specialty products for use in commercial and residential buildings (the “Business”). Following the Acquisition, BRJ LLC has carried on the Business.

The Acquisition was consummated pursuant to an Asset Purchase Agreement, dated as of November 1, 2016 (the “APA”). Total consideration for the Acquisition was approximately $16.5 million including delivery by BRJ LLC of a promissory note for $2,500,000 to BRJ Inc. (the “Note”), which is subordinate to the Company’s debt agreements, and working capital adjustments of approximately $1.1 million, which were paid during the six months ended June 30, 2017. The Note accrues interest at a rate of 5.25% per annum, payable quarterly, with the principal amount of the Note payable in equal quarterly installments of $62,500 commencing on November 1, 2018 and maturing on November 30, 2021.

The Company provided $10.95 million in debt and equity financing to complete the Acquisition, including $7.14 million of a subordinated loan to BRJ Inc. and $3.81 million in preferred equity of BRJ LLC (which is eliminated in consolidation), with the remainder from bank financing, the Note and entities affiliated with Lorraine Capital, LLC. The Company holds 76.17% of the common membership interests and 95.22% of the preferred membership interests of BRJ LLC, pursuant to the B.R. Johnson, LLC Limited Liability Company Agreement (the “LLC Agreement”) entered into by and among Lorraine Capital, LLC (which owns 20% of the common membership interests), Regional Brands and BRJ Acquisition Partners, LLC (which owns the remaining 3.83% of the common membership interests and 4.78% of the preferred membership interests).

To finance the Acquisition and potential future acquisitions, on November 1, 2016, we issued 894,393 shares of our Common Stock for aggregate proceeds to us of $12,074,306 in a private placement.

Unaudited Pro Forma Results – The unaudited pro forma supplemental information is based on estimates and assumptions which management believes are reasonable but are not necessarily indicative of the consolidated financial position or results of future periods or the results that actually would have been realized had the Acquisition occurred as of January 1, 2016. The unaudited pro forma supplemental information includes incremental interest costs and intangible asset amortization charges as a result of the Acquisition, net of the related tax effects.

Unaudited pro forma results for the three and nine months ended September 30, 2016:

	Three		Nine
	months		months
	ended		ended
	September		September
	30, 2016		30, 2016
Net sales	$	8,422,123	$	26,257,787
Gross profit		2,721,585		7,780,138
Amortization of intangibles		729,167		1,416,667
Net income to common shareholders	$	119,164	$	558,546
Earnings per common share-basic and diluted	$	0.13	$	0.62

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CONTRACTS IN PROCESS

9 Months Ended

Sep. 30, 2017

Contractors [Abstract]

Contract In Process [Text Block]

NOTE 3. CONTRACTS IN PROCESS

Cost of revenue for our contracts in process includes direct contract costs, such as materials and labor, and indirect costs that are attributable to contract activity. The timing of when we bill our customers is generally dependent upon advance billing terms, milestone billings based on the completion of certain phases of the work, or when services are provided. Projects with costs and estimated earnings recognized to date in excess of cumulative billings are reported on the accompanying balance sheet as an asset as costs and estimated earnings in excess of billings. Projects with cumulative billings in excess of costs and estimated earnings recognized to date are reported on the accompanying balance sheet as a liability as billings in excess of costs and estimated earnings. The following is information with respect to uncompleted contracts:

	September 30,		December 31,
	2017		2016
Costs incurred on uncompleted contracts	$	11,486,314	$	8,246,796
Estimated earnings		3,912,693		2,273,388
		15,399,007		10,520,184
Less: billings to date		(14,743,564)		(10,064,806)
	$	655,443	$	455,378
Included on the balance sheet as follows:
Under current assets
Costs and estimated earnings in excess of billings on uncompleted contracts	$	967,599	$	894,261
Under current liabilities
Billings in excess of costs and estimated earnings on uncompleted contracts		(312,156)		(438,883)
	$	655,443	$	455,378

Prior to the Acquisition on November 1, 2016 (See Note 2), the Company did not have any contracts in process.

