UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON,Washington, D.C. 20549

FormFORM 10-Q

(Mark One)

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

For the quarterly period ended March 31, 2016.June 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 No. —Number: 33-131110-NY

Regional Brands, Inc.

(Exact Name of Small Business Issuer as Specified in its Charter)

c/o Ancora Advisors LLC 6060 Parkland Boulevard, Cleveland, Ohio 44124 

(Address of Principal Executive Office) (Zip Code)

(216) 825-4000

(Registrant's telephone number including area code)

4Net Software, Inc.

31248 Oak Crest Drive, Suite 110, Westlake Village, California 91361

(Former Name or Former Address, if Changed Since Last Report)

Indicate by check mark whether the registrant: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 pastpreceding 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.

x Yes¨ No Nox

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¨ Nox Yes¨ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or 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).

x Yes¨    No   Nox

AsThe number of May 12, 2016,shares outstanding of the issuer had 379,701,697 outstanding sharesregistrant’s Common Stock, $0.00001 par value per share, was 1,274,603 as of common stock.August 4, 2017.

Regional Brands Inc.

TABLE OF CONTENTSINDEX

REGIONAL BRANDS INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

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

PART I - FINANCIAL INFORMATION

Item 1.            Financial Statements

REGIONAL BRANDS, INC.

(Formerly 4net Software, Inc.)

CONDENSED BALANCE SHEETS

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

(Unaudited)

See

The accompanying notes to these unauditedare an integral part of the condensed consolidated financial statements.statements

REGIONAL BRANDS, INC.

(Formerly 4net Software, Inc.)

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONSCASH FLOWS

(Unaudited)

See

The accompanying notes to theseunauditedare an integral part of the condensed consolidated financial statements.statements

REGIONAL BRANDS INC.

(Formerly 4net Software,Regional Brands Inc.)

CONDENSED STATEMENTS OF CASH FLOWS

SIX MONTHS ENDED MARCH 31, 2016 AND 2015

(Unaudited)

See accompanying notes to these unaudited condensed financial statements.

REGIONAL BRANDS, INC.

(Formerly 4net Software, Inc.)

NOTES TO UNAUDITEDTHE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 1 – DESCRIPTION1. NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

ORGANIZATION AND BUSINESS ACTIVITY – Regional Brands Inc. (Formerly(formerly 4net Software, Inc.), (“Regional Brands,” the “Company,” “we,” “our” and “us”) was incorporated under the laws of the State of Delaware in 1986. During the year ended September 30, 2015Regional Brands is a holding company formed to acquire regional companies with strong brand recognition, stable revenues and the six months ended March 31, 2016, the Company focused its efforts onprofitability. 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 growth by acquiring businesses with establishedoperating 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 earnings, whichdistributor of windows, doors and related hardware as well as specialty products for use in commercial and residential buildings. After the Company believes are undervalued. The Company utilized several criteria to evaluate prospective acquisitions including whetheracquisition 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 acquiredcomplementary to BRJ LLC. Additionally, we may seek to acquire Target Companies that satisfy the following criteria: (1) is an established businessbusinesses with viable services and/or products,products; (2) has an experienced and qualified management team,team; (3) has roomopportunities for growth and/or expansion into other markets,markets; (4) isare accretive to earnings,earnings; (5) offersoffer the opportunity to achieve and/or enhance profitabilityprofitability; and (6) increases stockholderincrease 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 six months ended June 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 Issuedand 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 six months ended June 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:

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:

The table below presents the Company's assets and liabilities measured at fair value on a recurring basis as of June 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 June 30, 2017:

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 six months ended June 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 six months ended June 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 six months ended June 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.

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 was 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 six months ended June 30, 2016:

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:

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.

