Attitude Drinks Inc. - FORM 10-Q

Attached files

file	filename
EX-21 - EXHIBIT 21 - Attitude Drinks Inc.	s102080_ex21.htm
EX-32.1 - EXHIBIT 32.1 - Attitude Drinks Inc.	s102080_ex32-1.htm
EX-31.1 - EXHIBIT 31.I - Attitude Drinks Inc.	s102080_ex31-i.htm
EX-31.2 - EXHIBIT 31.II - Attitude Drinks Inc.	s102080_ex31-ii.htm
EX-10.145 - EXHIBIT 10.145 - Attitude Drinks Inc.	s102080_ex10-145.htm
EX-10.143 - EXHIBIT 10.143 - Attitude Drinks Inc.	s102080_ex10-143.htm
EX-10.144 - EXHIBIT 10.144 - Attitude Drinks Inc.	s102080_ex10-144.htm
EX-10.146 - EXHIBIT 10.146 - Attitude Drinks Inc.	s102080_ex10-146.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

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

For the Quarterly Period Ended June 30, 2015

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

For the Transition Period from _________ to _________

Commission file number: 000-52904

ATTITUDE DRINKS INCORPORATED

(Exact name of registrant as specified on its charter)

Delaware		65-0109088
(State or other jurisdiction of incorporation or organization)		(IRS Employer Identification No.)

11231 U.S. Highway 1, #201, North Palm Beach, Florida 33408 USA

(Address of principal executive offices)

(561) 227-2727

(Registrant’s telephone number, including area code)

712 U.S. Highway 1, Suite # 200, North Palm Beach, Florida 33408

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

Indicate by check mark whether the issuer (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 x No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes x No ¨

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

Large accelerated filer	¨	Accelerated filer	¨
Non-accelerated filer	¨	Smaller reporting company	x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ¨ No x

APPLICABLE ONLY TO CORPORATE ISSUERS:

State the number of shares outstanding of each of the registrant's classes of common equity, as of the latest practicable date: 2,490,450,785 shares issued and outstanding as of November 2, 2015.

ATTITUDE DRINKS INCORPORATED AND SUBSIDIARIES

INDEX

		PAGE #

PART I	FINANCIAL INFORMATION

Item 1 .	Condensed Consolidated Financial Statements:

	Condensed Consolidated Balance Sheets – June 30, 2015 (unaudited) and March 31, 2015	4

	Condensed Consolidated Statements of Operations – Three Months Ended June 30, 2015 and 2014 (unaudited)	5

	Condensed Consolidated Statements of Cash Flows – Three Months Ended June 30, 2015 and 2014 (unaudited)	6

	Notes to Condensed Consolidated Financial Statements (unaudited)	7

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	33

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	62

Item 4.	Controls and Procedures	62

PART II	OTHER INFORMATION

Item 1.	Legal Proceedings	63

Item 2.	Unregistered Sales of Equity and Use of Proceeds	65

Item 3.	Defaults upon Senior Securities	65

Item 4.	Mine Safety Disclosures	65

Item 5.	Other Information	65

Item 6.	Exhibits	66

SIGNATURES		69

EXHIBITS

DOCUMENTS INCORPORATED BY REFERENCE: See Exhibits

PART I – FINANCIAL INFORMATION

ITEM 1. – CONDENSED FINANCIAL STATEMENTS

ATTITUDE DRINKS INCORPORATED AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEET

	June 30, 2015			March 31, 2015
	(unaudited)
ASSETS

CURRENT ASSETS:
Cash and cash equivalents	$	226,770		$	233,591
Accounts receivable		1,479			4,478
Real estate loans receivable		950,000			-
Inventories less reserve for abandoned property of $2,339 and allowance for obsolescence of $90,000 at June 30, 2015 and March 31, 2015		104,444			112,797
Prepaid expenses		41,353			1,150
TOTAL CURRENT ASSETS		1,324,046			352,016

FIXED ASSETS, NET		975,887			1,013,141

OTHER ASSETS:
Goodwill		4,038,945			-
Capitalized pre-opening costs - World of Beer		198,823			204,059
Deferred financing costs		67,889			-
Trademarks, net		4,462			4,537
Investment in Harrison, Vickers and Waterman Inc. common stock		65,000			-
Deposits and other assets		3,740			8,145
TOTAL OTHER ASSETS		4,378,859			216,741

TOTAL ASSETS	$	6,678,792		$	1,581,898

LIABILITIES AND STOCKHOLDERS' (DEFICIT)

CURRENT LIABILITIES:
Accounts payable	$	1,803,023		$	1,911,005
Accrued liabilities		5,528,711			6,757,764
Derivative liabilities		6,400,232			1,868,857
Short-term bridge loans payable		115,000			115,000
Real estate loan payable		950,000			-
Convertible notes payable		5,999,845			6,999,295
Non-convertible notes payable		694,020			625,016
Loans payable -World of Beer Minority Owners		50,660			50,767
Loans payable to related parties		-			21,463
TOTAL CURRENT LIABILITIES		21,541,491			18,349,167

LONG TERM LIABILITIES:
Convertible notes payable		369,022			178,500
Minority interest		1,552,276			(3,391	)
TOTAL LONG TERM LIABILITES		1,921,298			175,109

STOCKHOLDERS' (DEFICIT):
Series A and A-1 convertible preferred stock par value $0.00001 per share, 20,000,000 shares authorized, 9,000,051 shares issued and outstanding at June 30, 2015 and March 31, 2015, respectively		90			90
Common stock, par value $0.00001, 20,000,000,000 shares authorized and 2,309,624,423 and 1,161,193,362 shares issued and outstanding at June 30, 2015 and March 31, 2015, respectively		23,097			11,612
Additional paid-in capital		20,012,989			19,830,637
Deficit accumulated		(36,820,173	)		(36,784,717	)
TOTAL STOCKHOLDERS' (DEFICIT)		(16,783,997	)		(16,942,378	)

TOTAL LIABILITIES AND STOCKHOLDERS' (DEFICIT)	$	6,678,792		$	1,581,898

See accompanying notes to condensed consolidated financial statements

ATTITUDE DRINKS INCORPORATED AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

	Three			Three
	Months Ended			Months Ended
	June 30,			June 30,
	2015			2014
REVENUES:
Net revenues - World of Beer	$	872,853		$	-
Net revenues - Phase III		(1,419	)		21,907
Food and beverage costs - World of Beer		(55,635	)		-
Product and shipping costs		(186,106	)		(20,849	)
GROSS PROFIT		629,693			1,058

Real Estate Loans:
Interest income earned		28,422			-
Interest expense incurred		(28,422	)		-
GROSS PROFIT		-			-

TOTAL GROSS PROFIT		629,693			1,058

OPERATING EXPENSES:
Administrative salaries, taxes and employee benefits		284,236			169,023
Administrative consulting fees		75,000			75,000
World of Beer other expenses		202,488			-
World of Beer labor costs		259,387			-
Other general and administrative expenses		76,331			46,588
Administrative marketing and promotion expense		2,574			9,464
Administrative professional and legal fees		87,821			31,875
Product development costs		-			400
Depreciation and amortization		47,056			1,823
Total Operating Expenses		1,034,893			334,173

LOSS FROM OPERATIONS		(405,200	)		(333,115	)

OTHER INCOME (EXPENSE):
Interest and other financing costs		(684,518	)		(194,878	)
Deriviative expense		(2,038,679	)		-
Gain from debt restructuring		1,612,910			-
Total Other Income (Expense)		(1,110,287	)		(194,878	)

INCOME (LOSS) BEFORE PROVISION
FOR INCOME TAXES		(1,515,487	)		(527,993	)
Minority interest		1,465,605			-
Provision for income taxes		-			-

NET INCOME (LOSS)	$	(49,882	)	$	(527,993	)

Basic income (loss) per common share	$	-		$	-

Diluted income (loss) per common share	$	-		$	-

Weighted average common shares outstanding-basic		2,011,266,510			338,533,990

Weighted average common shares outstanding-dilted		2,011,266,510			338,533,990

See accompanying notes to consolidated financial statements

ATTITUDE DRINKS INCORPORATED AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

	Three Months			Three Months
	Ended			Ended
	June 30,			June 30,
	2015			2014
	(Unaudited)			(Unaudited)

CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss)/income	$	(49,882	)	$	(527,993	)
Adjustment to reconcile net (loss)/income to net cash used in operating activities:
Depreciation and amortization		47,056			1,823
Issuance of warrants		(84	)		-
Sale of companies to Harrison, Vickers and Waterman, Inc.		14,426			-
Issuance of convertible notes for past due services		75,000			262,000
Derivative expense		2,038,679			-
Fair value adjustment of convertible notes		241,930			(739,749	)
Amortization of debt discount		247,007			668,344
Minority interest		(1,465,605	)		-
Gain from debt restructuring		(1,612,910	)		-
Changes in operating assets and liabilities:
Accounts receivable		2,999			(6,415	)
Prepaid expenses and other assets		(35,798	)		386
Inventories		8,353			18,979
Accounts payable and accrued liabilities		444,980			190,166
Net cash provided/(used) in operating activities		(43,849	)		(132,459	)

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of equipment		(7,615	)		-
Dividends to World of Beer minority owners		(60,000	)		-
Purchase of Harrison, Vickers and Waterman Inc. common stock		(65,000	)		-
Net cash (used) in investing activities		(132,615	)		-

CASH FLOWS FROM FINANCING ACTIVITIES:
Loans payable from World of Beer minority owners		(107	)		-
Proceeds from convertible notes payable		120,750			62,700
Proceeds from short-term bridge loans payable		-			52,000
Proceeds from promissory notes		84,000			-
Other costs of financing		(35,000	)		(2,500	)
Net cash provided by financing activities		169,643			112,200

NET (DECREASE) IN CASH AND CASH EQUIVALENTS		(6,821	)		(20,259	)

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD		233,591			20,615

CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	226,770		$	356

See accompanying notes to condensed consolidated financial statements

ATTITUDE DRINKS INCORPORATED AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

THREE MONTHS ENDED JUNE 30, 2015

(Unaudited)

Note 1.

Organization, Basis of Presentation and Significant Accounting Policies

(a)

Organization:

Attitude Drinks Incorporated (“the Company”) was formed in Delaware on May 10, 1988 under the name of L.H.M. Corp which later became Mason Hill Holdings, Inc. The Company is engaged in two segments of the beverage industry: (i) the functional beverage segment through our development and sale of non-alcoholic beverages to retail establishments and (ii) the craft brewing segment through our indirect interest in a World of Beer franchise restaurant that sells, among other items, beer to consumers. Our plan of operation during the next 12 months is to focus our management’s attention on the non-alcoholic single serving beverage business, developing and marketing milk based products in two fast growing segments: sports recovery and functional dairy. Our indirect subsidiary, Attitude Beer Holding Co. (“ABH”), which is now owned by our majority-owned subsidiary Harrison, Vickers and Waterman Inc. (“HVWC”), is a 51% owner of a World of Beer franchise restaurant located in Connecticut and intends to establish additional franchise restaurants in other locations in Connecticut and the greater Boston area.

On September 19, 2007, the Company acquired Attitude Drink Company, Inc., a Delaware corporation (“ADCI”), under an Agreement and Plan of Merger (“Merger Agreement”) among Mason Hill Holdings, Inc. (“MHHI”) and ADCI. On September 30, 2007, the Company changed its name to Attitude Drinks Incorporated. Its wholly owned subsidiary, ADCI, was incorporated in Delaware on June 18, 2007. On December 1, 2014, the Company formed Attitude Beer Holding Co. (“ABH”), its second subsidiary company, in the state of Delaware which was sold to HVWC in April 2015. The Company’s principal executive offices are located at 11231 U. S. Highway 1, #201, North Palm Beach, Florida 33408. The telephone number is 561-227-2727. The Company’s common stock shares (PINK:ATTD) began trading June 2008. The Company's fiscal year end is March 31.

On December 24, 2014, New England WOB, LLC (“NEWOB”), Attitude Beer Holding Co.(”ABH”), Attitude Drinks Incorporated (“Attitude”), Glenn E. Straub (“Straub”) and James D. Cecil (“Cecil”) entered into a joint venture agreement. NEWOB entered into an Area Development Agreement with World of Beer Franchising, Inc which is in the business of entering into franchise agreements with third parties to own and operate World of Beer themed bar/restaurants. NEWOB developed a World of Beer franchise in Stamford, Connecticut as well as West Hartford, Connecticut. ABH was granted the right to participate in any World of Beer franchise that NEWOB proposes to develop. ABH has the option to become a 51% of any new World of Beer franchise for the contribution of 100% of the budgeted development costs of developing such new World of Beer franchise locations. NEWOB will manage the operations of each World of Beer franchise location. The financial results of each World of Beer franchise location will be consolidated into the overall results of HVWC which in turn will be consolidated into the overall results of Attitude while Attitude owns the majority ownership of HVWC. All applicable minority interest related items will be recorded for proper consolidations and reported results for Attitude’s consolidated financial statements.

On the same December 24, 2014 date, ABH purchased 51% of the West Hartford, Connecticut World of Beer franchise location and obtained an option for two years to purchase 51% of the Stamford, Connecticut World of Beer franchise location that was opened earlier in 2014. That option has not been exercised.

Note 1.

Organization, Basis of Presentation and Significant Accounting Policies (continued)

Recent Developments and Change in Business Model

On April 21, 2015, ABH and ABH’s other owners, Alpha Capital Anstalt, a company organized under the laws of Liechtenstein (“Alpha”) and Tarpon Bay Partners LLC, a Florida limited liability company (“Tarpon Bay”), (collectively all three companies as shareholders of ABH), entered into a Purchase Agreement with HVWC pursuant to which the shareholders of ABH sold to HVWC all of the outstanding shares of stock of ABH, and ABH thereupon became a wholly owned subsidiary of HVWC. In consideration for the purchase of the shares of common stock of ABH, HVWC issued: (i) to us 51 shares of a newly created HVWC Series B Preferred Stock (the “Series B Preferred Stock”) and a seven year warrant (the “B Warrant”) to purchase 5,000,000 shares of HVWC’s common stock, par value $.0001 per share (the “HVWC’s Common Stock”), at an exercise price of $0.075 per share (subject to customary anti-dilution adjustments); (ii) to Alpha, a secured convertible note due April 20, 2017 (the “Secured Convertible Note”) in the principal amount of $1,619,375, a seven year warrant (the “Alpha Warrant”), to purchase 1,295,500,000 shares of HVWC’s Common Stock at an exercise price of $0.0025 per share (subject to customary anti-dilution adjustments), and an additional investment right (“AIR”) to purchase up to $3,750,000 in additional notes (the “AIR Note”) and corresponding warrants (“the “AIR Warrant”); and (iii) to Tarpon, a Secured Convertible Note in the principal amount of $554,791.67, a seven year warrant (the “Tarpon Warrant”) to purchase 443,833,333 shares of HVWC’s Common Stock at an exercise price of $0.0025 per share (subject to customary anti-dilution adjustments), and an AIR to purchase up to $1,250,000 in additional notes and corresponding AIR Warrants. In addition, Alpha acquired 32,300 shares of the HVWC’s Series A Preferred Stock (convertible into 32,300,000 shares of HVWC’s Common Stock) from HVW Holdings LLC (an entity of which Mr. James Giordano, HVWC’s prior Chief Executive Officer and Chairman of the Board, is the managing member), subject to the terms of a Purchase Agreement (the “Series A Purchase Agreement”). We purchased 87,990,000 shares of HVWC’s Common Stock from HVW Holdings LLC at a price of $65,000, subject to the terms of a Purchase Agreement (the “Common Stock Purchase Agreement”) thereby making us the majority owner of HVWC. We will consolidate 100% of HVWC’s financial results after April 21, with the recording of applicable minority interest eliminations.

From the formation of ABH on December 1, 2014 until April 21, 2015, we were the majority holder of the outstanding equity of ABH (we held 87.5% of the outstanding common stock of ABH, and Alpha and Tarpon Bay held 9.9% and 2.6%, respectively, of the outstanding common stock of ABH) and the active manager of ABH. Accordingly for the three months ended June 30, 2015, the financial results of ABH were consolidated into our overall financial statements with the recording of any minority interest related activities through April 21, 2015. Since the Company was the majority owner of HVWC at April 21, 2015 the consolidated financial results of HVWC which includes ABH were consolidated into the overall results of the Company with the recording of any minority interest related activities.

(b)

Basis of Presentation/Going Concern:

In the opinion of management, the accompanying unaudited interim condensed consolidated financial statements of the Company contain all adjustments necessary to present fairly the Company’s financial position as of June 30, 2015 and 2014 and the results of its operations and cash flows for the three month periods ended June 30, 2015 and 2014. The significant accounting policies followed by the Company are set forth in Note 3 to the Company’s consolidated financial statements included in its Annual Report on Form 10-K for the year ended March 31, 2015. The accompanying unaudited interim financial statements have been prepared in accordance with instructions to Form 10-Q and therefore do not include all information and footnotes required by accounting principles generally accepted in the United States of America ("U.S. GAAP").

The results of operations for the three month period ended June 30, 2015 are not necessarily indicative of the results to be expected for the full year.

The Company’s consolidated financial statements include the accounts of Attitude Drinks Incorporated and its wholly-owned subsidiary, Attitude Drink Company, Inc. In addition, the Company consolidates 100% of the financial results of its other majority owned corporation, HVWC, which owns 100% of ABH. ABH is the majority owner of West Hartford WOB, LLC that owns the West Hartford, Connecticut World of Beer franchise location. All material intercompany balances and transactions have been eliminated as well as all related minority interest transactions have been recorded for proper consolidations and reporting.

Note 1.

Organization, Basis of Presentation and Significant Accounting Policies (continued)

The accompanying financial statements have been prepared on a going concern basis, which assumes the Company will realize its assets and discharge its liabilities in the normal course of business. As reflected in the accompanying financial statements, the Company for the three months period ended June 30, 2015 had a working capital deficit of ($20,217,445) as of June 30, 2015 and has incurred losses to date resulting in an accumulated deficit of ($36,820,173), including derivative income and expense. These factors create substantial doubt about the Company’s ability to continue as a going concern. The Company’s ability to continue as a going concern is dependent upon its ability to generate future profitable operations and/or to obtain the necessary financing to meet its obligations and pay its liabilities when they come due. Management’s plan includes obtaining additional funds by debt and/or equity financings; however, there is no assurance of additional funding being available.

(c)

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 the reported amounts of revenues and expenses during the reporting period. The most significant estimate included in the Company’s financial statements is the following: Fair value of the Company’s financial instruments that are required to be carried at fair value. The Company uses all available information and appropriate techniques to develop its estimates, including the use of outside consultants. However, actual results could differ from the Company’s estimates.

(d)

Business Segment and Geographic Information:

The Company currently operates in one dominant industry segment that it has defined as the sports-recovery drink industry. However, its next two products will enter into the functional milk category. Presently, there is no international business, although the Company may pursue the sale of its products in international markets during the next fiscal year. In addition, the first World of Beer franchise location in Connecticut opened in late January, 2015, and two other locations in the New England areas are expected to open in the spring of 2006. Other franchises will be opened in 2016 based on available financing capital.

(e)

Cash and Cash Equivalents:

The Company considers all highly liquid investments purchased with a remaining maturity of three months or less to be cash equivalents.

(f)

Real Estate Loans Receivable and Related Promissory Note Payable

At April 21, 2015, the Company recorded HVWC’s purchased real estate loans as well as certain assets in the form of real estate loans (the “Loans”). The purchase price was paid by HVWC via the issuance of a secured promissory note in the principal amount of $1,800,000 (the “Note”) due March 31, 2015.

Four loans, $1,800,000 in aggregate, were purchased with one loan of $180,000 being collected during the interim period ending December 31, 2013. The remaining three loans of $520,000, $550,000 and $550,000 were issued on April 2, 2013, May 15, 2013 and July 15, 2013, respectively. They all bear interest at 12% per annum and are due one year from the date of issuance. The loans are secured by a first lien.

Note 1.

Organization, Basis of Presentation and Significant Accounting Policies (continued)

The Note is secured by a Pledge Agreement whereby the proceeds of the Loans are pledged as security for the repayment of the Note. During the interim period ended December 31, 2013, the Company received payment on and paid down $330,000 of the Loans. The $550,000 loan was reduced to $400,000 during the year ended June 30, 2014 with a corresponding reduction in the promissory note payable. The balance of $400,000 is being disputed by the property owner, but the Company is fully insured by Title Insurance for this amount.