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DEBT

9 Months Ended

Sep. 30, 2017

Debt Disclosure [Abstract]

Debt Disclosure [Text Block]

NOTE 4. DEBT

In November 2016, BRJ LLC entered into a credit agreement with KeyBank, N.A. Under the credit agreement, BRJ LLC may borrow up to an aggregate amount of $6,000,000 (the “Credit Facility”) under revolving loans and letters of credit, with a sublimit of $500,000 for letters of credit. The Credit Facility is payable upon demand of KeyBank, N.A., or the lenders, or upon acceleration as a result of an event of default. At the closing of the Acquisition, approximately $1,900,000 was drawn under the Credit Facility to pay a portion of the purchase price and costs associated with the Acquisition, with the balance being available for general working capital of BRJ LLC.

Interest under the Credit Facility is payable monthly, starting on November 30, 2016, and accrues pursuant to the “base rate” of interest, which is equal to the highest of (a) KeyBank, N.A.’s prime rate, (b) one-half of one percent (0.50%) in excess of the Federal Funds Effective Rate of the Federal Reserve Bank of New York, and (c) one hundred (100) basis points in excess of the London Interbank Offered Rate for loans in Eurodollars with an interest period of one month, plus any applicable margin. The credit agreement also requires the payment of certain fees, including, but not limited to, letter of credit fees.

The Credit Facility is secured by substantially all of BRJ LLC’s assets. The Credit Facility contains customary financial and other covenant requirements, including, but not limited to, a covenant to not permit BRJ LLC’s consolidated fixed charge coverage ratio to exceed 1.15 to 1.00. The Credit Facility also contains customary events of default.

The effective interest rate on borrowings under the Credit Facility at September 30, 2017 was 3.69%. The aggregate borrowings outstanding under the Credit Facility at September 30, 2017 were $1,592,757 and, in addition, the bank has issued a letter of credit on behalf of the Company in the amount of $250,000 that expires on December 1, 2017.

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STOCKHOLDERS’ EQUITY

9 Months Ended

Sep. 30, 2017

Equity [Abstract]

Stockholders' Equity Note Disclosure [Text Block]

NOTE 5. STOCKHOLDERS’ EQUITY

The Company’s authorized capital consists of 3,000,000 shares of common stock, par value $0.00001 per share, and 50,000 shares of preferred stock, par value $0.01 per share.

On March 2, 2017, the Company filed a certificate of amendment (the “Amendment”) to the Company’s Certificate of Incorporation with the Delaware Secretary of State to reduce the number of shares of Common Stock the Company is authorized to issue from 50,000,000 to 3,000,000 shares and to reduce the number of shares of Preferred Stock the Company is authorized to issue from 5,000,000 to 50,000 shares. The Amendment was approved by the Board of Directors of the Company and the holders of a majority of the issued and outstanding shares of Common Stock by written consent in lieu of a meeting.

The Company recorded stock compensation expense for options vesting during the three and nine months ended September 30, 2017 of $15,181 and $46,181, respectively ($23,212 and $23,212, respectively, during the same periods in 2016).

On June 15, 2017, the Company’s stockholders approved and adopted the Company’s Amended and Restated 2016 Equity Incentive Plan (the “Amended and Restated Equity Incentive Plan”). The amendment modified the Company’s 2016 Equity Incentive Plan to, among other things, (1) provide the Board of Directors with the authority to grant awards in the form of restricted stock and restricted stock units, (2) set the maximum number of shares available for issuance under the Amended and Restated Equity Incentive Plan at 130,000 shares of the Company’s common stock, par value $0.00001 per share, and (3) adopt certain other technical amendments.

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RELATED PARTY TRANSACTIONS

9 Months Ended

Sep. 30, 2017

Related Party Transactions [Abstract]

Related Party Transactions Disclosure [Text Block]

NOTE 6. RELATED PARTY TRANSACTIONS

On April 8, 2016, the Company entered into a Management Services Agreement (the “MSA”) with Ancora Advisors, LLC, whereby Ancora Advisors, LLC agreed to provide specified services to the Company in exchange for a quarterly management fee in an amount equal to 0.14323% of the Company’s stockholders’ equity (excluding cash and cash equivalents) as shown on the Company’s balance sheet as of the end of each fiscal quarter of the Company. The management fee with respect to each fiscal quarter of the Company is paid no later than 10 days following the issuance of the Company’s financial statements for such fiscal quarter, and in any event no later than 60 days following the end of each fiscal quarter. For the nine months ended September 30, 2017, Ancora Advisors, LLC agreed to waive payment of the management fee, but reserves the right to institute payment of the management fee at its discretion.

