UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 10-Q

 

(Mark One)

 

x

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

For the nine months period ended March 31, 2016

 

OR

 

¨

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

For the transition period from __________ to __________

 

Commission File Number 333-162072

 

HARRISON VICKERS AND WATERMAN INC.

(Exact name of registrant as specified in its charter)

 

Nevada		26-2883037
(State or jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

 

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

Address of registrant’s principal executive offices

(561) 227-2727

Registrant’s telephone number including

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to filed 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 (Section 232.405 of this chapter) during the preceding 12 months (or 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	¨ (Do not check if a smaller reporting company)	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.

 

As of June 22, 2016, there were 192,392,024 shares of common stock, $0.0001 par value, of the registrant’s issued and outstanding shares.

 

 

			Page
PART I. – FINANCIAL INFORMATION:
Item 1.	Financial Statements
	Consolidated Balance Sheets at  March 31, 2016 (unaudited)  and June 30, 2015		3
	Consolidated Statements of Operations for the Three Months and Nine Months Ended March 31, 2016 and 2015		4
	Consolidated Statements of Cash Flows for the Nine Months Ended March 31, 2016 and 2015		5
	Notes to Interim Financial Statements		6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		20
Item 3.	Quantitative and Qualitative Disclosure about Mark Risk		33
Item 4.	Controls and Procedures		33
PART II – OTHER INFORMATION
Item 1.	Legal Proceedings		34
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		34
Item 3.	Defaults upon Senior Securities		35
Item 4.	Mine Safety Disclosures		35
Item 5.	Other Information		35
Item 6.	Exhibits		35
SIGNATURES			38

 

 

Harrison, Vickers and Waterman Inc. and Subsidiaries

Consolidated Balance Sheets

 

		March 31, 2016				June 30, 2015
		(unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents		$	79,606			$	226,088
Receivable from Attitude Drinks, Incorporated			321,811				131,423
Real estate loans receivable			-				950,000
Inventories			71,382				81,049
Prepaid expenses			7,874				44,192
TOTAL CURRENT ASSETS			480,673				1,432,752
FIXED ASSETS, NET			851,024				962,470
OTHER ASSETS:
Capitalized pre-opening costs - World of Beer			183,114				198,823
Investment in World of Beer franchise development			1,154,250				-
Deposits			13,505				-
TOTAL OTHER ASSETS			1,350,869				198,823
TOTAL ASSETS		$	2,682,566			$	2,594,045
LIABILITIES AND STOCKHOLDERS' (DEFICIT)
CURRENT LIABILITIES:
Accounts payable		$	180,112			$	367,974
Accrued liabilities			537,984				175,000
Derivative liabilities			10,164,872				4,237,890
Real estate loan payable			-				950,000
Convertible notes payable			-				144,699
Loans payable to minority owners			52,118				-
TOTAL CURRENT LIABILITIES			10,935,086				5,875,563
LONG TERM LIABILITIES:
Convertible notes payable			1,308,544				210,522
TOTAL LONG TERM LIABILITES			1,308,544				210,522
STOCKHOLDERS' (DEFICIT):
Preferred stock par value $0.0001: 1,000,000 shares authorized:
Series A 8% convertible preferred stock par value $0.0001 per share: stated value of $1,000 per share; 99,000 shares issued and outstanding at March 31, 2016 and 100,000 shares issued and outstanding at June 30, 2015			10				10
Series B convertible preferred stock par value $0.0001 per share: stated value of $1,000 per share; 51 shares issued and outstanding at March 31, 2016 and June 30, 2015			-				-
Common stock, par value $0.0001, 7,500,000,000 shares authorized and 149,977,595 and 126,337,367 shares issued and outstanding at March 31, 2016 and June 30, 2015, respectively			14,998				12,634
Additional paid-in capital			789,051				637,267
Accumulated deficit			(10,282,835	)			(4,159,946	)
TOTAL STOCKHOLDERS' (DEFICIT)			(9,478,776	)			(3,510,035	)
NON-CONTROLLING INTEREST			(82,288	)			17,995
TOTAL LIABILITIES , STOCKHOLDERS' (DEFICIT) AND NON-CONTROLLING INTEREST		$	2,682,566			$	2,594,045

 

See accompanying notes to condensed consolidated financial statements

 

 

Harrison, Vickers and Waterman Inc. and Subsidiaries

Condensed Consolidated Statements of Operations

 

		Three				Three				Nine				Nine
		Months Ended				Months Ended				Months Ended				Months Ended
		March 31,				March 31,				March 31,				March 31,
		2016				2015				2016				2015
		(unaudited)				(unaudited)				(unaudited)				(unaudited)
REVENUES:
Net revenues - World of Beer		$	672,481			$	-			$	2,263,250			$	-
Food and beverage costs - World of Beer			(187,110	)			-				(637,740	)			-
GROSS PROFIT			485,371				-				1,625,510				-
Real Estate Loans:
Interest income earned			-				45,833				-				134,033
Interest expense incurred			-				(45,833	)			-				(134,033	)
GROSS PROFIT			-				-				-				-
TOTAL GROSS PROFIT			485,371				-				1,625,510				-
OPERATING EXPENSES:
Administrative salaries, taxes and employee benefits			-				(175,000	)			-				(100,000	)
World of Beer other expenses			222,858				-				782,728				-
World of Beer labor costs			212,106				-				679,762				-
Other general and administrative expenses			31,952				652				81,672				27,547
Administrative professional and legal fees			31,760				5,000				74,945				39,500
Depreciation and amortization			40,103				-				120,307				-
Total Operating Expenses			538,779				(169,348	)			1,739,414				(32,953	)
LOSS FROM OPERATIONS			(53,408	)			169,348				(113,904	)			32,953
OTHER INCOME (EXPENSE):
Interest and other financing costs			(486,653	)			(11,761	)			(1,241,356	)			(24,721	)
Change in fair market value of derivative liability			(3,025,059	)			5,783				(1,645,023	)			9,491
Loss on extinguishment of debt			66,648				-				-				-
Loss on conversion of debt and preferred stock			(125,545	)			(2,600	)			(125,545	)			(2,600	)
Derivative expense			(824,959	)			(1,289	)			(2,985,315	)			(19,814	)
Total Other Income (Expense)			(4,395,568	)			(9,867	)			(5,997,239	)			(37,644	)
INCOME (LOSS) BEFORE PROVISION FOR INCOME TAXES			(4,448,976	)			159,481				(6,111,143	)			(4,691	)
Non-controlling interest			795				-				(11,745	)			-
Provision for income taxes			-				-				-				-
NET INCOME (LOSS)		$	(4,448,181	)		$	159,481			$	(6,122,888	)		$	(4,691	)
Basic income (loss) per common share		$	(0.03	)		$	-			$	(0.05	)		$	-
Diluted income (loss) per common share		$	(0.03	)		$	-			$	(0.05	)		$	-
Weighted average common shares outstanding-basic			136,504,266				124,470,700				131,907,136				124,381,163
Weighted average common shares outstanding-diluted			136,504,266				124,470,700				131,907,136				124,381,163

 

See accompanying notes to consolidated financial statements

 

 

Harrison, Vickers and Waterman Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

 

		Nine Months				Nine Months
		Ended				Ended
		March 31,				March 31,
		2016				2015
		(Unaudited)				(Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss)		$	(6,122,888	)		$	(4,691	)
Adjustment to reconcile net (loss)/income to net cash used in operating activities:
Depreciation and amortization			120,307				-
Derivative expense			2,985,315				19,814
Fair value adjustment of convertible notes			1,645,023				(9,491	)
Loss on conversion of debt and preferred stock			125,545				2,600
Amortization of debt discount			1,016,735				19,658
Non-controlling interest			11,745				-
Changes in operating assets and liabilities:
Real estate loans			-				520,000
Receivable from Attitude Drinks Incorporated			(190,388	)			-
Prepaid expenses and other assets			22,813				-
Inventories			9,667				-
Accounts payable and accrued liabilities			137,714				(60,751	)
Net cash provided/(used) in operating activities			(238,412	)			487,139
CASH FLOWS FROM INVESTING ACTIVITIES:
Dividends to World of Beer minority owners			(112,028	)			-
Purchase of equipment			(484	)			-
Investment in World of Beer franchise			(1,154,250	)			-
Reclassification to other accounts			7,334				-
Net cash (used) in investing activities			(1,259,428	)			-
CASH FLOWS FROM FINANCING ACTIVITIES:
Payment on secured promissory note			-				(520,000	)
Loans payable to minority owners			52,118				-
Proceeds from convertible notes payable			1,299,240				32,500
Net cash provided by financing activities			1,351,358				(487,500	)
NET (DECREASE) IN CASH  AND CASH EQUIVALENTS			(146,482	)			(361	)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD			226,088				361
CASH AND CASH EQUIVALENTS AT END OF PERIOD		$	79,606			$	-

 

See accompanying notes to condensed consolidated financial statements

 

 

Harrison, Vickers and Waterman Inc. and Subsidiaries

March 31, 2016

Notes to the Consolidated Financial Statements

(Unaudited)

 

Note 1 – Organization, Basis of Presentation and Significant Accounting Policies

 

(a) Organization

 

We were incorporated on June 5, 2008, under the laws of the State of Nevada under the name Sharp Performance Inc. From inception until September 2013, our business focus was on the provision of consulting services to the American automotive industry. On October 24, 2013, we changed our name to Harrison, Vickers & Waterman Inc. in conjunction with the change in our business focus. In connection with our shift to a new business focus on August 18, 2015, we filed a Definitive Information statement with the Securities and Exchange Commission to change our name to Attitude Beer, Inc., and we expect to file the Certificate of Amendment to our Certificate of Incorporation to effectuate the name change in the second half of 2016.

 

Change in Business Model

 

Through our wholly owned subsidiary, Attitude Beer Holding Co., a Delaware corporation (“ABH”), we are an owner of a 51% interest in a World of Beer franchise tavern and restaurant located in West Hartford Connecticut. In December 2014, ABH entered into a joint venture (the “JV”) with New England World of Beer (“NEWOB”) and together opened a 4,000 sq. foot tavern in West Hartford, Connecticut (“West Hartford WOB”) that sells a selection of over 500 craft and imported beers along with tavern food and other spirits and cocktails. New England World of Beer holds franchise rights for all of Connecticut and the greater Boston, Massachusetts area. Similar taverns are currently open in 20 states, namely AL, AZ, CO, CT, FL, GA, IL, LA, MD, MI, NC, NJ, NY, OH, SC, TN, TX, VA, WA and WI. Our joint venture partner, NEWOB, operates and manages this location. NEWOB acquired exclusive rights from World of Beer Franchising Inc to develop World of Beer franchise taverns and restaurants in the State of Connecticut and the greater Boston area. Through our agreement with NEWOB, we have the right, but are not obligated, to participate in the development of new franchises. As NEWOB has franchise rights with the World of Beer Franchising, Inc. in Tampa, Florida (“franchisor”), we expect to develop other franchise locations in these exclusive territories.

 

In April 2015, we entered into a Purchase Agreement (the “Purchase Agreement”), with the three original shareholders of ABH, namely, Attitude Drinks Incorporated, a Delaware corporation (“Attitude Drinks”), Alpha Capital Anstalt, a company organized under the laws of Liechtenstein (“Alpha”) and Tarpon Bay Partners LLC, a Florida limited liability company (“Tarpon Bay”), pursuant to which the shareholders sold to us all of the outstanding shares of stock of ABH, and ABH thereupon became our wholly owned subsidiary. In consideration for the purchase of the shares of common stock of ABH, we issued: (i) to Attitude Drinks, 51 shares of our newly created Series B Preferred Stock of the Company (the “Series B Preferred Stock”) and a seven year warrant (the “B Warrant”) to purchase 5,000,000 shares of our common stock, par value $.0001 per share (the “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 1,295,500,500, shares of 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 $554,792, a seven year warrant (the “Tarpon Warrant”) to purchase 443,833,333 shares of 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 our Series A Preferred Stock (convertible into 32,300,000 shares of Common Stock) from HVW Holdings LLC “HVW”, an entity of which Mr. James Giordano, our prior Chief Executive Officer and prior Chairman of the Board, was the managing member, subject to the terms of a Purchase Agreement (the “Series A Purchase Agreement”). Attitude Drinks purchased 87,990,000 shares of 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”).