The effective rate at June 30, 2017 was 3.69%. The aggregate borrowing outstanding under the Credit Agreement at June 30, 2017 was $2,074,871 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 six months ended June 30, 2017 of $15,397 and $31,000, respectively ($0 and $0, respectively 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 and closed a Securities PurchaseManagement Services Agreement (the “SPA”“MSA”) amongwith 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 Merlin Partners LP, Ancora Catalyst Fund LP, and Steven N. Bronson (collectivelycash equivalents) as shown on the “Purchasers”), wherebyCompany’s balance sheet as of the Company soldend of each fiscal quarter of the Company. The management fee with respect to the Purchasers the aggregate amount of 370,440,680 shares of common stock, par value $0.00001, for the aggregate purchase price of $5,000,000. The transactions contemplated by the SPA resulted in a change of controleach fiscal quarter of the Company from Steven N. Bronson to Merlin Partners LP, which purchased 240,786,442 shares of Common Stockis paid no later than 10 days following the issuance of the CompanyCompany’s financial statements for such fiscal quarter, and in any event no later than 60 days following the aggregate purchase priceend of $3,250,000.00, andeach fiscal quarter. For the six months ended June 30, 2017, Ancora Catalyst Fund LP, which purchased 92,610,170 shares of Common StockAdvisors, LLC agreed to waive payment of the Company formanagement fee, but reserves the aggregate purchase price of $1,250,000.00. As a result of Merlin Partners LP’s and Ancora Catalyst Fund LP’s purchase of Common Stock from the Company pursuantright to the SPA, Merlin Partners LP and Ancora Catalyst Fund LP collectively beneficially own 87.8%institute payment of the total issued and outstanding shares of Common Stock of the Company.management fee at its discretion.

The accompanying condensed interim financial statements of Regional Brands Inc. (the "Company") are unaudited. In the opinion of management, the interim data includes all normally recurring adjustments, necessary for a fair presentation of the results for the interim period. The results of operations for the three months and six months ended March 31, 2016 are not necessarily indicative of the operating results for the entire year.

The unaudited condensed interim financial statements included herein are prepared pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosure normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America has been condensed or omitted pursuant to such rules and regulations. In the opinion of management, the disclosures made are adequate to make the information not misleading. These unaudited condensed interim financial statements should be read in conjunction with the financial statements and notes included in the Company's Form 10-K for the year ended September 30, 2015.

USE OF ESTIMATES - The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

CASH – The Company has cash balance of $351 and $1,495 as of March 31, 2016 and September 30, 2015. At March 31, 2016, the Company had no cash equivalents.

REGIONAL BRANDS INC.

NOTES TO CONDENSED INTERIM FINANCIAL STATEMENTS

NOTE 2 - CONTROL

As of March 31, 2016 Mr. Bronson beneficially owned 5,800,210 shares of the Company's common stock. Mr. Bronson's beneficial ownership represented approximately 62.65% of the Company's issued and outstanding shares of common stock. Accordingly, Mr. Bronson has effective control of the Company. In the election of directors, stockholders are not entitled to cumulate their votes for nominees. Accordingly, as a practical matter, Mr. Bronson may be able to elect all of the Company's directors and otherwise direct the affairs of the Company. Effective April 7, 2016, the Company changed its name from 4Net Software, Inc. to Regional Brands Inc. Effective as of April 8, 2016, there was a change of control of the Company from Steven N. Bronson to Merlin Partners LP and Ancora Catalyst Fund LP, as more fully described in Note 5 below.

NOTE 3 - DUE TO RELATED PARTY

Since February 3, 2009, the Company'sCompany’s former president and principal executive officer hashad loaned the Company money to fund working capital needs to pay operating expenses. The loans arewere repayable upon demand and accrueaccrued 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 havehad accrued interest of $65,464$63,804 through March 31, 2016. On April 8, 2016, the Company issued to Mr. Bronson 18,522,034its former president and principal executive officer 18,522 shares of the Company’s Common Stock in full satisfaction for Mr. Bronson’shis loans to the Company.