The Company’s former president and principal executive officer had loaned the Company money to fund working capital needs to pay operating expenses. The loans were repayable upon demand and accrued interest at the rate of 10% per annum. As of March 31, 2016, the aggregate principal loan balance amounted to $186,196 and such loans had accrued interest of $63,804 through March 31, 2016. On April 8, 2016, the Company issued to its former president and principal executive officer 18,522 shares of the Company’s Common Stock in full satisfaction his loans to the Company.

Prior to May 12, 2016, the Company occupied a portion of the offices occupied by BKF Capital Group, Inc., 31248 Oak Crest Drive, Suite 110, Westlake Village, California 91361 on a month to month basis for a fee of $50 per month paid to BKF Capital Group, Inc. The Company’s former president and principal executive officer is also the Chairman, CEO and controlling shareholder of BKF Capital Group, Inc.

Effective May 12, 2016, the Company relocated its principal offices to 6060 Parkland Boulevard, Cleveland, OH 44124. The Company pays no rent for the use of the offices, which are located at the corporate headquarters of Ancora Advisors, LLC.

On November 1, 2016, in connection with the Acquisition, BRJ LLC entered into a Management Services Agreement (the “BRJ MSA”) with Lorraine Capital, LLC, a member of BRJ LLC, whereby Lorraine Capital, LLC agreed to provide specified management, financial and reporting services to us in exchange for an annual management fee in an amount equal to the greater of (i) $75,000 or (ii) five percent (5%) of the annual EBITDA (as defined in the BRJ MSA) of BRJ LLC, payable quarterly in arrears and subject to certain adjustments and offsets set forth in the BRJ MSA. The BRJ MSA may be terminated by BRJ LLC, Lorraine Capital, LLC or Regional Brands at any time upon 60 days’ prior written notice and also terminates upon the consummation of a sale of BRJ LLC. For the nine months ended September 30, 2017, the fees payable to Lorraine Capital LLC were approximately $144,000.

BRJ LLC has a relationship with a union qualified commercial window subcontractor, Airways Door Service, Inc. (“ADSI”), which is advantageous to us in situations that require union installation and repair services. Regarding the Acquisition, individuals affiliated with Lorraine Capital, LLC acquired 57% of ADSI’s common stock; the remaining common stock is owned by three of BRJ LLC’s employees. BRJ LLC paid ADSI for its services approximately $400,000 and $1,298,000, respectively, during the three months and nine months ended September 30, 2017. In addition, we provide ADSI services utilizing an agreed-upon fee schedule. These services include accounting, warehousing, equipment use, employee benefit administration, risk management coordination and clerical functions. The fee for these services was $11,850 and $35,100 respectively, during the three months and nine months ended September 30, 2017.

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INCOME TAXES

9 Months Ended

Sep. 30, 2017

Income Tax Disclosure [Abstract]

Income Tax Disclosure [Text Block]

NOTE 7. INCOME TAXES

We account for income taxes using the asset and liability method. Under this method, deferred tax assets and liabilities are determined based on differences between financial reporting and tax basis of assets and liabilities and are measured using the enacted tax rates and laws that may be in effect when the differences are expected to reverse.  The Company periodically evaluates the likelihood of realization of deferred tax assets, and provides for a valuation allowance when necessary. With recent consistency in earnings, a strong earnings history of B.R. Johnson, Inc., a recent acquisition, and favorable projections, the Company has reversed its valuation allowance on deferred tax assets associated with activity beginning with the acquisition of B.R. Johnson, Inc., but exclusive of pre-acquisition losses that are subject to limitations under Internal Revenue Code Section 382.

The Company has an effective income tax rate of 9.3% for the nine-months ended September 30, 2017.  This effective tax rate is substantially lower than the federal statutory rate of 34% due to the reversal of a portion of the valuation allowance during the quarter.

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NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)

9 Months Ended

Sep. 30, 2017

Accounting Policies [Abstract]

Organization And Business Activities Policy [Policy Text Block]