 

References in this Report to “company”, “we”, “us”, and “our” refer to the business of Harrison Vickers and Waterman, Inc. and our subsidiaries.

 

In September 2013, we shifted our focus to the commercial real estate industry and on September 6, 2013, we purchased from Harrison Vickers and Waterman LLC (“LLC”) certain real estate loans. As of September 30, 2015, we no longer own any real estate loans, and therefore commercial loans will no longer be part of our future business. Our main segment of business will be the development and operations of World of Beer franchise locations.

 

 

(b) Basis of Presentation/Going Concern

 

The Management of the Company is responsible for the selection and use of appropriate accounting policies and the appropriateness of accounting policies and their application.  Critical accounting policies and practices are those that are both most important to the portrayal of the Company’s financial condition and results and require management’s most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effects of matters that are inherently uncertain. The Company’s significant and critical accounting policies and practices are disclosed below as required by generally accepted accounting principles.

 

The accompanying unaudited interim consolidated financial statements and related notes have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and in accordance with the rules and regulations of the United States Securities and Exchange Commission (the “SEC”) with respect to Form 10-Q and Article 8 of Regulation S-X. The unaudited interim consolidated financial statements furnished reflect all adjustments (consisting of normal recurring accruals) which are, in the opinion of management, necessary to a fair statement of the results for the interim periods presented. Interim results are not necessarily indicative of the results for the full year. These consolidated financial statements should be read in conjunction with the financial statements of the Company for the fiscal year ended June 30, 2015 and notes thereto contained in the information filed as part of the Company’s Annual Report on Form 10-K filed with the SEC on September 15, 2015.

 

The Company elected June 30th as its fiscal year end date upon its formation.

 

(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(s) of the financial statements and the reported amounts of revenues and expenses during the reporting period(s).

 

Critical accounting estimates are estimates for which (a) the nature of the estimate is material due to the levels of subjectivity and judgment necessary to account for highly uncertain matters or the susceptibility of such matters to change and (b) the impact of the estimate on financial condition or operating performance is material. The Company’s critical accounting estimate(s) and assumption(s) affecting the financial statements were:

 

(i)

Assumption as a going concern: Management assumes that the Company will continue as a going concern, which contemplates continuity of operations, realization of assets and liquidation of liabilities in the normal course of business.

 

(ii)

Valuation allowance for deferred tax assets: Management assumes that the realization of the Company’s net deferred tax assets resulting from its net operating loss (“NOL”) carry–forwards for Federal income tax purposes that may be offset against future taxable income was not considered more likely than not and accordingly, the potential tax benefits of the net loss carry-forwards are offset by a full valuation allowance. Management made this assumption based on (a) the fact that the Company has incurred recurring losses, (b) general economic conditions and (c) its ability to raise additional funds to support its daily operations by way of a public or private offering, among other factors.

 

(iii)

Estimates and assumptions used in valuation of derivative liability and equity instruments: Management estimates the expected term of share options and similar instruments, expected volatility of the Company’s common shares and the method used to estimate it, expected annual rate of quarterly dividends and risk free rate(s) to value derivative liabilities, share options and similar instruments.

 

Those significant accounting estimates or assumptions bear the risk of change due to the fact that there are uncertainties attached to those estimates or assumptions, and certain estimates or assumptions are difficult to measure or value.

 

Management bases its estimates on historical experience and on various assumptions that are believed to be reasonable in relation to the financial statements taken as a whole under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources.

 

Management regularly evaluates the key factors and assumptions used to develop the estimates utilizing currently available information, changes in facts and circumstances, historical experience and reasonable assumptions. After such evaluations, if deemed appropriate those estimates are adjusted accordingly.

 

 

Actual results could differ from those estimates.

 

The Company applies the guidance of Topic 810 “Consolidation” of the FASB Accounting Standards Codification ("ASC") to determine whether and how to consolidate another entity.  Pursuant to ASC Paragraph 810-10-15-10, all majority-owned subsidiaries—all entities in which a parent has a controlling financial interest—shall be consolidated except (1) when control does not rest with the parent, the majority owner; (2) if the parent is a broker-dealer within the scope of Topic 940, and control is likely to be temporary; (3) consolidation by an investment company within the scope of Topic 946 of a non-investment-company investee. Pursuant to ASC Paragraph 810-10-15-8, the usual condition for a controlling financial interest is ownership of a majority voting interest, and, therefore, as a general rule ownership by one reporting entity, directly or indirectly, of more than 50 percent of the outstanding voting shares of another entity is a condition pointing toward consolidation.  The power to control may also exist with a lesser percentage of ownership, for example, by contract, lease, agreement with other stockholders, or by court decree. The Company consolidates all less-than-majority-owned subsidiaries, if any, in which the parent’s power to control exists.

 

The Company's consolidated subsidiaries and/or entities are as follows:

 

Name of consolidated subsidiary or entity		State or other jurisdiction of incorporation or organization		Date of incorporation or formation (date of acquisition, if applicable)		Attributable interest
Attitude Beer Holding Co.		The State of Delaware		April 21, 2015 (acquisition date)			100	%
West Hartford WOB LLC		The State of Florida		April 21, 2015 (acquisition date0			51	%

 

The consolidated financial statements of the Company include all accounts of the Company and its wholly owned subsidiary, Attitude Beer Holding Co. Attitude Beer Holding Co. also owns 51% of the World of Beer location in West Hartford, Connecticut which is also consolidated into the overall results. .All intercompany balances and transactions have been eliminated, and minority interest eliminations and consolidation adjustments have been made.

 

(d) Fair Value of Financial Instruments

 

The Company follows paragraph 820-10-35-37 of the FASB Accounting Standards Codification (“Paragraph 820-10-35-37”) to measure the fair value of its financial instruments and paragraph 825-10-50-10 of the FASB Accounting Standards Codification for disclosures about fair value of its financial instruments. Paragraph 820-10-35-37 establishes a framework for measuring fair value in accounting principles generally accepted in the United States of America (U.S. GAAP) and expands disclosures about fair value measurements. To increase consistency and comparability in fair value measurements and related disclosures, Paragraph 820-10-35-37 establishes a fair value hierarchy which prioritizes the inputs to valuation techniques used to measure fair value into three (3) broad levels.  The three (3) levels of fair value hierarchy defined by Paragraph 820-10-35-37 are described below:

 

Level 1		Quoted market prices available in active markets for identical assets or liabilities as of the reporting date.
Level 2		Pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date.
Level 3		Pricing inputs that are generally observable inputs and not corroborated by market data.

 

Financial assets are considered Level 3 when their fair values are determined using pricing models, discounted cash flow methodologies or similar techniques and at least one significant model assumption or input is unobservable.

 

The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs.  If the inputs used to measure the financial assets and liabilities fall within more than one level described above, the categorization is based on the lowest level input that is significant to the fair value measurement of the instrument.

 

The carrying amounts of the Company’s financial assets and liabilities, such as cash, real estate loans receivable and accrued expenses, approximate their fair values because of the short maturity of these instruments.

 

Transactions involving related parties cannot be presumed to be carried out on an arm's-length basis, as the requisite conditions of competitive, free-market dealings may not exist. Representations about transactions with related parties, if made, shall not imply that the related party transactions were consummated on terms equivalent to those that prevail in arm's-length transactions unless such representations can be substantiated.

 

Fair Value of Financial Assets and Liabilities Measured on a Recurring Basis

 

Level 3 Financial Liabilities – Derivative Warrant Liabilities

 

The Company uses Level 3 of the fair value hierarchy to measure the fair value of the derivative liabilities and revalues its derivative warrant liability at every reporting period and recognizes gains or losses in the consolidated statements of operations and comprehensive income (loss) that are attributable to the change in the fair value of the derivative warrant liability.

 

 

(e) Cash Equivalents

 

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

 

(f) Derivative Instruments

 

The Company evaluates its convertible debt, warrants or other contracts to determine if those contracts or embedded components of those contracts qualify as derivatives to be separately accounted for in accordance with Paragraph 810-10-05-4 of the Codification and Paragraph 815-40-25 of the Codification. The result of this accounting treatment is that the fair value of the embedded derivative is marked-to-market each balance sheet date and recorded as a liability. In the event that the fair value is recorded as a liability, the change in fair value is recorded in the statements of operations as other income or expense. Upon conversion or exercise of a derivative instrument, the instrument is marked to fair value at the conversion date, and then that fair value is reclassified to equity.

 

In circumstances where the embedded conversion option in a convertible instrument is required to be bifurcated and there are also other embedded derivative instruments in the convertible instrument that are required to be bifurcated, the bifurcated derivative instruments are accounted for as a single, compound derivative instrument.

 

The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is re-assessed at the end of each reporting period. Equity instruments that are initially classified as equity that become subject to reclassification are reclassified to liability at the fair value of the instrument on the reclassification date. Derivative instrument liabilities will be classified in the balance sheet as current or non-current based on whether or not net-cash settlement of the derivative instrument is expected within 12 months of the balance sheet date.

 

(g) Related Parties

 

The Company follows subtopic 850-10 of the FASB Accounting Standards Codification for the identification of related parties and disclosure of related party transactions.

 

Pursuant to Section 850-10-20 the Related parties include a. affiliates of the Company (“Affiliate” means, with respect to any specified Person, any other Person that, directly or indirectly through one or more intermediaries, controls, is controlled by or is under common control with such Person, as such terms are used in and construed under Rule 405 under the Securities Act); b. Entities for which investments in their equity securities would be required, absent the election of the fair value option under the Fair Value Option Subsection of Section 825–10–15, to be accounted for by the equity method by the investing entity; c. trusts for the benefit of employees, such as pension and profit-sharing trusts that are managed by or under the trusteeship of management; d. principal owners of the Company; e. management of the Company; f. other parties with which the Company may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests; and g. other parties that can significantly influence the management or operating policies of the transacting parties or that have an ownership interest in one of the transacting parties and can significantly influence the other to an extent that one or more of the transacting parties might be prevented from fully pursuing its own separate interests.

 

The consolidated financial statements shall include disclosures of material related party transactions, other than compensation arrangements, expense allowances, and other similar items in the ordinary course of business. However, disclosure of transactions that are eliminated in the preparation of consolidated or combined financial statements is not required in those statements. The disclosures shall include: a. the nature of the relationship(s) involved; b. a description of the transactions, including transactions to which no amounts or nominal amounts were ascribed, for each of the periods for which income statements are presented, and such other information deemed necessary to an understanding of the effects of the transactions on the consolidated financial statements; c. the dollar amounts of transactions for each of the periods for which income statements are presented and the effects of any change in the method of establishing the terms from that used in the preceding period; and d. amounts due from or to related parties as of the date of each balance sheet presented and, if not otherwise apparent, the terms and manner of settlement.

 

(h) Commitment and Contingencies

 

The Company follows subtopic 450-20 of the FASB Accounting Standards Codification to report accounting for contingencies. Certain conditions may exist as of the date the consolidated financial statements are issued, which may result in a loss to the Company but which will only be resolved when one or more future events occur or fail to occur.  The Company assesses such contingent liabilities, and such assessment inherently involves an exercise of judgment.  In assessing loss contingencies related to legal proceedings that are pending against the Company or un-asserted claims that may result in such proceedings, the Company evaluates the perceived merits of any legal proceedings or un-asserted claims as well as the perceived merits of the amount of relief sought or expected to be sought therein.