Note 4 - New Accounting Standards

In August 2014, the FASB issued ASU No. 2014-15 ("ASU 2014-15"), Presentation of Financial Statements-Going Concern (Subtopic 205-40) – Disclosure of Uncertainties about an Entity's Ability to Continue as a Going Concern. ASU 2014-15 requires a Company's management to evaluate, at each reporting period, whether there are conditions or events that raise substantial doubt about the entity's ability to continue as a going concern within one year after the date the financial statements are issued and provide related disclosures. ASU 2014-15 is effective for the annual period ending after December 15, 2016, and for annual periods and interim periods thereafter. The Company is currently evaluating the impact of the adoption of ASU 2014-15 on its consolidated financial statements.

Note 5 – Subsequent Event

On April 8, 2016, the Company entered into and closed a Securities Purchase Agreement (the “SPA”) among the Company and Merlin Partners LP, Ancora Catalyst Fund LP, and Steven N. Bronson (collectively the “Purchasers”), whereby the Company sold to the Purchasers the aggregate amount of 370,440,680 shares of common stock, par value $0.00001 (the “Shares” or the “Common Stock”), for the aggregate purchase price of $5,000,000 (including the cancellation of all indebtedness that had been loaned to the Company by Steven N. Bronson to fund operating expenses). In connection with the SPA, the Company changed its name from 4Net Software, Inc. to Regional Brands Inc. The transactions contemplated by the SPA also resulted in a change of control of the Company from Steven N. Bronson to Merlin Partners LP, which purchased 240,786,442 shares of Common Stock of the Company for the aggregate purchase price of $3,250,000.00, and Ancora Catalyst Fund LP, which purchased 92,610,170 shares of Common Stock of the Company for the aggregate purchase price of $1,250,000.00. As a result of Merlin Partners LP’s and Ancora Catalyst Fund LP’s purchase of Common Stock from the Company pursuant to the SPA, Merlin Partners LP and Ancora Catalyst Fund LP collectively beneficially own 87.8% of the total issued and outstanding shares of Common Stock of the Company.

Effective May 12, 2016, the Company relocated its principal offices to c/o Ancora Advisors LLC, 6060 Parkland Boulevard, Cleveland, OH 44124. The Company pays no rent for the use of the offices.

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 monthly fee of $50 per month paid to BKF Capital Group, Inc. Steven N. Bronson, the Company'sThe Company’s former Chairmanpresident and CEO,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.

Item 2. Management's DiscussionOn 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 Analysisreporting services to us in exchange for an annual management fee in an amount equal to the greater of (i) $75,000 or Plan(ii) five percent (5%) of Operation.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 six months ended June 30, 2017, the fees payable to Lorraine Capital LLC were approximately $98,000. In addition, during the three and six months ended June 30, 2017 approximately $60,000, and $120,000, respectively, was paid to members of Lorraine Capital, LLC as compensation for acting in a management function.

Forward Looking Statements DisclosureBRJ 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 $430,000 and $898,000, respectively, during the three months and six months ended June 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 $11,950 and $23,250, respectively, during the three months and six months ended June 30, 2017.

This reportNOTE 7. INCOME TAXES

The Company’s amortization expenses during the six months ended June 30, 2017 exceed the amounts currently deductible for tax purposes. Therefore, the Company has current tax expense during the six months ended June 30, 2017.

Due to the uncertainty as to the Company’s ability to generate sufficient taxable income in the future and utilize their deductible temporary differences and the net operating loss carryforwards (NOL) before they expire, and due to the limitation on Form 10-Q contains, in additionthe availability of the Company's NOL due to historical information, Forward-lookingownership changes, the Company has recorded a valuation allowance to offset the NOLs, and the total net deferred tax assets, as well.