On February 10, 2015, the note for $520,000 was fully repaid.

The current balance outstanding is $950,000. The Company plans to discontinue these operations and will eliminate these balances in September 2015.

(g)

Inventories:

Inventories, as estimated by management, currently consist of finished goods for Phase III products as well as start-up inventory for the World of Beer franchise location in West Hartford, Connecticut and are stated at the lower of cost on the first in, first-out method or market. The inventory is comprised of the following:

	June 30, 2015			March 31, 2015
		(unaudited)

World of Beer	$	81,048		$	88,235
Finished goods-Phase III		115,735			116,901
Less: Reserve for abandonment		(2,339	)		(2,339	)
Less: Reserve for obsolescence		(90,000	)		(90,000	)
Total inventories	$	104,444		$	112,797

(h)

Fixed Assets:

Fixed assets are stated at cost. Depreciation is computed using the straight-line method over a period of ten years for furniture and certain bar equipment, three years for corporate computer equipment and purchased software plus five years for World of Beer computer and point of sale systems. Maintenance, repairs and minor renewals are charged directly to expenses as incurred. Additions and betterments to property and equipment are capitalized. When assets are disposed of, the related cost and accumulated depreciation thereon are removed from the accounts, and any resulting gain or loss is included in the statement of operations. Leasehold improvements for the World of Beer location are depreciated over the life of the lease or twenty years. Fixed assets include both the fixed assets of the corporate office and the West Hartford, Connecticut World of Beer location which are as follows:

Note 1.

Organization, Basis of Presentation and Significant Accounting Policies (continued)

	June 30, 2015			March 31, 2015
	(unaudited)
Attitude Drink Company (a)	$	58,336		$	58,336
World of Beer:
Audio Visual		82,635			82,635
Bar furniture and equipment		198,836			198,836
Computer equipment		48,839			48,839
Leasehold improvements		489,812			490,964
Coolers		59,832			59,832
Millwork		69,000			69,000
Other		74,248			73,805

Total gross fixed assets		1,081,538			1,082,247
Less accumulated depreciation		(105,651	)		(69,106	)

Net fixed assets	$	975,887		$	1,013,141

(a) Net of reserve for abandoned furniture for $3,290

Depreciation expense for the three months ended June 30, 2015 was $36,545.

(i)

Goodwill

Goodwill represents the increase in the consideration paid over the fair value of HVWC’s consolidated assets being acquired by the Company on the acquisition date as set forth in the Statement of Financial Accounting Standard ASC 350 Intangibles- Goodwill and Other and ASC 850 Subsequent Accounting and Disclosure for Goodwill. In order to fairly value the enterprise, the following assumptions were made for a base case:

a. The Company would open another three World of Beer franchises. One would open October 1, 2015, and the other two would open on April 1, 2016;

b. Operating results would be predicated on 80% of the existing World of Beer location in West Hartford, Connecticut;

c. Discounted cash flow model through 2022 was used ;

d. 15% discount rate was used.

After the base case was quantified, various scenarios using 20% required rate of returns and 75% of operating results were quantified. After equal weighting of all these scenarios, it was determined that goodwill was worth $4,038,945 at June 30, 2015 as follows:

Value of enterprise	$	4,841,801
Add: Negative net equity
Of company		20.764
Intercompany eliminations		20,665
Less: Incremental debt acquired		(844,285	)

Goodwill	$	4,038,945

Note 1.

Organization, Basis of Presentation and Significant Accounting Policies (continued)

(j)

Capitalized Pre-Opening Expenses – World of Beer

Certain pre-opening expenses such as capitalized franchise fees, interest, legal costs, startup and organization costs are recorded as long term assets and are amortized over fifteen years unless certain capitalized costs have a shorter life period to amortize. Any incurred costs that are at best uncertain and fail to satisfy the suggested measurability test for accounting recognition as an asset are expensed.

	June 30,			March 31,
Propery Description	2015			2015
	(unaudited)
Pre-opening labor costs	$	66,734		$	66,734
Franchise fees		45,000			45,000
Training fees		28,857			28,857
Legal fees		22,615			22,615
Start-up costs		19,557			19,557
Other		25,182			25,181
Accumulated amortization		(9,122	)		(3,885	)

Total	$	198,823		$	204,059

Amortization expense amounted to $5,236 for the three months ended June 30, 2015.

(k)

Deferred Financing Costs

Deferred financing costs represent fees associated with the debt issuances for the merger with Attitude Beer as follows:

	June 30,			March 31,
	2015			2015
	(unaudited)
Legal fees associated with April 21, 2015 merger	$	35,000		$	-
Value of Preferred Series A shares associated with financing		40,089			-
Total costs	$	75,089		$	-
Less amortization		(7,200	)		-
Net deferred assets	$	67,889		$	-

All deferred financing costs are being amortized over the length of the financing, being two years. Amortization expense recorded for the three months ended June 30, 2015 was $7,200.

(l)

Trademarks:

Trademarks consist of costs associated with the acquisition and development of certain trademarks. Trademarks,

when acquired, will be amortized using the straight-line method over 15 year. The following table summarizes the components of the Company’s trademarks:

Note 1.

Organization, Basis of Presentation and Significant Accounting Policies (continued)

	June 30, 2015			March 31, 2015
	(unaudited)
Trademark costs	$	32,151		$	32,151
Less accumulated amortization		(27,689	)		(27,614	)
Total Trademarks - Net	$	4,462		$	4,537

Amortization expense amounted to $75 for the three months ended June 30, 2015.

(m)

Investment in HVWC

During April 21, 2015, we purchased 87,990,000 shares of HVWC’s Common Stock from HVW Holdings LLC at a price of $65,000, thereby making us the majority owner of HVWC. We will consolidate 100% of HVWC’s financial results with the recording of applicable consolidations and minority interest eliminations.

(n)

Impairment of Long-Lived Assets:

Our long-lived assets consist principally of goodwill, trademarks, furniture and equipment. We evaluate the carrying value and recoverability of our long-lived assets when circumstances warrant such evaluation by applying the provisions of the FASB Accounting Standards Codification which requires that long-lived assets be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable through the estimated undiscounted cash flows expected to result from the use and eventual disposition of the assets. Whenever any such impairment exists, an impairment loss will be recognized for the amount by which the carrying value exceeds the fair value.

(o)

Financial Instruments:

Financial instruments, as defined in the FASB Accounting Standards Codification, consist of cash, evidence of ownership in an entity and contracts that both (i) impose on one entity a contractual obligation to deliver cash or another financial instrument to a second entity, or to exchange other financial instruments on potentially unfavorable terms with the second entity, and (ii) conveys to that second entity a contractual right (a) to receive cash or another financial instrument from the first entity, or (b) to exchange other financial instruments on potentially favorable terms with the first entity. Accordingly, our financial instruments consist of cash and cash equivalents, accounts receivable, accounts payable, accrued liabilities, notes payable, derivative financial instruments, convertible debt and redeemable preferred stock that we have concluded the notes payable and derivative financial instruments are more akin to debt than equity.

Derivative financial instruments, as defined in the FASB Accounting Standards Codification, consist of financial instruments or other contracts that contain a notional amount and one or more underlying (e.g. interest rate, security price or other variable), require no initial net investment and permit net settlement. Derivative financial instruments may be free-standing or embedded in other financial instruments. Further, prior to February 21, 2013, derivative financial instruments were measured at fair value and recorded as liabilities or, in rare instances, assets. Fair value represents the price at which the property would change hands between a hypothetical willing and able buyer and a hypothetical willing and able seller acting at arm’s length in an open and unrestricted market, when neither is under compulsion to buy or sell and when both have reasonable knowledge of the relevant facts.

Note 1.

Organization, Basis of Presentation and Significant Accounting Policies (continued)

We generally do not use derivative financial instruments to hedge exposures to cash-flow, market or foreign-currency risks. However, we have entered into certain other financial instruments and contracts, such as debt financing arrangements, redeemable preferred stock arrangements and freestanding warrants with features that are either (i) not afforded equity classification, (ii) embody risks not clearly and closely related to host contracts, or (iii) may be net-cash settled by the counterparty. As required by the FASB Accounting Standards Codification, these instruments, prior to February 21, 2013, were not required to be carried as derivative liabilities, at fair value, in our financial statements as we were allowed to elect fair value measurement of the hybrid financial instruments, on a case-by-case basis, rather than bifurcate the derivative. We believed that fair value measurement of the various hybrid convertible promissory notes financing arrangements prior to February 21, 2013 provided a more meaningful presentation of that financial instrument.

Fair Value of Financial Instruments - Our financial instruments consist of cash and cash equivalents, accounts receivable, accounts payable and accrued expenses. We believe that the carrying amounts of the financial instruments approximate their respective current fair values due to their relatively short maturities.

Pursuant to the requirements of the Fair Value Measurements and Disclosures Topic of the FASB Codification, the Company’s financial assets and liabilities measured at fair value on a recurring basis are classified and disclosed in one of the following three categories:

Level 1: Financial instruments with unadjusted quoted prices listed on active market exchanges.

Level 2: Financial instruments lacking unadjusted, quoted prices from active market exchanges, including over the counter traded financial instruments. The prices for the financial instruments are determined using prices for recently traded financial instruments with similar underlying terms as well as directly or indirectly observable inputs, such as interest rates and yield curves that are observable at commonly quoted intervals.

Level 3: Financial instruments that are not actively traded on a market exchange. This category includes situations where there is little, if any, market activity for the financial instrument. The prices are determined using significant unobservable inputs or valuation techniques.

All cash and cash equivalents are considered Level 1 measurements for all periods presented. We do not have any financial instruments classified as Level 2. We have recorded a conversion feature liability in regards to convertible notes issued which are Level 3 and are further described below in note 3.

The Company carries cash and cash equivalents, inventory, and accounts payable and accrued expense at historical cost which approximates the fair value because of the short-term nature of these instruments.

(p)

(Loss)/Income Per Common Share:

Our basic loss per common share is computed by dividing loss applicable to common stockholders by the weighted average number of common shares outstanding during the reporting period. Diluted loss per common share is computed similar to basic loss per common share except that diluted loss per common share includes dilutive common stock equivalents, using the treasury stock method, and assumes that the convertible debt instruments were converted into common stock upon issuance, if dilutive. For the three months ended June 30, 2015 and 2014, respectively, potential common shares arising from the our stock warrants, stock options, convertible preferred stock and convertible debt and accrued interest payable amount to 17,690,385,577 as we cannot exceed our authorized 20,000,000,000 shares and 5,767,005,538 shares for 2014 and were not included in the computation of diluted loss per share because their effect was anti-dilutive.

Note 1.

Organization, Basis of Presentation and Significant Accounting Policies (continued)

(q)

Recent Accounting Pronouncements Applicable to the Company:

In May 2014, the FASB issued the FASB Accounting Standards Update No. 2014-09 “Revenue from Contracts with Customers (Topic 606)” (“ASU 2014-09”). This guidance amends the existing FASB Accounting Standards Codification, creating a new Topic 606, Revenue from Contracts with Customer. The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.

To achieve that core principle, an entity should apply the following steps:

Identify the contract(s) with the customer

Identify the performance obligations in the contract

Determine the transaction price

Allocate the transaction price to the performance obligations in the contract

Recognize revenue when (or as) the entity satisfies a performance obligations

The ASU also provides guidance on disclosures that should be provided to enable financial statement users to understand the nature, amount, timing and uncertainty of revenue recognition and cash flows arising from contracts with customers. Qualitative and quantitative information is required about the following:

1. Contracts with customers – including revenue and impairments recognized, disaggregation of revenue and information about contract balances and performance obligations (including the transaction price allocated to the remaining performance obligations)

2. Significant judgments and changes in judgments – determining the timing of satisfaction of performance obligations (over time or at a point in time) and determining the transaction price and amounts allocated to performance obligations

3. Assets recognized from the costs to obtain or fulfill a contract.

ASU 2014-09 is effective for periods beginning after December 15, 2016, including interim reporting periods within that reporting period for all public entities. Early application is not permitted.

Management does not believe that any other recently issued but not yet effective accounting pronouncements, if adopted, would have a material effect on the accompanying financial statements.

In August, 2014, the Financial Accounting Standards Board issued an ASU that contained guidance for the disclosure of uncertainties about an entity’s ability to continue as a going concern. There is no impact on the Company through the adoption of this update as the Company has always provided such required disclosures on doubt about the entity’s ability to continue as a going concern for one year from the date of completion of the audit.

In November, 2014, the Financial Accounting Standards Board issued an ASU that contained guidance about derivatives and hedging and determining whether the host contract in a hybrid financial instrument issued in the form of a share is more akin to debt or to equity. There are predominantly two methods used in current practice by issuers and investors in evaluating whether the nature of the host contract within a hybrid instrument issued in the form of a share is more akin to debt or to equity. This ASU is to eliminate the use of different methods in practice. As the Company utilizes the services of an outside professional specialty firm for such valuations, the Company believes there is no change needed for this update.

Note 1.

Organization, Basis of Presentation and Significant Accounting Policies (continued)

In February, 2015, the Financial Accounting Standards Board issued an ASU that contained guidance about Consolidation (Topic 810) and amendments to the consolidation analysis. These provisions provide amendments to limited partnerships and similar legal entities. As ABH owns the 51% majority of the World of Beer location in West Hartford which is an LLC corporation, the Company believes there is no change needed for this update.

Note 2.

Accrued Liabilities:

Accrued liabilities consist of the following as of June 30, 2015 and March 31, 2015:

	2015		2014
	(Unaudited)

Accrued payroll and related taxes	$	2,288,951	$	3,719,785
Accrued interest payable		1,932,873		1,846,857
Accrued marketing program costs		580,000		580,000
Accrued professional fees		134,220		108,640
Accrued board of directors' fees		251,792		242,792
Accrued World of Beer expenses		120,650		-
Accrued consulting expenses		124,372		124,372
Other expenses		95,853		135,318

Total Accrued Liabilities	$	5,528,711	$	6,757,764

Note 3.

Derivative Liabilities:

Valuation Hierarchy

ASC 820, “Fair Value Measurements and Disclosures,” establishes a valuation hierarchy for disclosure of the inputs to valuation used to measure fair value. This hierarchy prioritizes the inputs into three broad levels as follows. Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2 inputs are quoted prices for similar assets and liabilities in active markets or inputs that are observable for the asset or liability, either directly or indirectly through market corroboration, for substantially the full term of the financial instrument. Level 3 inputs are unobservable inputs based on the Company’s own assumptions used to measure assets and liabilities at fair value. A financial asset or liability’s classification within the hierarchy is determined based on the lowest level input that is significant to the fair value measurement.

Note 3. Derivative Liabilities (continued):

The following table provides the liabilities carried at fair value measured on a recurring basis as of June 30, 2015:

Fair Value Measurements at June 30, 2015

Quoted

Significant

Total

Prices in

Other

Significant

Carrying

Active

Observable

Unobservable

Value at

Markets

Inputs

June 30, 2015

(Level 1)

(Level 2)

(Level 3)

Conversion feature liability

6,400,232

The carrying amounts of cash, accounts receivable, prepaid expenses, accounts payable, and accrued liabilities approximate their fair value due to their short maturities. The Company measures the fair value of financial assets and liabilities based on the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The Company maximizes the use of observable inputs and minimizes the use of unobservable inputs when measuring fair value.

Level 3 liabilities are valued using unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the derivative liabilities. For fair value measurements categorized within Level 3 of the fair value hierarchy, the Company’s accounting department, who reports to the Principal Financial Officer, determines its valuation policies and procedures. The development and determination of the unobservable inputs for Level 3 fair value measurements and fair value calculations are the responsibility of the Company’s accounting department and are approved by the Principal Financial Officer.

Level 3 Valuation Techniques

Level 3 financial liabilities consist of the conversion feature liability for which there is no current market for these securities such that the determination of fair value requires significant judgment or estimation. Changes in fair value measurements categorized within Level 3 of the fair value hierarchy are analyzed each period based on changes in estimates or assumptions and recorded as appropriate. A significant decrease in the volatility or a significant decrease in the Company’s stock price, in isolation, would result in a significantly lower fair value measurement.

As of June 30, 2015, there were no transfers in or out of level 3 from other levels in the fair value hierarchy. Starting with the consolidated convertible notes payable as of February 21, 2013, we used a new lattice valuation model which required the embedded derivatives to be bundled and valued as a single compound embedded derivative, bifurcated from the debt host and treated as a liability at fair value.

Note 4.

Short-term Bridge Loans:

Summary of short-term bridge loan balances is as follows:

	June 30, 2015		March 31, 2015
	(Unaudited)

April 14, 2008 (a)	$	60,000	$	60,000
August 5, 2008 (b)		55,000		55,000

Total	$	115,000	$	115,000

April 14, 2008 financing:

(a) On April 14, 2008, the Company entered into a financing arrangement that provided for the issuance of a $60,000 face value short-term bridge loan note payable due July 15, 2008. There are no outstanding warrants associated with this financing as the expiration dates have expired.

April 14, 2008 financing (continued):

The Company entered into the following Modification and Waiver Agreements related to the April 14, 2008 financing:

Date	Terms	Consideration
June 2008	Extend maturity to July 19, 2008	Warrants indexed to 5 shares of common stock (warrants have expired)
September 2008	Extend maturity to December 15, 2008	12 shares of restricted stock
January 2009	Extend maturity date to April 30, 2009	1) Warrants indexed to 12 shares of common stock (warrants have expired) 2) 12 shares of restricted stock

The modifications resulted in a loss on extinguishment of $171,622 in accordance with the Financial Accounting Standards Codification. On December 15, 2008, the Company was in default on the notes for non-payment of the required principal payment. The remedy for event of default was acceleration of principal and interest so they were recorded at face value. As of March 31, 2013, this April 14, 2008 note was considered in default for non-payment. The Company is trying to find the debt holder to extend the due date of the note as the previous address is no longer valid.

August 5, 2008 financing:

(b) On August 5, 2008, the Company entered into a financing arrangement that provided for the issuance of a $55,000 face value short term bridge loan, due September 5, 2008. There are no outstanding warrants associated with this financing as the expiration dates have expired. The due date of the loan was extended to December 15, 2008 with 11 restricted shares of common stock issued as consideration. On December 15, 2008, the Company was in default on the notes for non-payment of the required principal payment. Remedies for an event of default are acceleration of principal and interest. There were no incremental penalties for the event of default; however the notes were recorded at face value. Remedies for an event of default are acceleration of principal and interest.

On January 15, 2009, the Company extended the term on the note from December 15, 2008 to April 30, 2009. As of December 31, 2012, this note was considered in default for non-payment. The debt holder is a board director and will exchange the note for Series C Convertible Preferred Stock in August, 2015.

Note 5

Convertible Notes Payable:

All convertible notes payable are recorded at fair value as prescribed by the FASB Accounting Standards Codification. Convertible debt carrying values consist of the following:

			Fair Value Amounts
Outstanding			June 30,			March 31,
Face Value			2015			2014
			(unaudited)
$	5,452,892	Converitlbe Note Financing due February 21 2015 (a), (1)	$	5,419,270		$	5,413,574
	105,575	Convertible Note Financing due December 31, 2014 (b), (2)		105,575			605,520
	550,000	Convertible Note Financings due from January 30, 2015 through October 31, 2016 ($25,000 due each month) (2-i)		550,000
	37,000	Convertible Note Financing due June 7, 2014 (c), (3)		37,000			37,000
	2,174,167	HVWC Convertible Note Financing due April 21, 2017 (d), (4)		237,843			1,204,500
	27,500	Convertible Note Financing due May 13, 2015 (e), (5)		19,800			35,200
	20,000	Convertible Note Financing due December 22, 2016 (f), (6)		20,000			20,000
	20,750	HVWC Convertible Note Financing due December 31, 2016 (g), (7)		20,750			-
	58,500	Convertible Note Financing due January 14, 2017 (h), (8)		58,500			58,500
	96,628	HVWC Convertible Note Financing due April 1, 2017 (i), (9)		96,628			-
		Less discount on convertible notes		(196,499	)		(196,499	)
$	8,543,012	Total convertible notes payable (10)	$	6,368,867		$	7,177,795

(1) All previous convertible notes prior to February 21, 2013 were surrendered to the Company through a February 21, 2013 exchange agreement whereas the Company issued new face value consolidated notes per debt holder for a total amount of $5,020,944, $350,000 face value in new notes for the surrender of 425,003 Class A warrants plus $121,327 in a new note for work rendered for this consolidated financing for a grand total of $5,492,271. The principal amount of the above $5,452,892 balance equals the original $5,492,271 total financing plus new allonges issued after that date less conversions.