 

 

If the assessment of a contingency indicates that it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in the Company’s consolidated financial statements.  If the assessment indicates that a potentially material loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, and an estimate of the range of possible losses, if determinable and material, would be disclosed.

 

Loss contingencies considered remote are generally not disclosed unless they involve guarantees, in which case the guarantees would be disclosed.  

 

(i) Revenue Recognition

 

The Company follows paragraph 605-10-S99-1 of the FASB Accounting Standards Codification for revenue recognition.  The Company will recognize revenue when it is realized or realizable and earned.  The Company considers revenue realized or realizable and earned when all of the following criteria are met: (i) persuasive evidence of an arrangement exists, (ii) the product has been shipped or the services have been rendered to the customer, (iii) the sales price is fixed or determinable, and (iv) collectability is reasonably assured.

 

(j) Deferred Tax Assets and Income Tax Provision

 

The Company accounts for income taxes under Section 740-10-30 of the FASB Accounting Standards Codification, which requires recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the consolidated financial statements or tax returns.  Under this method, deferred tax assets and liabilities are based on the differences between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the fiscal year in which the differences are expected to reverse.  Deferred tax assets are reduced by a valuation allowance to the extent management concludes it is more likely than not that the assets will not be realized.  Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the fiscal years in which those temporary differences are expected to be recovered or settled.  The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the Statements of Operations in the period that includes the enactment date.

 

The Company adopted section 740-10-25 of the FASB Accounting Standards Codification (“Section 740-10-25”) with regards to uncertainty income taxes.  Section 740-10-25 addresses the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the consolidated financial statements.  Under Section 740-10-25, the Company may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position.  The tax benefits recognized in the consolidated financial statements from such a position should be measured based on the largest benefit that has a greater than fifty percent (50%) likelihood of being realized upon ultimate settlement. Section 740-10-25 also provides guidance on de-recognition, classification, interest and penalties on income taxes, accounting in interim periods and requires increased disclosures.

 

The estimated future tax effects of temporary differences between the tax basis of assets and liabilities are reported in the accompanying consolidated balance sheets, as well as tax credit carry-backs and carry-forwards. The Company periodically reviews the recoverability of deferred tax assets recorded on its consolidated balance sheets and provides valuation allowances as management deems necessary.

 

Management makes judgments as to the interpretation of the tax laws that might be challenged upon an audit and cause changes to previous estimates of tax liability. In addition, the Company operates within multiple taxing jurisdictions and is subject to audit in these jurisdictions. In management’s opinion, adequate provisions for income taxes have been made for all years. If actual taxable income by tax jurisdiction varies from estimates, additional allowances or reversals of reserves may be necessary.

 

(k) Tax years that remain subject to examination by major tax jurisdictions

 

The Company discloses tax years that remain subject to examination by major tax jurisdictions pursuant to the ASC Paragraph 740-10-50-15.

 

(l) Earnings per Share

 

Earnings Per Share ("EPS") is the amount of earnings attributable to each share of common stock. For convenience, the term is used to refer to either earnings or loss per share.  EPS is computed pursuant to section 260-10-45 of the FASB Accounting Standards Codification.  Pursuant to ASC Paragraphs 260-10-45-10 through 260-10-45-16 Basic EPS shall be computed by dividing income available to common stockholders (the numerator) by the weighted-average number of common shares outstanding (the denominator) during the period.  Income available to common stockholders shall be computed by deducting both the dividends declared in the period on preferred stock (whether or not paid) and the dividends accumulated for the period on cumulative preferred stock (whether or not earned) from income from continuing operations (if that amount appears in the income statement) and also from net income. The computation of diluted EPS is similar to the computation of basic EPS except that the denominator is increased to include the number of additional common shares that would have been outstanding if the dilutive potential common shares had been issued during the period to reflect the potential dilution that could occur from common shares issuable through contingent shares issuance arrangement, stock options or warrants.

 

 

Pursuant to ASC Paragraphs 260-10-45-45-21 through 260-10-45-45-23, Diluted EPS shall be based on the most advantageous conversion rate or exercise price from the standpoint of the security holder.  The dilutive effect of outstanding call options and warrants (and their equivalents) issued by the reporting entity shall be reflected in diluted EPS by application of the treasury stock method unless the provisions of paragraphs 260-10-45-35 through 45-36 and 260-10-55-8 through 55-11 require that another method be applied. Equivalents of options and warrants include non-vested stock granted to employees, stock purchase contracts, and partially paid stock subscriptions (see paragraph 260–10–55–23). Anti-dilutive contracts, such as purchased put options and purchased call options, shall be excluded from diluted EPS.   Under the treasury stock method: a. Exercise of options and warrants shall be assumed at the beginning of the period (or at time of issuance, if later) and common shares shall be assumed to be issued. b. The proceeds from exercise shall be assumed to be used to purchase common stock at the average market price during the period. (See paragraphs 260-10-45-29 and 260-10-55-4 through 55-5.) c. The incremental shares (the difference between the number of shares assumed issued and the number of shares assumed purchased) shall be included in the denominator of the diluted EPS computation.

 

There were 4,320,353,271 potentially outstanding dilutive common shares for the reporting period ended March 31, 2016 although there is a 9.99% limit of the outstanding common shares that can be converted to common shares.

 

(m) Cash Flows Reporting

 

The Company adopted paragraph 230-10-45-24 of the FASB Accounting Standards Codification for cash flows reporting, classifies cash receipts and payments according to whether they stem from operating, investing, or financing activities and provides definitions of each category, and uses the indirect or reconciliation method (“Indirect method”) as defined by paragraph 230-10-45-25 of the FASB Accounting Standards Codification to report net cash flow from operating activities by adjusting net income to reconcile it to net cash flow from operating activities by removing the effects of (a) all deferrals of past operating cash receipts and payments and all accruals of expected future operating cash receipts and payments and (b) all items that are included in net income that do not affect operating cash receipts and payments.  The Company reports the reporting currency equivalent of foreign currency cash flows, using the current exchange rate at the time of the cash flows and the effect of exchange rate changes on cash held in foreign currencies is reported as a separate item in the reconciliation of beginning and ending balances of cash and cash equivalents and separately provides information about investing and financing activities not resulting in cash receipts or payments in the period pursuant to paragraph 830-230-45-1 of the FASB Accounting Standards Codification.

 

(n) Subsequent Events

 

The Company follows the guidance in Section 855-10-50 of the FASB Accounting Standards Codification for the disclosure of subsequent events. The Company will evaluate subsequent events through the date when the consolidated financial statements were issued.  Pursuant to ASU 2010-09 of the FASB Accounting Standards Codification, the Company as an SEC filer considers its consolidated financial statements issued when they are widely distributed to users, such as through filing them on EDGAR.

 

(o) Recently Issued Accounting Pronouncements

 

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:

 

1.

Identify the contract(s) with the customer

2.

Identify the performance obligations in the contract

3.

Determine the transaction price

4.

Allocate the transaction price to the performance obligations in the contract

5.

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.

 

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.

 

In February, 2016, the Financial Accounting Standards Board issued an ASU that contained guidance about Leases (Topic 842). This topic provides guidance in that a lessee should recognize the assets and liabilities that arise from operating leases. For operating leases as we have no finance or capital leases, the lessee is required to do the following: (1) Recognize a right-of-use assets and a lease liability, initially measured at the present value of the lease payments, in the statement of financial position; (2) recognize a single lease cost, calculated so that the cost of the lease is allocated over the lease term on a generally straight-line basis; (3) classify all cash payments within operating activities in the statement of cash flows. This pronouncement probably will relate to our leases for our World of Beer locations and are to be effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. As such, we will prepare the needed calculations beginning in our fiscal year July 1, 2017 that ends June 30. 2018. The Company believes there is no change needed until July 1 2017.

 

Note 2 – Going Concern

 

The Company has elected to adopt early application of Accounting Standards Update No. 2014-15, “Presentation of Financial Statements—Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern (“ASU 2014-15”).

 

The Company’s consolidated financial statements have been prepared assuming that it will continue as a going concern, which contemplates continuity of operations, realization of assets and liquidation of liabilities in the normal course of business.

 

The Company is attempting to further implement its business plan and generate sufficient revenue; however, the Company’s cash position may not be sufficient to support its daily operations.  While the Company believes in the viability of its strategy to further implement its business plan and generate sufficient revenue and in its ability to raise additional funds by way of a public or private offering, there can be no assurances to that effect.  The ability of the Company to continue as a going concern is dependent upon its ability to further implement its business plan and generate sufficient revenue and its ability to raise additional funds by way of a public or private offering.

 

The consolidated financial statements do not include any adjustments related to the recoverability and classification of reported asset amounts or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

 

 

Note 3- Receivable from Attitude Drinks Incorporated

 

Attitude Drinks Incorporated is the majority owner of the Company.  Occasionally, cash is forwarded to and from the entities, and a receivable/payable balance is established. As of the report date, the Company had a receivable of $321,811 that is due from Attitude Drinks Incorporated.

 

Note 4 – Inventories

 

Inventories, as estimated by management, currently consist of 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:

 

		March 31, 2016				June 30, 2015
		(unaudited)
Bottled and Draft Beer		$	40,692			$	46,190
Other alcoholic beverages			17,018				11,141
Food items			7,941				11,399
Other Items			5,731				12,319
Total inventories		$	71,382			$	81,049

 

Note 5 – Prepaid expenses

 

Prepaid expenses represent mainly prepaid insurance premiums in the amount of $7,351 that will be written off over the length of the applicable insurance policies.

 

Note 6 – Property and Equipment

 

Property and equipment relate to the fixtures at the West Hartford, Connecticut World of Beer location which are as follows:

 

		March 31,				June 30,
Property Description		2016				2015				Depreciable life
		(unaudited)
Tenant improvement		$	489,812			$	489,812			20 years
Bar equipment			236,109				236,109			10 years
Communications equipment			88,210				88,210			5 years
Capitalized permitting and fees			46,290				46,290			15 years
Other			155,933				162,783			5-7 years
			1,016,354				1,023,204
Accumulated depreciation			(165,330	)			(60,734	)
Total net property and equipment		$	851,024			$	962,470

 

Depreciation expense recorded for the nine months ended March 31, 2016 was $120,307.

 

Note 7 – Capitalized Costs

 

Capitalized costs represent all costs incurred at the West Hartford, Connecticut World of Beer location prior to its opening date. Such costs include:

 

 

		March 31,				June 30,
		2016				2015
Description		Amount				Amount
		(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			25,181				25,182
Accumulated amortization			(24,830	)			(9,122	)
Total		$	183,114			$	198,823

 

Amortization expense recorded for the nine months ended March 31, 2016 was $15,709.

 

Note 8 – Investment in World of Beer franchise development

 

Milford, Connecticut

Total payments of $659,250 were made for the future development of the Milford, Connecticut World of Beer franchise location. Additional investments for this location will be made in 2016 for the eventual opening in April 2016.

 

Cambridge, Massachusetts

Total payments of $355,000 were made for the future development of the Cambridge, Massachusetts World of Beer franchise location. . As with Milford, additional investments for this location will be made in 2016 for the eventual opening around July, 2016.

 

Southeast Florida

On January 26, 2016, an agreement between Southeast Florida Craft LLC, Attitude Beer Holding Co., Glenn E. Straub and James D Cecil was made to create a Joint Venture Agreement whereas Southeast Florida Craft LLC entered an Area Development Agreement with World of Beer Franchising Inc. to acquire territorial rights to develop up to five World of Beer franchise locations in the Palm Beach, Broward and Dade counties in Southeast Florida. As such, Attitude Beer Holding Co. paid on the same date $140,000 to acquire these five (5) franchises. Attitude Beer Holding Co. will become a 60% owner of these franchise locations for the contribution of 100% of the budgeted development costs in developing these franchises.