Regional Brands Inc. (formerly 4net Software, Inc.) (“Regional Brands,” the “Company,” “we,” “our” and “us”) was incorporated under the laws of the State of Delaware in 1986. Regional Brands is a holding company formed to acquire regional companies with strong brand recognition, stable revenues and profitability. Regional Brands has been pursuing a business strategy whereby it seeks to engage in an acquisition, merger or other business combination transaction with undervalued businesses (each, a “Target Company”) with a history of operating revenues in markets that provide opportunities for growth. On November 1, 2016 (See Note 2) the Company's majority-owned subsidiary acquired substantially all of the assets (the “Acquisition”) of B.R. Johnson, Inc. (“BRJ Inc.”), a seller and distributor of windows, doors and related hardware as well as specialty products for use in commercial and residential buildings. After the acquisition of the business of BRJ Inc. by our majority-owned subsidiary, B.R. Johnson, LLC (“BRJ LLC”), we are currently focused on considering opportunities for growth of BRJ LLC through utilizing its balance sheet to provide capital for additional acquisitions of companies that would be complementary to BRJ LLC. Additionally, we may seek to acquire Target Companies that satisfy the following criteria: (1) established businesses with viable services or products; (2) an experienced and qualified management team; (3) opportunities for growth and/or expansion into other markets; (4) are accretive to earnings; (5) offer the opportunity to achieve and/or enhance profitability; and (6) increase shareholder value.

Basis of Presentation and Significant Accounting Policies [Text Block]

Basis of Presentation - The accompanying condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) for interim financial information. Accordingly, these statements do not include all of the information and footnotes required by U.S. GAAP. In the opinion of management, the accompanying condensed consolidated balance sheets and related condensed consolidated statements of operations and cash flows include all adjustments, consisting only of normal recurring items necessary for their fair presentation in accordance with U.S. GAAP. Interim results are not necessarily indicative of results expected for a full year. For further information regarding the Company’s accounting policies, please refer to the audited consolidated financial statements and footnotes for the year ended December 31, 2016 included in the Company’s annual report on Form 10-K filed with the Securities and Exchange Commission on March 31, 2017. The unaudited Condensed Statement of Operations and Statement of Cash Flows for the nine months ended September 30, 2016 of BRJ Inc., as predecessor to the Company, are included in this report as supplementary information.

Consolidation, Policy [Policy Text Block]

Principles of Consolidation - The consolidated financial statements include the accounts of Regional Brands Inc. and its majority-owned subsidiary, BRJ LLC. All intercompany balances and transactions have been eliminated in consolidation.

Use of Estimates, Policy [Policy Text Block]

Use of Estimates - The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect amounts reported in the financial statements and accompanying notes. Actual results could differ materially from those estimates and be based on events different from those assumptions. Future events and their effects cannot be predicted with certainty; estimating, therefore, requires the exercise of judgment. Thus, accounting estimates change as new events occur, as more experience is acquired or as additional information is obtained. We believe the most significant estimates and judgments are associated with revenue recognition for our customer contracts in process, including estimating costs and the recognition of unapproved change orders and claims.

Earnings Per Share, Policy [Policy Text Block]

Common Shares Issued and Earnings (Loss) Per Share - Common shares issued are recorded based on the value of the shares issued or consideration received, including cash, services rendered or other non-monetary assets, whichever is more readily determinable. The Company presents basic and diluted earnings (loss) per share. Basic earnings (loss) per share reflect the actual weighted average number of shares issued and outstanding during the period. Diluted earnings (loss) per share is computed including the number of additional shares that would have been outstanding if dilutive potential shares had been issued, such as those issuable upon exercise of outstanding stock options or conversion of convertible securities. In a loss period, the calculation for basic and diluted loss per share is considered to be the same, as the impact of the issuance of any potential common shares would be anti-dilutive. During the three and nine months ended September 30, 2017, since the exercise prices of the outstanding stock options were above the average market price of our common stock during the period, the outstanding stock options were considered anti-dilutive.

Fair Value of Financial Instruments, Policy [Policy Text Block]

Fair Value of Financial Instruments - Financial instruments include cash, accounts receivable, accounts payable, accrued expenses, and line of credit. Fair values approximate carrying values for these financial instruments and the line of credit is stated at the carrying value as the stated interest rate approximates market rates currently available to the Company.

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The Fair Value Measurement Topic of the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) establishes a three-tier fair value hierarchy which prioritizes the inputs used in measuring fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). These tiers include: 

⋅ Level 1, defined as observable inputs such as quoted prices for identical instruments in active markets;

⋅ Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable such as quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active; and

⋅ Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions, such as valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.

The Company’s valuation techniques used to measure the fair value of money market funds, certificate of deposits, and certain marketable equity securities were derived from quoted prices in active markets for identical assets or liabilities.

In accordance with the fair value accounting requirements, companies may choose to measure eligible financial instruments and certain other items at fair value. The Company has not elected the fair value option for any eligible financial instruments.