(2) Monthly retainer fee to our outside financial consulting firm of $25,000 face value from December, 2012 through December 31, 2015 less conversions. (2-i) Continued $25,000 monthly retainer fees from January 30, 2015 through October 31, 2016 less conversions.

(3) Retainer fee to our previous legal counsel of $37,000 face value issued June 7, 2013.

(4) HVWC issued two convertible notes payable, one for $554,792 and another one for $1,619,375 on April 21, 2015 with a maturity date of April 21, 2017 at an interest rate of 10%.

(5) Issued convertible note for $35,200 on May 13, 2014 less conversion of $7,700.

(6) Issued convertible note for $20,000 on December 12, 2014 for past due services.

(7) HVWC issued two convertible notes on May 8, 2015, one for $13,250 and the other one for $7,500 at an interest rate of 10% with a maturity date of May 8, 2015.

(8) Issued three convertible notes for $13,500, $13,500 and $31,500 to three different accredited investors on January 14, 2015.

Note 5 – Convertible Notes Payable (continued):

(9) HVWC issued nine small convertible notes to the same accredited investor as all notes have a maturity date of April 1, 2017.

(10) The consolidated notes required a new lattice valuation model that required the recording of a discount that will be amortized (accretion) over the life of the convertible notes payable.

Since these new consolidated notes contained new language as compared to the previous notes, we needed to use a different valuation model for applicable valuations, derivatives and fair market value. In order to determine the fair market value, we analyzed the various securities agreements and exchange agreements, compared the Company to comparable companies to determine industry factors for volatility, growth and future financing, developed a lattice model that valued the convertible notes on a probability weighted scenario model as well as future projections of the various potential outcomes and valued the convertible notes at issuance and at the end of the reporting period to account for the derivative liability. Based on our analysis in determining the proper accounting treatment and valuation as set forth in the Statement of Financial Accounting Standard ASC 820-10-35-37 (Fair Value in Financial Instruments), Statement of Financial Accounting Standard ASC 815 (Accounting for Derivative Instruments and Hedging Activities), Emerging Issues Task (“EITF”) For Issue No. 00-10 and EITF 07-05, the embedded derivatives are bundled and valued as a single, compound embedded derivative, bifurcated from the debt host and treated as a liability. The single compound embedded derivative features valued include the variable conversion feature, and the value of these embedded derivatives for the convertible notes is treated as a liability. These derivative liabilities are marked-to-market each quarter with the change in fair value recorded in the Statement of Operations.

Long-term Convertible Debt Maturities:

Annual maturities of long-term outstanding convertible debt (face value) as of June 30, 2015 are as follows:

	Face Value
Years ending March 31,	$ Amount
2016	$	6,011,467
2017		2,434,917
2018		96,628
2019		-
2020		-
thereafter		-

	$	8,543,012

Note 5 – Convertible Notes Payable (continued):

(a)

February 21, 2013 Consolidated Convertible Notes

On February 21, 2013, all previous convertible notes payable with outstanding balances totaling $5,020,944 were surrendered by the debt holders to the Company through exchange agreements whereas the Company issued one consolidated note to each debt holder for the total outstanding convertible note amounts. In addition and on the same date, all outstanding Class A warrants associated with these convertible note payables totaling 425,003 Class A warrants were surrendered by the debt holders to the Company in which the Company issued additional convertible notes payable for the total amount of $350,000. All applicable 364 Class B warrants were cancelled as well. Both the surrendered convertible notes payable for $5,020,944 and warrants for $350,000 were combined into one new convertible note payable per debt holder for a grand total of $5,370,944. All of these consolidated notes contain the same terms, maturity dates and conversion criteria and replace all terms, conditions and conversion criteria contained in the surrendered notes. These notes have a maturity date of February 21, 2015 and an interest rate of 4%. They are in default. The Company is working with each debt holder to extend the maturity date as well as implementing in 2015 a debt restructuring program to address such issues. During the month of August, 2015, the Company was successful in reducing a total of approximately $4.1 million of the total outstanding amount with the three largest debt holders by exchange close to one half of the total to Series C Convertible Preferred Stock with the other one half to be written off the books as a gain on the profit/loss statement. The conversion price per share is equal to seventy-five percent (75%) of the average of the three lowest closing bid prices for the Common stock as reported by Bloomberg L.P. for the principal market for the twenty trading days preceding a conversion date but in no event greater than $10.00. Each conversion submitted by a holder must be at least the lesser of (i) $10,000 of principal and interest or (ii) the balance due on the note. In addition, another new convertible note was issued for $121,327 to one of the accredited debt holders for their efforts in assisting the Company with these consolidated notes, warrants and modifications. The amount was determined at 5% of the then outstanding balance of all the convertible notes payable held by the debt holder. This note is identical to the above notes for the terms, conversion criteria and maturity date. No accrued interest payable amounts were added to these new notes. A total of $806,879 in principal and $193,214 in accrued interest were converted into shares of common stock from February 21, 2013 through June 30, 2015. In addition, additional allonge financings were added as follows:

TABLE FOR ADDED ALLONGES

	ALLONGE		$
DATE	#		AMOUNT

4/11/2013		8	$	71,500
6/5/2013		9		88,000
6/21/2013		10		88,000
7/23/2013		11		82,500
8/8/2013		12		110,000
9/18/2013		13		110,000
10/28/2013		14		55,000
11/15/2013		15		55,000
2/11/2014		16		55,000
5/2/2014		17		27,500
7/11/2014		18		25,000

		TOTAL	$	767,500

Note 5 – Convertible Notes Payable (continued):

(b) Monthly $25,000 Retainer Fee Convertible Notes

We issue each month a convertible note for $25,000 to Southridge Partners II LP as part of their consulting fees. Previously issued convertible notes from August, 2012 through November, 2012 were consolidated in the above February 21, 2013 convertible note. From December, 2012 through June, 2015, we issued $25,000 monthly convertible notes for a total of $775,000. All of these notes have maturity dates from December 31, 2014 to October 31, 2016. The Company is working with the debt holder to extend the maturity dates of these convertible notes and was successful in reducing the total convertible notes by approximately $641,000 of the total through the issuance of close to one half of the total to Series C Convertible Preferred Stock and the write off of the other one half amount to a gain on the profit/loss statement in August, 2015. The convertible notes can be converted into shares of Common Stock six months after issuance at a conversion price to equal the current market price multiplied by eighty percent (80%). Current market price means the average of the closing bid prices for the common stock for the five (5) trading days ending on the trading day immediately before the relevant conversion date. Total conversions of $119,425 have been made for these convertible notes.

(c) June 7, 2013 Convertible Note

We issued a $37,000 convertible note on June 7, 2013 for past due services. The maturity date of this note is June 7, 2014, and the note is in default. The Company is working with the debt holder to extend the maturity date of this convertible note. The note maybe converted into shares of common stock after a six month holding period at a conversion price to equal the current market price multiplied by eighty percent (80%). Current market price means the average of the closing bid prices for the common stock for the five (5) trading days ending on the trading day immediately before the relevant conversion date. No conversions have been made on these notes.

(d) HVWC April 21, 2015 Convertible Notes

As part of the April 21, 2015 purchase by HVWC of ABH, previous ABH convertible notes that were issued for the financing of the World of Beer location in West Hartford, Connecticut were transferred into two newly issued convertible notes payable from HVWC, one for $1,619,375 and the other one for $554,792, for a total of $2,174,167. The notes have a maturity date of April 21, 2017 and an interest rate of 10%. The conversion price for the principal and interest shall be equal to the lesser of (i) $0.0025, or (ii) fifty percent (50%) of the lowest Closing Price of HVWC’s Common Stock for the thirty (30) Trading Days preceding the Conversion Price. There have been no conversions of these notes.

(e) May 13, 2014 Convertible Note

We issued a convertible promissory note to a new accredited investor for $35,200 with a maturity date of May 13, 2015 which is in default at an interest rate of 4%. The conversion price per share is equal to seventy-five percent (75%) of the average of the three lowest closing bid prices for the common stock as reported by Bloomberg L.P. for the principal market for the twenty trading days preceding a conversion date but in no event greater than $.02. Each conversion submitted by the holder must be at least the lesser of (i) $1,000 of principal and interest or (ii) the balance due on the note. Conversion will be calculated to the hundredth of a penny (e.g. $0.0001). A conversion of $7,700 was made during the three months ended June 30, 2015. We will work with this investor to extend the maturity date.

Note 5 – Convertible Notes Payable (continued):

(f) December 19, 2014 Convertible Note

We issued a convertible promissory note for past due services to an accredited investor for $20,000 with a maturity date of December 22, 2016 at an interest rate of 10%. The conversion price per share is equal to seventy-five percent (75%) of the average of the three lowest closing bid prices for the common stock as reported by Bloomberg L.P. for the principal market for the ten trading days preceding a conversion date but in no event greater than $.02. Debt holder is limited to conversions up to 4.99% of the outstanding shares of the Common Stock. No conversions have been made.

(g) HVWC April and May 2015 Notes

On April 27, 2015, HVWC issued a convertible note for $13,250 and another convertible note for $7,500 on May 8, 2015. Both have a maturity date of December 31, 2016 and an interest rate of 10%. The conversion price for the principal and interest shall be equal to the lesser of (i) $0.0025, or (ii) fifty percent (50%) of the lowest Closing Price of HVWC’s Common Stock for the thirty (30) Trading Days preceding the Conversion Price. There have been no conversions of these notes.

(h) January 14, 2015 convertible notes

On January 14, 2015, we issued three (3) convertible notes for $13,500, $13,500 and $31,500 for a total of $58,500. All notes have the same maturity date of January 14, 2017 and the same interest rate of ten percent (10%). All three notes contain the same conversion language as follows: the conversion price per share shall be equal to seventy-five (75%) of the average of the three lowest closing bid prices for the Common Stock as reported by Bloomberg L.P. for the principal market for the ten trading days preceding a conversion date but in no event greater than $.02. There have been no conversions of these convertible notes.

(i) April 21, 2015 HVWC convertible notes

As part of the April 21, 2015 purchase of ABH by HVWC, certain HVWC’s convertible notes for a total of $96,628 were amended for the conversion price which is equal to the lesser of (i) $0.0025, or (ii) fifty percent (50%) of the lowest Closing Price of HVWC’s Common Stock for the thirty (30) Trading Days preceding the Conversion Price. The maturity date is April 1, 2017 with an interest rate of 10%. There have been no conversions of these notes.

Note 6.

Non-convertible Notes payable:

For the period ended March 31, 2011, we paid $23,750 as part of a promissory note in the total principal amount of $34,000 as a final settlement amount for a previous license agreement. The remaining amount due of $10,250 was required to be settled through monthly payments of $4,250 through December, 2010. Although we did not make all payments at June 30, 2013, we anticipate making those payments in 2013 when additional capital is available.

On January 26, 2011, we entered into a promissory note with our previous landlord in the principal amount of $75,762. This amount was due June 30, 2011 together with interest of 10% computed on the basis of the actual

number of days elapsed over a 360-day year on the unpaid balance. The default rate shall be a per annum interest rate equal to the maximum amount permitted by applicable law as we currently use 15%. Although we have not paid this note yet, we anticipate making a payment pending a future financing. On October 12, 2012, the previous landlord sold $20,000 of the promissory note to another accredited investor resulting in an outstanding amount of $55,762. The sold $20,000 note has since been fully converted into shares of common stock.

Note 6. Non-convertible Notes payable (continued):

On June 14, 2012, we entered into two promissory notes for $100,000 and $40,000, respectively, with two current accredited investors. These notes are subject to an interest rate of ten percent (10%) and are due the sooner of (i) October 14, 2012 or (ii) from the proceeds of the next funding. We received the $100,000 payment on June 27, 2012 and the $40,000 payment on July 9, 2012. The amounts are still outstanding, and we accrue interest at the default interest rate of 18%. We expect to convert these notes into convertible notes payable later in 2015.

On June 26, 2012, we entered into a promissory note of $110,000 with a current accredited investor. We agreed to pay a finder’s fee of $10,000, and we received the net payment of $100,000 on June 28, 2012. The note is subject to an interest rate of ten percent (10%) and is due the sooner of (i) October 14, 2012 or (ii) from the proceeds of the next funding. The amount is still outstanding, and we accrue interest at the default interest rate of 18%. We expect to convert these notes into convertible notes payable later in 2015.

On December 23, 2013, we entered into promissory notes with four current investors in the total principal amount of $45,505. These amounts are due December 31, 2014 and are not subject to any interest rates. These notes are exchangeable for equal aggregate amounts of notes of different authorized denominations, as requested by the holder surrendering the same. No service charge will be made for such registration or transfer or exchange.

On March 24, 2014, we entered into promissory notes with three current investors in the total principal amount of $50,000. These amounts are due February 28, 2015 and are not subject to any interest rates. These notes are exchangeable for equal aggregate amounts of notes of different authorized denominations, as requested by the holder surrendering the same. No service charge will be made for such registration or transfer or exchange.

On April 30, 2014, we entered into a promissory note with one current investor in the total principal amount of $12,000. This amount is due March 31, 2015 and is not subject to any interest rates. This note is exchangeable for equal aggregate amounts of notes of different authorized denominations, as requested by the holder surrendering the same. No service charge will be made for such registration or transfer or exchange.

On June 11, 2014, we entered into promissory notes with four current investors in the total principal amount of $40,000. These amounts are due February 28, 2015 and are not subject to any interest rates. These notes are exchangeable for equal aggregate amounts of notes of different authorized denominations, as requested by the holder surrendering the same. No service charge will be made for such registration or transfer or exchange.

On July 31, 2014, we entered into a promissory note with a current investor in the total principal amount of $15,000. This amount is due May 31, 2015 and is not subject to any interest rates. This note is exchangeable for equal aggregate amounts of notes of different authorized denominations, as requested by the holder surrendering the same. No service charge will be made for such registration or transfer or exchange.

On August 21, 2014, we entered into a promissory note with a current investor in the total principal amount of $10,000. This amount is due August 21, 2015 and is not subject to any interest rates. This note is exchangeable for equal aggregate amounts of notes of different authorized denominations, as requested by the holder surrendering the same. No service charge will be made for such registration or transfer or exchange.

On August 29, 2014, we entered into a promissory note with a current investor in the total principal amount of $10,000. This amount is due August 31, 2015 and is not subject to any interest rates. This note is exchangeable for equal aggregate amounts of notes of different authorized denominations, as requested by the holder surrendering the same. No service charge will be made for such registration or transfer or exchange.

Note 6. Non-convertible Notes payable (continued):

On September 17 and 30, 2014, we entered into promissory notes with two current investors in the total principal amount of $40,000. These amounts are due as follows: $10,000 due September 30, 2015, $15,000 due August 31, 2015 and $15,000 due September 30, 2015 and are not subject to any interest rates. These notes are exchangeable for equal aggregate amounts of notes of different authorized denominations, as requested by the holder surrendering the same. No service charge will be made for such registration or transfer or exchange.

On November 19, 2014, we entered into a promissory note with a current investor in the total principal amount of $10,000 with a maturity date of November 30, 2015 at no interest. This note is exchangeable for an equal aggregate amount of notes of different authorized denominations, as requested by the holder surrendering the same. No service charge will be made for such registration or transfer or exchange

On November 19, 2014, we entered into a promissory note with a current investor in the total principal amount of $31,500 with a maturity date of December 19, 2015 at no interest. This note is exchangeable for an equal aggregate amount of notes of different authorized denominations, as requested by the holder surrendering the same. No service charge will be made for such registration or transfer or exchange

On March 5, 2015, we entered into a promissory note with a current investor in the total principal amount of $7,500 with a maturity date of March 5, 2016 at no interest. This note is exchangeable for an equal aggregate amount of notes of different authorized denominations, as requested by the holder surrendering the same.

On March 13, 2015, we entered into a promissory note with a current investor in the total principal amount of $7,500 with a maturity date of March 13, 2016 at no interest. This note is exchangeable for an equal aggregate amount of notes of different authorized denominations, as requested by the holder surrendering the same.

On March 19, 2015, we entered into a promissory note with a current investor in the total principal amount of $7,500 with a maturity date of March 19, 2016 at no interest. This note is exchangeable for an equal aggregate amount of notes of different authorized denominations, as requested by the holder surrendering the same.

On March 27, 2015, we entered into a promissory note with a current investor in the total principal amount of $7,500 with a maturity date of March 26, 2016 at no interest. This note is exchangeable for an equal aggregate amount of notes of different authorized denominations, as requested by the holder surrendering the same.

During the month of April, 2015, we entered into promissory notes with a current investor for individual notes of $7,500, $7,500 and $7,500 at no interest with maturity dates of April 3, 2016, April 17, 2016 and April 24, 2016. These notes are exchangeable for an equal aggregate amount of notes of different authorized denominations, as requested by the holder surrendering the same.

During the month of May, 2015, we entered into promissory notes with a current investor for individual notes of $7,500, $16,500, $7,500, $7,500 and $7,500 at no interest with maturity dates of May 1, 2016, May 1, 2016, May 15, 2016, May 22, 2016 and May 29, 2016. These notes are exchangeable for an equal aggregate amount of notes of different authorized denominations, as requested by the holder surrendering the same.

During the month of June, 2015, we entered into promissory notes with a current investor for individual notes of $7,500 and $7,500 at no interest with maturity dates of June 12, 2016 and June 26, 2016. These notes are exchangeable for an equal aggregate amount of notes of different authorized denominations, as requested by the holder surrendering the same.

Note 7. Loans payable (West Hartford WOB LLC):

A total of $50,660 is owed to the 49% owners of the West Hartford, Connecticut World of Beer location. These loans are due on demand and have a 5% interest rate. ABH will be making payments on these loans either via cash flows/profits or dividends as determined by our partners’ directions.

Note 8. Minority Interest

Attitude Drinks Incorporated owns 70% of HVWC, resulting in the recording of 30% minority interest transactions for proper consolidations and reporting. Attitude Beer Holding Co. which is owned by HVWC owns 51% of West Hartford WOB LLC which owns the World of Beer franchise store in West Hartford, Connecticut. We record 49% minority interest transactions for that venture.

Note 9. Stockholders’ Deficit:

a) Series A Preferred Stock:

The Company’s articles of incorporation authorize the issuance of 20,000,000 shares of preferred stock which the Company has designated as Series A Preferred (“Series A” and “Series A-1”), $.00001 par value. Each share of Series A and A-1 is convertible into six shares of the Company’s common stock for a period of five years from the date of issue. The conversion basis is not adjusted for any stock split or combination of the common stock. Inasmuch as the Series A Convertible Preferred Stock has been outstanding for in excess of five years, it no longer has the right to convert into six shares of common stock for each one share of preferred stock. The Company must at all times have sufficient common shares reserved to effect the conversion of all outstanding Series A and A-1 Preferred. The holders of the Series A and A-1 Preferred are entitled to receive common stock dividends when, as, if and in the amount declared by the directors of the Company to be in cash or in market value of the Company’s common stock. The Company is restricted from paying dividends or making distributions on its common stock without the approval of a majority of the Series A and A-1 holders. The Series A and A-1 are senior to the Common Stock and any other series or class of the Company’s Preferred Stock. The Series A and A-1 has liquidation rights in the event of any liquidation, dissolution, or winding up of the Company, whether voluntary or involuntary, the holders of the Series A and A-1 then outstanding shall be entitled to be paid out of the assets of the Company available for distribution to its shareholders, before any payment or declaration and setting apart for payment of any amount shall be made in respect of any outstanding capital stock of the Company, an amount equal to $.00001 per share. The Company, at the option of its directors, may at any time or from time to time redeem the whole or any part of the outstanding Series A. Upon redemption, the Company shall pay for each share redeemed the amount of $2.00 per share, payable in cash, plus a premium to compensate the original purchaser(s) for the investment risk and cost of capital equal to the greater of (a) $2.00 per share, or (b) an amount per share equal to fifty percent (50%) of the market capitalization of the Company on the date of notice of such redemption divided by 2,000,000. We have evaluated our Series A Preferred Stock and determined these shares required equity classification because the number of shares convertible into common stock is fixed and reserved. Redemption of these preferred shares cannot be affected because of the Company’s stockholders’ deficit.