 

Note 9- Accrued liabilities

 

Accrued liabilities consist of the following for March 31, 2016 and June 30, 2015:

 

		March 31,				June 30,
		2016				2015
		(unaudited)
Accrued payroll and related taxes		$	201,822			$	175,000
Accrued interest payable			256,522				-
Accrued professional fees			18,200				-
Accrued World of Beer expenses			6,892				-
Accrued personal property taxes			28,500				-
Accrued lease liability			26,048				-
Total Accrued Liabilities		$	537,984			$	175,000

 

Note 10 – Derivative Financial Instruments

 

The Company’s derivative financial instruments are embedded derivatives associated with the Company’s convertible debentures. The Company’s convertible debentures issued to institutional investors are hybrid instruments which contain an embedded derivative feature which would individually warrant separate accounting as a derivative instrument under Paragraph 815-10-05-4.  The embedded derivative feature includes the conversion feature attached to certain Notes. Pursuant to Paragraph 815-10-05-4, the value of the embedded derivative liability has been bifurcated from the debt host contract and recorded as a derivative liability resulting in a reduction of the initial carrying amount (as unamortized discount) of the notes, which are amortized as debt discount to be presented in other (income) expenses in the statements of operations using the effective interest method over the life of the notes.

 

 

The compound embedded derivatives within the notes have been valued using a layered discounted probability-weighted cash flow approach, recorded at fair value at the date of issuance; and marked-to-market at each reporting period end date with changes in fair value recorded in the Company’s statements of operations as “change in the fair value of derivative instrument”.

 

Summary of Fair Value of Financial Assets and Liabilities Measured on a Recurring Basis

 

Financial assets and liabilities measured at fair value on a recurring basis are summarized below and disclosed on the balance sheets:

 

Fair Value Measurements at March 31, 2016

Quoted

Significant

Total

Prices in

Other

Significant

Carrying

Active

Observable

Unobservable

Value at

Markets

Inputs

Inputs

March 31, 2016

(Level 1)

(Level 2)

(Level 3)

Conversion feature liability

$

10,164,872

$

-

$

-

$

10,164,872

 

Summary of the Changes in Fair Value of Level 3 Financial Liabilities

 

The table below provides a summary of the changes in fair value, including net transfers in and/or out, of all financial assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) during the nine months ended March 31, 2016:

 

		Fair Value Measurements at March 31, 2016
		Derivative
		liability				Total
Balance, June 30, 2015		$	4,237,890			$	4,237,890
Purchases, issuances and settlements			2,941,667				2,941,667
Total gans or losses (realized/unrealized)
Included in net (income) loss			2,985,315				2,985,315
Included in other comprehensive income
Transfers in and/or out of Level 3
Balance, March 31, 2016		$	10,164,872			$	10,164,872

 

Note 11 – Convertible Notes Payable

 

Convertible Notes payable are as follows:

 

 

RECAP ANALYSIS OF ALL CONVERTIBLE NOTES PAYABLE

FOR THE NINE MONTHS ENDED MARCH 31, 2016

 

Outstanding
Face Value
Convertible				Issue						Default				$ Amount				Interest
Note Amounts				Date				Due Date		Yes/No				Past Due				Rate
$	13,633				9/1/2013			4/1/2017			No				-				10	%
	2,500				10/9/2013			4/1/2017			No				-				10	%
	5,000				10/23/2013			4/1/2017			No				-				10	%
	5,000				1/31/2014			4/1/2017			No				-				10	%
	10,000				5/15/2014			4/1/2017			No				-				10	%
	5,000				5/30/2014			4/1/2017			No				-				10	%
	25,000				9/24/2014			4/1/2017			No				-				10	%
	5,000				10/24/2014			4/1/2017			No				-				10	%
	2,500				3/16/2015			4/1/2017			No				-				10	%
	2,174,167				4/21/2015			4/21/2017			No				-				10	%
	13,250				4/27/2015			4/1/2017			No				-				10	%
	7,500				5/8/2015			4/1/2017			No				-				10	%
	80,000				7/29/2015			7/29/2017			No				-				10	%
	78,000				10/14/2015			10/14/2017			No				-				10	%
	35,000				10/20/2015			10/20/2017			No				-				10	%
	325,000				11/19/2015			11/19/2017			No				-				10	%
	110,000				11/19/2015			11/19/2017			No				-				10	%
	446,245				1/26/2016			1/26/2018			No				-				10	%
	200,000				2/29/2016			2/28/2018			No				-				10	%
	25,000				3/24/2016			3/24/2018			No				-				10	%
$	3,567,795													$	-

 

On July 29, 2015, we issued a convertible note payable for $80,000 with a two year maturity at an interest rate of ten percent per annum. We also issued a warrant to purchase up to 64, 000,000 shares of our common stock at a price of $.0025 with an expiration date of July 29, 2022.

 

On October 14, 2015, we issued a convertible note payable for $78,000 with a maturity date of October 14, 2017 at an interest rate of ten percent per annum. We also issued a warrant to purchase up to 62,400,000 shares of our common stock at a price of $.0025 with an expiration date of October 14, 2022.

 

On October 20, 2015, we issued a convertible note payable for $35,000 with a maturity date of October 20, 2017 at an interest rate of ten percent per annum. We also issued a warrant to purchase up to 28,000,000 shares of our common stock at a price of $.0025 with an expiration date of October 20, 2022.

 

On November 19, 2015, we issued two convertible notes payable, one for $325,000 and the other for $110,000, for a total of $435,000 with a maturity date of November 19, 2017 at an interest rate of ten percent per annum. We also issued two different warrants for a total to purchase up to 348,000,000 shares of our common stock at a price of $.0025 with an expiration date of November 19, 2022.

 

On January 26, 2016, we issued two convertible notes payable to two different accredited investors, one for $343,745 and the other for $102,500 for a total of $446,245 with a maturity date of January 26, 2018 at an interest rate of ten percent per annum. In addition, we issued two different warrants for a total to purchase up to 356,996,000 shares of our common stock at a price of $0.0025 with an expiration date of January 26, 2023.

 

 

On February 29, 2016, we issued a convertible note payable for $200,000 with a maturity date of February 28, 2018 at an interest rate of ten percent per annum. In addition, we issued a warrant to purchase a total of 160,000,000 shares of our common stock at a price of $0.0025 with an expiration date of February 28, 2023.

 

On March 14, 2016, we issued a convertible note payable for $25,000 with a maturity date of March 14, 2018 at an interest rate of ten percent per annum. In addition, we issued a warrant to purchase a total of 20,000,000 shares of our common stock at a price of $0.0025 with an expiration date of March 14, 2023.

 

Note 12 – Loans payable to minority owners

 

A total of $52,118 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 13 – Non –controlling Interest

 

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 this venture.

 

Note 14 – Stockholders’ Deficit

 

Shares Authorized

 

Upon formation, the total number of shares of all classes of stock which the Company is authorized to issue is Seventy Five Million (75,000,000) shares of which One Million (1,000,000) shares are Preferred Stock, par value $0.0001 per share, and Seventy Four Million (74,000,000) shares are Common Stock, par value $0.0001 per share.

 

On October 24, 2013 the Company filed a Certificate of Amendment to amend its Articles of Incorporation (the “Actions”) to: (i) change the name of the Company to Harrison, Vickers & Waterman Inc.; (ii) increase the number of shares of authorized common stock of the Corporation from 74,000,000 to 2,000,000,000 shares; and (iii) effectuate a forward stock split of our common stock at a ratio determined by our Board of Directors of 324.5 for 1.

 

All shares and per share amounts in the consolidated financial statements have been adjusted to give retroactive effect to the Stock Split and the change in authorized stock.

 

On August 8, 2015, the Company filed a Definitive Information Statement whereas stockholders’ approval was received to increase the authorized shares of common stock from 2,000,000,000 shares to 7,500,000,000 shares as well as to change the name to Attitude Beer, Inc. We will file the necessary amendment with the state of Nevada in 2016 to effectuate these changes but until then, we are reflecting the increase in authorized shares on the financial statements.

 

Series A 8% Convertible Preferred Stock

 

On September 17, 2013 the Company filed the Series A 8% Convertible Preferred Stock Certificate of Designation with the Secretary of State of Nevada (the “Certificate of Designation”) authorizing 100,000 shares of Series A Convertible Preferred Stock with a stated value of $1,000 per share and establishing the rights, preferences, privileges and obligations thereof.

 

As set forth in the Certificate of Designation, the holders of Series A Convertible Preferred Stock are entitled to receive, when and as declared by the Board of Directors out of funds legally available therefore, and the Company is obligated to accrue, quarterly in arrears on March 31, September 30, September 30, and December 31 of each year, cumulative dividends on the Series A Preferred Stock at the rate per share equal to eight percent (8%) per annum on the Stated Value, payable in common stock valued at the closing trade price per share on the last trading day of the calendar quarter. Through the Balance sheet date, the holders of the Series A Preferred Stock have waived all dividends.  There is no guarantee they will do so going forward. The Series A Convertible Preferred Stock does not have the right to vote on any matter that may from time to time be submitted to the Company’s shareholders for a vote, either by written consent or by proxy. So long as any shares of Series A Preferred Stock are outstanding, the Company does not have the right to, and cannot cause its subsidiaries not to, without the affirmative vote of the Requisite Holders, (a) alter or change adversely the powers, preferences or rights given to the Series A Preferred Stock, (b) alter or amend this Certificate of Designation, (c) amend its certificate of incorporation, bylaws or other charter documents so as to affect adversely any rights of any Holders of the Series A Preferred Stock, (d) increase the authorized or designated number of shares of Series A Preferred Stock, (e) issue any additional shares of Series A Preferred Stock (including the reissuance of any shares of Series A Preferred Stock converted for Common Stock) or (f) enter into any agreement with respect to the foregoing. Each share of Series A Convertible Preferred Stock is convertible into 1,000 shares of Common Stock. For a period of 24 months from the Issuance Date, if the Company issues shares of common stock (or securities, including any derivative securities, containing the right to purchase, exercise or convert into shares of common stock) (the “Dilution Shares”) such that the outstanding number of shares of common stock on a fully diluted basis is greater than 214,000,000 shares (inclusive of conversions of Series A Preferred Stock at the Conversion Ratio immediately above), then the Conversion Ratio for the Series A Preferred Stock then outstanding and unconverted as of the date the Dilution Shares are issued shall be adjusted to equal the Conversion Ratio multiplied by a fraction, the numerator of which shall be the number of shares outstanding on a fully diluted basis after the issuance of the Dilution Shares, and the denominator shall be 214,000,000. The Company cannot effect any conversion of the Series A Preferred Stock, to the extent that, after giving effect to the conversion, such Holder (together with such Holder’s Affiliates, and any Persons acting as a group together with such Holder or any of such Holder’s Affiliates) would beneficially own in excess of 9.9% of the number of shares of the Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock issuable upon conversion of Series A Preferred Stock.

 

 

Effective September 6, 2013 the Company entered into a Securities Purchase Agreement (the “HVW Agreement”) with HVW Holdings LLC (“HVW”). Pursuant to the Agreement, the Company agreed to sell to HVW an aggregate 32,300 shares of its Series A, 8% Convertible Preferred Stock which pursuant to the terms thereof will be convertible into 32,300,000 shares of the Company’s common stock. The consideration under the HVW Agreement was certain services to be rendered by HVW to the Company pursuant to a management agreement (the “Management Agreement”) entered into between the Company and HVW on September 6, 2013. HVW sold these 32,300 shares to another investor on April 21, 2015.

 

In addition, the Company issued 46,500 shares of its Series A, 8% Convertible Preferred Stock to its former president, Robert Sharp and 16,200 shares to an investor.  Robert Sharp sold 36,500 of these shares to two other investors on April 21, 2015

 

The 95,000 shares issued of the A 8% Convertible Preferred Stock were valued at $425,000 in aggregate, $208,206, $144,500 and $72,474 of which were booked as compensation – officer, management fees and consulting fees, respectively.