The table below presents the Company's assets and liabilities measured at fair value on a recurring basis as of December 31, 2016, aggregated by the level in the fair value hierarchy within which those measurements fall.

Assets and Liabilities Measured at Fair Value on a Recurring Basis at December 31, 2016:

Assets	Level 1		Level 2		Level 3		Balance at December 31, 2016
Marketable Equity Securities	$	952,208	$	—	$	—	$	952,208
Money Market Funds	$	3,492,895	$	—	$	—	$	3,492,895
Certificates of Deposit	$	1,256,216	$	—	$	—	$	1,256,216

The table below presents the Company's assets and liabilities measured at fair value on a recurring basis as of September 30, 2017, aggregated by the level in the fair value hierarchy within which those measurements fall.

Assets and Liabilities Measured at Fair Value on a Recurring Basis at September 30, 2017:

Assets	Level 1		Level 2		Level 3		Balance at September 30, 2017
Marketable Equity Securities	$	1,794,413	$	—	$	—	$	1,794,413
Money Market Funds	$	4,019,092	$	—	$	—	$	4,019,092

Fiscal Period, Policy [Policy Text Block]

Change in fiscal year end. On December 20, 2016, the Board of Directors of the Company approved a change in the Company’s fiscal year-end, moving from September 30 to December 31 of each year.

Comprehensive Income, Policy [Policy Text Block]

Comprehensive Income (Loss) - Comprehensive income (loss) is defined as the change in equity of the Company during a period from transactions and other events and circumstances from non-owner sources. It consists of net income (loss) and other income and losses affecting stockholders’ equity that, under U.S. GAAP, are excluded from net income (loss). The change in fair value of investments was the only item impacting other comprehensive income (loss) for the three and nine months ended September 30, 2017 and 2016.

1 for 1,000 stock split- On July 22, 2016, the Company filed a certificate of amendment (the “Amendment”) to the Company’s Certificate of Incorporation with the Delaware Secretary of State to effect a 1 for 1,000 reverse stock split (the “Reverse Split”) of the Company’s issued and outstanding Common Stock and to reduce the number of shares of Common Stock the Company is authorized to issue from 750,000,000 to 50,000,000 shares.  The Reverse Split became effective on July 26, 2016 (the “Effective Time”).  The Amendment, including the Reverse Split, was approved by the Board of Directors of the Company and the holders of a majority of the issued and outstanding shares of Common Stock by written consent in lieu of a meeting.

 

As a result of the Reverse Split, at the Effective Time, every 1,000 shares of the Company’s issued and outstanding Common Stock were automatically combined and reclassified into one (1) share of Common Stock.  The Company rounded up any fractional shares, on account of the Reverse Split, to the nearest whole share of Common Stock. The Company has prepared the financial, share and per share information included in this quarterly report on a post-split basis.

New Accounting Pronouncements, Policy [Policy Text Block]

Recent Accounting Pronouncements –

FASB ASU 2015-11, Inventory (Topic 330): “Simplifying the Measurement of Inventory.” This ASU requires inventory within the scope of the guidance to be measured at the lower of cost or net realizable value. FASB ASU 2015-11 is effective for annual and interim periods beginning after December 15, 2016, with prospective application required. The Company adopted this guidance during the nine months ended September 30, 2017 and it has not had a material impact on the Company’s consolidated financial statements.

In May 2014, the FASB issued ASU 2014-9 “Revenue from Contracts with Customers” (“ASU 2014-9”). The guidance requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. Subsequently, the FASB has issued the following standards related to ASU 2014-09: ASU No. 2016-08, “Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations” (“ASU 2016-08”); ASU No. 2016-10, “Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing” (“ASU 2016-10”); and ASU No. 2016-12, “Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients” (“ASU 2016-12”). The Company must adopt ASU 2016-08, ASU 2016-10 and ASU 2016-12 with ASU 2014-09 (collectively, the “new revenue standards”). The new revenue standards will replace most existing revenue recognition guidance in U.S. GAAP when they become effective and permit the use of either a retrospective or cumulative effect transition method. We are currently evaluating the alternative methods of adoption and the effect of this guidance on our consolidated financial statements and related disclosures. We are also in the process of identifying material contracts and revenue streams that are potentially impacted by this guidance. This guidance is effective January 1, 2018 using a full or modified retrospective approach with early adoption permitted January 1, 2017.