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 Section 27Athe Private Securities Litigation Reform Act of 1995 (the “1995 Reform Act”).   The Company desires to avail itself of certain “safe harbor” provisions of the Securities1995 Reform Act of 1933 and Section 21Eis 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 Securities Exchange Act of 1934 (the "Exchange Act"). You can identify thesedate made. These forward-looking statements when you see words such as "expect," "anticipate", "estimate," "may," "plans," "believe," and other similar expressions. These statements are not guarantees of future performance and are subject to certainvarious risks, uncertainties and assumptionsfactors that are difficultcould cause actual results to predict. Actual results could differ materially from those projectedthe results anticipated in the forward-looking statements. Factors that could cause such a difference include, but are not limited to,statements, including, without limitation, those discussed under Part I, Item 1A “Risk Factors” in the section entitled "Factors Affecting Operating Results and Market Price of Stock," contained in the Company'sour Annual Report on Form 10-K for the yeartransition period ended September 30, 2015. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. We undertake no obligation to update any forward -looking statements.December 31, 2016, and those described herein.

The following discussion and analysis provides information whichthat our management of Regional Brands Inc. (the "Company") believes to beis relevant to an assessment and understanding of the Company'sour results of operations and financial condition. This discussioncondition and should be read togetherin conjunction with the Company's financial statements and the notes to financial statements, which are includedfootnotes that appear elsewhere in this report as well as the Company's Annual Report on Form 10-K for the year ended September 30, 2015 which is incorporated herein by reference.report.

General

Regional Brands’ Business StrategyBrands 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.

The CompanyNature 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 the Companyiswe have been seeking to engage in investment,an acquisition, merger or other businesscombination transactions (each, a "Transaction")business combination transaction with undervalued businesses (a"Target Company"(each, a “Target Company”) with a history of operating revenues in markets that provideopportunitiesprovide opportunities for growth. The CompanyAfter the acquisition of the business of BRJ Inc. by Regional Brands’ majority-owned subsidiary, BRJ LLC, Regional Brands is currently engaged in identifying,investigating and, if investigation warrants, entering into a Transaction with one or morefocused 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 will enhancesatisfy the Company's revenues and increaseshareholder value. The Company utilizes several criteria to evaluate TargetCompanies including whether the Target Company:following criteria: (1) is an established businesswithbusinesses with viable services or products,products; (2) has an experienced and qualifiedmanagement team,qualified management team; (3) has opportunities for growth and/or expansion into othermarkets,other markets; (4) isare accretive to earnings,earnings; (5) offersoffer the opportunity to achieveand/achieve and/or enhance profitability,profitability; and (6) increasesincrease 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 some cases, managementaddition, 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 Company will haveremaining preferred and common membership interests and loaned to BRJ LLC $358,696 on the authoritysame terms as the Regional Brands senior subordinated loan pursuant to effectTransactions without submitting the proposala participation agreement. The senior subordinated loan is subordinated to the stockholders for theirconsideration. In some instances, however, a proposed Transaction may besubmitted to the stockholders for their consideration, either voluntarily by theBoard of Directors to seek the stockholders' advice and consent, or because of arequirement of applicable law to do so.

Management believes that the successful implementation of the Company'sbusiness strategy will allow the Company to increase revenues and earningsand achieve profitability. There can be no assurances, however, that the Companywill successfully complete any additional acquisitions or investments or that the Company will achieve profitability.BRJ LLC’s Credit Facility.

ResultsBRJ LLC, on November 1, 2016, acquired the business of OperationsBRJ 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 six months ended March 31,June 30, 2017 and June 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 2015,six months ended June 30, 2017, the Company had no revenue. Operating expensesnet sales of $11,151,952 and $19,898,301, 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 March 31, 2016 and 2015 were $4,105 and $6,950, respectively. Interest expenseJune 30, 2017 increased by $945,969 or 9.3% to $4,558$11,151,952 from $3,963 due to the increase in the outstanding loan balance.