 

On November 4, 2013, the owners of the Series A Convertible Preferred Stock agreed that the conversion ratio, as defined in the Certificate of Designation, shall not change in the event of forward-split or reverse-split for a period of nine months from issuance.

 

On April 21, 2015, we issued 5,000 new shares of the Series A Convertible Preferred Stock to another investor. On March 21, 2015, 1,000 shares of the Series A Convertible Preferred Stock were converted into 1,056,075 shares of common stock.

 

On March 21, 2016 one investor converted 1,000 shares of Series A Convertible Preferred Stock for 1,056,075 shares of common stock.

 

Series B Convertible Preferred Stock

 

On April 21, 2015, the Company issued 51 shares of Series B Convertible Preferred Stock to Attitude Drinks Incorporated.  At the time, the Company accounted for approximately $1,000,000 in additional paid in capital due to its issuance.  Each share has a par value of $0.0001 and a stated value of $1,000 per share. Unless in the event of liquidation, holders shall not be entitled to receive dividends. Each one (1) share of the Series B Preferred Stock shall have voting rights equal to (x) (i) 0.019607 multiplied by the aggregate total of (A) the issued and outstanding shares of Common Stock eligible to vote at the time of the respective vote, plus (B) the number of votes which all other series or classes of securities other than this Series B Preferred Stock are entitled to cast together with the holders of Common Stock at the time of the relevant vote (the amount determined by this clause (i), the “Numerator”), divided by (ii) 0.49, minus (y) the Numerator.

 

Common Stock

 

On April 21, 2015, Attitude Drinks Incorporated purchased 87,990,000 shares of Common Stock from HVW Holdings LLC at a price of $65,000, making this company the majority owner of the Company’s common stock.

 

On October 2, 2015, we issued 6,664,820 shares of the Company’s common stock for the conversion of $9,670 in convertible notes payable and $6,992 in accrued interest payable at a conversion price of $.0025. As these notes were not originally convertible and subsequently were changed to convertible notes, we had to recognize a loss of $66,648 on the conversion of this converted debt as there were no embedded derivatives.

 

On March 12, 2016, we issued 10,262,200 shares of the Company’s common stock for the conversion of $7,650 in convertible notes payable and $47 in accrued interest payable at a conversion price of $.00075.

 

On March 14, 2016, we issued 5,657,133 shares of the Company’s common stock for the conversion of $3,075 in convertible notes payable and $1,168 in accrued interest payable at a conversion price of $.00075.

 

 

As noted above in the Series A Convertible Preferred Stock section, we issued 1,056,075 shares of the Company’s common stock for the conversion of 1,000 shares of this convertible preferred stock.

 

At March, 2016, the Company had issued and outstanding 149.977.595 shares of common stock with no shares owned by our officers.

 

Common Stock Warrants

 

As of March 31, 2015, the Company had a total of 2,771,631,733 warrants which includes the issuance of 64,000,000 new warrants on July 29, 2015, 90,400,000 new warrants during the month of October, 2015, 348,000,000 new warrants during the month of November, 2015, 80,000,000 new warrants during the month of December, 2015, 356,996,000 new warrants during the month of January, 2016 and 20,000,000 new warrants during the month of March, 2016. No warrants have been exercised.

 

Equity Incentive Plan

 

On October 24, 2013, the Company created the 2013 Equity Incentive Plan (the “2013 Plan.”) The aggregate number of shares of Common stock that may be issued under the Plan shall not exceed five million (5,000,000) shares.

 

On August 8, 2015, the Company filed a Definitive Information Statement whereas stockholders’ approval was received to approve the 2015 Stock Incentive Plan whereas an aggregate of 600,000,000 shares of our common stock may be issued under this Plan.

 

No shares have been issued under any plan as of March 31, 2016.

 

Note 15 – Commitments and Contingencies

 

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 December 31, 2015, are as follows:

 

Years ending June 30,		Amount
2016		$	33,230
2017			134,918
2018			138,965
2019			143,134
2020			147,428
thereafter			719,481
		$	1,317,157

 

Rent expense recorded for the nine months ended March 31, 2016 was $171,999.

 

Note 16 – Subsequent Events

 

On April 1, 2016, we issued a convertible note for $212,500 with a maturity date of April 1, 2018 at an interest rate of 10%. In addition, we issued a warrant for this note to purchase up to 170,000,000 shares of common stock at an exercise price of $.0025.

 

On April 1, 2016, we issued a convertible note for $300,000 with a maturity date of April 1, 2018 at an interest rate of 10%. In addition, we issued a warrant for this note to purchase up to 240,000,000 shares of common stock at an exercise price of $.0025.

 

On April 7, 2016, we issued 7,485,413 shares of common stock for two conversions with the first on $2,000 convertible debt and $494 accrued interest and the second conversion of $2,500 convertible debt and $620 accrued interest with both converted at a conversion price of $.00075 .

 

 

On April 8, 2016, we issued 4,984,667 shares of common stock for the conversion of $3,675 convertible debt and $63 accrued interest at a conversion price of $.00075.

 

On April 20, 2016, we issued 1,056,075 shares of common stock for the conversion of 1,000 shares of Series a Convertible Preferred Stock.

 

On April 21, 2016, we issued 6,780,627 shares of common stock for the conversion of $5,050 convertible debt and $35 accrued interest at a conversion price of $.00075

 

On April 25, 2016, we issued a convertible note for $200,000 with a maturity date of April 25, 2018 at an interest rate of 10%. In addition, we issued a warrant for this note to purchase up to 80,000,000 shares of common stock at an exercise price of $.0025.

 

On May 9, 2016, we issued a convertible note for $300,000 with a maturity date of May 9, 2018 at an interest rate of 10%. In addition, we issued a warrant for this note to purchase up to 240,000,000 shares of common stock at an exercise price of $.0025.

 

On May 9, 2016, we issued a convertible note for $100,000 with a maturity date of May 9, 2018 at an interest rate of 10%. In addition, we issued a warrant for this note to purchase up to 80,000,000 shares of common stock at an exercise price of $.0025.

 

On May 20, 2016, we issued 11,439,010 shares of common stock for the conversion of $10,000 convertible debt and $2,011 accrued interest at a conversion price of $.00105.

 

On May 20, 2016, we issued 4,708,867 shares of common stock for the conversion of $4,908 convertible debt and $36 accrued interest at a conversion price of $.00105.

 

On May20, 2016, we issued a convertible note for $100,000 with a maturity date of May 20, 2018 at an interest rate of 10%. In addition, we issued a warrant for this note to purchase up to 80,000,000 shares of common stock at an exercise price of $.0025.

 

On May 23, 2016, we issued 5,959,770 shares of common stock for the conversion of $5,000 convertible debt and $1,257 accrued interest at a conversion price of $.00105.

 

On May25, 2016, we issued a convertible note for $300,000 with a maturity date of May 25, 2018 at an interest rate of 10%. In addition, we issued a warrant for this note to purchase up to 240,000,000 shares of common stock at an exercise price of $.0025.

 

On May26, 2016, we issued a convertible note for $25,000 with a maturity date of May 26, 2018 at an interest rate of 10%. In addition, we issued a warrant for this note to purchase up to 20,000,000 shares of common stock at an exercise price of $.0025.

 

On June 8, 2016, we issued a convertible note for $50,000 with a maturity date of June 8, 2018 at an interest rate of 10%. In addition, we issued a warrant for this note to purchase up to 40,000,000 shares of common stock at an exercise price of $.0025.

 

On June 8, 2016, we issued a convertible note for $150,000 with a maturity date of June 8, 2018 at an interest rate of 10%. In addition, we issued a warrant for this note to purchase up to 120,000,000 shares of common stock at an exercise price of $.0025.

 

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

 

The following discussion and analysis of our financial condition and results of our operations should be read in conjunction with our financial statements and the notes thereto which appear elsewhere in this report. The results shown herein are not necessarily indicative of the results to be expected for any future periods.

 

This discussion contains forward-looking statements, based on current expectations. All statements regarding future events, our future financial performance and operating results, our business strategy and our financing plans are forward-looking statements and involve risks and uncertainties. In many cases, you can identify forward-looking statements by terminology, such as “may,” “will,” “should,” “expects,” “intends,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “potential” or “continue,” or the negative of such terms and other comparable terminology. These statements are only predictions. Known and unknown risks, uncertainties and other factors could cause our actual results and the timing of events to differ materially from those projected in any forward-looking statements. In evaluating these statements, you should specifically consider various factors, including, but not limited to, those set forth in our Annual Report on Form 10-K for the year ended June 30, 2015 and in this report.

 

 

General

 

Our Company

 

Since September 2013 until recently, we were primarily engaged in the business of making commercial secured real estate loans. Our business model until the ABH acquisition was solely focused upon making commercial secured real estate loans under advantageous and risk adverse terms. We no longer are involved in the commercial secured real estate loans as we will devote our total efforts in the development and operations of World of Beer franchises.

 

On April 21, 2015, we commenced operations in a new line of business, the ownership of World of Beer taverns that serve craft and imported beer along with food and other spirits. ABH currently owns in a joint venture, an interest in one World of Beer tavern located in West Hartford, Connecticut and just started construction of a second World of Beer Tavern in Milford, Connecticut as well as the construction of a third World of Beer Tavern in Cambridge, Massachusetts. Both new stores are expected to be opening sometime in spring of 2016. ABH also has a two year option to own 51% of the World of Beer franchise in Stamford, Connecticut which has not been exercised. World of Beer began as a neighborhood tavern and has grown to close to 80 locations in 20 states.

 

In December 2014, ABH entered into a joint venture with New England World of Beer and together opened a 4,000+ sq. foot tavern in West Hartford, Connecticut that sells a selection of over 500 craft and imported beers along with tavern food, other spirits and cocktails. New England World of Beer holds franchise rights for all of Connecticut and the greater Boston, Massachusetts area. Similar taverns are currently open in 20 states, namely AL, AZ, CO, CT, FL, GA, IL, LA, MD, MI, NC, NJ, NY, OH, SC, TN, TX, VA, WA and WI.

 

History and Other Information

 

We were incorporated on June 5, 2008, under the laws of the State of Nevada under the name of Sharp Performance Inc. From inception until September 2013, our business focus was on the provision of consulting services to the American automobile industry. On October 24, 2013, we changed our name to Harrison, Vickers and Waterman Inc. in conjunction with the change in our business focus. As we have now changed our business only to the development and operations of World of Beer franchises, we recently filed a Definitive Statement to change our name to Attitude Beer, Inc. which we expect to file the Certificate of Amendment to our Certificate of Incorporation to effectuate the name change in 2016.

 

Our mailing address is 11231 U.S. Highway 1, #201, North Palm Beach, FL 33408. Our telephone number is (561) 227-2727. Our fiscal year end is June 30 ^th.

 

Plan of Operations

 

We are continuing to seek other sources of financing to develop our business plan, implement our sales and marketing plan to meet other operational expense requirements and to find and develop new World of Beer locations not only in our protected territories but as well as in other locations throughout the United States. 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 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 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 convertible debt obligations for $3,567,795 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.

 

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.

 

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.  

 

Results of Operations for the Nine Months Ended March 31, 2016 As Compared to March 31, 2015

 

Commensurate with the change in business model described under “General” above, the Company generated $2,263,250 in net revenues for the nine months ended March 31, 2016. These are revenues associated with the operations of the West Hartford World of Beer location. For the nine months ended March 31, 2015, the Company did not own any World of Beer franchises, thus producing no prior year revenues.

 

Administrative Salaries, taxes and employee benefits were zero for the nine months ended March 31, 2016 as compared to $(100.000) for the prior year which was an accrual adjustment. There are no corporate employees in 2016 as Attitude Drinks Incorporated’s employees provide all needed management services for the Company.

 

We reported $782,728 other expenses and $679,762 labor costs for the West Hartford World of Beer location. There are no prior year comparison figures as we did not buy the first World of Beer location until April, 2015.