In March 2016, the FASB issued ASU 2016-09, “Compensation — Stock Compensation: Improvements to Employee Share-Based Payment Accounting.” The standard is intended to simplify several areas of accounting for share-based compensation arrangements, including the income tax impact, classification on the statement of cash flows and forfeitures. This pronouncement is effective for fiscal years beginning after December 15, 2016, and interim periods within those years. The Company adopted this guidance during the nine months ended September 30, 2017 and it has not had a material impact on the Company’s consolidated financial statements.

In February 2016, the FASB issued an accounting standard update ASU 2016-02, “Leases" to replace existing lease accounting guidance. This pronouncement is intended to provide enhanced transparency and comparability by requiring lessees to record right-of-use assets and corresponding lease liabilities on the balance sheet for most leases. Expenses associated with leases will continue to be recognized in a manner similar to current accounting guidance. This pronouncement is effective for annual and interim periods beginning after December 15, 2018, with early adoption permitted. The adoption is required to be applied on a modified retrospective basis for each prior reporting period presented. The Company has not yet determined the effect that the adoption of this pronouncement may have on its financial position and/or results of operations.

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NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables)

9 Months Ended

Sep. 30, 2017

Accounting Policies [Abstract]

Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis [Table Text Block]

Assets and Liabilities Measured at Fair Value on a Recurring Basis at December 31, 2016:

Assets	Level 1		Level 2		Level 3		Balance at December 31, 2016
Marketable Equity Securities	$	952,208	$	—	$	—	$	952,208
Money Market Funds	$	3,492,895	$	—	$	—	$	3,492,895
Certificates of Deposit	$	1,256,216	$	—	$	—	$	1,256,216

Assets and Liabilities Measured at Fair Value on a Recurring Basis at September 30, 2017:

Assets	Level 1		Level 2		Level 3		Balance at September 30, 2017
Marketable Equity Securities	$	1,794,413	$	—	$	—	$	1,794,413
Money Market Funds	$	4,019,092	$	—	$	—	$	4,019,092

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ACQUISITION OF B.R. JOHNSON, INC. (Tables)

9 Months Ended

Sep. 30, 2017

Business Combinations [Abstract]

Business Acquisition, Pro Forma Information [Table Text Block]

Unaudited pro forma results for the three and nine months ended September 30, 2016:

	Three		Nine
	months		months
	ended		ended
	September		September
	30, 2016		30, 2016
Net sales	$	8,422,123	$	26,257,787
Gross profit		2,721,585		7,780,138
Amortization of intangibles		729,167		1,416,667
Net income to common shareholders	$	119,164	$	558,546
Earnings per common share-basic and diluted	$	0.13	$	0.62

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CONTRACTS IN PROCESS (Tables)

9 Months Ended

Sep. 30, 2017

Contractors [Abstract]

Schedule For Uncompleted Contract [Table Text Block]

The following is information with respect to uncompleted contracts:

	September 30,		December 31,
	2017		2016
Costs incurred on uncompleted contracts	$	11,486,314	$	8,246,796
Estimated earnings		3,912,693		2,273,388
		15,399,007		10,520,184
Less: billings to date		(14,743,564)		(10,064,806)
	$	655,443	$	455,378
Included on the balance sheet as follows:
Under current assets
Costs and estimated earnings in excess of billings on uncompleted contracts	$	967,599	$	894,261
Under current liabilities
Billings in excess of costs and estimated earnings on uncompleted contracts		(312,156)		(438,883)
	$	655,443	$	455,378

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NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($)	Sep. 30, 2017	Dec. 31, 2016
Marketable Equity Securities [Member]
Assets, Fair Value Disclosure	$ 1,794,413	$ 952,208
Marketable Equity Securities [Member] | Fair Value, Inputs, Level 1 [Member]
Assets, Fair Value Disclosure	1,794,413	952,208
Marketable Equity Securities [Member] | Fair Value, Inputs, Level 2 [Member]
Assets, Fair Value Disclosure	0	0
Marketable Equity Securities [Member] | Fair Value, Inputs, Level 3 [Member]
Assets, Fair Value Disclosure	0	0
Money Market Funds [Member]
Assets, Fair Value Disclosure	4,019,092	3,492,895
Money Market Funds [Member] | Fair Value, Inputs, Level 1 [Member]
Assets, Fair Value Disclosure	4,019,092	3,492,895
Money Market Funds [Member] | Fair Value, Inputs, Level 2 [Member]
Assets, Fair Value Disclosure	0	0
Money Market Funds [Member] | Fair Value, Inputs, Level 3 [Member]
Assets, Fair Value Disclosure	$ 0	0
Certificates of Deposit [Member]
Assets, Fair Value Disclosure		1,256,216
Certificates of Deposit [Member] | Fair Value, Inputs, Level 1 [Member]
Assets, Fair Value Disclosure		1,256,216
Certificates of Deposit [Member] | Fair Value, Inputs, Level 2 [Member]
Assets, Fair Value Disclosure		0
Certificates of Deposit [Member] | Fair Value, Inputs, Level 3 [Member]
Assets, Fair Value Disclosure		$ 0