$10,205,983. For the six months ended March 31, 2016 and 2015,June 30, 2017, on a pro forma basis, the Company’s net sales increased by $2,062,637 or 11.6% to $19,898,301 from $17,835,664. The increases in 2017 were 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 no revenue. Operating expensescost of sales of $7,723,645 and $13,974,339, respectively, during the three and six months ended June 30, 2017 due to inclusion of BRJ LLC's operations. On a pro forma basis, cost of sales for the three months ended June 30, 2017 increased by 4.7% or $349,875. For the six months ended March 31, 2016 and 2015June 30, 2017, on a pro forma basis, cost of sales increased by 10.1% or $1,287,228. The increases in cost of sales in 2017 were $10,410 and $10,900, respectively. Interest expense increased to $9,126 from $7,695 due to higher net sales in 2017. As a percentage of net sales, pro forma cost of sales during the three and six months ended June 30, 2017 were 69.3% and 70.2%, respectively, compared to 72.2% and 71.1%, respectively, in 2016.

Selling: As of result of the inclusion of BRJ LLC's operations during the three and six months ended June 30, 2017, the Company had selling expenses of $1,221,981 and $2,321,745, respectively. There were no selling expenses during the three and six months ended June 30, 2016. On a pro forma basis, the selling expenses during the three months ended June 30, 2017 were $1,221,981 compared to $992,542 in 2016. For the six months ended June 30, 2017, on a pro forma basis, the selling expenses increased from $2,016,740 to $2,321,745. The increases in selling expenses in 2017 were due to additional compensation costs arising from increased net sales.

General and administrative:General and administrative expensesincreased by $972,283 from $54,180 in the three months ended June 30, 2016 to $1,026,463 during the three months ended June 30, 2017. $939,032 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 outstanding loan balance.six months ended June 30, 2017, the Company’s general and administrative expenses increased by $1,911,041. $1,779,427 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. On a pro forma basis, the general and administrative expenses for BRJ LLC’s operations, during the three and six months ended June 30, 2017 were, $939,032 and $1,779,427, respectively, compared to $766,420 and $1,397,875, respectively, in 2016.

Amortization of intangible assets:Amortization of intangibles arising from the BRJ Inc. acquisition amounted to $429,167 and $1,116,667, respectively, during the three and six months ended June 30, 2017.

Interest Expense: The interest expense during the three and six months ended June 30, 2017 increased by $58,479 and $118,223, 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 June 30, 2017 increased by $395,552 to $355,486 compared to a net loss of $40,066 incurred during the three months ended June 30, 2016. For the six months ended June 30, 2017, net income increased by $76,518 to $27,789 compared to a loss of $48,729 during the six months ended June 30, 2016. During the three months ended June 30, 2017, we had an unrealized loss on investments of $244 resulting in comprehensive income of $322,579 to common stockholders, after an income of $32,663 to noncontrolling interest. During the six months ended June 30, 2017, we had an unrealized loss on investments of $1,476 resulting in comprehensive income of $7,616 to common stockholders, after an income of $18,697 to noncontrolling interest.

Liquidity and Capital Resources

At June 30, 2017, we had working capital of $10,321,900 compared to working capital of approximately $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 six months ended March 31,June 30, 2017, our operating activities provided cash of approximately $1,583,000 compared to approximately $42,000 used during the six months ended June 30, 2016.

During the six months ended June 30, 2017, our operations, after adjusting for non-cash items, generated approximately $1,243,000 of cash. Changes in working capital items provided approximately $340,000 of cash during the six months ended June 30, 2017. During the six months ended June 30, 2016, our operations used approximately $40,000 of cash, and working capital items used approximately $2,000 of cash.

During the six months ended June 30, 2017, the Company satisfied itspaid approximately $1.1 million in settlement of working capital needs fromto the seller of BRJ Inc. and purchased short term investments for approximately $752,000.

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 at June 30, 2017 was 3.69%. The aggregate borrowings outstanding under the Credit Facility at June 30, 2017 was $2,074,871 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.

Based on current plans, management anticipates that the cash on hand, the expected cash flows from our majority-owned subsidiary BRJ LLC, and the loans extendedavailability under the Credit Facility will satisfy our capital requirements and fund our operations for 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 Company's former presidentlast two years.