During the quarter ended September 30, 2009, 9,000,000 shares of Series A Preferred were granted to Roy Warren. We recorded a non-cash expense for $1,620,000 which is based on the then market price of $0.03 per common share times the convertible stock equivalents (9,000,000 preferred shares x 6 = 54,000,000 common stock equivalents). These shares have specific voting power in that Roy Warren has voting rights for the 54,000,000 common stock equivalents. The Board of Directors on September 4, 2009 approved an amendment whereas Section 2(A) of the Certificate of Designation is hereby declared in its entirety, and the following shall be substituted in lieu thereof-Rights, Powers and Preferences: The Series A have the voting powers, preferences and relative, participating, optional and other special rights, qualifications, limitations and restrictions as follows: Designation and Amount – Out of the Twenty Million (20,000,000) shares of the $0.00001 par value authorized preferred stock, 14,999,049 shares have been designated as shares of “Series A.

During the quarter ended March, 31, 2013, 51 shares of Series A-1 Preferred, convertible into 306 shares of common stock at the option of the holder, were granted to Roy Warren for services rendered. We recorded a non-cash expense for $0.09 which is based on the then market price of $0.0003 per common share times the convertible stock equivalents (51 preferred shares x 6 = 306 common stock equivalents).

Note 9. Stockholders’ Deficit (continued):

(b) Common Stock Warrants:

As of June 30, 2015, the Company had 4,545,000 outstanding warrants at an exercise price of $0.0005. The warrants have an expiration date of December 24, 2019. No warrants were issued or exercised during the three months ended June 30, 2015.

(c) Common Stock:

At June 30, 2015, the Company had issued and outstanding 2,309,624,423 shares of common stock of which 30,244 shares are owned by our two officers. Holders of shares of common stock are entitled to one vote for each share on all matters to be voted on by the shareholders. Holders of common stock have no cumulative voting rights. In the event of liquidation, dissolution or winding down of the Company, the holders of shares of common stock are entitled to share, pro rata, all assets remaining after payment in full of all liabilities. Holders of common stock have no preemptive rights to purchase our common stock. There are no conversion rights or redemption or sinking fund provisions with respect to the common stock. All of the outstanding shares of common stock are validly issued, fully paid and non-assessable.

COMMON STOCK ISSUED FROM APRIL 1, 2015 THROUGH JUNE 30, 2015

	# OF			$ DEBT		$ INTEREST		$
DATE OF	SHARES			AMOUNT		AMOUNT		CONVERSION
CONVERSION	ISSUED			CONVERTED		CONVERTED		PRICE

4/9/2015		65,625,000	(a)	$	5,250	$	-	$	0.00008
4/16/2015		41,556,729	(b)		8,311				0.0002
4/17/2015		6,802,840	(b)		1,361				0.0002
4/20/2015		640,192,616	(c)		128,039				0.0002
4/17/2015		121,562,500	(a)		9,725				0.00008
4/30/2015		121,250,000	(a)		9,700				0.00008
5/20/2015		106,818,400	(a)		7,700		311		0.000075
6/8/2015		44,622,976	(c)		8,924				0.0002

(a) Conversion of convertible notes payable

(b) Payment for past due accounts payable as part of restructuring program

(d) Options Issued During the Three Months Ended June 30, 2015:

None

Note 10. – Certain Relationships and Related Transactions and Director Independence

During the quarter ended September 30, 2009, 9,000,000 shares of Series A Preferred, convertible into 54,000,000 shares of common stock at the option of the holder, were granted to Roy Warren for services rendered. We recorded a non-cash expense for $1,620,000 which is based on the then market price of $0.03 per common share times the convertible stock equivalents (9,000,000 preferred shares x 6 = 54,000,000 common stock equivalents). Inasmuch as the Series A Convertible Preferred Stock has been outstanding for in excess of five years, it no longer has the right to convert into six shares of common stock for each one share of preferred stock. These shares vote with the common stock at a rate of 6 votes per share (54,000,000 total votes). During the quarter ended March, 31, 2013, 51 shares of Series A-1 Preferred, convertible into 306 shares of common stock at the option of the holder, were granted to Roy Warren for services rendered. We recorded a non-cash expense for $0.09 which is based on the then market price of $0.0003 per common share times the convertible stock equivalents (51 preferred shares x 6 = 306 common stock equivalents).

H. John Buckman is a board director of the company and is a debt holder of the company of a note payable at the face value of $55,000. He also received 21 shares of restricted stock that related to this note payable, 3 shares of restricted stock for being a Director and 300 shares of restricted stock for his services related to a November 2009

financing (total of 324 shares of restricted stock). He also received 500,000 non-qualified stock options at an exercise price of $.004 with full vestment as the life of the stock options is five (5) years.

Director Independence

H. John Buckman and Mike Edwards are independent directors as defined by Rule 10A-3 of the Exchange Act

under NASDAQ rules. Roy G. Warren is not independent as he is an officer of the Company.

Attitude Beer Holding Co.

On April 21, 2015, ABH was sold to HVWC. As part of the sale, we received 87,990,000 shares of HVWC resulting in us being the majority owner of the common shares of HVWC.

Note 11. Commitments and Contingencies:

We entered into an office lease for 3,333 square feet at our new office in North Palm Beach, Florida on January 3, 2013 with a lease term of three years with two years as renewable terms. Starting February 1, 2013, the minimum starting monthly base rent without sales tax was $1,602 plus monthly operating expense for $2,670 for a monthly total of $4,272. The lease provides for annual 3% increases throughout its term. Future minimum rental payments for the new office lease, based on the current adjusted minimum monthly amount of $4,370 and excluding variable common area maintenance charges, as of June 30, 2015, are as follows:

Years ending March 31,	Amount

2016	$	39,430
2017		53,146
2018		44,730

We had a disagreement with the landlord and were forced to vacate the offices including some inventory and fixed assets. Our new mailing address is 11231 U.S. Highway 1, #201, North Palm Beach, Florida 33408. We are working on a solution with the landlord to resolve these problems. We are working in our home offices and have accrued rent expense for the three months ended June 30, 2015 for a total of $13,740.

Note 11. Commitments and Contingencies (continued):

Lease of West Hartford, Connecticut World of Beer

Through the December 24, 2014 purchase of 51% of the West Hartford, Connecticut World of Beer property, the lease is for 4,163 square feet and was signed on May 16, 2014 for ten years with the option to extend the lease for two (2) additional periods of five (5) years each. The minimum starting monthly base rent was $10,754 with 3% increases annually. Future minimum rental payments for this lease, based on the current minimum monthly amount of $10,754, as of June 30, 2015, are as follows:

Years ending March 31,	Amount

2016		97,754
2017		133,196
2018		137,197
2019		141,308
2019		145,552
thereafter		795,932
	$	1,450,939

Rent expense recorded from April 21, 2015 through June 30, 2015 is $34,455

Production and Supply Agreements

On December 16, 2008, we signed a manufacturing agreement with O-AT-KA Milk Products Cooperative, Inc. for the production of our current products. The manufacturer will manufacture, package and ship such products. All products will be purchased freight on board (F.O.B) with the Company paying for the shipping costs.

Note 12 - Segment Reporting

The Company operates in two segments which are consistent with its internal organization. The major segments are beverage brand development and restaurant/tavern World of Beer franchise locations.

Revenues, expenses and assets not explicitly attributed to a segment are deemed to be unallocated.

See below for a summary:

Note 12 - Segment Reporting (continued)

ATTITUDE DRINKS INCORPORATED

SEGMENT REPORTING

JUNE 30, 2015

	Corporate
	Beverage
	Branding			Restaurant/
	Development			Tavern			Total

Net Revenues	$	(1,419	)	$	872,853		$	871,434

Cost of Goods Sold		504			241,237			241,741

Gross Margin		(1,923	)		631,616			629,693

Operating Expenses		413,432			621,461			1,034,893

Other Income/(Expense)		1,160,245			(2,270,532	)		(1,110,287	)

Net Income (Loss) Before Minority Interest		892,936			(2,408,423	)		(1,515,487	)

Minority Interest		(5,336	)		1,470,941			1,465,605

Net income/(Loss)		887,600			(937,482	)		(49,882	)

Total Current Assets		26,459			1,297,587			1,324,046

Total Assets		109,338			6,569,454			6,678,792

Total Liabilities		15,824,429			7,638,360			23,462,789

Note 12 - Segment Reporting (continued)

ATTITUDE DRINKS INCORPORATED

SEGMENT REPORTING

JUNE 30, 2014

	Corporate
	Beverage
	Branding			Restaurant/		Minority
	Development			Tavern		Interest		Total

Net Revenues	$	21,907		$	-	$	-	$	21,907

Cost of Goods Sold		20,849			-		-		20,849

Gross Margin		1,058			-		-		1,058

Operating Expenses		334,173			-		-		334,173

Other Income/(Expense)		(194,878	)		-		-		(194,878	)

Net Income (Loss) Before Minority Interest		(527,993	)		-		-		(527,993	)

Minority Interest		-			-		-		-

Net income/(Loss)		(527,993	)		-		-		(527,993	)

Total Current Assets		21,791			-		-		21,791

Total Assets		51,188			-		-		51,188

Total Liabilities		12,667,935			-		-		12,667,935

Note 13 – Subsequent Events

On July 1, 2015, the Company issued a convertible note to Southridge Partners II LP for $25,000 for their July, 2015 consulting services.

On July 29, 2015, HVWC, which Attitude Drinks Incorporated is the majority owner, issued a convertible note in the amount of $80,000 with a maturity date of July 29, 2017 at an interest rate of 10% as well as 64,000 warrants with a life of 7 years and an exercise price of $0.0025.

On August 1, 2015, the Company issued a convertible note to Southridge Partners II LP for $25,000 for their August, 2015 consulting services

On August 12, 2015, the Company filed a Form 8K to list filings with the state of Delaware for a (1) Corrected Restated Certificate of Incorporation (2) Certificate of Amendment to the Certificate of Designations, Powers, Preferences and Rights of Series A Convertible Preferred Stock and (3) Certificate of Designations, Preferences, and Rights of Series C Convertible Preferred Stock.

Note 14 – Subsequent Events (continued)

On August 18, 2015 and August 28, 2015, the Company filed a Form 8K for the exchange of notes payable and past due accrued salaries for shares of Series C Convertible Preferred Stock, warrants equating to the same number of common stock from conversions of Series C Convertible Preferred Stock as well as Additional Investment Rights to purchase same number of Series C Convertible Preferred Stock and corresponding warrants. A total of 4,265 shares of Series C Convertible Preferred Stock were issued for these debt exchanges. Total notes payable, accrued interest payable and accrued salaries and accrued payroll taxes in the approximate amount of $8,227,452 were taken off the Company’s records with approximately $3,933,051 that was moved to equity accounts for the Series C Convertible Preferred Stock transactions and $4,179,795 recorded of a gain from the debt restructuring program for the forgiveness of approximately one half of the past due liabilities.

Also on August 18, 2015, HVWC which Attitude Drinks Incorporated is the majority owner filed a DEF 14C which the majority of the voting power was received to change the name of Harrison, Vickers and Waterman Inc. to Attitude Beer, Inc. In addition, approval was received to increase the authorized common stock from 2,000,000,000 to 7,500,000,000 as well as the 2015 Stock Incentive Plan. An application has been filed with FINRA to approve these requests.

On September 1, 2015, the Company issued a convertible note to Southridge Partners II LP for $25,000 for their September, 2015 consulting services.

On September 21, 2015, the Company issued 200,000,000 shares of common stock for the conversion of $10,000 or 10 shares of Series C Convertible Preferred Stock at a conversion price of $.00005.

On October 1, 2015, HVWC issued 6,664,820 shares of its common stock for the conversion of $9,670 principal debt and accrued interest of $6,992 at a conversion price of $.0025.

On October 8, 2015, the Company issued 160,000,000 shares of common stock for the conversion of $8,000 or 8 shares of Series C Convertible Preferred Stock at a conversion price of $.00005.

On October 8, 2015, the Company received $5,000 in which it will issue either a convertible note payable of Series C Convertible Preferred Stock.

On October 14, 2015, HVWC issued a convertible note for $78,000 with a maturity date of October 14, 2017 at an interest rate of 10%. In addition, HVWC issued a warrant for the right purchase up to a total of 62,400,000 shares of HVWC’s common stock.

On October 20, 2015, HVWC issued a convertible note for $35,000 with a maturity date of October 20, 2017 at an interest rate of 10%.

On October 27, 2015, HVWC announced the agreement to build another World of Beer franchise location in Cambridge, Massachusetts with operations planned to commence in spring 2016.

ITEM 2. –

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

EXECUTIVE LEVEL OVERVIEW

Our Business Model

Phase III

Our plan of operation during the next 12 months is to continue the implementation of market and sales promotion programs to gain awareness of our “Phase III® Recovery drink in new markets as well as to build a national sales campaign throughout key markets in the west coast, southwest, Midwest, southeast and northeast parts of the United States. We plan to build an aggressive and experienced sales team to bring the brand to discerning consumers. In addition, we intend to increase our efforts to sell our products online and through increased social media marketing. Our management will continue to focus on the non-alcoholic single serving beverage business, developing and marketing milk based products in two fast growing segments: sports recovery and functional dairy. We do not directly manufacture our products but instead outsource the manufacturing process to a third party contract packer.

The pricing and gross profit margin for the products will vary. Each product delivers different functionality and utilizes different types of packaging and package sizes. Without exception, these products are expected to command premium pricing due to the functionality and value-added formulation and will therefore be priced according to the nearest competitive brands in their respective spaces. The functional milk drinks are also expected to command approximately the same percentage margin due to the premium pricing commanded by the experiential functionality. Singles should obtain higher margin than multi-packs.

World of Beer

As already stated, ABH and its joint venture partners of New England WOB, LLC, anticipate developing new World of Beer franchise locations throughout its protected territories in Connecticut and greater Boston, Massachusetts. It is anticipated that ABH will provide the financing for construction of these stores, and New England WOB, LLC will provide the real estate location search and development as well as manage the operations of each store.

World of Beer is an organization of around 80 company owned and franchised craft taverns and growing in 20 states. Most World of Beer locations provide a selection of over 500 unique craft and imported beers, modern tavern fare spirits and craft cocktails and a complete entertainment experience including live music, sports viewing, seasonal and local celebrations and highly trained servers with in-depth beer knowledge. ABH’s first World of Beer location is located in West Hartford, Connecticut which opened in late January, 2015. The West Hartford location is a 4,000 square foot tavern and serves lunch and dinner daily and hosts live music performances on Friday and Saturday nights. New England World of Beer, LLC opened its first store in Stamford, Connecticut in 2014 as ABH has an option with a 2 years life to purchase 51% of this store as that option has not been exercised.

Celebrating the popularity of craft beer and its culture, ABH and New England WOB, LLC plan to develop and build other World of Beer franchises in key market areas in the state of Connecticut and in certain areas in Massachusetts with primary emphasis in the greater Boston areas. We have signed leases to build new stores in Milford, Connecticut and Cambridge Massachusetts with expectations for opening in spring of 2016. Depending on available financing and market conditions, we will seek other territories to expand in the future as well. New England World of Beer, LLC is an expert in commercial real estate development and restaurant/bar operations and management and has broad business experience as entrepreneurs, operators and developers, having managed numerous businesses and commercial real estate ventures. The planned stores will be built in areas where we believe these operations will command premium pricing and respectable profit margins.

ABH’s future plan of operations for the World of Beer franchises is to continue the search, development and operations of World of Beer franchises throughout the state of Connecticut and the greater Boston areas over the next few years, especially in that we have these protected territories. Its joint venture partners are commercial real estate developer specialists and based on the availability of financing, plan to aggressively to build and open as many World of Beer locations as financing will allow. The West Hartford, Connecticut store which opened in late January, 2015 has exceeded expectations and budgets and is profitable since the opening date. Future new taverns are projected to be at least 4,000 square feet and have one of the world’s widest selections of craft beers, bottled and on tap with more than 500 bottles and 50 rotating taps. The stores will serve lunch and dinner daily with dishes inspired by international flavors such as Giant Bavarian Pretzels, Guinness Brat Sliders and the Chimay Burger. The taverns will host live music performances on Friday and Saturday nights each weekend. The taverns will also provide signature craft spirit cocktails, ciders, wine along with nonalcoholic beverages. ABH is expected to continue the World of Beer theme as being uncommon establishments where the experience is as essential as the products.

Plan of Operations

We are continuing to seek other sources of financing to develop our business plan, implement our sales and marketing plan and to meet other operational expense requirements and to find and develop new World of Beer locations. Historically, we have had to rely on convertible debt financings to cover operating costs. Based on the available cash, we have no assurance that we will be able to obtain additional funding to sustain our limited operations. If we do not obtain additional funding, we may need to cease operations until we do so and, in that event, may consider a sale of the rights to our product line(s) and intangible assets such as our trademarks or a joint venture partner that will provide funding to the enterprise. We may also need to sell our interest in the World of Beer locations if we do not continue to obtain the proper financing for our needs. However, certain of our Attitude Drinks Incorporated convertible debt obligations totaling $6,251,467 and HVWC convertible debt obligations for $2,291,545 are secured by Attitude’s assets. Failure to fulfill our obligations under these notes and related agreements could lead to the loss of these assets, which would be detrimental to our operations.

Our future operations are totally dependent upon obtaining additional funding. Past fundings have been subject to defaults by the company’s inability to meet due dates for certain notes payable, thereby triggering anti-dilution rights which created the need to issue additional shares of common stock and/or additional warrants to purchase additional shares of common stock in order to extend the applicable due dates for certain notes payable. There can be no assurance that these defaults will not happen again in the future, thereby creating the potential need for additional issuances of shares of common stock and/or warrants, assuming the holders agree to further extensions.

We will consider equity and/or convertible debt financings, either or both of a private sale or a registered public offering of our common stock; however, at this time and with the current economy, it seems unlikely that we can obtain an underwriter.

We anticipate that, depending on market conditions and our plan of operations, we may incur operating losses in the future based mainly on the fact that we may not be able to generate enough gross profits from our sales to cover our operating expenses and to increase our sales and marketing efforts. Our “Phase III® Recovery” drink product was introduced in early 2010 and based on historical spending, we anticipate a need of funding in the range of $1,500,000 to $1,700,000 for the next twelve months to meet our business plan and operating needs only. This figure does not include any new product research and development activities.

This discussion and analysis of our consolidated financial condition and results of operations are based on our consolidated financial statements, which have been prepared in accordance with accounting principles that are generally accepted in the United States of America.

Critical Accounting Policies

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The most critical estimates included in our financial statements are the following:

Financial Instrument Valuation

In estimating the fair value of our derivative financial instruments that are required to be carried as liabilities at fair value pursuant to the FASB Accounting Standards Codification for the period ended June 30, 2015, we use all available information and appropriate techniques including outside consultants to develop our estimates. However, actual results could differ from our estimates.

Derivative Financial Instruments

We generally do not use derivative financial instruments to hedge exposures to cash-flow, market or foreign-currency risks. However, we have and will frequently enter into certain other financial instruments and contracts, such as debt financing arrangements and freestanding warrants with features that are either (i) not afforded equity classification, (ii) embody risks not clearly and closely related to host contracts or (iii) may be net-cash settled by the counterparty to a financing transaction. As required by the FASB Accounting Standards Codification, these instruments are required to be carried as derivative liabilities, at fair value, in our financial statements. However, in the past, we were allowed to elect fair value measurement of the hybrid financial instruments, on a case-by-case basis, rather than bifurcate the derivative for all of our previous convertible notes up to February 21, 2013 when we issued new consolidated exchange convertible notes under different terms and language. We believed that fair value measurement of the hybrid convertible promissory notes arising from our various financing arrangements provided a more meaningful presentation of that financial instrument; however, as just previously mentioned on February 21, 2013, we consolidated all the past outstanding convertible notes into new consolidated exchange notes that contained different language and eliminated many of the toxic elements listed in the old convertible notes.

We estimate fair values of derivative financial instruments using various techniques (and combinations thereof) that are considered to be consistent with the objective measuring of fair values. In selecting the appropriate technique(s), we consider, among other factors, the nature of the instrument, the market risks that such instruments embody and the expected means of settlement. For less complex derivative instruments, such as free-standing warrants, we generally use the Black-Scholes-Merton option valuation technique, since it embodies all of the requisite assumptions (including trading volatility, estimated terms and risk free rates) necessary to fair value these instruments. For complex hybrid instruments, such as convertible promissory notes that include embedded conversion options, puts and redemption features embedded in them, we generally use techniques that embody all of the requisite assumptions (including credit risk, interest-rate risk, dilution and exercise/conversion behaviors) that are necessary to fair value these more complex instruments. For forward contracts that contingently require net-cash settlement as the principal means of settlement, we project and discount future cash flows applying probability-weightage to multiple possible outcomes. After consulting with a new outside valuation firm, we found that many companies are using other valuation models, primarily the lattice model to bifurcate the derivative and record the derivatives at fair value. We elected to use this new valuation model for the new consolidated notes because that model would value all convertible notes based on a probability weighted scenario model and future projections of the various potential outcomes on all assumptions, observable inputs and inherent valuation of risk, The embedded derivatives that were analyzed and incorporated into our model included the conversion feature with the variable market based conversion and the default provisions. This lattice model analyzed the underlying economic factors that influenced which of these events would occur, when they were likely to occur and the specific terms that would be in effect at the time (i.e. interest rates, stock price, conversion price, etc.). Projections were then made on these underlying factors which led to a set of potential scenarios. Probabilities were assigned to each of these scenarios based on management projections. This led to a cash flow projection and a probability associated with that cash flow. A discounted weighted average cash flow over the various scenarios was completed, and it was compared to the discounted cash flow of the 2 year 4% instrument without the embedded derivatives, thus determining a value for the compound embedded derivatives at the point of issue. These derivative liabilities need to be marked-to-market each reporting period with the change in fair value to be recorded in the profit/loss statement. Fair value is defined as the amount for which an asset (or liability) could be exchanged in a current transaction between knowledgeable, unrelated willing parties when neither party is acting under compulsion.

Estimating fair values of derivative financial instruments requires the development of significant and subjective estimates that may, and are likely to, change over the duration of the instrument with related changes in internal and external market factors. In addition, option-based techniques are highly volatile and sensitive to changes in the trading market price of our common stock, which has a high-historical volatility.

Impairment of Long-Lived Assets

Our long-lived assets consist principally of intangible assets, and to a much lesser extent, furniture and equipment. We evaluate the carrying value and recoverability of our long-lived assets when circumstances warrant such evaluation by applying the provisions of the FASB Accounting Standards Codification which requires that long-lived assets be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable through the estimated undiscounted cash flows expected to result from the use and eventual disposition of the assets. Whenever any such impairment exists, an impairment loss will be recognized for the amount by which the carrying value exceeds the fair value. We did note record any impairment expense for the three months ended June 30, 2015 and 2014.

Recent accounting pronouncements

To achieve that core principle, an entity should apply the following steps:

Identify the contract(s) with the customer

Identify the performance obligations in the contract

Determine the transaction price

Allocate the transaction price to the performance obligations in the contract

Recognize revenue when (or as) the entity satisfies a performance obligations

3. Assets recognized from the costs to obtain or fulfill a contract.

ASU 2014-09 is effective for periods beginning after December 15, 2016, including interim reporting periods within that reporting period for all public entities. Early application is not permitted.

Management does not believe that any other recently issued but not yet effective accounting pronouncements, if adopted, would have a material effect on the accompanying financial statements.

RESULTS OF OPERATIONS

Revenues and Gross Margin

Revenues	6/30/2015			6/30/2014			$ Change			% Change

Phase III
Revenues	$	(1,419	)	$	23,831		$	(25,250	)		-106.0	%
Less returns and allowance		-			(1,924	)		1,924			-100.0	%
Net Revenues		(1,419	)		21,907			(23,326	)		-106.5	%
Less cost of sales		504			20,849			(20,345	)		-97.6	%
Gross profit/(loss)		(1,923	)		1,058			(2,981	)		-281.8	%

World of Beer
Revenues		888,784			-			888,784			N/M
Less comps		(14,965	)		-			(14,965	)		N/M
Less promotions		(966	)		-			(966	)		N/M
Net revenues		872,853			-			872,853			N/M
Less costs of sales		241,237			-			241,237			N/M
Gross profit/(loss)	$	631,616		$	-		$	631,616			N/M

Total Net Revenues	$	871,434		$	21,907			849,527			3877.9	%
Total costs of sales		241,741			20,849			220,892			1059.5	%
Total gross profit/(loss)	$	629,693		$	1,058		$	628,635			59417.3	%

All revenues were generated in the United States. The increase in our revenues for the three months ended June 30, 2015 as compared to the prior three months ended June 30, 2014 is the result of opening the first World of Beer tavern in late January, 2015. Phase III revenues were lower for the three months ended June 30, 2015 mainly due to the fact that we no longer sell our products in the Florida Walgreens’ stores and the lack of adequate capital for proper advertising and promotional costs.

As part of opening and operating a new World of Beer location, we provided certain free complimentary drinks and services to customers in the amount of $14,965 for the three months ended June 30, 2015.

Based on available capital, we, on our own or through our subsidiaries, plan to increase our revenues during the next twelve months by implementing marketing and sales promotion programs to introduce our “Phase III® Recovery” drink to new markets in the 2015 and 2016 calendar years, developing a sales force, securing additional national distributors, expanding our products offering, developing and opening new World of Beer taverns, increasing our volume per outlet and implementing new grass roots marketing and sample programs.

The computation of the percentage of expenses to revenues is not meaningful at this time and is not representative of expected future operations.

Product and shipping costs for the Phase III products for the three months ended June 30, 2015 were less than the three months ended June 30, 2014 mainly due to the lower sales of the Phase III® Recovery products.

Operating Expenses

	6/30/2015		6/30/2014		$ Change			% Change

Attitude Drink Company Inc. and Attitude Drinks Incorporated
Salaries, taxes and employee benefit costs	$	109,236	$	169,023	$	(59,787	)		-35.4	%
Consulting fees		75,000		75,000		-			0.0	%
Other administrative and general expenses		42,626		46,588		(3,962	)		-8.5	%
Marketing and promotion expenses		2,574		9,464		(6,890	)		-72.8	%
Professional and legal fees		46,365		31,875		14,490			45.5	%
Product development costs		-		400		(400	)		-100.0	%
Depreciation and amortization		15,121		1,823		13,298			729.5	%

Total operating expenses		290,922		334,173		(43,251	)		-12.9	%

Harrison, Vickers and Waterman, Inc. and World of Beer
Administrative salaries		175,000		-		175,000			N/M
Restaurant/tavern salaries, taxes and employee benefit costs		259,387		-		259,387			N/M
Restaurant/tavern other administrative and general expenses		202,488		-		202,488			N/M
Other administrative and general expenses		33,705		-		33,705			N/M
Professional and legal fees		41,456		-		41,456			N/M
Depreciation and amortization		31,935		-		31,935			N/M

Total operating expenses		743,971		-		743,971			N/M

Consolidated operating expenses	$	1,034,893	$	334,173	$	700,720			209.7	%

Attitude Drink Company Inc. and Attitude Drinks Incorporated:

Administrative salaries, taxes and employee benefit costs

For the three months ended June 30, 2015, total expenses of $109,236 were lower by $59,787 (35.4%) over last year’s comparable figures of $169,023 mainly due to fewer employees caused by a lack of financing

Administrative consulting fees

Consulting fees of $75,000 for the three months ended June 30, 2015 were the same as last year’s figures. These fees relate to the use of an outside financial services consulting firm.

Other administrative and general expenses

For the three months ended June 30, 2015, total expenses of $42,626 were $3,962 (8.5%) less than last year’s comparable figures of $46,588 mainly due to decreased activities from a lack of financing. These expenses mainly relate to accrued rent expense for $13,740, board of directors accrued fees of $9,000, filing fees for $8,965 and telephone costs for $2,642.

Administrative marketing and promotion expenses

For the three months ended June 30, 2015, we incurred total administrative marketing and promotion expenses of $2,574 as compared to $9,464 for the three months ended June 30, 2014 for a decrease of $6,890 or (72.8%). This decrease was due primarily to the decision to spend fewer marketing dollars for the three months ended June 30, 2015 due to limited resources and capital.

Administrative professional and legal fees

These costs related to the use of outside legal, accounting and auditing firms. Total costs for the three months ended June 30, 2015 of $46,365 were $14,490 45.5% higher than the previous year’s comparable costs of $31,875 mainly due to the need for more legal services for the purchase of HVCW.

HVWC (World of Beer):

Administrative salaries

This represents the accrual of $175,000 for salaries of the former CEO and Sole Director, James Giordano. He believes he is owed these funds for his exit from HVCW. We disagree but have recorded the amount. We will address this issue as soon as practical.

Restaurant/tavern salaries, taxes and employee benefit costs

As this location was opened in late January, 2015, there are no comparable costs for 2014. These costs relate to all of the payroll and tax expenses for operating the West Hartford World of Beer location.

Restaurant/tavern other administrative and general expenses

These costs relate to the new World of Beer franchise location in West Hartford, Connecticut that opened in late January, 2015. The key expenses relate to: rent expense for $46,788, royalties to corporate World of Beer for $43,503, utility costs for $10,909, credit card processing fees for $13,220, disposal fees for $10,083, music and entertainment for $10,342, cleaning expense for $27,229 and the rest for other costs to operate the World of Beer facility. There are no comparable costs for 2014.

Professional and legal fees

These costs relate to the use of outside legal counsel and auditors for the corporate functions of HVWC. There are no comparable costs for 2014.

Depreciation and amortization

For the three months ended June 30, 2015, we recorded depreciation and amortization expense for $31,935 as there are no comparable costs for 2014. Most of the expense relates to the new World of Beer location that opened in late January, 2015 in West Hartford, Connecticut for the depreciable fixed assets and amortized deferred pre-opening expenses.

Other Income (Expense)

Interest income/(expense)

The following table summarizes the effects on our income (expense) associated with changes in the fair values of our financial instruments that are carried at fair value from the three months ended June 30, 2015 and the three months ended June 30, 2014:

	Three Months			Twelve Months
	ended			ended
	June 30, 2015			June 30, 2014
Our financing arrangements giving ris to derivative financial instruments and the income effects:

Total interest income/(expense) arising from fair value adjustments	$	(241,930	)	$	739,749
Amortization of debt expense/accretion		(247,007	)		(668,344	)
Other interest expense		(195,581	)		(266,283	)
	$	(684,518	)	$	(194,878	)

Our financial instruments that are recorded at fair value will change in future periods based upon changes in our trading market price and changes in other assumptions and market indicators used in the valuation techniques.

Interest and Other Financing Costs:

We recorded interest expense for the three months ended June 30, 2015 for $(684,518) and interest expense for $(194,878) for the three months ended June 30, 2014 in connection with our debt obligations at interest rates from 10% to 15%. The change of ($489,640) over the prior fiscal year was attributed to the recording of debt instruments at fair value (debt discount expense) due to the changes in the stock price. We recorded the amortization of debt discounts for $247,007 and $668,344 for the three months ended June 30, 2015 and 2014, respectively.

Gain from debt restructuring

For the three months ended June 30, 2015, we implemented a restructuring program to address certain past due accounts payable and accrued salaries. As a result, we issued 733,175,168 shares of restricted common stock to certain vendors and previous employees as part of their agreement to settle these past due amounts. As such, we were able to write off total payables in the amount of $1,759,545. As the original amounts were settled at reduced amounts for the value of the stock, we recognized a gain for this debt restructuring in the amount of $1,612,910.

Minority Interest

For the three months ended June 30, 2015, we recorded minority interest in the amount of $1,465,605 which represents the elimination of 49% profit of the West Hartford World of Beer location as well as 30% elimination for the loss of HVWC as these percentages represent minority ownership interests in both companies.

Net Loss

We reported a net loss for the three months ended June 30, 2015 of $(49,882) and a net loss of $(527,993) for the three months ended June 30, 2014. The majority of the expenses for the three months ended June 30, 2015 related to salary related costs, consulting fees, general and administrative fees, professional and legal fees and recognition of interest expense reflecting the changes in the fair value of the convertible debts. Most of the costs incurred in the prior three months ended June 30, 2014 related to salary related costs, consulting fees, professional and legal fee and recognition of interest income reflecting changes in the fair value of the convertible debts.

Loss per Common Share Applicable to Common Stockholders

The Company’s basic and diluted loss per common share applicable to common stockholders for the three months ended June 30, 2015 was $(0.00), and the basic and diluted loss per common share for the prior three months ended June 30, 2014 was $(0.00). Because the Company experienced a net loss for the three months ended June 30, 2015, all potential common share conversions existing in our financial instruments would have an anti-dilutive impact on earnings per share; therefore, diluted loss per common share equals basic loss per common share for this period. The weighted average common shares outstanding for the three months ended June 30, 2015 and 2014 were 2,011,266,510 and 338,533,990, respectively for the basic and diluted loss calculation.

LIQUIDITY AND CAPITAL RESOURCES

We have yet to achieve any substantial revenues or profitability, and our ability to continue as a going concern will be dependent upon us receiving additional third party financings to fund our business at least throughout the next twelve months in our new fiscal year. Ultimately, our ability to continue is dependent upon the achievement of profitable operations. We anticipate that, depending on market conditions and our plan of operations, we may incur operating losses in the future based mainly based on the fact that we may not be able to generate enough gross profits from our sales to cover our operating expenses and to increase our sales and marketing efforts. There is no assurance that further funding will be available at acceptable terms, if at all, or that we will be able to achieve profitability or receive adequate funding for new product research and development activities. These conditions raise substantial doubt about our ability to continue as a going concern. The accompanying financial statements do not reflect any adjustments that may result from the outcome of this uncertainty.

Working Capital Needs and Major Cash Expenditures

We currently have monthly working capital needs of approximately $125,000 to $150,000. This amount is, however, expected to increase in the next fiscal year, primarily due to the following factors:

¨ Increased employees, sales consultant and related travel costs

¨ Required interest payments on our convertible promissory notes payable

¨ Increased product development costs for new products, packaging and marketing materials

External Sources of Liquidity-External Debt Financing and Use of Common Stock for the three months ended June 30, 2015:

External Debt Financing:

On April 3, 2015, we issued a promissory note to Southridge Partners II LP in which we received $7,500.

On April 17, 2015, we issued a promissory note to Southridge Partners II LP in which we received $7,500.

On April 24, 2015, we issued a promissory note to Southridge Partners II LP in which we received $7,500.

On May 1, 2015, we issued a promissory note to Southridge Partners II LP in which we received $7,500.

On May 1, 2015, we issued a promissory note to Southridge Partners II LP in which we received $16,500.

On May 15, 2015, we issued a promissory note to Southridge Partners II LP in which we received $7,500.

On May 22, 2015, we issued a promissory note to Southridge Partners II LP in which we received $7,500

On May 29, 2015, we issued a promissory note to Southridge Partners II LP in which we received $7,500

On June 12, 2015, we issued a promissory note to Southridge Partners II LP in which we received $7,500

On June 26, 2015, we issued a promissory note to Southridge Partners II LP in which we received $7,500

All of the net proceeds from the above financings were used for operations and working capital purposes.

The foregoing securities were issued in reliance upon an exemption from registration under Section 4(a)(2) and/or Regulation D of the Securities Act of 1933, as amended. All of the investors were accredited investors and/or had preexisting relationships with the Company, there was no general solicitation or advertising in connection with the offer or sale of securities, and the securities were issued with a restricted legend.

Information about our cash flows

	For the Three Months Ended
	June 30,			June 30,
	2015			2014
Cash provided by (used in):

Operating activities	$	(43,849	)	$	(132,459	)

Investing activities	$	(132,615	)	$	-

Financing activities	$	169,643		$	112,200

For the three months ended June 30, 2015, we reported a net loss of $(49,882) which was affected by recording the fair value adjustment of the convertible notes for $241,930, amortization of debt discount for $247,007 and derivative expense of $2,038,679 offset by minority interest for $(1,465,605) and gain from debt restructuring for $(1,612,910). Cash flows generated from our operating activities were inadequate to cover our cash disbursement needs as we had to rely on new convertible debt financings and bridge loans to cover operating costs. Cash used by investing activities were attributed mainly to the purchase of equipment and operating expenses related to the opening of the World of Beer restaurant and tavern. Cash provided by financing activities increased due to the proceeds from the issuance of additional convertible debt financings and short-term bridge loans payable for net proceeds of $169,643.

For the prior three months ended June 30, 2014, we reported a net loss of $(527,993) which was affected by recording the fair value adjustment of the convertible notes for $(739,749), offset by the amortization of debt discount for $668,344 as well as changes in accounts payable and accrued expenses for $190,166. Cash flows generated from our operating activities were inadequate to cover our cash disbursement needs as we had to rely on new convertible debt financings and bridge loans to cover operating costs. Cash used by investing activities were attributed mainly to the purchase of a company vehicle. Cash provided by financing activities increased due to the proceeds from the issuance of additional convertible debt financings and short-term bridge loans payable for net proceeds of $112,200.

Defaults for Short-Term Non-Convertible Loans for the three months ended June 30, 2015:

At June 30, 2015, two short-term bridge notes for a total of $115,000 were past due. One of these notes is held by one of our Board of Directors and he exchanged his note for shares of Series C Convertible Preferred Stock in August, 2015. We are still trying to locate the other debt holder to extend the maturity date.

Debt restructuring program

For the three months ended June 30, 2015, we implemented a debt restructuring program whereas we issued restricted shares of common stock to vendors and previous employees for the reduction of our accounts and one note payable for $118,559 and accrued payroll liabilities by $1,640,986. Through this restructuring program, we were able to record a gain to our statement of operations for the three months ended June 30, 2014 for $1,612,910. In addition for the six months ended September 30, 2015, the restructuring program resulted in a year to date gain to the statement of operations for approximately $5,834,709 and a total reduction of notes and loans payables of approximately $5,079,480, salaries payable of $3,546,669, accrued interest payable for $1,288,483 and accounts payable of $137,959.

The following table sets forth various details of all convertible notes and short-term bridge loans including applicable interest and default rates for the three months ended June 30, 2015:

RECAP ANALYSIS OF ALL CONVERTIBLE NOTES PAYABLE

AND SHORT-TERM BRIDGE NON-CONVERTIBLE LOANS

FOR THE THREE MONTHS ENDED JUNE 30, 2015

Outstanding						(c)					Default			Accrued
Convertible			Issue		Default	$ Amount		Interest			Interest			Default
Note Amounts			Date	Due Date	Yes/No	Past Due		Rate			Rate			Interest

$	5,452,892	(a)	February, 2013	2/21/2015	Yes (b)		5,452,892		4	%		20	%		-
$	5,575		April, 2013	12/31/2014	Yes (b)		5,575		None			None			-
$	25,000		May, 2013	12/31/2014	Yes (b)		25,000		None			None			-
$	25,000		June, 2013	12/31/2014	Yes (b)		25,000		None			None			-
$	37,000		June, 2013	6/7/2014	Yes (b)		37,000		None			None			-
$	25,000		July, 2013	12/31/2014	Yes (b)		25,000		None			None			-
$	25,000		August, 2013	12/31/2014	Yes (b)		25,000		None			None			-
$	25,000		September, 2013	1/31/2015	Yes (b)		25,000		None			None			-
$	25,000		October, 2013	2/28/2015	Yes (b)		25,000		None			None			-
$	25,000		November, 2013	3/31/2015	Yes (b)		25,000		None			None			-
$	25,000		December, 2013	4/30/2015	Yes (b)		25,000		None			None			-
$	25,000		January, 2014	5/31/2015	Yes (b)		25,000		None			None			-
$	25,000		February, 2014	6/30/2015	Yes (b)		25,000		None			None			-
$	25,000		March, 2014	7/31/2015	No		-		None			None			-
$	25,000		April, 2014	8/31/2015	No		-		None			None			-
$	25,000		May, 2014	9/30/2015	No		-		None			None			-
$	27,500		May, 2014	5/13/2015	Yes (b)		27,500		4	%		20	%		-
$	25,000		June, 2014	10/31/2015	No		-		None			None			-
$	25,000		July, 2014	11/30/2015	No		-		None			None			-
$	25,000		August, 2014	12/31/2015	No		-		None			None			-
$	25,000		September, 2014	1/31/2016	No		-		None			None			-
$	25,000		October, 2014	2/28/2016	No		-		None			None			-
$	25,000		November, 2014	3/31/2016	No		-		None			None			-
$	25,000		December, 2014	4/30/2016	No		-		None			None			-
$	20,000		December, 2014	12/22/2016	No		-		10	%		20	%		-
$	25,000		January, 2015	5/31/2016	No		-		None			None			-
$	13,500		January, 2015	1/14/2017	No		-		10	%		20	%		-
$	13,500		January, 2015	1/14/2017	No		-		10	%		20	%		-
$	31,500		January, 2015	1/14/2017	No		-		10	%		20	%		-
$	25,000		February, 2015	6/30/2016	No		-		None			None			-
$	25,000		March, 2015	7/31/2016	No		-		None			None			-
$	13,250		April, 2015	12/31/2016	No				10	%		10	%		-
$	25,000		April, 2015	8/31/2016	No				None			None			-
$	96,628		April, 2015	4/1/2017	No				10	%		10	%		-
$	2,174,167		April, 2015	4/21/2017	No				10	%		10	%		-
$	25,000		May, 2015	9/30/2016	No				None			None			-
$	7,500		May, 2015	12/31/2016	No				10	%		10	%		-
$	25,000		June, 2015	10/31/2016	No				None			None			-

$	8,543,012					$	5,772,967

(a) Total amount includes total consolidated notes plus additional issued allonges.

(b) The Company is implementing a restruturing program and is working with the debt holders to extend the maturity dates. No presentation of defaults to the Company from the debt holders has occurred, thus no recording of default interest rates.

SHORT-TERM BRIDGE LOANS (d)
$	60,000	April 14, 2008	Past due	Yes	$	60,000	15	%	$	55,101
$	55,000	August 5, 2008	Past due	Yes	$	55,000	15	%		67,155
$	115,000	Total amount past due			$	115,000			$	122,256

(d) Notes indicated in default are in default because they are past due. One of the debt holders is a Board Director and has received shares of Series C Convertible Preferred Stock in August, 2015 as an exchange to eliminate the payable.

During August, 2015, approximately $3.3 million of the above debt that was in default was exchanged for Series C Convertible Preferred Stock.

CERTAIN BUSINESS RISKS:

Investing in our securities involves a high degree of risk. You should carefully consider the risk factors discussed below, together with all the other information contained or incorporated by reference in this report and in our filings under the Securities Exchange Act of 1934, as amended, or the Exchange Act, before deciding whether to purchase any of our securities. Each of the risk factors could adversely affect our business, operating results and financial condition, as well as adversely affect the value of an investment in our securities, and the occurrence of any of these risks might cause you to lose all or part of your investment.

Risks Relating to Our Business

We have a history of operating losses. If we continue to incur operating losses, we eventually may have insufficient working capital to maintain or expand operations according to our business plan.

As of June 30, 2015, we had a total shareholders’ deficit of $16,783,997 and a working capital deficit of $20,217,445, compared to a total shareholders’ deficit of $16,942,378 and a working capital deficit of $17,997,151 at March 31, 2015. Cash and cash equivalents were $226,770 as of June 30, 2015 as compared to $233,591 at March 31, 2015. The main contributing factor to the working capital deficit was primarily attributable to the changes in the fair value calculations for the valuation of our convertible notes payable as well as changes in the derivative liabilities.

Our auditors have expressed doubt as to our ability to continue as a going concern.

Our financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that might be necessary should we be unable to continue as a going concern. Our auditor’s report reflects substantial doubt about our ability to continue as a going concern. For the foreseeable future, we will have to fund all of our operations and capital expenditures from the net proceeds of equity or debt offerings we may have and cash on hand. Although we plan to pursue additional financing, there can be no assurance that we will be able to secure financing when needed or obtain such financing on terms satisfactory to us, if at all, or that any additional funding we do obtain will be sufficient to meet our needs in the long term. Obtaining additional financing may be more difficult because of the uncertainty regarding our ability to continue as a going concern. If we are unable to secure additional financing in the future on acceptable terms, or at all, we may be unable to complete planned development of certain products.

To date, we have generated no material product revenues. Our operating losses have negatively impacted our liquidity, and we are continuing our efforts to develop new products, while focusing on increasing net sales. However, changes may occur that would consume our existing capital at a faster rate than projected, including, among others, the progress of our research and development efforts and hiring of additional key employees. If we continue to suffer losses from operations, our working capital may be insufficient to support our ability to expand our business operations as rapidly as we would deem necessary at any time, unless we are able to obtain additional financing. There can be no assurance that we will be able to obtain such financing on acceptable terms, or at all. If adequate funds are not available or are not available on acceptable terms, we may not be able to pursue our business objectives and would be required to reduce our level of operations, including reducing infrastructure, promotions, personnel and other operating expenses. These events could adversely affect our business, results of operations and financial condition. If adequate funds are not available or if they are not available on acceptable terms, our ability to fund the growth of our operations, take advantage of opportunities, develop products or services or otherwise respond to competitive pressures, could be curtailed or significantly limited. Any additional sources of financing will likely involve the sale of our equity securities, which will have a dilutive effect on our stockholders. If we are unable to achieve profitability, the market value of our common stock will decline, and there would be a material adverse effect on our financial condition.

At June 30, 2015, we were in default on certain of our short-term bridge loans and convertible note payables.

At June 30, 2015, we were in default on short term bridge notes totaling $115,000 in principal. One of the two note holders is on our Board of Directors and has exchanged his notes payable during August, 2015 into shares of Series C Convertible Preferred Stock. We continue to locate the other note holder which we have been doing for some time. The remedy for default under the notes is acceleration of principal and interest due thereunder. In addition, we were in default on certain convertible note payables in the total amount of $5,772.967. We implemented a restructuring program in August, 2015 and will work with our investors to extend these maturity dates. There is no assurance that we will be able to continue to extend these obligations. Penalties for default under our convertible notes include but are not limited to acceleration of principal and interest and default interest rates from 15% up to 20%.

Defaults on these obligations could materially adversely affect our business operating results and financial condition to such extent that we may be forced to restructure, file for bankruptcy, sell assets or cease operation. Further, certain of these obligations are secured by our assets. Failure to fulfill our obligations under these notes and related agreements could lead to the loss of these assets, which would be detrimental to our operations. Our main assets relate to ABH’s assets in the World of Beer location in West Hartford, Connecticut. If we lose those assets, we would have a very difficult time conducting our business.

We may not be able to develop successful new beverage products which are important to our growth.

An important part of our strategy is to increase our sales through the development of new beverage products. We cannot assure you that we will be able to continue to develop, market and distribute future beverage products that will have market acceptance. The failure to continue to develop new beverage products that gain market acceptance could have an adverse impact on our growth and materially adversely affect our financial condition. Further, we may have higher obsolescent product expense if new products fail to perform as expected due to the need to write off excess inventory of the new products.

Our results of operations may be impacted in various ways by the introduction of new products, even if they are successful, including the following:

	●	sales of new products could adversely impact sales of existing products;
	●	we may incur higher cost of goods sold and selling, general and administrative expenses in the periods when we introduce new products due to increased costs associated with the introduction and marketing of new products, most of which are expensed as incurred; and
	●	when we introduce new platforms and bottle sizes, we may experience increased freight and logistics costs as our co-packers adjust their facilities for the new products.

The beverage business is highly competitive.

The premium and functional beverage drink industries are highly competitive. Many of our competitors have substantially greater financial, marketing, personnel and other resources than we do. Competitors in these industries include bottlers and distributors of nationally advertised and marketed products, as well as chain store and private label drinks. The principal methods of competition include brand recognition, price and price promotion, retail space management, service to the retail trade, new product introductions, packaging changes, distribution methods and advertising. We also compete for distributors, shelf space and customers primarily with other premium beverage companies. As additional competitors enter the field, our market share may fail to increase or may decrease.

The growth of our revenues is dependent on acceptance of our products by mainstream consumers.

We have limited resources to introduce our products to the mainstream consumer. As such, we will need to increase our sales force and execute agreements with distributors who, in turn, distribute to mainstream consumers at grocery stores, club stores and other retailers. If our products are not accepted by the mainstream consumer, our business could suffer.

Our failure to accurately estimate demand for our products could adversely affect our business and financial results.

We may not correctly estimate demand for our products. Our ability to estimate demand for our products is imprecise, particularly with new products, and may be less precise during periods of rapid growth, particularly in new markets. If we materially underestimate demand for our products or are unable to secure sufficient ingredients or raw materials including, but not limited to, containers, labels, flavors or packing arrangements, we might not be able to satisfy demand on a short-term basis. Moreover, industry-wide shortages of certain ingredients have been and could, from time to time in the future, be experienced, which could interfere with and/or delay production of certain of our products and could have a material adverse effect on our business and financial results. We do not use hedging agreements or alternative instruments to manage this risk.

The loss of our third-party distributors could impair our operations and substantially reduce our financial results.

We continually seek to expand distribution of our products by entering into distribution arrangements with regional bottlers or other direct store delivery distributors having established sales, marketing and distribution organizations. Many distributors are affiliated with and manufacture and/or distribute other beverage products. In many cases, such products compete directly with our products.

The marketing efforts of our distributors are important for our success. If our brands prove to be less attractive to our existing distributors and/or if we fail to attract additional distributors and/or our distributors do not market and promote our products above the products of our competitors, our business, financial condition and results of operations could be adversely affected.

Inability to secure co-packers for our products could impair our operations and substantially reduce our financial results.

We rely on third parties, called co-packers in our industry, to produce our products. We currently have only one co-packing agreement for our products and at this time have only one milk-based product commercially available (Phase III® Recovery). Our co-packing agreement with our principal co-packer was signed on December 16, 2008 and had an initial term of three (3) years which has now expired. This agreement is automatically renewed for consecutive one (1) year periods (next renewal date of December 16, 2015) unless either party provides notice of cancellation at least one hundred twenty (120) calendar days prior to the end of the initial term or subsequent extension period. Our dependence on one co-packer puts us at substantial risk in our operations. If we lose this relationship and/or require new co-packing relationships for other products, we may be unable to establish such relationships on favorable terms, if at all. Further, co-packing arrangements with potential new companies may be on a short term basis, and such co-packers may discontinue their relationship with us on short notice. Our dependence on co-packing arrangements exposes us to various risks, including:

	●	if any of those co-packers were to terminate our co-packing arrangement or have difficulties in producing beverages for us, our ability to produce our beverages would be adversely affected until we were able to make alternative arrangements; and
	●	our business reputation would be adversely affected if any of the co-packers were to produce inferior quality products.

We compete in an industry that is brand-conscious so brand name recognition and acceptance of our products are critical to our success.

Our business is substantially dependent upon awareness and market acceptance of our products and brands by our targeted consumers. In addition, our business depends on acceptance by our independent distributors of our brands as beverage brands that have the potential to provide incremental sales growth rather than reduce distributors’ existing beverage sales. We believe that the success of our product name brands will also be substantially dependent upon acceptance of our product name brands. Accordingly, any failure of our brands to maintain or increase acceptance or market penetration would likely have a material adverse affect on our revenues and financial results.

We compete in an industry characterized by rapid changes in consumer preferences and public perception so our ability to continue to market our existing products and develop new products to satisfy our consumers’ changing preferences will determine our long-term success.

Consumers are seeking greater variety in their beverages. Our future success will depend, in part, upon our continued ability to develop and introduce different and innovative beverages. In order to retain and expand our market share, we must continue to develop and introduce different and innovative beverages and be competitive in the areas of quality and health, although there can be no assurance of our ability to do so. There is no assurance that consumers will continue to purchase our products in the future. Additionally, many of our products are considered premium products and to maintain market share during recessionary periods, we may have to reduce profit margins, which would adversely affect our results of operations. Product lifecycles for some beverage brands and/or products and/or packages may be limited to a few years before consumers’ preferences change. The beverages we currently market are in their early lifecycles, and there can be no assurance that such beverages will become or remain profitable for us. The beverage industry is subject to changing consumer preferences, and shifts in consumer preferences may adversely affect us if we misjudge such preferences. We may be unable to achieve volume growth through product and packaging initiatives. We also may be unable to penetrate new markets. If our revenues decline, our business, financial condition and results of operations will be materially and adversely affected.

Our quarterly operating results may fluctuate significantly because of the seasonality of our business.

As our products are relatively new, there may be seasonality issues that could cause our financial performance to fluctuate. In addition, beverage sales can be adversely affected by sustained periods of bad weather.

Our business is subject to many regulations, and noncompliance is costly.

The production, marketing and sale of our unique beverages, including contents, labels, caps and containers, are subject to the rules and regulations of various federal, provincial, state and local health agencies. If a regulatory authority finds that a current or future product or production run is not in compliance with any of these regulations, we may be fined, or production may be stopped, thus adversely affecting our financial conditions and operations. Similarly, any adverse publicity associated with any noncompliance may damage our reputation and our ability to successfully market our products. Furthermore, the rules and regulations are subject to change from time to time and while we closely monitor developments in this area, we have no way of anticipating whether changes in these rules and regulations will impact our business adversely. Additional or revised regulatory requirements, whether labeling, environmental, tax or otherwise, could have a material adverse effect on our financial condition and results of operations.

We face risks associated with product liability claims and product recalls.

Other companies in the beverage industry have experienced product liability litigation and product recalls arising primarily from defectively manufactured products or packaging. Our co-packer maintains product liability insurance insuring our operations from any claims associated with product liability. This insurance may or may not be sufficient to protect us. We do not maintain product recall insurance. In the event we were to experience additional product liability or product recall claim, our business operations and financial condition could be materially and adversely affected.

We have identified material weaknesses in our internal controls, and we cannot provide assurances that these weaknesses will be effectively remediated or that additional material weaknesses will not occur in the future.

If our internal control over financial reporting or our disclosure controls and procedures are not effective, we may not be able to accurately report our financial results, prevent fraud, or file our periodic reports in a timely manner, which may cause investors to lose confidence in our reported financial information and may lead to a decline in our stock price. Our most recent evaluation of our internal controls resulted in our conclusion that our disclosure controls and procedures and that our internal controls over financial reporting were not effective. Effective internal controls are necessary for us to provide reliable financial reports. All internal control systems, no matter how well designed, have inherent limitations. Even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. In our case, our failure to achieve and maintain an effective internal control environment could cause us to be unable to produce reliable financial reports or prevent fraud. This may cause investors to lose confidence in our reported financial information, which could in turn have a material adverse effect on our stock price.

Our intellectual property rights are critical to our success; the loss of such rights could materially, adversely affect our business.

We regard the protection of our trademarks, trade dress and trade secrets as critical to our future success. We have registered our trademarks in the United States that are very important to our business. We also own the copyright in and to portions of the content on the packaging of our products. We regard our trademarks, copyrights and similar intellectual property as critical to our success and attempt to protect such property with registered and common law trademarks and copyrights, restrictions on disclosure and other actions to prevent infringement. Product packages, mechanical designs and artwork are important to our success, and we would take action to protect against imitation of our packaging and trade dress and to protect our trademarks and copyrights, as necessary. We also rely on a combination of laws and contractual restrictions, such as confidentiality agreements, to establish and protect our proprietary rights, trade dress and trade secrets. However, laws and contractual restrictions may not be sufficient to protect the exclusivity of our intellectual property rights, trade dress or trade secrets. Furthermore, enforcing our rights to our intellectual property could involve the expenditure of significant management and financial resources. There can be no assurance that other third parties will not infringe or misappropriate our trademarks and similar proprietary rights. If we lose some or all of our intellectual property rights, our business may be materially and adversely affected.

If we are not able to retain the full time services of our management team, including Roy G. Warren, it will be more difficult for us to manage our operations and our operating performance could suffer.

Our business is dependent, to a large extent, upon the services of our management team, including Roy G. Warren, our founder and Chief Executive Officer and Chairman of the Board. We depend on our management team, but especially on Mr. Warren’s creativity and leadership in running or supervising virtually all aspects of our day-to-day operations. We do not have a written employment agreement with any member of our management team or Mr. Warren. In addition, we do not maintain key person life insurance on any of our management team or Mr. Warren. Therefore, in the event of the loss or unavailability of any member of the management team to us, there can be no assurance that we would be able to locate in a timely manner or employ qualified personnel to replace him. The loss of the services of any member of our management team or our failure to attract and retain other key personnel over time would jeopardize our ability to execute our business plan and could have a material adverse effect on our business, results of operations and financial condition.

We need to manage our growth and implement and maintain procedures and controls during a time of rapid expansion in our business.

If we are to expand our operations, such expansion would place a significant strain on our management, operational and financial resources. Such expansion would also require improvements in our operational, accounting and information systems, procedures and controls. If we fail to manage this anticipated expansion properly, it could divert our limited management, cash, personnel, and other resources from other responsibilities and could adversely affect our financial performance.

Our business may be negatively impacted by a slowing economy or by unfavorable economic conditions or developments in the United States and/or in other countries in which we may operate.

A general slowdown in the economy in the United States or unfavorable economic conditions or other developments may result in decreased consumer demand, business disruption, supply constraints, foreign currency devaluation, inflation or deflation. A slowdown in the economy or unstable economic conditions in the United States or in the countries in which we operate could have an adverse impact on our business results or financial condition. Currently we do not have any international operations.

The beneficial ownership of a significant percentage of our common stock gives Roy Warren and members of his family effective control of us and limits the influence of other shareholders on important policy and management issues.

Roy Warren, our Chief Executive Officer and Chairman of our Board, through his control of 51% of our voting stock, has control over our company and important matters relating to us. As a result he can control the outcome of all matters submitted to our shareholders for approval, including the election of our directors, our business strategy, our day-to-day operations and any proposed merger, consolidation or sale of all or substantially all of our assets. This control of our company could discourage the acquisition of our common stock by potential investors and could have an anti-takeover effect, preventing a change in control of our company that might be otherwise beneficial to our shareholders, and possibly depressing the trading price of our common stock. There can be no assurance that conflicts of interest will not arise with respect to Roy Warren’s ownership and control of our company or that any conflicts will be resolved in a manner favorable to the other shareholders of our company.

Certain provisions of the General Corporation Law of the State of Delaware, our Amended and Restated Certificate of Incorporation, as amended, and our bylaws may have anti-takeover effects which may make an acquisition of our company by another company more difficult.

We are subject to the provisions of Section 203 of the General Corporation Law of the State of Delaware, which prohibits a Delaware corporation from engaging in any business combination, including mergers and asset sales, with an interested stockholder (generally, a 15% or greater stockholder) for a period of three years after the date of the transaction in which the person became an interested stockholder, unless the business combination is approved in a prescribed manner. The operation of Section 203 may have anti-takeover effects, which could delay, defer or prevent a takeover attempt that a holder of our common stock might consider in its best interest.

Our Amended and Restated Certificate of Incorporation and bylaws contain provisions that permit us to issue, without any further vote or action by the stockholders, up to 20,000,000 shares of preferred stock in one or more series and, with respect to each such series, to fix the number of shares constituting the series and the designation of the series, the voting powers, if any, of the shares of the series, and the preferences and relative, participating, optional and other special rights, if any, and any qualifications, limitations or restrictions, of the shares of such series.

These provisions on our Amended and Restated Certificate of Incorporation may have anti-takeover effects, which could delay, defer or prevent a takeover attempt that a holder of our common stock might consider in its best interest.

Certain of our officers may have a conflict of interest and lack of availability.

Some of our officers, including our Chief Executive Officer and our Chief Financial Officer, are currently working for the Company on a part-time basis and are the Chief Executive Officer and Chief Financial Officer of Harrison Vickers and Waterman Inc. These officers have discretion to decide what time they devote to our activities, which may result in a lack of availability when needed due to responsibilities at other jobs.

We do not have an audit committee.

While not being legally obligated to have an audit committee or independent audit committee financial expert, we currently do not have an audit committee or independent audit committee financial expert which is an important entity-level control over the Company’s financial statements.

Risks Related to the World of Beer operations

If ABH is unable to identify and obtain suitable new franchises sites and successfully open new franchises, our revenue will suffer and profits may be reduced.

ABH requires that all proposed franchise sites meet certain site selection criteria. ABH may make errors in selecting these criteria or applying these criteria to a particular site, or there may be an insignificant number of new sites meeting these criteria that would enable us to achieve our planned expansion in future periods. ABH faces significant competition from other restaurant companies and retailers for sites that meet its criteria, and the supply of sites may be limited in some markets. Further, ABH may be precluded from acquiring an otherwise suitable site due to an exclusivity restriction held by another tenant. As a result of these factors, costs to obtain and lease sites may increase, or ABH may not be able to obtain certain sites due to unacceptable costs. ABH’s inability to obtain suitable sites at reasonable costs may reduce our income growth.

To successfully expand its business, ABH must open new World of Beer restaurants on schedule and in a profitable manner. In the past, World of Beer franchisees have experienced delays in restaurant openings, and may experience similar delays in the future. Delays in opening new sites could hurt ABH’s ability to meet its growth objectives, which may affect our results of operations and thus our stock price. We cannot guarantee that ABH or any future franchisees will be able to achieve its expansion goals. Further, any sites that it opens may not achieve operating results similar or better than the existing restaurant. If ABH is unable to generate positive cash flow from a new site, it may be required to recognize an impairment loss with respect to the assets for that restaurant. ABH’s ability to expand successfully will depend on a number of factors, many of which are beyond its control. These factors include:

Negotiating acceptable lease or purchase terms for new sites;

Cost effective and timely planning, design and build-out of sites;

Creating Guest awareness of our restaurants and taverns in new markets;

Competition in new and existing markets;

General economic conditions.

The restaurants and taverns may not achieve market acceptance in the new regions ABH enters.

ABH’s expansion plans depend on opening restaurants and taverns in markets starting with New England where it has little or no operating experience. ABH may not be successful in operating in locations in new markets on a profitable basis. The success of these new locations will be affected by the different competitive conditions, consumer tastes and discretionary spending patterns of the new markets as well as ABH’s ability to generate market awareness of its brands. Sales at locations opening in new markets may take longer to reach profitable levels, if at all.

New restaurants added to existing markets may take sales from existing restaurants.

ABH intends to open new restaurants and taverns in its existing market, which may reduce sales performance and guest visits for existing location. In addition, new locations added in existing markets may not achieve sales and operating performance at the same level as established restaurants in the market.

A security failure in ABH’s information technology systems could expose us to potential liability and loss of revenues.

ABH accepts credit and debit card payments at our restaurant. A number of retailers have recently experienced actual or potential security breaches in which credit and debit card information may have been stolen, including a number of highly publicized incidents with well-known retailers. The intentional, inadvertent or negligent release or disclosure of data by ABH or its service providers could result in theft, loss, fraudulent or unlawful use of customer data which could harm its and our reputation and result in remedial and other costs, fines or lawsuits.

Shortages or interruptions in the availability and delivery of food and other supplies may increase costs or reduce revenues.

Possible shortages or interruptions in the supply of food items and other supplies to a location(s) caused by inclement weather, terrorist attacks, natural disasters such as floods, drought and hurricanes, pandemics, the inability of vendors to obtain credit in a tightened credit market, food safety warnings or advisories or the prospect of such pronouncements, or other conditions beyond ABH’s control could adversely affect the availability, quality and cost of items it buys and the operations of its restaurants. ABH’s inability to effectively manage supply chain risk could increase costs and limit the availability of products critical to the restaurant operations.

There are general risks associated with the restaurant and bar/tavern industry.

Restaurants are a very cyclical business. Specific factors that impact economic recessions can negatively influence discretionary consumer spending in restaurants and bars and result in lower customer counts as consumers become more price conscientious, tending to conserve their cash amid unemployment and other economic uncertainty. The effects of higher gasoline prices can also negatively affect discretionary consumer spending in restaurants and bars. Increasing costs for energy can affect profit margins in many other ways. Petroleum based material is often used to package certain products for distribution. In addition, suppliers may add fuel surcharges to their invoices. The cost to transport products from the distributors to restaurant operations will rise with each increase in fuel prices. Higher costs for electricity and natural gas result in higher costs to a) heat and cool restaurant facilities, b) refrigerate and cook food and c) manufacture and store food at ABH’s locations. Inflationary pressure, particularly on food costs, labor costs (especially associated with increases in the minimum wage) and health care benefits, can negatively affect the operation of the business. Shortages of qualified labor are sometimes experienced in certain local economies. In addition, the loss of any key executives could pose a significant adverse effect on ABH and us.

If consumer confidence in the business deteriorates, our business, financial condition and results of operations could be adversely affected.

The restaurants are built on consumers’ confidence in the World of Beer brand. As a consumer business, the strength of the brand and reputation are of paramount importance to ABH and us. A number of factors could adversely affect consumer confidence in the brand, many of which are beyond ABH’s control and could have an adverse impact on its and our results of operations. These factors include:

	•		any regulatory action or investigation against it or us;
	•		any negative publicity about a restaurant in the World Of Beer franchise; and
	•		any negative publicity about our restaurants.

In addition, ABH is largely dependent on the other World of Beer franchisees to maintain the reputation of its brand. Despite the measures that it puts in place to ensure their compliance with its performance standards, ABH’s lack of control over its operations may result in the low quality of service being attributed to the brand, negatively affecting its and our overall reputation. Any event that hurts its or our brand and reputation among consumers as a reliable services provider could have a material adverse effect on its and our business, financial condition and results of operations.

ABH faces substantial competition in our target markets

The restaurant industry is highly competitive, and many of the competitors are substantially larger and possess greater financial resources than ABH and us. Our restaurant(s) have numerous competitors, including national chains, regional and local chains, as well as independent operators. None of these competitors, in the opinion of our management, is dominant in the family-style sector of the restaurant industry. In addition, competition continues to increase from non-traditional competitors such as supermarkets that not only offer home meal replacement but also have in-store dining space trends that continue to grow in popularity. The principal methods of competition in the restaurant industry are brand name recognition and advertising; menu selection and prices; food quality and customer perceptions of value, speed and quality of service; cleanliness and fresh, attractive facilities in convenient locations. In addition to competition for customers, sharp competition exists for qualified restaurant managers, hourly restaurant workers and quality sites on which to build new locations.

The restaurant and bar industry is very competitive, and ABH faces competition from large national chains as well as individually owned restaurants. Large chains such as Buffalo Wild Wings have a similar open style that appeals to sports fan and family demographics. There are additional restaurants that feature custom beers. Many of these competitors have substantially more resources than ABH and us which allow them to have economies of scale allowing them price points which compare favorably to ABH’s price points. They also have the ability to market their restaurants given their sheer size which ABH does not possess. All of these factors may make it difficult for ABH and us to succeed.

Unfavorable publicity could harm ABH’s and our business.

Multi-unit restaurant businesses such as ABH’s business can be adversely affected by publicity resulting from complaints or litigation or general publicity regarding poor food quality, food-borne illness, personal injury, food tampering, adverse health effects of consumption of various food products or high-calorie foods (including obesity), or other concerns. Negative publicity from traditional media or on-line social network postings may also result from actual or alleged incidents or events taking place in ABH’s restaurants. Regardless of whether the allegations or complaints are valid, unfavorable publicity relating to a number of our restaurants, or only to a single restaurant, could adversely affect public perception of the entire brand. Adverse publicity and its effect on overall consumer perceptions of food safety, or ABH’s failure to respond effectively to adverse publicity, could have a material adverse effect on its and our business.

Changes in employment laws or regulation could harm ABH’s performance.

Various federal and state labor laws govern ABH’s relationship with its employees and affect operating costs. These laws include minimum wage requirements, overtime pay, healthcare reform and the implementation of the Patient Protection and Affordable Care Act, unemployment tax rates, workers’ compensation rates, citizenship requirements, union membership and sales taxes. A number of factors could adversely affect ABH’s operating results, including additional government-imposed increases in minimum wages, overtime pay, paid leaves of absence and mandated health benefits, mandated training for employees, increased tax reporting and tax payment requirements for employees who receive tips, a reduction in the number of states that allow tips to be credited toward minimum wage requirements, changing regulations from the National Labor Relations Board and increased employee litigation including claims relating to the Fair Labor Standards Act.

The Americans with Disabilities Act is a federal law that prohibits discrimination on the basis of disability in public accommodations and employment. Although ABH’s restaurants are designed to be accessible to the disabled, ABH could be required to make modifications to its restaurants to provide service to, or make reasonable accommodations for disabled persons.

Economic conditions could have a material adverse impact on ABH’s landlords or other tenants in retail centers in which it or its franchisees are located, which in turn could negatively affect its financial results.

ABH’s landlords may be unable to obtain financing or remain in good standing under their existing financing arrangements, resulting in failures to pay required construction contributions or satisfy other lease covenants to ABH. In addition other tenants at retail centers in which ABH or its franchisees are located or have executed leases may fail to open or may cease operations. If any landlords fail to satisfy required co-tenancies, such failures may result in ABH or its franchisees terminating leases or delaying openings in these locations. Also, decreases in total tenant occupancy in retail centers in which ABH are located may affect guest traffic at its restaurants. All of these factors could have a material adverse impact on its and our operations.

ABH may experience higher-than-anticipated costs associated with the opening of new locations or with the closing, relocating and remodeling of existing restaurants, which may adversely affect its and our results of operations.

ABH’s and our revenues and expenses can be impacted significantly by the location, number and timing of the opening of new restaurants and the closing, relocating, and remodeling of existing restaurants. ABH incurs substantial pre-opening expenses each time it opens a new restaurant and incurs other expenses when it closes, relocates or remodels existing restaurants. These expenses are generally higher when it opens restaurants in new markets, but the costs of opening, closing, relocating or remodeling any of our restaurants may be higher than anticipated. An increase in such expenses could have an adverse effect on ABH’s and our results of operations.

ABH’s and our success depends substantially on the value of ABH’s brands and its reputation for offering guests an unparalleled Guest experience.

We believe that ABH has built a strong reputation for the quality and breadth of its menu items as part of the total experience that guests enjoy in its restaurants. We believe ABH must protect and grow the value of its brands to continue to be successful in the future. Any incident that erodes consumer trust in or affinity for its brands could significantly reduce their value. If consumers perceive or experience a reduction in food quality, service, or ambiance, or in any way believe ABH failed to deliver a consistently positive experience, its and our brand value could suffer.

ABH’s inability to successfully and sufficiently raise menu prices could result in a decline in profitability.

ABH utilizes menu price increases to help offset cost increases, including increased cost for commodities, minimum wages, employee benefits, insurance arrangements, construction, utilities and other key operating costs. If its selection and amount of menu price increases are not accepted by consumers and reduce guest traffic, or are insufficient to counter increased costs, its and our financial results could be harmed.

Our quarterly operating results may fluctuate due to the timing of special events and other factors, including the recognition of impairment losses.

Our quarterly operating results depend, in part, on revenue that ABH derived from special events, such as the Super Bowl® and other sporting events viewed by our guests in our World of Beer franchised locations such as the NFL, MLB, NBA, NHL and NCAA. Interruptions in the viewing of these professional and collegiate sporting league events due to strikes, lockouts or labor disputes may impact our results. Additionally, ABH’s and thus indirectly our results are subject to fluctuations based on the dates of sporting events and their availability for viewing through broadcast, satellite and cable networks. Historically, sales in most of World of Beer restaurants have been higher during fall and winter months based on the relative popularity and extent of national, regional and local sporting and other events. Further, quarterly operating results may fluctuate significantly because of other factors, including:

Fluctuations in food costs, particularly chicken wings;

The timing of new restaurant openings which may impact margins due to the related preopening costs and initially higher restaurant level operating expense ratios;

Potential distraction or unusual expenses associated with expansion into other geographical territories;

ABH’s ability to operate effectively in new markets in which it has limited operating experience;

Labor availability and costs for hourly and management personnel;

Changes in competitive factors;

Disruption in supplies;

General economic conditions, consumer confidence and fluctuations in discretionary spending;

Claims experience for self-insurance programs;

Increases or decreases in labor or other variable expenses;

The impact of inclement weather, natural disasters and other calamities;

Fluctuations in interest rates;

The timing and amount of asset impairment loss and restaurant closing charges; and

Tax expenses and other non-operating costs.

ABH may not be able to attract and retain qualified team members and key executives to operate and manage our business.

ABH”s success and the success of its individual restaurant(s) and business depends on its ability to attract, motivate, develop and retain a sufficient number of qualified key executives and restaurant employees, including restaurant managers and hourly team members. The inability to recruit, develop and retain these individuals may delay the planned openings of new restaurant and tavern locations or result in high employee turnover in existing locations, thus increasing the cost to efficiently operate our restaurants. This could inhibit expansion plans and business performance and, to the extent that a labor shortage may force ABH to pay higher wages, harm its profitability. The loss of any of its key executive officers could jeopardize its ability to meet its financial targets.

The sale of alcoholic beverages at ABH’s locations subjects it to additional regulations and potential liability.

Because ABH’s locations sell alcoholic beverages, it is required to comply with the alcohol licensing requirements of the federal government, states and municipalities where its restaurants are located. Alcoholic beverage control regulations require applications to state authorities and, in certain locations, county and municipal authorities for a license and permit to sell alcoholic beverages on the premises and to provide service for extended hours and on Sundays. Typically, the licenses are renewed annually and may be revoked or suspended for cause at any time. Alcoholic beverage control regulations relate to numerous aspects of the daily operations of the restaurants and bars, including minimum age of guests and employees, hours of operation, advertising, wholesale purchasing, inventory control and handling, storage and dispensing of alcoholic beverages. If ABH fails to comply with federal, state or local regulations, its licenses may be revoked, and it may be forced to terminate the sale of alcoholic beverages at one or more of its locations. Further, growing movements to change laws relating to alcohol may result in a decline in alcohol consumption at its facilities or increase the number of dram shop claims made against it, either of which may negatively impact operations or result in the loss of liquor licenses.

In certain states ABH is subject to “dram shop” statutes, which generally allow a person injured by an intoxicated person the right to recover damages from an establishment that wrongfully served alcoholic beverages to the intoxicated person. Some dram shop litigation against restaurant companies has resulted in significant judgments, including punitive damages.

Changes in consumer preferences or discretionary consumer spending could harm ABH’s and our performance.

The success of ABH’s World of Beer franchises depends, in part, upon the continued popularity of the overall World of Beer system locations throughout the United States as well as ABH’s unique food and beverage items and appeal of sports bars and casual dining restaurants. ABH also depends on trends toward consumers eating away from home. Shifts in these consumer preferences could negatively affect its future profitability. Such shifts could be based on health concerns related to the cholesterol, carbohydrate, fat, calorie or salt content of certain food items, including items featured on its menu. Negative publicity over the health aspects of such food items may adversely affect consumer demand for its menu items and could result in a decrease in guest traffic to its restaurants, which could materially harm its business. In addition, ABH will be required to disclose calorie counts for all food items on its menus, due to federal regulations, and this may have an effect on consumers’ eating habits. Other federal regulations could follow this pattern. In addition, ABH’s success depends to a significant extent on numerous factors affecting discretionary consumer spending, including economic conditions, disposable consumer income and consumer confidence. A decline in consumer spending or in economic conditions could reduce guest traffic or impose practical limits

A regional or global health pandemic could severely affect ABH’s business.

A health pandemic is a disease outbreak that spreads rapidly and widely by infection and affects many individuals in an area or population at the same time. If a regional or global health pandemic was to occur, depending upon its duration and severity, ABH’s and our business could be severely affected. ABH has positioned its brand as a place where people can gather together.

Customers might avoid public gathering places in the event of a health pandemic, and local, regional or national governments might limit or ban public gatherings to halt or delay the spread of disease. A regional or global health pandemic might also adversely impact our business by disrupting or delaying production and delivery of materials and products in its supply chain and by causing staffing shortages in ABH’s restaurants. The impact of a health pandemic might be disproportionately greater than on other companies that depend less on the gathering of people together for the sale or use of their products and services.

As a result of the factors discussed above, ABH’s and our quarterly and annual operating results may fluctuate significantly. Accordingly, results for any one quarter are not necessarily indicative of results to be expected for any other quarter or for any year. These fluctuations may cause future operating results to fall below the expectations of securities analysts and shareholders. In that event, the price of our common stock would likely decrease.

ABH may be subject to increased labor and insurance costs.

ABH’s restaurant operations are subject to federal and state laws governing such matters as minimum wages, working conditions, overtime, and tip credits. As federal and state minimum wage rates increase, ABH may need to increase not only the wages of our minimum wage employees, but also the wages paid to employees at wage rates that are above minimum wage. Labor shortages, increased employee turnover, and health care mandates could also increase its labor costs. This, in turn, could lead it to increase prices which could impact its sales. Conversely, if competitive pressures or other factors prevent ABH from offsetting increased labor costs by increases in prices, its profitability may decline. In addition, the current premiums that ABH pays for its insurance (including workers' compensation, general liability, property, health, and directors' and officers' liability) may increase at any time, thereby further increasing our costs. The dollar amount of claims that ABH actually experiences under its workers' compensation and general liability insurance, for which it carries high per-claim deductibles, may also increase at any time, thereby further increasing its costs. Also, the decreased availability of property and liability insurance has the potential to negatively impact the cost of premiums and the magnitude of uninsured losses.

ABH’s current insurance may not provide adequate levels of coverage against claims.

ABH currently maintains insurance customary for businesses of its size and type. However, there are types of losses it may incur that cannot be insured against or that it believed are not economically reasonable to insure, such as losses due to natural disasters. Such damages could have a material adverse effect on its and our business and results of operations.

ABH is dependent on information technology and any material failure of that technology could impair its ability to efficiently operate its business.

ABH relies on information systems across its operations, including, for example, point-of-sale processing in its locations, management of its supply chain, collection of cash and credit and debit card payments, payment of obligations and various other processes and procedures. ABH’s ability to efficiently manage its business depends significantly on the reliability and capacity of these systems. The failure of these systems to operate effectively, problems with maintenance, upgrading or transitioning to replacement systems, or a breach in security of these systems could cause delays in customer service, reduce efficiency in its operations, require significant investment to remediate the issue or cause negative publicity that could damage its and our brand. Significant capital investments might be required to remediate any problems.

If ABH is unable to maintain its rights to use key technologies of third parties, its and our business may be harmed.

ABH relies on certain technology licensed from third parties and may be required to license additional technology in the future for use in managing its internet sites and providing related services to users and customers. These third-party technology licenses may not continue to be available to it on acceptable commercial terms or at all. The inability to enter into and maintain any of these technology licenses could significantly harm its and our business, financial condition and operating results.

ABH’s future growth may require it to raise additional capital in the future, but that capital may not be available when it is needed or may be available only at an excessive cost.

In order to build out ABH’s business plan and to be ultimately successful, it will need ample capital to purchase/rent new properties, build new locations, hire personnel and market its locations. ABH may not generate sufficient cash from its existing operations in order to do so. Therefore, it or we may at some point choose to raise additional capital to support its continued growth. ABH’s and our ability to raise additional capital will depend, in part, on conditions in the capital markets at that time which are outside of its control. Accordingly, it or we may be unable to raise additional capital, if and when needed, on terms acceptable to it or us, or at all. If ABH or we cannot raise additional capital when needed, its ability to further expand operations through internal growth and acquisitions could be materially impacted. In the event of a material decrease in our stock price, future issuances of equity securities could result in dilution of existing shareholder interests.

The occurrence of any failure, breach or interruption in service involving ABH’s systems or those of its service providers could damage its reputation, cause losses, increase its expenses, and result in a loss of customers, an increase in regulatory scrutiny or expose ABH to civil litigation and possibly financial liability, any of which could adversely impact its and our financial condition, results of operations and the market price of our stock.

Communications and information systems are essential to the conduct of ABH’s business, as it uses such systems to manage its customer relationships, its general ledger, its deposits and its loans. ABH’s operations rely on the secure processing, storage and transmission of confidential and other information in its computer systems and networks. Although ABH takes protective measures and endeavor to modify them as circumstances warrant, the security of its computer systems, software and networks may be vulnerable to breaches, unauthorized access, misuse, computer viruses or other malicious code and cyber attacks that could have a security impact. In addition, breaches of security may occur through intentional or unintentional acts by those having authorized or unauthorized access to its confidential or other information or the confidential or other information of our customers, clients or counterparties. If one or more of such events was to occur, the confidential and other information processed and stored in and transmitted through its computer systems and networks could potentially be jeopardized or could otherwise cause interruptions or malfunctions in its operations or the operations of its customers, clients or counterparties. This could cause ABH significant reputational damage or result in its experiencing significant losses.

Furthermore, ABH may be required to expend significant additional resources to modify its protective measures or to investigate and remediate vulnerabilities or other exposures arising from operational and security risks. ABH also may be subject to litigation and financial losses that are either not insured against or not fully covered through any insurance it maintains. In addition, ABH routinely transmits and receives personal, confidential and proprietary information by e-mail and other electronic means. It has discussed and worked with its customers, clients and counterparties to develop secure transmission capabilities, but it does not have, and may be unable to put in place, secure capabilities with all of these constituents, and it may not be able to ensure that these third parties have appropriate controls in place to protect the confidentiality of such information.

While ABH has established policies and procedures to prevent or limit the impact of systems failures and interruptions, there can be no assurance that such events will not occur or that they will be adequately addressed if they do. In addition, ABH outsources certain aspects of its data processing to certain third-party providers. If its third-party providers encounter difficulties, or if it has difficulty in communication with them, its ability to adequately process and account for customer transactions could be affected, and its business operations could be adversely impacted. Threats to information security also exist in the processing of customer information through various other vendors and their personnel.

Risks Relating to Our Securities

There has been a very limited public trading market for our securities, and the market for our securities may continue to be limited and be sporadic and highly volatile.

There is currently a limited public market for our common stock. Our common stock has been listed for trading on the OTC Pink. We cannot assure you that an active market for our shares will be established or maintained in the future. Holders of our common stock may, therefore, have difficulty selling their shares, should they decide to do so. In addition, there can be no assurances that such markets will continue or that any shares, which may be purchased, may be sold without incurring a loss. Any such market price of our shares may not necessarily bear any relationship to our book value, assets, past operating results, financial condition or any other established criteria of value and may not be indicative of the market price for the shares in the future.

In addition, the market price of our common stock may be volatile, which could cause the value of our common stock to decline. Securities markets experience significant price and volume fluctuations. This market volatility, as well as general economic conditions, could cause the market price of our common stock to fluctuate substantially. Many factors that are beyond our control may significantly affect the market price of our shares. These factors include:

	●	price and volume fluctuations in the stock markets;
	●	changes in our revenues and earnings or other variations in operating results;
	●	any shortfall in revenue or increase in losses from levels expected by us or securities analysts;
	●	changes in regulatory policies or law;
	●	operating performance of companies comparable to us; and
	●	general economic trends and other external factors.

Even if an active market for our common stock is established, stockholders may have to sell their shares at prices substantially lower than the price they paid for it or might otherwise receive than if a broad public market existed.

Future financings could adversely affect common stock ownership interest and rights in comparison with those of other security holders.

Our board of directors has the power to issue additional shares of common or preferred stock without stockholder approval. If additional funds are raised through the issuance of equity or convertible debt securities, the percentage ownership of our existing stockholders will be reduced, and these newly issued securities may have rights, preferences or privileges senior to those of existing stockholders. In addition, as of September 22, 2015, we had issued and outstanding options and warrants that may be exercised into 14,599,204 shares of common stock, 9,000,000 shares of Series A Convertible Preferred Stock and 51 shares of Series A-1 Convertible Preferred Stock that may be converted into 54,000,306 shares of common stock, outstanding principal convertible notes totaling $1,488,487 (excludes ABH’s convertible notes of $2,371,545 which are not convertible into our common stock) and accrued interest payable of $417,338 (excludes accrued interest for ABH convertible notes) which together may be converted into shares of common stock (subject to 4.99-9.99% beneficial ownership limitations and a limit of a total of 20,000,000 authorized shares) at a maximum conversion cap rate of $.02 per share. Actual conversion prices are subject to certain discounts from market prices as the stock prices change daily and have been significantly less than the $.02 price, resulting in a possible calculation to reach the maximum authorized amount of 20,000,000,000 common shares. The Series A and A-1 Preferred Stock vote with the common stock on an as converted basis. Pursuant to the terms and conditions of our outstanding Series A and Series A-1 Preferred Stock, the conversion rate and the voting rights of the Series A and A-1 will not adjust as a result of any reverse stock split. Further, the authorized but unissued Series A will not adjust as a result of any reverse split. As a result, in the event of a reverse split of our common stock, the voting power would be concentrated with the Series A holder.

Further, if we issue any additional common stock or securities convertible into common stock, such issuance will reduce the proportionate ownership and voting power of each other stockholder diluting each stockholder. In addition, such stock issuances might result in a reduction of the book value of our common stock.

Because we do not have an audit or compensation committee, shareholders will have to rely on our President, who is not independent, to perform these functions.

We do not have an audit or compensation committee comprised of independent directors. Indeed, we do not have any audit or compensation committee. These functions are performed by our Chief Executive Officer and Chief Financial Officer. An independent audit committee plays a crucial role in the corporate governance process, assessing our processes relating to our risks and control environment, overseeing financial reporting, and evaluating internal and independent audit processes. The lack of an independent audit committee may prevent the Board from being independent from our management in their judgments and decisions and their ability to pursue the responsibilities of an audit committee without undue influence. We may have difficulty attracting and retaining directors with the requisite qualifications. If we are unable to attract and retain qualified, independent directors, the management of our business could be compromised. Our lack of an independent compensation committee presents the risk that our executive officers on the Board may have influence over his personal compensation and benefits levels that may not be commensurate with our financial performance.

Our common shares are subject to the "Penny Stock" Rules of the SEC and the trading market in our securities is limited, which makes transactions in our stock cumbersome and may reduce the value of an investment in our stock.

The Securities and Exchange Commission has adopted Rule 15g-9, which establishes the definition of a “penny stock,” for the purposes relevant to us, as any equity security that has a market price of less than $5.00 per share or with an exercise price of less than $5.00 per share, subject to certain exceptions. For any transaction involving a penny stock, unless exempt, the rules require:

that a broker or dealer approve a person's account for transactions in penny stocks; and

the broker or dealer receives from the investor a written agreement to the transaction, setting forth the identity and quantity of the penny stock to be purchased.

In order to approve a person's account for transactions in penny stocks, the broker or dealer must:

obtain financial information and investment experience objectives of the person; and

make a reasonable determination that the transactions in penny stocks are suitable for that person and the person has sufficient knowledge and experience in financial matters to be capable of evaluating the risks of transactions in penny stocks. The broker or dealer must also deliver, prior to any transaction in a penny stock, a disclosure schedule prescribed by the Commission relating to the penny stock market, which, in highlight form:

sets forth the basis on which the broker or dealer made the suitability determination; and

that the broker or dealer received a signed, written agreement from the investor prior to the transaction.

Generally, brokers may be less willing to execute transactions in securities subject to the “penny stock” rules. This may make it more difficult for investors to dispose of our shares of common stock and cause a decline in the market value of our stock.

Disclosure also has to be made about the risks of investing in penny stocks in both public offerings and in secondary trading and about the commissions payable to both the broker-dealer and the registered representative, current quotations for the securities and the rights and remedies available to an investor in cases of fraud in penny stock transactions. Finally, monthly statements have to be sent disclosing recent price information for the penny stock held in the account and information on the limited market in penny stocks.

If an active market develops for our shares, sales of our shares relying upon Rule 144 may depress prices in that market by a material amount.

The majority of the outstanding shares of our common stock held by present stockholders are ”restricted securities” within the meaning of Rule 144 under the Securities Act of 1933, as amended. The SEC has recently adopted amendments to Rule 144, which became effective on February 15, 2008 and applies to securities acquired both before and after that date. Under these amendments, a person who has beneficially owned restricted shares of our common stock or warrants for at least six months would be entitled to sell their securities provided that (i) such person is not deemed to have been one of our affiliates at the time of, or at any time during the three months preceding, a sale and (ii) we have been current with the Exchange Act periodic reporting requirements for at least twelve months before the sale.

Persons who have beneficially owned restricted shares of our common stock or warrants for at least six months but who are our affiliates at the time of, or at any time during the three months preceding, a sale, would be subject to additional restrictions, by which such person would be entitled to sell within any three-month period only a number of securities that does not exceed 1% of the total number of shares of our common stock then outstanding, which would equal 23,096,244 shares of our common stock immediately after this offering, for a company trading on the pink sheets or Over-the-Counter Bulletin Board such as us.

The market for penny stocks has experienced numerous frauds and abuses which could adversely impact investors in our stock.

We believe that the market for penny stocks has suffered from patterns of fraud and abuse. Such patterns include:

Control of the market for the security by one or a few broker-dealers that are often related to the promoter or issuer;

Manipulation of prices through prearranged matching of purchases and sales and false and misleading press releases;

“Boiler room” practices involving high pressure sales tactics and unrealistic price projections by inexperienced sales persons;

Excessive and undisclosed bid-ask differentials and markups by selling broker-dealers; and

The wholesale dumping of the same securities by promoters and broker-dealers after prices have been manipulated to a desired level, along with the inevitable collapse of those prices with consequent investor losses.

We do not expect to pay dividends to holders of our common stock in the foreseeable future. As a result, holders of our common stock must rely on stock appreciation for any return on their investment.

There are no restrictions in our Articles of Incorporation or Bylaws that prevent us from declaring dividends. The Nevada General Corporation Law, however, does prohibit us from declaring dividends where, after giving effect to the distribution of the dividend, we would not be able to pay our debts as they become due in the usual course of business, or if our total assets would be less than the sum of our total liabilities plus the amount that would be needed to satisfy the rights of shareholders who have preferential rights superior to those receiving the distribution. We have not declared any dividends since our inception, and we do not plan to declare any dividends on our common stock in the foreseeable future. Accordingly, holders of our common stock will have to rely on capital appreciation, if any, to earn a return on their investment in our common stock.

We may issue shares of preferred stock in the future that may adversely impact the right of holders of our common stock.

As of the date of this Report, our Articles of Incorporation authorizes us to issue up to 20,000,000 shares of preferred stock, of which 14,999,949 shares have been designated as shares of Series A, 51 shares have been designated as Series A-1 and 100,000 shares have been designated as Series C. Accordingly, our Board of directors will have the authority to fix and determine the relative rights and preferences of preferred shares, as well as the authority to issue such shares, without further stockholder approval. As a result, our Board of Directors could authorize the issuance of a series of preferred stock that would grant to holders preferred rights to our assets upon liquidation, the right to receive dividends before dividends are declared to holders of our common stock and the right to the redemption of such preferred shares, together with a premium, prior to the redemption of the common stock. To the extent that we do issue such additional shares of preferred stock, the rights of holders of common stock could be impaired thereby, including, without limitation, dilution of their ownership interests in us. In addition, shares of preferred stock could be issued with terms calculated to delay or prevent a change in control or make removal of management more difficult, which may not be in the interest of holders of common stock. To date, our investors in the Series A Preferred Convertible Preferred Stock have waived their dividends which we were obligated to pay to them. There is no guarantee going forward that they will waive these dividends in the future. If so, the number of shares issued may be materially dilute your investment.

A substantial number of our shares are available for sale in the public market, and sales of those shares could adversely affect our stock price and our ability to obtain financing.

Sales of a substantial number of shares of common stock into the public market, or the perception that such sales could occur, could substantially reduce our stock price in the public market for our common stock and could impair our ability to obtain capital through a subsequent financing of our securities. We have 2,309,624,423 shares of common stock outstanding as of June 30, 2015 of which 2,309,593,853 shares are held by non-affiliates. Further, we have outstanding convertible notes in the face value of $8,543,101 (includes HVWC notes) which may be converted into shares of common stock at a maximum conversion price of $.02. Generally, the holders of the securities convertible or exercisable into our common stock may be able to sell the common stock issued upon conversion or exercise after a six month holding period under Rule 144 adopted under the Securities Act of 1933 (as amended, the “Securities Act”). As such, you should expect a significant number of such shares of common stock to be sold. Depending upon market liquidity at the time our common stock is resold by the holders thereof, such re-sales could cause the trading price of our common stock to decline. In addition, the sale of a substantial number of shares of our common stock, an anticipation of such sales, could make it more difficult for us to sell equity or equity-related securities in the future at a time and at a price that we might otherwise wish to effect sales.

EFFECTS OF INFLATION

We believe that inflation has not had any material effect on our net sales and results of operations.

ITEM 3. – QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable

ITEM 4. – CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Disclosure controls and procedures, as defined in Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934 (the “Exchange Act”), are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

We carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of June 30, 2015. Based upon such evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of such period, the Company’s disclosure controls and procedures were not effective as required under Rules 13a-15(e) and 15d-15(e) under the Exchange Act.

Management’s Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal controls over financial reporting. Under the supervision and with the participation of our management, including our Chief Executive Officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting using framework similar to criteria referenced in the initial steps of the Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). Based on this evaluation, management concluded that our internal control over financial reporting was not effective as of the three months ended June 30, 2015.

A material weakness is a significant deficiency (as defined in the Public Company Accounting Oversight Board’s Auditing Standard No. 2), or a combination of significant deficiencies, that results in reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis. In its assessment of the effectiveness of our internal controls over financial reporting, management determined that there were control deficiencies as of the three months ended June 30, 2015 that constituted material weaknesses, as described below.

* We have noted that there may be an insufficient quantity of dedicated resources and experienced personnel involved in reviewing and designing internal controls. As a result, a material misstatement of the interim and annual financial statements could occur and not be prevented or detected on a timely basis.

* We do not have an audit committee or an independent audit committee financial expert. While not being legally obligated to have an audit committee or independent audit committee financial expert, it is the management’s view that to have an audit committee, comprised of independent board members and an independent audit committee financial expert, is an important entity-level control over the Company's financial statements. Currently, the Board does not have sufficient independent directors to form such an audit committee. Also, the Board of Directors does not have an independent director with sufficient financial expertise to serve as an independent financial expert.

* Due to the complex nature of recording derivatives and similar financial instruments, we noted a need for increased coordination and review of techniques and assumptions used in recording derivatives to ensure accounting in conformity with generally accepted accounting principles.

This annual report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management’s report is not subject to attestation by our registered public accounting firm pursuant to rules of the SEC that permit us to provide only management’s report in this annual report.

Remediation Efforts to Address Deficiencies in Internal Control over Financial Reporting

As a result of the findings from the evaluation conducted of the effectiveness of our internal control over financing reporting as set forth above, we intend to take practical, cost-effective steps in implementing internal controls, including the following remedial measures, some of which have already been taken:

* Interviewing and potentially hiring outside consultants that are experts in designing internal controls over financial reporting based on criteria established in Internal Control-Integrated Framework issued by COSO.

* we have hired an outside consultant to assist with controls over the review and application of derivatives to ensure accounting in conformity with generally accepted accounting principles.

* The Board of Directors to consider nominating an audit committee and audit committee financial expert, which may or may not consist of independent members as funds allow.

Due to inadequate financing, we have not hired any outside experts to design additional internal controls over financial reporting or recommended a new board director that is a financial expert.

A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are 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. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

Changes in Internal Control over Financial Reporting

No change in our internal control over financial reporting occurred during the quarter ended June 30, 2015, that materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II – OTHER INFORMATION

Item 1. Legal Proceedings

On May 18, 2009, F&M Merchant Group, LLC commenced a lawsuit in the District Court of Denton County, Texas to recover the balance owed by us under a Sales Agent Agreement entered by the parties on November 1, 2008. This agreement requires us to pay $5,000 per month and a 5% commission on all net sales. On September 3, 2009, a final judgment by default was approved by the district court in Denton County, Texas for a total sum of $22,348. This claim has been recorded on the Company’s records. Due to the lack of adequate capital financing, we have not been able to make any payments. We will address this matter as soon as practical and once we have adequate financing.

On August 21, 2009, CH Fulfillment Services, LLC commenced a lawsuit in the district court of Mobile, Alabama to recover past due amounts owed by us under a contract to provide shipping and fulfillment services. The claim is for $2,106 plus interest and legal costs. This amount was already recorded on our records as well as projected interest costs of $682 and estimated court costs of $307 for a total of $3,095. A process of garnishment by the district court in Mobile County, Alabama was approved on September 25, 2009 for the total amount of $3,095. On October 26, 2009, the same court authorized a garnishment process to pay $657 which was done as part payment of the total due amount. Current outstanding balance due is $2,438. No other payments have been made.

On October 1, 2013, Beanpot Broadcasting Corp. d/b/a WXRV-FM, commenced a lawsuit in the Commonwealth of Massachusetts District Court Department of the Trial Court Haverhill Division to recover past due amounts owed by us for rendered independent sales contracting services. The claim was for $15,500 for past due services, $4,169 in service charges, $363 for prejudgment interest and $200 court costs for a total of $20,232. The total $20,232 amount was already recorded on our records. On November 15, 2013, the Trial Court of Massachusetts entered a judgment for the plaintiff (“Beanpot”) for the total $20,232. Due to the lack of adequate capital financing, we have not been able to make any payments. We will address this matter as soon as practical and once we have adequate financing.

On November 27, 2013, we received an order of the court from The Trial Court of Massachusetts District Court Department, Small Claims Session in Plymouth, Massachusetts to attend a hearing on December 12 2013 about a small claims amount of $5,000 from Marshfield Broadcasting Company, Inc. to recover past due amounts. A total of $5,500 was already recorded our records. On December 31, 2013, a judgment in the amount of $5,238 was entered in favor of Marshfield Broadcasting Inc. No payments have been made as we expect to resolve this matter as soon as practical and once we have adequate financing.

On February 4, 2014, Philip Terrano commenced a lawsuit in the circuit court of the 15^th Judicial Circuit and for Palm Beach County, Florida to recover past due amounts owed by us for past compensation in the amount of approximately $17,000. We disagree with this amount as our records reflect a total amount owed of $6,974. On May 28, 2014, we entered into a settlement agreement with Terrano to pay him a total of $11,000, to be remitted 60 days of the effective date of this agreement. Due to a lack of capital financing, we expect to address this matter as soon as we can.

On June 9, 2014, North Palm Beach Broadcasting Company d/b/a/ WSVU-AM Radio filed a lawsuit in the 15^th Judicial Circuit in and for Palm Beach County, Florida to recover past due services owed by us in the amount of $22,000 that is due with interest. We do not agree with that amount as we did make various payments in 2013 that totaled $8,000. We are working with that party to arrive at a mutual agreeable outstanding amount if any. We do not have any other outstanding balance that is recorded on our records. On August 6, 2014, we received a Default Final Judgment from Palm Beach County Circuit Court in Florida for a total amount of $23, 411. We are still contesting that amount and will resolve the matter as soon as possible.

On June 26, 2014, Innerworkings, Inc. filed a lawsuit in the County Court of the Fifteenth Judicial Circuit in and for Palm Beach County, Florida to recover past due services owed by us in the amount of $5,039 that is due with interest. This same amount has already been recorded on our records. We expect to address this issue as soon as practical and when we have adequate capital.

On November 11, 2014, C.A. Courtesy Demos, Inc. commenced a lawsuit in the County Court, Palm Beach County, Florida civil action to recover past due amounts owed by us for rendered services. The claim was for $5,803. We do not agree with this amount and have not recorded this amount on our records as services were supposed to be rendered, but a hurricane in the northeastern section of the United States occurred at that given time. We will address this matter as soon as practical and once we have adequate financing.

On November 20, 2014, Pavilion Law Center, LLC filed a motion in the Circuit Court of the Fifteenth Judicial Circuit in and for Palm Beach County, Florida to enforce a settlement agreement for past due fees. We are contesting some of the amounts and will resolve this matter as soon as practical.

On April 22, 2015, Edgar Agents LLC filed a lawsuit in the Circuit Court of the Fifteenth Judicial Circuit in and for Palm Beach County, Florida to recover past due amounts owned by us for rendered services. The claim was for $23,323.50 plus interest and costs. We have recorded $19,069.50 in our records as we have not received the backup for the $4,254.00 difference. On August 13, 2015, the court entered into a final judgment against us for a total amount of $24,215. We expect to resolve this matter as soon as practical and once we have adequate financing.

On August 26, 2015, Harrison, Vickers and Waterman Inc. (“HVWC”) which we own the majority of the outstanding shares received a lawsuit from James Giordano, previous CEO of HVW that was filed in the State of Connecticut Superior Court in Stamford, Connecticut. The claim is approximately $220,833 for past salaries. HVWC does not agree with this complaint and will address as soon as possible. HVW does have a recorded amount of $175,000 on its books.

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

During the three months ended June 30, 2015, the Company issued a total of 1,148,431,061 shares of common stock for the conversions of $32,375 of principal of convertible notes payable and $311 of related accrued interest to note holders of the Company pursuant to the terms of the note instruments as well as for the exchange of old accounts payable and accrued payroll salaries for a total of $146,636.