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NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Textual) - shares	9 Months Ended
	Sep. 30, 2017	Mar. 02, 2017	Dec. 31, 2016	Jul. 22, 2016
Summary Of Significant Accounting Policies [Line Items]
Common Stock, Shares Authorized	3,000,000	50,000,000	3,000,000
Stockholders' Equity Note, Changes in Capital Structure, Retroactive Impact	As a result of the Reverse Split, at the Effective Time, every 1,000 shares of the Companys issued and outstanding Common Stock were automatically combined and reclassified into one (1) share of Common Stock.
Stockholders' Equity, Reverse Stock Split	effect a 1 for 1,000
Maximum [Member]
Summary Of Significant Accounting Policies [Line Items]
Common Stock, Shares Authorized				750,000,000
Minimum [Member]
Summary Of Significant Accounting Policies [Line Items]
Common Stock, Shares Authorized				50,000,000

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ACQUISITION OF B.R. JOHNSON, INC. (Details) - USD ($)	3 Months Ended	9 Months Ended
	Sep. 30, 2016	Sep. 30, 2016
Net sales	$ 8,422,123	$ 26,257,787
Gross profit	2,721,585	7,780,138
Amortization of intangibles	729,167	1,416,667
Net income to common shareholders	$ 119,164	$ 558,546
Earnings per common share-basic and diluted	$ 0.13	$ 0.62

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ACQUISITION OF B.R. JOHNSON, INC (Details Textual) - USD ($)		6 Months Ended
	Nov. 01, 2016	Jun. 30, 2017
Business Acquisition [Line Items]
Business Combination, Consideration Transferred	$ 16,500,000
Business Combination, Consideration Transferred, Other		$ 1,100,000
Private Placement [Member]
Business Acquisition [Line Items]
Stock Issued During Period, Shares, New Issues	894,393
Stock Issued During Period, Value, New Issues	$ 12,074,306
Common Stock [Member]
Business Acquisition [Line Items]
Equity Method Investment, Ownership Percentage	76.17%
Preferred Stock [Member]
Business Acquisition [Line Items]
Equity Method Investment, Ownership Percentage	95.22%
Lorraine Capital, LLC [Member] | Common Stock [Member]
Business Acquisition [Line Items]
Equity Method Investment, Ownership Percentage	20.00%
Regional Brands Inc [Member] | Common Stock [Member]
Business Acquisition [Line Items]
Equity Method Investment, Ownership Percentage	3.83%
BRJ Acquisition Partners, LLC [Member] | Preferred Stock [Member]
Business Acquisition [Line Items]
Equity Method Investment, Ownership Percentage	4.78%
B.R. Johnson, Inc. [Member]
Business Acquisition [Line Items]
Business Combination, Consideration Transferred	$ 10,950,000
Business Combination, Consideration Transferred, Liabilities Incurred	2,500,000
Business Combination, Consideration Transferred, Equity Interests Issued and Issuable	$ 3,810,000
B.R. Johnson, Inc. [Member] | Subordinated Debt [Member]
Business Acquisition [Line Items]
Debt Instrument, Interest Rate, Stated Percentage	5.25%
Debt Instrument, Periodic Payment, Principal	$ 62,500
Debt Instrument, Maturity Date	Nov. 30, 2021
B.R. Johnson, Inc. [Member] | Senior Subordinated Notes [Member]
Business Acquisition [Line Items]
Business Combination, Consideration Transferred, Liabilities Incurred	$ 7,140,000

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CONTRACTS IN PROCESS (Details) - USD ($)	9 Months Ended	12 Months Ended
	Sep. 30, 2017	Dec. 31, 2016
Costs incurred on uncompleted contracts	$ 11,486,314	$ 8,246,796
Estimated earnings	3,912,693	2,273,388
Contract In Process, Total Cost And Estimated Earning	15,399,007	10,520,184
Less: billings to date	(14,743,564)	(10,064,806)
Contracted Balance Billing Net	655,443	455,378
Under current assets
Costs and estimated earnings in excess of billings on uncompleted contracts	967,599	894,261
Under current liabilities
Billings in excess of costs and estimated earnings on uncompleted contracts	(312,156)	(438,883)
Contracted Balance Billing Net	$ 655,443	$ 455,378

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DEBT (Details Textual) - USD ($)	1 Months Ended	9 Months Ended
	Nov. 30, 2016	Sep. 30, 2017
Line of Credit Facility, Interest Rate Description		Interest under the Credit Facility is payable monthly, starting on November 30, 2016, and accrues pursuant to the “base rate” of interest, which is equal to the highest of (a) KeyBank, N.A.’s prime rate, (b) one-half of one percent (0.50%) in excess of the Federal Funds Effective Rate of the Federal Reserve Bank of New York, and (c) one hundred (100) basis points in excess of the London Interbank Offered Rate for loans in Eurodollars with an interest period of one month, plus any applicable margin.
Letter of Credit [Member]
Line of Credit Facility, Maximum Borrowing Capacity	$ 500,000
Proceeds from Lines of Credit	1,900,000
Credit Agreement [Member]
Line of Credit Facility, Maximum Borrowing Capacity	$ 6,000,000
Line of Credit Facility, Interest Rate at Period End		3.69%
Long-term Line of Credit		$ 1,592,757
Letters of Credit Outstanding, Amount		$ 250,000

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STOCKHOLDERS’ EQUITY (Details Textual) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016	Jun. 15, 2017	Mar. 02, 2017	Dec. 31, 2016
Class of Stock [Line Items]
Common Stock, Shares Authorized	3,000,000		3,000,000			50,000,000	3,000,000
Common Stock, Par Or Stated Value Per Share	$ 0.00001		$ 0.00001				$ 0.00001
Preferred Stock, Shares Authorized	50,000		50,000			5,000,000	50,000
Preferred Stock, Par Or Stated Value Per Share	$ 0.01		$ 0.01				$ 0.01
Share-based Compensation	$ 15,181	$ 23,212	$ 46,181	$ 23,212
Amended Restated Equity Incentive Plan [Member]
Class of Stock [Line Items]
Common Stock, Par Or Stated Value Per Share					$ 0.00001
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized					130,000

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RELATED PARTY TRANSACTIONS (Details Textual) - USD ($)			3 Months Ended	9 Months Ended
	Nov. 01, 2016	Apr. 08, 2016	Sep. 30, 2017	Sep. 30, 2017	Mar. 31, 2016
Related Party Transaction [Line Items]
Operating Leases, Rent Expense		$ 50
Related party transaction Management fee percentage		0.14323%
Management Fee Income			$ 11,850	$ 35,100
Payment for Management Fee			$ 400,000	$ 1,298,000
Management [Member]
Related Party Transaction [Line Items]
Related Party Transaction, Rate				10.00%
Notes Payable Related Parties Classified Current Excluding Interest					$ 186,196
Accrued Interest Related Party Current					$ 63,804
Mr. Bronson [Member]
Related Party Transaction [Line Items]
Debt Conversion, Converted Instrument, Shares Issued		18,522
Lorraine Capital, LLC [Member]
Related Party Transaction [Line Items]
Management Fee, Description	an amount equal to the greater of (i) $75,000 or (ii) five percent (5%) of the annual EBITDA (as defined in the BRJ MSA) of BRJ LLC, payable quarterly in arrears and subject to certain adjustments and offsets set forth in the BRJ MSA. The BRJ MSA may be terminated by BRJ LLC, Lorraine Capital, LLC or Regional Brands at any time upon 60 days prior written notice and also terminates upon the consummation of a sale of BRJ LLC. For the nine months ended September 30, 2017, the fees payable to Lorraine Capital LLC were approximately $144,000
Airways Door Services [Member]
Related Party Transaction [Line Items]
Business Acquisition, Percentage of Voting Interests Acquired	57.00%

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INCOME TAXES (Details Textual)	9 Months Ended
	Sep. 30, 2017
Effective Income Tax Rate Reconciliation, Percent	9.30%
Effective Income Tax Rate Reconciliation, at Federal Statutory Income Tax Rate, Percent	34.00%