Critical Accounting Policies

The preparation of financial statements and principal executive officerrelated disclosures in conformity with U.S. GAAP requires management to enablemake judgments, assumptions and estimates that affect the Company to pay its expenses. Asamounts reported in our financial statements and accompanying notes.  The financial statements as of MarchDecember 31, 2016 describe the Company had cash balancesignificant accounting policies and methods used in the preparation of $351. The Company will needthe 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 fundsinformation is obtained.  Critical accounting policies are impacted significantly by judgments, assumptions and estimates used in order to satisfy itsthe preparation of our financial obligations and to finance any transaction or acquisition by the Company. Therestatements. 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 assurances thatmaterial changes to such critical accounting policies as of the Company will be able to obtain additional funds if and when needed.Quarterly Report on Form 10-Q for the period ended June 30, 2017.

ITEM 3 – QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable.

Item 4. Controls and ProceduresITEM 4 - CONTROLS AND PROCEDURES

DisclosureWe maintain disclosure controls and procedures are controls and other procedures that are designed to provide reasonable assurancesensure that information required to be disclosed by the Company in its periodicour reports filed or submitted by the Company 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 Securities and Exchange Commission'sSEC’s rules and forms. Disclosure controlsforms, and procedures include, without limitation, controls and procedures designed to provide reasonable assurances that such information required to be disclosed by the Company in its periodic reports that are filed under the Exchange Act is accumulated and communicated to our Principal Executive Officer,management, including our principal executive and financial officer, as appropriate, to allow timely decisions regarding required disclosure.

Evaluation Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of disclosureachieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

AsOur principal executive and financial officer, after evaluating the effectiveness of the Company’s “disclosure controls and procedures” (as defined in Exchange Act Rules 13a-15(e) or 15d-15(e)) as of the end of the period covered by this report, the Company carried out an evaluation, under the supervision and with the participation of management includingconcluded that our Principal Executive Officer and Principal Financial Officer, of the effectiveness of the design and operation of the Company's disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act). Based on the evaluation, the Company's Principal Executive Officer and Principal Financial Officers have concluded that the Company's disclosure controls and procedures are effective at the reasonable assurance level.were effective.

Changes in internal controls over financial reporting.Internal Control Over Financial Reporting

There werewas no changeschange in the Company'sour internal controlscontrol over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) during the three months ended June 30, 2017 that havehas materially affected, or areis reasonably likely to materially affect, the Company'sour internal control over financial reporting.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings.Proceedings.

During the quarter ended March 31, 2016, the Company was not a party to anyThere are currently no pending or threatened material legal proceedings.proceedings against us.

Item 6. Exhibits.1A. Risk Factors.

a. Exhibits

The following exhibits are hereby filed as partThere have been no material changes from the risk factors disclosed in Part 1, Item 1A, of this Quarterlyour Annual Report on Form 10-Q10-K for the transition period ended December 31, 2016, except for the addition of the following which supplements our previously disclosed risk factors.

Our financial statements are subject to changes in accounting standards that could adversely impact our profitability or incorporated herein by reference.financial position.

Our financial statements are subject to the application of generally accepted accounting principles in the United States of America, which are periodically revised and/or expanded. Accordingly, from time to time, we must adopt new or revised accounting standards that recognized authoritative bodies, including the Financial Accounting Standards Board, have issued. Recently, accounting standard setters issued new guidance that further interprets or seeks to revise accounting pronouncements related to revenue recognition and lease accounting and issued new standards expanding disclosures. We discuss the impact of accounting pronouncements that have been issued but not yet implemented in our annual and quarterly reports on Form 10-K and Form 10-Q. It is possible that accounting standards we must adopt in the future could change the current accounting treatment that we apply to our consolidated financial statements and that such changes could have a material adverse effect on our reported results of operations and/or financial condition.

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

None.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

None.

Item 5. Other Information.

None.

ITEM 6 – EXHIBITS

* 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.

* Filed herewith.

SIGNATURES

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

Dated: May 13, 2016

EXHIBIT INDEX

The following Exhibits are filed herewith: