American Heritage International Inc.

What they do

The company sells disposable electronic cigarettes under its American Heritage brand. It acquired intellectual property from American Heritage LLC in exchange for Series A Convertible Preferred Stock. It has taken delivery of its first order of electronic cigarettes and is fulfilling sales orders.

Revenue drivers

• Disposable electronic cigarettes — The company's primary product line, marketed as an alternative to tobacco cigarettes. First order delivered; sales orders being fulfilled.

Recent performance

Revenue was $42,599 in the quarter ended September 30, 2014, up from zero in the prior-year quarter. For full-year 2013, the company reported a net loss of $168,761 and operating cash flow of -$120,530. Total assets were $76,925 as of December 31, 2014, with negative shareholder equity of -$46,346. Cash and equivalents were $91,579 as of September 30, 2014.

Strategy

Management states it intends to capitalize on the rapid growth of the electronic cigarette industry and become a market leader. The company has launched its American Heritage brand disposable electronic cigarettes and is focusing on fulfilling sales orders. It aims to generate sufficient cash flow from operations and efficiently finance receivables from customers/distributors.

Risks

• Going concern uncertainty — The company has negative working capital and accumulated losses, raising doubt about its ability to continue as a going concern.
• Competition from larger players — The company faces competition from much larger, established companies in the electronic cigarette industry, which could limit market share.
• Regulatory exposure — The electronic cigarette industry is subject to evolving regulations, and the company's compliance could be costly or restrict its marketing.
• Key personnel dependence — The company's success depends on attracting and retaining key personnel; loss of such individuals could harm operations.

Outlook

Management highlights the need to successfully execute its 2014 operating plan and launch its American Heritage brand. It expects to continue using cash and working capital to finance rapid growth. The company cautions that actual results could differ materially from forward-looking statements.