 

 

General and administrative expenses increased $54,125 over the prior year mainly due to increased investor relations and costs for the March 31, 2016 reporting period.

 

Professional fees increased $35,445 for the nine months period ended March 31, 2016 versus March 31, 2015, primarily due to increased accounting and legal fees incurred in 2016.

 

Depreciation and amortization expenses were $120,307 for the nine months ended March 31, 2016 as there were no comparison figures for the prior year as we did not purchase the first World of Beer location until April, 2015.

 

Results of Operations for the Three Months Ended March 31, 2016 As Compared to March 31, 2015

 

Commensurate with the change in business model described under “General” above, the Company generated $672,481 in net revenues for the three months ended March 31, 2016. These are revenues associated with the operations of the West Hartford World of Beer location. There are no comparison figures for the prior year as we did not purchase the first World of Beer location until April, 2015. Administrative Salaries, taxes and employee benefits were zero for the three months ended March 31, 2016 as compared to $(175,000) for the prior year as this amount represented an accrual adjustment. There are no corporate employees in 2015 as Attitude Drinks Incorporated’s employees provide all needed management services for the Company.

 

We reported $222,858 other expenses and $212,106 labor costs for the World of Beer location. There are no prior year comparison figures as we did not buy the first World of Beer location until April, 2015.

 

General and administrative expenses increased $31,300 mainly due to increased investor relations costs in 2016.

 

Professional fees increased $26,760 for the three months period ended March 31, 2016 versus March 31, 2015, primarily due to the increased need for legal services in 2016.

 

Depreciation and amortization expenses were $40,103 for the three months ended March 31, 2016 as there were no comparison figures for the prior year as we did not purchase the first World of Beer location until April, 2015.

 

Liquidity and Capital Resources

 

Our ability to continue as a going concern will be dependent upon us receiving additional third party financings to build our new World of Beer franchises and 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.  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.  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.

 

External Debt Financing:

 

On July 29, 2015, we issued a convertible note payable to Alpha Capital Anstalt in which we received $80,000.

 

On October 14, 2015, we issued a convertible note payable to Alpha Capital Anstalt in which we received $78,000.

 

On October 20, 2015, we issued a convertible note payable to Tarpon Bay Partners LLC in which we received $35,000.

 

On November 19, 2015, we issued two convertible notes payable, one to Alpha Capital Anstalt for $325,000 and one to Tarpon Bay Partners LLC for $110,000.

 

On January 26, 2016, we issued two convertible notes payable, one to Alpha Capital Anstalt for $343,745 and one to Tarpon Bay Partners LLC for $102,500.

 

On February 29, 2016, we issued a convertible note payable to Alpha Capital Anstalt for $200,000.

 

On March 14, 2016, wee issued a convertible note payable to Tarpon Bay Partners LLC for $25,000.

 

Proceeds of the above financing were used for payments on the new Milford, Connecticut World of Beer location for $659,250 and $355,000 for payments on the new Cambridge, Massachusetts World of Beer location. The rest was used for 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.

 

Dividend Distributions:

 

We have received a total of $116,600 in dividend distributions from the operations of the West Hartford, Connecticut World of Beer location. These funds were used for working capital purposes.

 

Our cash balance at March 31, 2016 was $79,606, a decrease of $146,482 from June 30, 2015, mainly due to slower seasonal activities and the payment of dividends to the Company and our joint venture partners.

 

We have limited capital resources, as, among other things, we have a limited operating history. We have generated reasonable revenues to date, but we may not be able to generate sufficient revenues to become profitable in the future.

 

The report of our independent registered public accounting firm on our financial statements for the fiscal year ended June 30, 2015 contains an explanatory paragraph regarding our ability to continue as a going concern based on our history of net losses since our inception.

 

We do not believe that we have sufficient funds on hand to fully implement our business operations or to meet our cash obligations for the next 12-months period. As a result, we may need to seek additional funding in the near future. We currently do not have a specific plan of how we will obtain such funding; however, we anticipate that additional funding will be in the form of convertible debt financing. At this time, we cannot provide investors with any assurance that we will be able to generate sufficient funding from the sale of our common stock or through issuance of debt to meet our obligations over the next 12 months. We do have Additional Investment Rights from two accredited investors for a total of $5,000,000 in which a total of $1,374,245 has been exercised to be used for the development of new World of Beer franchise locations, but there is no assurance that these investors will continue to provide financings for these ventures. We will seek new investors especially in new territories’ developments present themselves.

 

We do not anticipate the need to hire corporate employees over the next 12 months as Attitude Drinks Incorporated’s employees are providing their services for the operations and management of the Company. We may set up a service provider contract with Attitude Drinks Incorporated to receive charges for these services as a way to reduce the receivable balance due from Attitude Drinks Incorporated.

 

Off-Balance Sheet Arrangements

 

We have no off-balance sheet arrangements.

 

Our business is subject to numerous risk factors, including the following:

 

Risks Related to Our Business

 

If we are unable to identify and obtain suitable new franchise sites and successfully open new franchises, our revenue growth rate and profits may be reduced.

 

We require that all proposed franchise sites meet our site selection criteria. We 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. We face significant competition from other restaurant companies and retailers for sites that meet our criteria, and the supply of sites may be limited in some markets. Further, we may be precluded from acquiring an otherwise suitable site due to an exclusivity restriction held by another tenant. As a result of these factors, our costs to obtain and lease sites may increase, or we may not be able to obtain certain sites due to unacceptable costs. Our inability to obtain suitable sites at reasonable costs may reduce our growth.

 

To successfully expand our business, we 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 we may experience similar delays in the future. Delays in opening new sites could hurt our ability to meet our growth objectives, which may affect our results of operations and thus our stock price. We cannot guarantee that we or any future franchisees will be able to achieve our expansion goals. Further, any sites that we open may not achieve operating results similar or better than our existing restaurant. If we are unable to generate positive cash flow from a new site, we may be required to recognize an impairment loss with respect to the assets for that restaurant. Our ability to expand successfully will depend on a number of factors, many of which are beyond our 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.

 

Our restaurants and taverns may not achieve market acceptance in the new regions we enter.

 

Our expansion plans depend on opening restaurants and taverns in markets starting with New England where we have little or no operating experience. We may not be successful in operating our 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 our ability to generate market awareness of our brands. Sales at our locations opening in new markets may take longer to reach profitable levels, if at all.

 

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

 

We intend to open new restaurants and taverns in our existing market, which may reduce sales performance and guest visits for our 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 our information technology systems could expose us to potential liability and loss of revenues.

 

We accept 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 our company or our service providers could result in theft, loss, fraudulent or unlawful use of customer data which could harm 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 our location(s) caused by inclement weather, terrorist attacks, natural disasters such as floods, drought and hurricanes, pandemics, the inability of our vendors to obtain credit in a tightened credit market, food safety warnings or advisories or the prospect of such pronouncements, or other conditions beyond our control could adversely affect the availability, quality and cost of items we buy and the operations of our restaurants. Our inability to effectively manage supply chain risk could increase our costs and limit the availability of products critical to our restaurant operations.

 

Our business is difficult to evaluate because we are currently focused on a new line of business and have very limited operating history and information.

 

Our company was incorporated on June 5, 2008, which makes an evaluation of us extremely difficult. In addition, we have recently shifted our focus from the commercial real estate lending to restaurant and tavern sales. There is a risk that we will be unable to successfully operate this new line of business or be able to successfully integrate it with our current management and structure. Our estimates of capital and personnel required for our new line of business are based on the experience of management and businesses that are familiar to them. We are subject to the risks such as our ability to implement our business plan, market acceptance of our proposed business and services, under-capitalization, cash shortages, limitations with respect to personnel, financing and other resources, competition from better funded and experienced companies, and uncertainty of our ability to generate revenues. There is no assurance that our activities will be successful or will result in any revenues or profit, and the likelihood of our success must be considered in light of the stage of our development. In addition, no assurance can be given that we will be able to consummate our business strategy and plans, as described herein, or that financial, technological, market, or other limitations may force us to modify, alter, significantly delay, or significantly impede the implementation of such plans. We have insufficient results for investors to use to identify historical trends or even to make quarter to quarter comparisons of our operating results. You should consider our prospects in light of the risk, expenses and difficulties we will encounter as an early stage company. Our revenue and income potential is unproven, and our business model is continually evolving. We are subject to the risks inherent to the operation of a new business enterprise and cannot assure you that we will be able to successfully address these risks.

 

We may not be profitable.

 

We expect to incur operating losses for the foreseeable future. For the nine months ended March 31, 2016, we had a loss from operations of $(113,904) which includes $120,307 in depreciation and amortization expense for a net profit of operations of $6,403 as compared to a profit from operations of $32,953 for the nine months ended March 31, 2015. Our ability to become profitable depends on our ability to have successful operations and generate and sustain revenues, while maintaining reasonable expense levels, all of which are uncertain in light of our limited operating history in our current line of business and our beginning of our new food and beverage line of business.

 

 

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

 

Our auditors’ report reflects the fact that the ability of our Company to continue as a going concern and expresses substantial doubt about our ability to continue as a going concern. This substantial doubt is due to our lack of committed funding and lack of revenue. Our consolidated financial statements reported a net loss of ($6,122,888) for the nine months ended March 31, 2016 which includes a change in the fair market value of our derivative liabilities as well as derivative expense. If we are unable to continue as a going concern, you will lose your investment. You should not invest in us unless you can afford to lose your entire investment. See the notes to our Financial Statements.

 

There are general risks associated with the restaurant industry.

 

Restaurants are a very cyclical business.  Specific factors that impact our 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 the Company’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 the Company.

 

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

 

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

 

•

any regulatory action or investigation against us;

 

•

any negative publicity about a restaurant in the World Of Beer franchise; and

 

•

any negative publicity about our restaurants.

 

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

 

We face substantial competition in our target markets

 

The restaurant industry is highly competitive, and many of our competitors are substantially larger and possess greater financial resources than we do. 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 we face 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 our sports fan and family demographic.

 

 

There are additional restaurants that feature custom beers.  Many of these competitors have substantially more resources than we which allows them to have economies of scale allowing them price points which compare favorably to ours.  They also have the ability to market their restaurants given their sheer size which we do not possess.  All of these factors may make it difficult for us to succeed.

 

Unfavorable publicity could harm our business.

 

Multi-unit restaurant businesses such as ours 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 our 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 our failure to respond effectively to adverse publicity, could have a material adverse effect on our business.

 

Changes in employment laws or regulation could harm our performance.

 

Various federal and state labor laws govern our relationship with our 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 our 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 our restaurants are designed to be accessible to the disabled, we could be required to make modifications to our restaurants to provide service to, or make reasonable accommodations for disabled persons.

 

Failure of our internal controls over financial reporting could harm our business and financial results. 

 

Our management is responsible for establishing and maintaining effective internal control over financial reporting. Internal control over financial reporting is a process to provide reasonable assurance regarding the reliability of financial reporting for external purposes in accordance with accounting principles generally accepted in the United States. Because of its inherent limitations, internal control over financial reporting is not intended to provide absolute assurance that we would prevent or detect a misstatement of our financial statements or fraud. Any failure to maintain an effective system of internal control over financial reporting could limit our ability to report our financial results accurately and timely or to detect and prevent fraud. A significant financial reporting failure or material weakness in internal control over financial reporting could cause a loss of investor confidence and decline in the market price of our stock.

 

Economic conditions could have a material adverse impact on our landlords or other tenants in retail centers in which we or our franchisees are located, which in turn could negatively affect our financial results.

 

Our 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 us. In addition other tenants at retail centers in which we or our franchisees are located or have executed leases may fail to open or may cease operations. If our landlords fail to satisfy required co-tenancies, such failures may result in us or our franchisees terminating leases or delaying openings in these locations. Also, decreases in total tenant occupancy in retail centers in which we are located may affect guest traffic at our restaurants. All of these factors could have a material adverse impact on our operations.

 

We 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 our results of operations.

 

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. We incur substantial pre-opening expenses each time we open a new restaurant and incur other expenses when we close, relocate or remodel existing restaurants. These expenses are generally higher when we open 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 our results of operations.

 

 

Our success depends substantially on the value of our brands and our reputation for offering guests an unparalleled Guest experience.

 

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

 

Our inability to successfully and sufficiently raise menu prices could result in a decline in profitability.

 

We utilize 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 our selection and amount of menu price increases are not accepted by consumers and reduce guest traffic, or are insufficient to counter increased costs, 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 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, 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 our 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, our 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 our expansion into other geographical territories;

 

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Our ability to operate effectively in new markets in which we have limited operating experience;

 

·

Labor availability and costs for hourly and management personnel;

 

·

Changes in competitive factors;

 

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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;

 

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Fluctuations in interest rates;

 

·

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

 

·

Tax expenses and other non-operating costs.

 

As a result of the factors discussed above, 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.

 

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

 

Our success and the success of our individual restaurant(s) and business depends on our 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 our expansion plans and business performance and, to the extent that a labor shortage may force us to pay higher wages, harm our profitability. The loss of any of our key executive officers could jeopardize our ability to meet our financial targets.

 

The sale of alcoholic beverages at our locations subjects us to additional regulations and potential liability.

 

Because our locations sell alcoholic beverages, we are required to comply with the alcohol licensing requirements of the federal government, states and municipalities where our 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 we fail to comply with federal, state or local regulations, our licenses may be revoked, and we may be forced to terminate the sale of alcoholic beverages at one or more of our locations. Further, growing movements to change laws relating to alcohol may result in a decline in alcohol consumption at our facilities or increase the number of dram shop claims made against us, either of which may negatively impact operations or result in the loss of liquor licenses.

 

In certain states we are 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 our performance.

 

The success of our 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 our unique food and beverage items and appeal of sports bars and casual dining restaurants. We also depend on trends toward consumers eating away from home. Shifts in these consumer preferences could negatively affect our 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 our menu. Negative publicity over the health aspects of such food items may adversely affect consumer demand for our menu items and could result in a decrease in guest traffic to our restaurants, which could materially harm our business. In addition, we will be required to disclose calorie counts for all food items on our menus, due to federal regulations, and this may have an effect on consumers’ eating habits. Other federal regulations could follow this pattern. In addition, our 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 on pricing, either of which could harm our business, financial condition, operating results or cash flow.

 

A regional or global health pandemic could severely affect our 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, our business could be severely affected. We have positioned our 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 our 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.

 

We may be subject to increased labor and insurance costs.

 

Our 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, we 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 our labor costs. This, in turn, could lead us to increase prices which could impact our sales. Conversely, if competitive pressures or other factors prevent us from offsetting increased labor costs by increases in prices, our profitability may decline. In addition, the current premiums that we pay for our 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 we actually experience under our workers' compensation and general liability insurance, for which we carry high per-claim deductibles, may also increase at any time, thereby further increasing our 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.

 

 

Our current insurance may not provide adequate levels of coverage against claims.

 

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

 

We are dependent on information technology and any material failure of that technology could impair our ability to efficiently operate our business.

 

We rely on information systems across our operations, including, for example, point-of-sale processing in our locations, management of our supply chain, collection of cash and credit and debit card payments, payment of obligations and various other processes and procedures. Our ability to efficiently manage our 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 our operations, require significant investment to remediate the issue or cause negative publicity that could damage our brand. Significant capital investments might be required to remediate any problems.

 

If we are unable to maintain our rights to use key technologies of third parties, our business may be harmed.

 

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

 

Our future growth may require us 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 our business plan and to be ultimately successful, we will need ample capital to purchase/rent new properties, build new locations, hire personnel and market our locations. We may not generate sufficient cash from our existing operations in order to do so. Therefore, we may at some point choose to raise additional capital to support our continued growth. Our ability to raise additional capital will depend, in part, on conditions in the capital markets at that time which are outside of our control. Accordingly, we may be unable to raise additional capital, if and when needed, on terms acceptable to us, or at all. If 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.

 

If we are unable to obtain additional funding, our business operations will be harmed. Even if we do obtain additional financing, our then existing shareholders may suffer substantial dilution.

 

It is possible that additional capital will be required to effectively support the operations and to otherwise implement our overall business strategy. The inability to raise the required capital will restrict our ability to grow and may reduce our ability to continue to conduct business operations. Our ability to obtain capital will also depend on market conditions, the national economy and other factors beyond our control. If we are unable to obtain necessary financing, we will likely be required to curtail our business plans, which could cause the company to become dormant. Any additional equity financing may involve substantial dilution to our then existing shareholders.

 

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

 

Communications and information systems are essential to the conduct of our business, as we use such systems to manage our customer relationships, our general ledger, our deposits and our loans. Our operations rely on the secure processing, storage and transmission of confidential and other information in our computer systems and networks. Although we take protective measures and endeavor to modify them as circumstances warrant, the security of our 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 our 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 our computer systems and networks could potentially be jeopardized or could otherwise cause interruptions or malfunctions in our operations or the operations of our customers, clients or counterparties. This could cause us significant reputational damage or result in our experiencing significant losses.

 

 

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

 

While we have 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, we outsource certain aspects of our data processing to certain third-party providers. If our third-party providers encounter difficulties, or if we have difficulty in communication with them, our ability to adequately process and account for customer transactions could be affected, and our 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.

 

Our management team is not required to devote their full time to our business.

 

Our Chief Executive Officer, Roy Warren, and our Chief Financial Officer, Tommy Kee, hold the same roles at Attitude Drinks, Incorporated, and another publicly traded company that is the majority owner of Harrison, Vickers and Waterman, Inc. As a result of this other obligation, there is a substantial risk that  both Mr. Warren and Mr. Kee may not devote as much time as is necessary to our operations, which may harm our business and operating results.

 

Our Former CEO and Director believes he is owed $175,000

 

We had accrued $175,000 to our former CEO and Sole Director, James Giordano.  Upon Mr. Giordano’s exit from our firm, we arranged for the purchase of his common shares held as complete compensation for his tenure here.  All other liabilities to Mr. Giordano for services rendered were eliminated.  Mr. Giordano disputes this assertion and has filed a lawsuit with the State of Connecticut on April 24, 2016 against the Company for this dispute.  If we are required to remit to Mr. Giordano $175,000, it will take away funds from operating and expanding the business, which may greatly harm our cash position and growth potential.

 

Shareholders may be diluted significantly through our efforts to obtain financing and satisfy obligations through issuance of additional shares of our common stock.

 

We have no committed source of financing. Wherever possible, our Board of Directors will attempt to use non-cash consideration to satisfy obligations. In many instances, we believe that the non-cash consideration will consist of shares of our stock. As of the date of this Report, we have 7,500,000,000 authorized shares of common stock of which 149,977,595 are currently outstanding. We also have 1,000,000 shares of preferred stock authorized of which 100,000 shares have been designated as Series A Convertible Preferred Stock which 99,000 shares are outstanding and maybe converted into 99,000,000 shares of common stock. We also have designated and issued 51 shares of Series B Convertible Preferred Stock that may be converted into 51,000 shares of common stock. Our Board of directors has authority, without action or vote of the shareholders, to issue all or part of the remaining authorized but unissued common shares. The preferred shares are subject to certain rights of the holders of the Series A and B Convertible Preferred Stock and may also be issued without the vote of the common stockholders. In addition, if a trading market develops for our common stock, we may attempt to raise capital by selling shares of our common stock, possibly at a discount to market. These actions will result in dilution of the ownership interests of existing shareholders and may further dilute common stock book value. Such dilution may be substantial. Such issuances may also serve to enhance existing management’s ability to maintain control of the Company because the shares may be issued to parties or entities committed to supporting existing management.

 

We are and will continue to be completely dependent on the services of our Chief Executive Officer, Roy Warren, the loss of whose services may cause our business operations to cease, and we will need to engage and retain qualified employees and consultants to further implement our strategy.

 

As of the date of this Report, our operations and business strategy are completely dependent upon the knowledge and business contacts of Roy Warren, our President and CEO. He is under no contractual obligation to remain employed by us. If he should choose to leave us for any reason before we have hired additional personnel, our operations may fail. Even if we are able to find additional personnel, it is uncertain whether we could find someone who could develop our business along the lines described herein. We will fail without Mr. Warren or an appropriate replacement(s). We may, in the future, acquire key-man life insurance on the life of Mr. Warren naming us as the beneficiary when and if we obtain the resources to do so, assuming Mr. Warren remains insurable. We have not yet procured such insurance, and there is no guarantee that we will be able to obtain such insurance in the future. Accordingly, it is important that we are able to attract, motivate and retain highly qualified and talented personnel and independent contractors. Furthermore, much of our marketing efforts rely principally on the personality and achievements of Roy Warren. If he was to incur any negative publicity, our operating results may be harmed.

 

 

We are dependent upon affiliated parties for the provisions of a substantial portion of our administrative services as we do not have the internal capabilities to provide such services.

 

We utilize the services of three employees of Attitude Drinks to perform administrative services for us.  These individuals are not obligated to devote any set amount of time to our business and may not be available when needed.  There can be no assurance that we can successfully develop the necessary expertise and infrastructure on our own without the assistance of these affiliated entities.

 

Our articles of incorporation provide for indemnification of officers and directors at our expense and limit their liability, which may result in a major cost to us and hurt the interests of our shareholders because corporate resources may be expended for the benefit of officers and/or directors.

 

Our articles of incorporation and applicable Nevada law provide for the indemnification of our directors, officers, employees and agents, under certain circumstances, against attorney's fees and other expenses incurred by them in any litigation to which they become a party arising from their association with or activities on our behalf. We will also bear the expenses of such litigation for any of our directors, officers, employees, or agents upon such person's promise to repay us if it is ultimately determined that any such person shall not have been entitled to indemnification. There is no assurance that we would be able to collect on such promises. Therefore, if it is ultimately determined that any such person shall not have been entitled to indemnification; this indemnification policy could result in substantial expenditures by us which we will be unable to recoup.

 

The costs to meet our reporting and other requirements as a public company subject to the Securities Exchange Act of 1934, as amended, may be substantial and may result in us having insufficient funds to expand our business or even to meet routine business obligations.

 

As a public entity subject to the reporting requirements of the Exchange Act, we will incur ongoing expenses associated with professional fees for accounting, legal and a host of other expenses for annual reports and proxy statements. We estimate that these costs will range up to $100,000 per year for the next few years and will be higher if our business volume and activity increases, but lower during the first year of being public because our overall business volume will be lower. Until we become profitable, we will be required to sell additional equity or seek loans to pay such expenses.

 

Risks Related to Our Common Stock

 

Any additional funding we arrange through the sale of our common stock will result in dilution to existing security holders.

 

Our most likely source of working capital and additional funds for the foreseeable future will be through the profits from World of Beer restaurants and taverns, and the sale of additional shares of our common stock. Such issuances will cause security holders’ interests in our common stock to be diluted which will negatively affect the value of your shares.

 

Any active trading market that may develop may be restricted by virtue of state securities “Blue Sky” laws, which prohibit trading absent compliance with individual state laws. These restrictions may make it difficult or impossible for our security holders to sell shares of our common stock in those states.

 

There is a limited public market for our common stock, and there can be no assurance that an active public market will develop in the foreseeable future. Transfer of our common stock may also be restricted under the securities regulations and laws promulgated by various states and foreign jurisdictions, commonly referred to as “Blue Sky” laws. Absent compliance with such individual state laws, our common stock may not be traded in such jurisdictions. Because the securities registered hereunder have not been registered for resale under the Blue Sky laws of any state, the holders of such shares and persons who desire to purchase them in any trading market that might develop in the future should be aware that there may be significant state Blue Sky law restrictions upon the ability of investors to sell the securities and of purchasers to purchase the securities. These restrictions prohibit or limit the secondary trading of our common stock.

 

We currently do not intend to, and may not be able to, qualify our securities for resale by our selling security holders in approximately 17 states that do not offer manual exemptions and require shares to be qualified before they can be resold by our security holders. Accordingly, investors should consider the secondary market for our securities to be a limited one.

 

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.

 

 

There is volatility in our stock price.

 

The market for our stock has, from time to time, experienced extreme price and volume fluctuations. Factors such as announcements of variations in our quarterly financial results and fluctuations in same-store sales could cause the market price of our stock to fluctuate significantly. In addition, the stock market in general, and the market prices for restaurant companies in particular, have experienced volatility that often has been unrelated to the operating performance of such companies. These broad market and industry fluctuations may adversely affect the price of our stock, regardless of our operating performance. Additionally, volatility or a lack of positive performance in our stock price may adversely affect our ability to retain key employees, many of whom have been granted equity compensation.

 

The market price of our stock can be influenced by stockholders' expectations about the ability of our business to grow and to achieve certain profitability targets. If our financial performance in a particular quarter does not meet the expectations of our stockholders, it may adversely affect their views concerning our growth potential and future financial performance. In addition, if the securities analysts who regularly follow our stock lower their ratings of our stock, the market price of our stock is likely to drop significantly.

 

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:

 

O

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

 

O

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 apply 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 1,499,776 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 1,000,000 shares of preferred stock, of which 100,000 have been designated as Series A Convertible Preferred Stock and 51 have been designated as Series B Convertible Preferred Stock. 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.

 

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

Pursuant to Item 305(e) of Regulation S-K (§ 229.305(e)), the Company is not required to provide the information required by this Item as it is a “smaller reporting company,” as defined by Rule 229.10(f)(1).

 

ITEM 4. CONTROLS AND PROCEDURES

 

Evaluation of Disclosure Controls and Procedures

 

We carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Principal Financial Officer, of the effectiveness of our disclosure controls and procedures (as defined in Exchange Act Rules 13a - 15(e) and 15d - 15(e)). Based upon that evaluation, our principal executive officer concluded that, as of the end of the period covered in this report, our disclosure controls and procedures were not effective to ensure that information required to be disclosed in reports filed under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the required time periods and is accumulated and communicated to our management, including our Principal Executive Officer, as appropriate to allow timely decisions regarding required disclosure.

 

 

Inherent Limitations of Internal Controls

 

Our Principal Executive Officer and Principal Financial Officer do not expect that our disclosure controls or internal controls will prevent all error and all fraud. Although our disclosure controls and procedures were designed to provide reasonable assurance of achieving their objectives, a control system, no matter how well conceived and operated, can provide only reasonable, not absolute assurance that the objectives of the 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. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented if there exists in an individual a desire to do so. There can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.

 

Changes in Internal Control over Financial Reporting

 

There were no changes in our internal control over financial reporting during our most recent quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 

PART II.

 

ITEM 1. LEGAL PROCEEDINGS

 

James Giordano, our previous CEO, filed a lawsuit on August 26, 2015 since refiled on April 14, 2016 in the State of Connecticut in Hartford County. The claim is in a total amount of no less than $220,833 for past salaries.  The Company does not agree with this complaint and will respond as soon as practical. The Company has recorded a liability of $175,000 in regards to the disputed claim.

 

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

 

On July 29, 2015, we issued a convertible note payable for $80,000 with a two year maturity at an interest rate of ten percent per annum. We also issued a warrant to purchase up to 64,000 shares of our common stock at a price of $.0025 with an expiration date of June 29, 2022.

 

On October 14, 2015, we issued a convertible note payable for $78,000 with a maturity date of October 14, 2017 at an interest rate of ten percent per annum. We also issued a warrant to purchase up to 62,400,000 shares of our common stock at a price of $.0025 with an expiration date of October 14, 2022.

 

On October 20, 2015, we issued a convertible note payable for $35,000 with a maturity date of October 20, 2017 at an interest rate of ten percent per annum. We also issued a warrant to purchase up to 28,000,000 shares of our common stock at a price of $.0025 with an expiration date of October 20, 2022.

 

On November 19, 2015, we issued two convertible notes payable, one for $325,000 and the other for $110,000, for a total of $435,000 with a maturity date of November 19, 2017 at an interest rate of ten percent per annum. We also issued two different warrants for a total to purchase up to 348,000,000 shares of our common stock at a price of $.0025 with an expiration date of November 19, 2022.

 

On January 26, 2016, we issued two convertible notes payable, one to Alpha Capital Anstalt for $343,745 and one to Tarpon Bay Partners LLC for $102,500 with a maturity date of January 26, 2018 at an interest rate of ten percent per annum. We also issued two different warrants for a total to purchase up to 356,996,000 shares of our common stock at a price of $.0025 with an expiration date of January 26, 2023.

 

On February 29, 2016, we issued a convertible note payable to Alpha Capital Anstalt for $200,000 with a maturity date of February 28, 2018 at an interest rate of ten percent per annum. We also issued a warrant to purchase up to 160,000,000 shares of our common stock at a price of $.0025 with an expiration date of February 28, 2023.

 

On March 14, 2016, we issued a convertible note payable to Tarpon Bay Partners LLC for $25,000 with a maturity date of March 14, 2018 at an interest rate of ten percent per annum. We also issued a warrant to purchase up to 20,000,000 shares of our common stock at a price of $.0025 with an expiration date of March 14, 2023.

 

 

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 restrictive legend.

 

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

 

There were no defaults upon securities

 

ITEM 4. MINE SAFETY DISCLOSURES

 

Not applicable

 

ITEM 5. OTHER INFORMATION

 

None

 

ITEM 6. EXHIBIT INDEX

 

Exhibit				Incorporated		Filed
No.		Documents Description		By Reference		Herewith
3.1		Articles of Incorporation		(1)
3.2		Bylaws		(1)
10.1		Specimen Common Stock Certificate		(1)
10.1A		Form of Subscription Agreement		(2)
10.2		LLC Contribution Agreement		(1)
10.3		Management Agreement with HVW Holdings LLC		(3)
10.4		Securities Purchase Agreement wth HVW Holdings LLC		(3)
10.5		Certificate of Designation of Rights and Preferences for Series A 8% Convertible Preferred Stock		(4)
10.6		Certificate of Amendment		(5)
10.7		2013 Equity Incentive Plan		(5)
10.8		Certificate of Designation of Series B Convertible Preferred Stock		(6)
10.9		A Warrant issued to Alpha Capital Anstalt		(6)
10.10		A Warrant issued to Tarpon Bay Partners LLC		(6)
10.11		B Warrant issued to Attitude Drinks Incorporated		(6)
10.12		Secured Convertible Note due 2017 issued to Alpha Capital Anstalt		(6)
10.13		Secured Convertible Note due 2017 issued to Tarpon Bay Partners LLC		(6)
10.14		Additional Investment Right issued to Alpha Capital Anstalt		(6)
10.15		Additional Investment Right issued to Tarpon Bay Partners LLC		(6)
10.16		Asset Purchase Agreement		(6)
10.17		Stock Pledge Agreement		(6)
10.18		Guaranty - Attitude Beer Holding Co.		(6)
10.19		Guaranty - Attitude Drinks Incorporated		(6)
10.20		Purchase Agreement - Alpha Capital Anstalt		(6)

 

 

10.21		Purchase Agreement - Attitude Drinks Incorporated		(6)
10.22		Milford  Operating Agreement		(7)
10.23		Note issued to Alpha Capital Anstalt on July 29, 2015		(7)
10.24		Warrant to Alpha Capital Anstalt issued on July 29, 2015		(7)
10.25		Convertible Note and Warrant issued to Alpha Capital Anstalt on October 14, 2015		(8)
10.26		Convertible Note and Warrant issued to Tarpon Bay Partners on October 20, 2015		(8)
10.27		Cambridge Operating Agreement		(8)
10.28		Convertible Note and Warrant issued to Alpha Capital Anstalt on November 19, 2015		(9)
10.29		Convertible Note and Warrant issued to Tarpon Bay Partners on November 19, 2015		(9)
10.30		Convertible Note and Warrant issued to Alpha Capital Anstalt on December 7, 2015		(9)
10.31		Convertible Note and Warrant issued to Tarpon Bay Partners on December 7, 2015		(9)
10.32		Convertible Note and Warrant to Tarpon Bay Partners on January 26, 2016		(9)
10.33		Joint Venture Agreement		(9)
10.34		Convertible Note and Warrant to Alpha Capital Anstalt on January 26, 2016				X
10.35		Convertible Note and Warrant to Alpha Capital Anstalt on February 29, 2016				X
10.36		Convertible Note and Warrant to Tarpon Bay Partners on March 14, 2016				X
10.37		Convertible Note and Warrant to Alpha Capital Anstalt on April 1, 2016				X
10.38		Convertible Note and Warrant to Southridge Partners II LP on April 1, 2016				X
10.39		Convertible Note and Warrant to EMA Financial, LLC on April 25,2016				X
10.40		Convertible Note and Warrant issued to Alpha Capital Anstalt on May 9, 2016				X
10.41		Convertible Note and Warrant issued to Southridge Partners II LP on May 9, 2016				X
10.42		Convertible Note and Warrant issued to Southridge Partners II LP on May 20, 2016				X
10.43		Convertible Note and Warrant issued to Alpha Capital Anstalt on May 25, 2016				X
10.44		Convertible Note and Warrant issued to Alpha Capital Anstalt on May 26, 2016				X
10.45		Convertible Note and Warrant issued to Southridge Partners II LP on June 8, 2016				X
10.46		Convertible Note and Warrant issued to Alpha Capital Anstalt on June 8, 2016				X
21.1		Subsidiary of Registrant

 

(31)(i)		Certification of Chief Executive Officer pursuant to Rule 13a-14(a)/15d-14 (a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002				X
(31)(ii)		Certification of Chief Financial Officer pursuant to Rule 13a-14(a)/15d-14 (a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002				X
(32)(1)		Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002				X
101.INS		XBRL Instance Document				X
101.SCH		XBRL Taxonomy Extension Schema Document				X
101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document				X
101.DEF		XBRL Taxonomy Extension Definition Linkbase Document				X
101.LAB		XBRL Taxonomy Extension Label Linkbase				X
101.PRE		XBRL Taxonomy Extension Presentation Linkbase				X

 

  

(1) previously filed with Registration Statement on Form S-1 on September 23, 2009 (File No. 333-162072)

(2) previously filed with Registration Statement on Form S-1/A on March 12, 2010 (File No. 333-162072)

(3) previously filed as an exhibit on Form 8-K on September 6, 2013 (SEC Accession No. 0001078782-13-001812)

(4) previously filed as an exhibit on Form 8-K on September 18, 2013 (SEC Accession No. 0001078782-13-001871)

(5) previously filed as an exihibit on Form 8-K on October 25, 2013 (SEC Accession No. 0001078782-13-002087)

(6) previously filed as an exhibit on Form 8-K on April 27, 2015 (SEC Accession No. 0001144204-15-025280)

(7) previously filed as an exhibit on Form 10-K on September 9, 2015 (SEC Accession No. 0001078782-15-0001462)

(8) previously filed as an exhibit on Form 10-Q on November 16, 2015 (SEC Accession No. 0001615774-15-003277)

(9) previously filed as an exhibit on Form 10-Q on February 16, 2016 (SEC Accession No. 0001615774-16-004189)

 

  

SIGNATURES

 

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

 

ATTITUDE DRINKS INCORPORATED
(Registrant)
Date: June 27, 2016
/S/Roy G. Warren
Roy G. Warren
President and Chief Executive Officer
/S/Tommy E. Kee
Tommy E. Kee
Chief Financial Officer and Principal Accounting Officer