UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
DC 20549
FORM
10-Q
[X] |
Quarterly
Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
|
|
|
For
the quarterly period ended August 31, 2015 |
|
|
[ ] |
Transition
Report pursuant to 13 or 15(d) of the Securities Exchange Act of 1934 |
|
|
|
For
the transition period from __________ to __________ |
|
|
|
Commission
File Number: 333-179028 |
Avalanche
International, Corp.
(Exact
name of registrant as specified in its charter)
Nevada |
|
38-3841757 |
(State
or other jurisdiction of incorporation or organization) |
|
(IRS
Employer Identification No.) |
5940
S. Rainbow Blvd, Las Vegas, NV 89118 |
(Address
of principal executive offices) |
(888)
863-9490 |
(Registrant’s
telephone number) |
|
_______________________________________________________________ |
(Former
name, former address and former fiscal year, if changed since last report) |
Indicated
by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days [X] Yes [ ] No
Indicate
by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller
reporting company.
[
] Large accelerated filer
[
] Non-accelerated filer |
[
] Accelerated filer
[X]
Smaller reporting company |
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). [ ] 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 (§ 229.405 of this chapter) during the
preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes [X] No [
]
State
the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: 6,314,248
common shares as of January 20, 2016.
PART
I - FINANCIAL INFORMATION
Item
1. Financial Statements
Our
condensed consolidated financial statements included in this Form 10-Q are as follows:
Avalanche
International, Corp. and Subsidiary
Condensed
Consolidated Balance Sheets
(unaudited)
ASSETS |
August
31, 2015 | |
November
30, 2014 |
Current
Assets: |
| | | |
| (Restated) | |
Cash |
$ | 656 | | |
$ | 2,247 | |
Accounts
receivable, related party |
| 17,190 | | |
| — | |
Loan
and interest receivable |
| 12,798 | | |
| — | |
Loan
and interest receivable, related party |
| 167,326 | | |
| — | |
Inventory |
| 2,680 | | |
| 25,900 | |
Total
current assets |
| 200,650 | | |
| 28,147 | |
Other
assets |
| 705 | | |
| 526 | |
Total
assets |
$ | 201,355 | | |
$ | 28,673 | |
|
| | | |
| | |
LIABILITIES
AND STOCKHOLDERS’ EQUITY (DEFICIT) |
| | | |
| | |
Current
Liabilities: |
| | | |
| | |
Accounts
payable and accrued expenses |
$ | 129,731 | | |
$ | 87,217 | |
Accounts
payable, related party |
| — | | |
| 88,572 | |
Due
to related parties |
| 12,709 | | |
| 6,927 | |
Derivative
liability |
| 717,796 | | |
| — | |
Convertible
notes payable, net of discount of $328,700 and $9,040, respectively |
| 239,085 | | |
| 54,210 | |
Loans
payable |
| 33,934 | | |
| 18,300 | |
Total
current liabilities |
| 1,133,255 | | |
| 255,226 | |
Long
Term Liabilities |
| | | |
| | |
Convertible
note payable, net of discount of $23,300 |
| 37,227 | | |
| — | |
Total
liabilities |
| 1,170,482 | | |
| 255,226 | |
|
| | | |
| | |
Stockholders'
Equity (Deficit): |
| | | |
| | |
Common
stock, $0.001 par value; 75,000,000 shares authorized; 5,703,816 and 5,144,400 shares issued and outstanding, respectively |
| 5,705 | | |
| 5,144 | |
Preferred
stock, $0.001 par value; 10,000,000 shares authorized |
| — | | |
| — | |
Class
A Preferred stock, $0.001 par value; 50,000 shares designated, 29,380 and 14,000 shares issued and outstanding, respectively |
| 29 | | |
| 14 | |
Additional
paid-in capital |
| 966,775 | | |
| 203,445 | |
Accumulated
deficit |
| (1,941,636 | ) | |
| (435,156 | ) |
Total
stockholders’ equity (deficit) |
| (969,127 | ) | |
| (226,553 | ) |
Total
liabilities and stockholders’ equity |
$ | 201,355 | | |
$ | 28,673 | |
The
accompanying notes are an integral part of these condensed consolidated financial statements.
Avalanche
International, Corp. and Subsidiary
Condensed
Consolidated Statements of Operations
(unaudited)
|
|
For
the Three Months Ended
August 31, |
|
For
the Nine Months Ended
August 31, |
|
|
2015 |
|
2014 |
|
2015 |
|
2014 |
|
|
|
|
(Restated) |
|
|
|
(Restated) |
Revenue |
$ |
169 |
$ |
6,431 |
$ |
38,831 |
$ |
10,172 |
Cost
of revenue |
|
258 |
|
1,098 |
|
29,550 |
|
3,279 |
Gross
margin |
|
(89) |
|
5,333 |
|
9,281 |
|
6,893 |
|
|
|
|
|
|
|
|
|
Operating
Expenses: |
|
|
|
|
|
|
|
|
Advertising
and marketing |
|
- |
|
61,193 |
|
6,364 |
|
61,193 |
|
General
and administrative |
|
488,466 |
|
84,406 |
|
1,050,951 |
|
123,538 |
|
Total
operating expense |
|
488,466 |
|
145,599 |
|
1,057,315 |
|
184,731 |
Net
loss from operations |
|
(488,555) |
|
(140,266) |
|
(1,048,034) |
|
(177,838) |
Other
income (expense): |
|
|
|
|
|
|
|
|
Interest
income |
|
6,074 |
|
- |
|
6,074 |
|
- |
Interest
expense |
|
(28,208) |
|
- |
|
(39,063) |
|
- |
Interest
expense – debt discount |
|
(164,685) |
|
- |
|
(248,863) |
|
- |
Loss
on issuance of convertible debt |
|
(55,093) |
|
- |
|
(356,402) |
|
- |
Change
in fair value on derivative liability |
|
(2,968) |
|
- |
|
179,808 |
|
- |
Total
other expense |
|
(244,880) |
|
- |
|
(458,446) |
|
- |
Loss
before income tax |
|
(733,435) |
|
(140,266) |
|
(1,506,480) |
|
(177,838) |
Provision
for income taxes |
|
- |
|
- |
|
- |
|
- |
Net
Loss |
$ |
(733,435) |
|
(140,266) |
$ |
(1,506,480) |
$ |
(177,838) |
Loss
per common share |
|
|
|
|
|
|
|
|
Basic
and diluted |
$ |
(0.13) |
$ |
(0.03) |
$ |
(0.28) |
$ |
(0.04) |
Weighted
average common shares |
|
|
|
|
|
|
|
|
Basic
and diluted |
|
5,651,549 |
|
5,075,478 |
|
5,442,147 |
|
5,071,839 |
The
accompanying notes are an integral part of these condensed consolidated financial statements.
Avalanche
International, Corp. and Subsidiary
Condensed
Consolidated Statements of Cash Flows
(unaudited)
|
For
the Nine Months Ended
August 31, |
|
2015 | |
2014 |
Cash
flows from operating activities: |
| | | |
| (restated) | |
Net
loss for the period |
$ | (1,506,480 | ) | |
$ | (177,838 | ) |
Adjustments
to reconcile net loss to net cash used by operating activities: |
| | | |
| | |
Share
based compensation |
| 680,487 | | |
| — | |
Debt
discount amortization |
| 248,863 | | |
| — | |
Loss
on issuance of convertible debt |
| 356,402 | | |
| — | |
Gain
on derivative liability |
| (179,808 | ) | |
| — | |
Changes
in operating assets and liabilities: |
| | | |
| | |
Accounts
receivable |
| (17,190 | ) | |
| (154 | ) |
Inventory |
| 23,220 | | |
| (13,180 | ) |
Other
assets |
| 8,860 | | |
| — | |
Accounts
payable and accrued expense |
| 37,696 | | |
| 67,469 | |
Accounts
payable – related party |
| (88,572 | ) | |
| 41,240 | |
Other
liabilities |
| — | | |
| 4,771 | |
Accrued
interest |
| 28,401 | | |
| — | |
Accrued
compensation |
| (2,412 | ) | |
| 1,860 | |
Net
cash used in operating activities |
| (410,533 | ) | |
| (75,832 | ) |
Cash
flows from investing activities: |
| | | |
| | |
Loan
and interest receivable |
| (12,798 | ) | |
| — | |
Loan
and interest receivable, related party |
| (160,197 | ) | |
| — | |
Net
cash used by investing activities |
| (172,995 | ) | |
| — | |
Cash
flows from financing activities: |
| | | |
| | |
Proceeds
from convertible notes payable |
| 508,000 | | |
| — | |
Proceeds
from other loans |
| 21,305 | | |
| — | |
Payments
of note payable |
| (32,050 | ) | |
| — | |
Advances
from related parties |
| 58,366 | | |
| — | |
Repayment
of related party advances |
| (52,584 | ) | |
| — | |
Proceeds
from issuance of common stock |
| 2,000 | | |
| 28,000 | |
Proceeds
from issuance of preferred stock |
| 76,900 | | |
| 60,000 | |
Net
cash provided by financing activities |
| 581,937 | | |
| 88,000 | |
Increase
(decrease) in cash |
| (1,591 | ) | |
| 12,168 | |
Cash,
beginning of period |
| 2,247 | | |
| — | |
Cash,
end of period |
$ | 656 | | |
$ | 12,168 | |
Supplemental
Disclosures: |
| | | |
| | |
Cash
paid for interest |
$ | — | | |
$ | — | |
Cash
paid for income tax |
$ | — | | |
$ | — | |
Non-Cash
Investing and Financing Information: |
| | | |
| | |
Common
stock issued for conversion of debt |
$ | 4,518 | | |
$ | — | |
Derivative
liability recorded in connection with convertible debt |
$ | 717,796 | | |
$ | — | |
The
accompanying notes are an integral part of these condensed consolidated financial statements.
Avalanche
International, Corp. and Subsidiary
Notes
to the Condensed Consolidated Financial Statements
August
31, 2015
(Unaudited)
NOTE
1 - ORGANIZATION AND DESCRIPTION OF BUSINESS
Avalanche
International, Corp. (“the Company”) was incorporated under the laws of the State of Nevada on April 14, 2011. The
company had plans to distribute crystallized glass tile in the North American markets to wholesale customers. On May 14, 2014,
the Company entered into an Agreement of Conveyance, Transfer and Assignment of Assets and Assumption of Obligations (the “Agreement”)
with our sole officer and director, John Pulos. Pursuant to the Agreement, the Company transferred all assets to Mr. Pulos. In
exchange for this assignment of assets, Mr. Pulos agreed to assume and cancel all liabilities due to him. In conjunction with
the change in management, it was decided to abandon this line of business and become a holding company with operations at the
subsidiary levels only. The Company formed its first wholly owned subsidiary, Smith and Ramsay Brands, LLC (“SRB”),
on May 19, 2014. The Company acquired certain perpetual license, know how, product, name license and other capabilities from Smith
and Ramsay, LLC, a Nevada company. Smith and Ramsay Brands, LLC is a manufacturer and distributor of flavored liquids for electronic
vaporizers and eCigarettes and distributor of vape accessories. SRB manufactures its premium signature brand of eLiquid, Smith
and Ramsay, a line that features all natural flavors produced in the United States. SRB rolled out its flagship product to
targeted areas in the fall of 2014, following its pre-launch phase. The Smith and Ramsay line was manufactured, packaged and strategically
distributed on a limited basis to generate revenue in test markets. The Company’s goal is to maintain a high standard of
quality and to insure the production and warehouse environments, processes and procedures continue to meet or exceed guidelines
of the FDA, and are in line with International Organization for Standardization (“ISO”) and Current Good Manufacturing
Practices (“cGMP”).
Basis
of Unaudited Interim Financial Information
The
accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles
generally accepted in the United States of America (“GAAP”) and the rules of the Securities and Exchange Commission
("SEC") for interim financial information and the SEC instructions to Form 10-Q, accordingly, they do not include all
of the information and footnotes required by U.S. GAAP for completed financial statements. In the opinion of management, all adjustments
necessary in order for the financial statements to not be misleading have been reflected herein. Operating results for the interim
period ended August 31, 2015 are not necessarily indicative of the results that can be expected for the full year. These unaudited
interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements of
the Company for the year ended November 30, 2014.
Use
of Estimates
In
preparing financial statements in conformity with U.S. GAAP, management is required to make estimates and assumptions that affect
the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial
statements, as well as the reported amounts of expenses during the reporting period. Due to inherent uncertainty involved in making
estimates, actual results reported in future periods may be affected by changes in these estimates. On an ongoing basis, the Company
evaluates its estimates and assumptions. These estimates and assumptions include valuing equity securities in share-based payment
arrangements, estimating the fair value of equity instruments recorded as derivative liabilities, and estimating the useful lives
of amortizable assets and whether impairment charges may apply.
Principles
of Consolidation
The
consolidated financial statements include the accounts of Avalanche International, Corp. and its wholly-owned subsidiary Smith
and Ramsay Brands, LLC. All significant intercompany accounts and transactions have been eliminated.
Reclassification
The
Company reclassified debt issuance costs from current assets to short-term debt, net on the condensed consolidated balance sheets
for all periods presented pursuant to early adoption of Accounting Standards Update ("ASU") No. 2015-03 - Simplifying
the Presentation of Debt Issuance Costs.
Convertible
Instruments
The
Company bifurcates conversion options from their host instruments and account for them as free standing derivative financial instruments
if certain criteria are met. The criteria include circumstances in which (a) the economic characteristics and risks of the embedded
derivative instrument are not clearly and closely related to the economic characteristics and risks of the host contract, (b)
the hybrid instrument that embodies both the embedded derivative instrument and the host contract is not re-measured at fair value
under otherwise applicable generally accepted accounting principles with changes in fair value reported in earnings as they occur
and (c) a separate instrument with the same terms as the embedded derivative instrument would be considered a derivative instrument.
An exception to this rule is when the host instrument is deemed to be conventional, as that term is described under applicable
GAAP.
When
the Company has determined that the embedded conversion options should not be bifurcated from their host instruments, the Company
records, when necessary, discounts to convertible notes for the intrinsic value of conversion options embedded in debt instruments
based upon the differences between the fair value of the underlying common stock at the commitment date of the note transaction
and the effective conversion price embedded in the note. Debt discounts under these arrangements are amortized over the term of
the related debt to their stated date of redemption. The Company also records, when necessary, deemed dividends for the intrinsic
value of conversion options embedded in preferred shares based upon the differences between the fair value of the underlying common
stock at the commitment date of the transaction and the effective conversion price embedded in the preferred shares.
Recent
Accounting Pronouncements
The
Company has implemented all new accounting pronouncements that are in effect. These pronouncements did not have any material
impact on the financial statements unless otherwise disclosed, and the Company does not believe that there are any other new accounting
pronouncements that have been issued, that might have a material impact on its financial position or results of operations.
NOTE
2 – GOING CONCERN
The
consolidated financial statements have been prepared on a going concern basis which assumes the Company will be able to realize
its assets and discharge its liabilities in the normal course of business for the foreseeable future. The Company has an accumulated
deficit of $1,941,636 as of August 31, 2015 and a net loss of $1,506,480 for the nine months ended August 31, 2015, raising substantial
doubt about the Company’s ability to continue as a going concern. The ability to continue as a going concern is dependent
upon the Company generating profitable operations in the future and/or to obtain the necessary financing to meet its obligations
and repay its liabilities arising from normal business operations when they come due. Management intends to finance operating
costs over the next twelve months with loans and/or private placement of common stock.
NOTE
3 – LOAN RECEIVABLE
On
June 5, 2015, the Company executed a Promissory Note Sale Agreement with Black Mountain Equities, Inc. The agreement transferred
and assigned the Convertible Note, dated March 5, 2014 issued by IDS Industries, Inc. (now Aja Cannafacturing, Inc.) to Black
Mountain Equities, Inc. The Note was transferred in consideration of payment of $12,500. On the same day the Company executed
a Promissory Note with Aja Cannafacturing, Inc. for $12,500. The note is unsecured, accrues interest at 10% and is due December
31, 2015. This loan is currently in default and being renegotiated.
NOTE
4 - RELATED PARTY TRANSACTIONS
During
the nine months ended August 31, 2015, the Company sold $34,017 in products to Vape Nation, generating 87.6% of its revenue. Vape
Nation, is 50% owned by MCKEA Holdings, LLC. MCKEA Holdings, LLC is the majority member of Philou Ventures, LLC, which is our
controlling shareholder. Kristine L. Ault is the Manager of MCKEA Holdings, LLC and the wife to the Chairman of Avalanche International,
Corp.
Cross
Click Media, Inc. (“Cross Click”) performs sales, marketing, and investor relation services for the Company. MCKEA
Holdings, LLC is the controlling shareholder of Cross Click Media, Inc. MCKEA Holdings, LLC is also the majority member of Philou
Ventures, LLC, which is our controlling shareholder.
Cross
Click performed services on behalf of the Company in the amount of $53,679 and $60,000 for the three months ended August
31, 2015 and 2014 and $97,000 and $60,000 for the nine months ended August 31, 2015 and 2014, which are included in advertising
and marketing expense in the statement of operations.
Loan receivable, related party
On June 5, 2015, the Company executed a Promissory Note Sale Agreement with Black Mountain Equities, Inc.
The agreement transferred and assigned the Convertible Note, dated March 5, 2014 issued by Cross Click Media, Inc. to Black Mountain
Equities, Inc. The Note was transferred in consideration of payment of $12,500. On the same day the Company executed a Promissory
Note with Cross Click Media, Inc. for $12,500. The note is unsecured, accrues interest at 10% and is due December 31, 2015.
In
addition, the Company loaned Cross Click approximately $202,500. Approximately $54,000 of accounts payable for services
performed by Cross Click Media, Inc. was used to reduce to the loan receivable. The loan is due in one year and bears interest
at 12%. As of August 31, 2015 principal and interest of approximately $161,000 was outstanding. Principal and interest
from the loan of approximately $167,000 are included in Loan Receivable, related party on the balance sheet. This loan is currently in default and being renegotiated.
Interest
income of $6,062 was included in the statement of operations for the three and nine months ended August 31, 2015. This loan is currently in default and being renegotiated.
NOTE
5 – LOANS PAYABLE
On
November 26, 2014, the Company executed a Promissory Note with Argent Offset, LLC for $12,500. The note included a $500 loan fee,
accrued interest at 10%, compounded monthly, and was due December 5, 2014. A late payment fee of $500 per day was to be incurred
from December 6, 2014 through December 7, 2014 and then increases to $1,000 per day. On February 1, 2015, the Company entered
into a Temporary Forbearance Agreement with Argent. Under the forbearance agreement, the Company agreed to pay a forbearance fee
of $7,500. The new loan will bear interest at an annual rate of 10% until due on August 1, 2015. Further, we have agreed to pay
12.5% of any new funds invested in the company until the amount due is paid in full. As of August 31, 2015, $11,500 has been repaid
on this loan and an additional $8,129 added, leaving a balance of $17,129 and accrued interest of $1,301. This loan is currently
in default and being renegotiated.
During
the third quarter of fiscal year 2015 Argent Offset, LLC advanced the Company $4,305 to pay for certain operating expenses. The
advances are unsecured, non-interest bearing and due on demand.
On
March 17, 2015, the Company executed a Promissory Note for $10,750 with Strategic IR, Inc. The note bears interest at 10% per
annum and is due on or before April 16, 2015. The note includes a one-time loan fee of $1,750 for a total due of $12,500. On April
16, 2015, the interest increased to 21% since the note has not yet been repaid. Accrued interest as of August 31, 2015, is $936.
This note is currently in default.
On
August 10, 2015, the Company executed a Short Term Promissory Note for $5,000 with a third party. The note required a $250 loan
fee, was unsecured, accrued interest at 10% and was due August 19, 2015. The note and $23 of accrued interest was repaid in full
on August 27, 2015.
|
Issue
Date | |
Maturity
Date | |
Stated
Interest Rate | |
Principle
Balance Outstanding 8/31/2015 |
Argent
Offset, LLC |
11/26/14 | |
8/1/15 | |
| 10 | % | |
$ | 17,129 | |
Argent
Offset, LLC |
various | |
demand | |
| n/a | | |
| 4,305 | |
Strategic
IR, Inc. |
3/17/15 | |
4/16/2015 | |
| 21 | % | |
| 12,500 | |
|
| |
| |
| | | |
$ | 33,934 | |
NOTE
6 – CONVERTIBLE NOTES PAYABLE
The
following is a summary of outstanding convertible promissory notes as of November 30, 2014:
|
Issue
Date |
Maturity
Date |
Stated
Interest Rate |
Conversion
Terms |
Principle
Balance Outstanding 11/30/2014 |
LG
Capital Funding, LLC |
11/3/2014 |
11/3/2015 |
8% |
Not
yet convertible |
63,250 |
|
Face
Value |
Initial
Discount |
Accumulated
Amortization |
Carrying
Value |
LG
Capital Funding, LLC |
63,250 |
9,040 |
- |
54,210 |
The
following is a summary of outstanding convertible promissory notes as of August 31, 2015:
| |
Issue
Date | |
Maturity
Date | |
Stated
Interest Rate | |
Conversion
Terms (1) | |
Principle
Balance Outstanding 8/31/2015 |
LG
Capital Funding, LLC | |
| 11/3/2014 | | |
11/3/2015 | |
| 8 | % | |
$ | 0.24 | | |
| $ 59,000
(2) | |
Dr.
Gary Gelbfish | |
| 3/27/2015 | | |
9/23/2015 | |
| 10 | % | |
| 0.37 | | |
| 100,000 | |
JMJ
Financial | |
| 4/29/2015 | | |
4/29/2017 | |
| 12 | % | |
| 0.24 | | |
| 33,000 | |
Union
Capital, LLC | |
| 5/11/2015 | | |
5/11/2016 | |
| 8 | % | |
| 0.24 | | |
| 115,000 | |
Adar
Bays, LL | |
| 5/12/2015 | | |
5/12/2016 | |
| 8 | % | |
| 0.24 | | |
| 115,000 | |
Typenex
Co-Investment, LLC | |
| 5/29/2015 | | |
6/29/2016 | |
| 10 | % | |
| 0.50 | | |
| 87,500 | |
Black
Mountain Equities, Inc. | |
| 6/4/2015 | | |
6/4/2016 | |
| 8 | % | |
| 0.28 | | |
| 55,000 | |
Lord
Abstract, LLC | |
| 6/30/2015 | | |
6/30/2016 | |
| 10 | % | |
| 0.24 | | |
| 8,800 | |
GCEF
Opportunity Fund, LLC | |
| 6/30/2015 | | |
6/30/2016 | |
| 10 | % | |
| 0.24 | | |
| 27,500 | |
JMJ
Financial | |
| 8/27/2015 | | |
8/27/2017 | |
| 12 | % | |
| 0.24 | | |
| 27,500 | |
| |
| | | |
| |
| | | |
| | | |
$ | 628,300 | |
| (1) | Conversion
terms vary between a 30% - 40% discount on lowest or closing prices for a specified time
period preceding conversion. |
| (2) | Converted
$4,250 of principle to common stock. |
Accrued
interest on the above notes was $26,285 and $374 as of August 31, 2015 and November 30, 2014, respectively.
Debt
discount expense including original issue discounts for the three and nine months ended August 31, 2015 was $164,685 and $248,863,
respectively. Carrying value, of all convertible notes, net of debt discounts as of August 31, 2015 is $276, 312.
Based
on the fair value of the embedded conversion options on the day of issuance a loss of $55,093 and $356,402 for the three months
and nine months ended August 31, 2015 was recorded in the statement of operations.
Principal amounts payable for convertible notes payable and due to related parties for the following fiscal
years is as follows:
Twelve
months ended November 30, | |
|
| 2015 | | |
$ | 205,655 | |
| 2016 | | |
| 408,800 | |
| 2017 | | |
| 60,500 | |
| 2018 | | |
| — | |
| 2019 | | |
| — | |
| Total
Future Maturities | | |
$ | 674,955 | |
NOTE
7 – FAIR VALUE MEASUREMENTS
The
following table classifies the Company’s liabilities measured at fair value on a recurring basis into the fair value hierarchy
as of August 31, 2015:
| |
Fair
value measured at August 31, 2015 |
| |
| | | |
| Quoted
prices in active | | |
| Significant
other | | |
| Significant | |
| |
| Fair
value at | | |
| markets | | |
| observable
inputs | | |
| unobservable
inputs | |
| |
| August
31, 2015 | | |
| (Level
1) | | |
| (Level
2) | | |
| (Level
3) | |
Derivative
liability | |
$ | 717,796 | | |
$ | — | | |
$ | — | | |
$ | 717,796 | |
There
were no transfers between Level 1, 2 or 3 during the nine month period ended August 31, 2015.
The
following table presents changes in Level 3 liabilities measured at fair value for the nine month period ended August 31, 2015.
Both observable and unobservable inputs were used to determine the fair value of positions that the Company has classified within
the Level 3 category. Unrealized gains and losses associated with liabilities within the Level 3 category include
changes in fair value that were attributable to both observable (e.g., changes in market interest rates) and unobservable (e.g.,
changes in unobservable long-dated volatilities) inputs.
|
| Derivative
Liability | |
Balance
– November 30, 2014 |
$ | — | |
Initial
valuation |
| 627,559 | |
Change
in fair value on derivative |
| (182,776 | ) |
Balance
– May 31, 2015 |
| 444,783 | |
Initial
valuation |
| 270,045 | |
Change
in fair value on derivative |
| 2,968 | |
Balance
– August 31, 2015 |
$ | 717,796 | |
A
summary of quantitative information about significant unobservable inputs (Level 3 inputs) used in measuring the Company’s
derivative liabilities that are categorized within Level 3 of the fair value hierarchy for the nine months ended August 31, 2015
is as follows:
Date
of valuation |
August
31, 2015 | |
Inception |
Stock
price |
$ | 0.50 | | |
| $2.46
– 0.50 | |
Conversion price |
| .24
– 0.28 | | |
| .24
– 1.20 | |
Volatility (annual) |
| 116%
- 373% | | |
| 111%
- 159% | |
Risk-free rate |
| .05%
- .75% | | |
| .08%
- .56% | |
Years to maturity |
| .18
- 2 | | |
| .5
- 2 | |
The
development and determination of the unobservable inputs for Level 3 fair value measurements and fair value calculations are the
responsibility of the Company’s management.
NOTE
8 - COMMON STOCK
The
Company is authorized to issue 75,000,000 common shares with a par value of $0.001 per share.
Private
placements
On
December 15, 2014, the Company issued 1,600 shares of common stock at a price of $1.25 per share for total cash proceeds of $2,000.
Share
based compensation
On
March 27, 2015, we issued 50,000 shares of common stock to Dr. Gary Gelbfish in connection with the issuance of a convertible
promissory note. The fair value of the common stock issued was determined to be $41,349 based its fair value relative to the fair
value of the debt issued.
During
the nine months ended August 31, 2015, the Company issued 440,000 shares of common stock to service providers for total non-cash
compensation of $583,125. All shares were valued based on the closing price of the stock on the date of grant.
During
the nine months ended August 31, 2015, the Company issued 48,990 shares of common stock, in connection with the issuance of convertible
promissory notes, for total non-cash compensation of $56,063. All shares were valued based on the closing price of the stock on
the date of grant.
Convertible
debt conversion
On
August 19, 2015, the Company issued 18,826 shares of common stock to LG Capital Funding, LLC in conversion of $4,250 of principal
and $268 of accrued interest.
NOTE
9 - PREFERRED STOCK
The
Company is authorized to issue 10,000,000 preferred shares with a par value of $0.001 per share.
On
July 31, 2014, the Board of Directors designated a series of preferred stock titled Class A Convertible Preferred Stock consisting
of 50,000 shares. Each share of Class A Convertible Preferred Stock (“preferred stock”) has a stated value of $5.00
per share. The holders of preferred stock have no voting rights. The holders are entitled to receive cumulative dividends at a
rate of 10% of the stated value per annum, payable twice a year, subject to the availability of funds and approval by the Board
of Directors. In the discretion of the Board of Directors dividends may be paid with common stock. In the event of liquidation
or dissolution of the Company each holder of preferred stock shall be entitled to be paid in cash $5 per share plus cumulative
dividends if any
On
January 30, 2015, the Company issued 15,380 shares of preferred stock at a price of $5.00 per share for total cash proceeds of
$76,900.
NOTE
10 – LOSS PER SHARE APPLICABLE TO COMMON SHAREHOLDERS
The
following table sets forth the computations of loss per share amounts applicable to common stockholders for the three and nine
months ended August 31, 2015 and 2014. Potentially dilutive shares were excluded from the computation as of August 31, 2015 and
2014 since they would have been anti-dilutive.
|
Three Months Ended August 31, | |
Nine Months Ended August 31, |
|
2015 | |
2014 | |
2015 | |
2014 |
Loss
applicable to common stockholders |
$ | (733,435 | ) | |
$ | (140,266 | ) | |
$ | (1,506,480 | ) | |
$ | (177,838 | ) |
|
| | | |
| | | |
| | | |
| | |
Basic
and diluted loss per common share |
$ | (0.13 | ) | |
$ | (0.03 | ) | |
$ | (0.28 | ) | |
$ | (0.04 | ) |
|
| | | |
| | | |
| | | |
| | |
Weighted
average common shares outstanding (1): |
| | | |
| | | |
| | | |
| | |
Basic
and diluted shares |
| 5,651,549 | | |
| 5,075,478 | | |
| 5,442,147 | | |
| 5,071,839 | |
|
| | | |
| | | |
| | | |
| | |
Potentially
dilutive securities (2): |
| | | |
| | | |
| | | |
| | |
Convertible
notes (3) |
| 2,254,942 | | |
| — | | |
| 2,254,942 | | |
| — | |
Convertible
preferred stock (3) |
| 528,193 | | |
| — | | |
| 528,193 | | |
| — | |
|
(1) |
Excludes
nonvested restricted stock and restricted stock units. |
|
(2) |
Excludes
grants with performance and market conditions as the necessary conditions have not been satisfied. |
|
(3) |
The
impact of the convertible notes and the convertible preferred stock on earnings per share is antidilutive in a period of loss. |
NOTE
11 – LETTER OF INTENT AND COMMITMENTS
On June 12, 2015, we entered into a binding
Letter of Intent (the “LOI”) for the purchase of all of the issued and outstanding capital stock of J.S. Technologies,
Inc., a California corporation (“JS”). JS is the manufacturer of Suhr brand guitars and related electronics and
accessories. Under the LOI, we have agreed to purchase all of the issued and outstanding capital stock in JS for a total
purchase price of $11,000,000. The purchase price will be paid, at the option of the individual JS stockholders, in either
cash, new convertible preferred stock, or a combination of both. The new convertible preferred stock to be issued as payment
toward the purchase price will have a stated value of $4.00 per share, will accrue dividends at a rate of six percent per year,
and will be convertible to common stock at a price of $1.00 per share of common stock. All shares of the new preferred stock
issued and outstanding at thirty-six months after closing will be automatically converted to common stock.
The anticipated closing date of the acquisition
will be in in 120 days from the date of the LOI and will be documented by a definitive agreement to be prepared by the parties.
The transaction must close by the later of: (i) 120 days from the date of the LOI, or (ii) 60 days after delivery of audited
financial statements and auditor reviewed subsequent quarters for JS, which is a condition to closing. There are numerous
additional conditions to closing of the acquisition, including, but not limited to: (i) execution of the definitive agreement by
not less than 65% of JS’s stockholders and compliance with JS’s bylaws and a buy/sell agreement governing its common
stock, (ii) our readiness and ability to pay the required portion of the purchase price to each JS stockholder who is ready and
willing to sell its shares, and (iii) concurrent closing of an additional agreement under which we will purchase S&J Design
Labs, LLC, the affiliated company which owns the building and equipment used in JS’s operations. As of the date of this filing the auditor reviews of the subsequent quarters have not yet been completed.
Both parties have agreed to extend the closing until all conditions have been met.
The LOI also contains a “no-shop”
provision for the time between the date of the LOI and the defined closing date. In addition, if we or any of the JS stockholders
signing the LOI fail and refuse to close the acquisition on the defined closing date, and the other parties are ready and able
to close, the breaching party will be assessed a $250,000 break-up fee. Extensive additional covenants, conditions, representations,
and warranties between the parties are included in the LOI. The foregoing is a brief summary of the material terms of the LOI,
which should be reviewed in its entirety for additional information.
On August 4, 2015, we
entered into a Secured Promissory Note (the “Note”) with JS. Under the Note, we intend to lend up to $400,000 to JS
in order to provide short-term financing pending our intended acquisition of JS. The Note calls for an initial advance in the amount
of $200,000 to be made as soon as practicable. Up to two additional advances of $100,000 each may be made thirty and sixty days,
respectively, from the date of the Note. The Note bears interest at a rate of ten percent per year and is due in one year. Monthly
payment of interest only are due beginning September 1, 2015. The Note is secured by substantially all of the assets of JS. Through
the date of this filing we have not provided financing associated with this commitment.
Also on August 4, 2015,
we executed an Amendment to the LOI. The original LOI required that the parties settle on a purchase price for affiliated company
S&J Design Labs, LLC within thirty days of the LOI. The Amendment allows the parties until the closing date of the acquisition
to set a purchase price for S&J Design Labs, LLC.
Our ability to close the acquisition of JS
as contemplated by the LOI will be dependent upon us obtaining additional financing through debt and/or equity financing arrangements.
Although management is working to secure the additional capital required to close the transaction, there is a risk that such
additional financing will not be available to us on acceptable terms or in the amounts required to close the planned acquisition.
NOTE
12 – RESTATEMENT
The
consolidated financial statements for the year ended November 30, 2014 and for the three and nine months ended August 31, 2014
have been amended to expense the previously capitalized licensing fee. An analysis of those restated numbers are as follows.
|
November
30, 2014 |
|
|
As
Reported |
|
Adjustment |
|
As
Restated |
Product
license |
$ |
29,250 |
$ |
(29,250) |
$ |
- |
Total
assets |
|
66,963 |
|
(29,250) |
|
37,713 |
|
|
|
|
|
|
|
Accumulated
deficit |
|
(405,906) |
|
(29,250) |
|
(435,156) |
Total
stockholders’ equity (deficit) |
|
(197,303) |
|
(29,250) |
|
(226,553) |
Total
liabilities and stockholders’ equity |
|
66,963 |
|
29,250 |
|
37,713 |
|
For
the Three Months Ended
August
31, 2014 |
|
For
the Nine Months Ended
August
31, 2014 |
|
|
As
Reported |
|
Adjustment |
|
As
Restated |
|
As
Reported |
|
Adjustment |
|
As
Restated |
General
and administrative |
$ |
70,906 |
$ |
13,500 |
$ |
84,406 |
$ |
107,788 |
$ |
15,750 |
$ |
123,538 |
Total
Operating Expenses |
|
132,099 |
|
13,500 |
|
145,599 |
|
168,981 |
|
15,750 |
|
184,731 |
Net
loss from operations |
$ |
(126,766) |
$ |
(13,500) |
$ |
(140,266) |
$ |
(162,088) |
$ |
(15,750) |
$ |
(177,838) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For
the Three Months Ended
May
30, 2015 |
|
For
the Six Months Ended
May
30, 2015 |
|
|
As
Reported |
|
Adjustment |
|
As
Restated |
|
As
Reported |
|
Adjustment |
|
As
Restated |
General
and administrative |
$ |
363,769 |
$ |
11,250 |
$ |
375,019 |
$ |
537,735 |
$ |
24,750 |
$ |
562,485 |
Total
Operating Expenses |
|
363,769 |
|
11,250 |
|
375,019 |
|
544,099 |
|
24,750 |
|
568,849 |
Net
loss from operations |
$ |
(570,226) |
$ |
(11,250) |
$ |
(581,476) |
$ |
(748,295) |
$ |
(24,750) |
$ |
(773,045) |
|
|
|
|
|
|
|
|
|
|
|
|
|
NOTE
13 - SUBSEQUENT EVENTS
On
September 8, 2015, the Company issued 22,239 shares of common stock to LG Capital Funding, LLC in conversion of $5,000 of principal
and $338 of accrued interest.
On
September 21, 2015, pursuant to individual Notices of Conversion executed by each of the holders of its Class A Convertible Preferred
Stock, the Corporation exchanged all 29,380 shares of its issued and outstanding Class A Convertible Preferred Stock, as well
as accrued dividends thereon in the amount of $11,556, for a total of 528,193 shares common stock.
On
October 8, 2015, the Company entered into a Promissory Note (the “Note”) with Studio Capital, LLC. (“Studio”).
Under the Note, the Company borrowed the sum of $125,000. The Note featured an original issue discount of $25,000, resulting in
net funding to the Company of $100,000. The Note is due in six (6) months and does not bear interest. As additional consideration
to Studio, the Company agreed to issue it five thousand (5,000) shares of common stock.
On
October 8, 2015, the Company issued 30,000 shares of common stock to an individual for consideration of personally guaranteeing
the Promissory Note to Studio Capital, LLC.
On December 2, 2015, the Company entered into
a Promissory Note (the “Note”) with a third party. Under the Note, the Company borrowed the sum of $125,000. The Note
featured an original issue discount of $25,000, resulting in net funding to the Company of $100,000. The Note is due in sixty (60)
days and does not bear interest. As additional consideration to the investor, the Company agreed to issue a warrant to purchase
up to 100,000 shares of the Company’s common stock at a price of $0.01 per share, exercisable for a period of one year.
On December 2, 2015, the Company entered into
a Promissory Note (the “Note”) with a third party. Under the Note, the Company borrowed the sum of $125,000. The Note
featured an original issue discount of $25,000, resulting in net funding to the Company of $100,000. The Note is due in sixty (60)
days and does not bear interest. As additional consideration to the investor, the Company agreed to issue a warrant to purchase
up to 100,000 shares of the Company’s common stock at a price of $0.01 per share, exercisable for a period of one year.
December 10, 2015, the Company entered into
a Subscription Agreement with a third party, whereby it sold 25,000 shares of common stock for $5,000.
In January of 2016, the Company entered into
Amendments to its promissory notes with Adar Bays, Union Capital, LG Capital, and Typenex (the “Amendments”).In general,
each of the Amendments stipulates that the lender will, for a period of ninety (90) days, convert no more than ten percent (10%)
of the principal amount due under their notes in any thirty (30) day period. In addition, the specific Amendments also provide
as follows:
| · | The Adar Bays and Union
Capital Amendments each provide that the conversion discount shall be increased by 5%, such that these notes are convertible at
55%, rather than 60%, of market price as defined in the notes. Further, the pricing period, or “look-back” for determining
the conversion price has been extended from 20 days to 25 days, and the pre-payment penalty has been increased to 150%. |
| · | The LG Capital Amendment
also calls for additional consideration to LG Capital in the form of warrants to purchase 75,000 shares of our common stock at
a price of $0.30 per share, exercisable for 3 years. Also, we will be permitted to re-pay the LG Capital note with the applicable
penalty set forth in the note for a pre-payment made between 91 and 180 days after issue. |
Item
2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Forward-Looking
Statements
Certain
statements, other than purely historical information, including estimates, projections, statements relating to our business plans,
objectives, and expected operating results, and the assumptions upon which those statements are based, are “forward-looking
statements.” These forward-looking statements generally are identified by the words “believes,” “project,”
“expects,” “anticipates,” “estimates,” “intends,” “strategy,” “plan,”
“may,” “will,” “would,” “will be,” “will continue,” “will likely
result,” and similar expressions. Forward-looking statements are based on current expectations and assumptions that are
subject to risks and uncertainties which may cause actual results to differ materially from the forward-looking statements. Our
ability to predict results or the actual effect of future plans or strategies is inherently uncertain. Factors which could have
a material adverse effect on our operations and future prospects on a consolidated basis include, but are not limited to: changes
in economic conditions, legislative/regulatory changes, availability of capital, interest rates, competition, and generally accepted
accounting principles. These risks and uncertainties should also be considered in evaluating forward-looking statements and undue
reliance should not be placed on such statements.
Management’s
Discussion and Analysis of Financial Condition and Results of Operations
Company
Overview and Description of Business
Avalanche
International Corp., a Nevada corporation, is a holding company with one subsidiary, Smith and Ramsay Brands, LLC. We have acquired
certain intellectual property, knowhow, product and capability from Smith and Ramsay, LLC, a Nevada company. Smith and Ramsay
Brands, LLC (SRB) is a manufacturer and distributor of flavored liquids for electronic vaporizers and eCigarettes and accessories.
SRB currently has a single brand of premium vape liquid, its signature brand Smith and Ramsay, which began a targeted rollout
mid-Fall of 2014 following its pre-launch phase. The Smith and Ramsay line was manufactured, packaged and strategically distributed
on a limited basis to generate revenue in test markets. Due to the feedback we received during our test marketing, from our observations
of the changing consumer demand in the marketplace and our direct experience with our customers, the Company sought and received
Board approval to establish Puff Systems. Puff Systems is a new business unit focused on the manufacturing and distribution of
vape devices including pens and vape accessories. Puff Systems was launched as a department of Smith and Ramsay Brands so it could
minimize costs while developing its business model and proving concept. The efforts and success of Puff Systems are being evaluated
by the Company’s management to determine the unit’s future path. While the Company has chosen to focus primarily on
its subsidiary’s business model, it reserves the right to explore other opportunities that either may leverage its current
activities, expand organically into new revenue streams or enter new industries that will provide added value for its shareholders.
This includes the pursuit of a merger or acquisition of existing businesses from other industries with proceeds from new capital
raised.
“Vape”
is the common term used to refer to the use of vaporizers by consumers which has grown out of the increasing popular use of electronic
cigarettes as an alternative to traditional cigarette and other tobacco uses. The use of electronic cigarettes and vaporizers
has been accelerated by state and local legislation outlawing the smoking of tobacco products in public places. In 2012, Goldman
Sachs declared electronic cigarettes one of the top 10 disruptive technologies to watch.
This
highly competitive and innovative marketplace has made its mark and set a consumer standard by offering a wide and colorful array
of varying flavors, nicotine levels and other attributes to produce a truly unique and customized experience. We believe that,
as this market matures, there will be a natural rising demand for better quality products and wider range of varying flavors that
is appetizing to an even more diverse consumer base. Through Smith and Ramsay Brands, we plan to provide a wide variety of high
quality vapor liquids to anticipate and lead this demand in a commercial manner to assure product integrity and consistency.
It
is the plan of SRB to move into the market place during 2015 and over the next twenty four (24) months following its launch mid-Fall
of 2014 of its Smith and Ramsay signature brand upon threshold funding being reached. Management’s goal is to expand aggressively
with additional flavors in the signature brand, and expanding through additional new brands and the acquisition and distribution
of signature and non-signature accessories. The signature line of premium vape liquid will focus on the Vape store and traditional
smoke shop markets, while another brand product line and offerings will focus on the convenience store and gas station marketplace,
and other lines will target ethnic-specific markets, etc. Additional products within these brand lines as well as external to
these lines will focus on combination hardware/liquid market that includes disposable devices with preloaded liquid, and/or preloaded
cartridges for use in specific types of devices.
Intellectual
Property
We
have purchased the following intellectual property from Smith and Ramsay, LLC:
Patent
/ Trademark/knowhow |
Patent
Title / Trademark |
Recipe
for Toasty Monkey |
Trademark
currently in filing process |
Recipe
for Tricky |
Trademark
currently in filing process |
Recipe
for Java Hopper |
Trademark
currently in filing process |
Recipe
for Peaches and Mango |
Trademark
currently in filing process |
Recipe
for Berries and Cream |
Trademark
currently in filing process |
Smith
and Ramsay |
Trademark
currently in filing process |
Smith
and Ramsay Brands |
Trademark
currently in filing process |
Domain
Names
www.AvalancheInternationalCorp.com
www.Smith
AndRamsay.co
www.SmithAndRamsay.com
www.SmithAndRamsayBrands.co
www.SmithAndRamsayBrands.com
www.SmithAndRamsayBrands.info
www.SmithAndRamsayBrands.net
www.SmithAndRamsayBrands.org
www.SmithNRamsay.com
www.SmithAndRamsay.com
Employees
As
of August 31, 2015, we employed two permanent management level personnel and work with outside labor and consultants to complete
the tasks at hand. We may require additional employees in the future. There is intense competition for capable, experienced
personnel and there is no assurance the Company will be able to obtain new qualified employees when required.
Letter
of Intent for Acquisition of J.S. Technologies, Inc.
On
June 12, 2015, we entered into a binding Letter of Intent (the “LOI”) for the purchase of all of the issued and outstanding
capital stock of J.S. Technologies, Inc., a California corporation (“JS”). JS is the manufacturer of Suhr brand
guitars and related electronics and accessories. Under the LOI, we have agreed to purchase all of the issued and outstanding
capital stock in JS for a total purchase price of $11,000,000. The purchase price will be paid, at the option of the individual
JS stockholders, in either cash, new convertible preferred stock, or a combination of both. The new convertible preferred
stock to be issued as payment toward the purchase price will have a stated value of $4.00 per share, will accrue dividends at
a rate of six percent per year, and will be convertible to common stock at a price of $1.00 per share of common stock. All
shares of the new preferred stock issued and outstanding at thirty-six months after closing will be automatically converted to
common stock.
The
anticipated closing date of the acquisition will be in in 120 days from the date of the LOI and will be documented by a
definitive agreement to be prepared by the parties. The transaction must close by the later of: (i) 120 days from the
date of the LOI, or (ii) 60 days after delivery of audited financial statements and auditor reviewed subsequent quarters for
JS, which is a condition to closing. There are numerous additional conditions to closing of the acquisition, including,
but not limited to: (i) execution of the definitive agreement by not less than 65% of JS’s stockholders and compliance
with JS’s bylaws and a buy/sell agreement governing its common stock, (ii) our readiness and ability to pay the
required portion of the purchase price to each JS stockholder who is ready and willing to sell its shares, and (iii)
concurrent closing of an additional agreement under which we will purchase S&J Design Labs, LLC, the affiliated company
which owns the building and equipment used in JS’s operations. As of the date of this filing the auditor reviews of the subsequent quarters have not yet been completed.
Both parties have agreed to extend the closing until all conditions have been met.
The
LOI also contains a “no-shop” provision for the time between the date of the LOI and the defined closing date. In
addition, if we or any of the JS stockholders signing the LOI fail and refuse to close the acquisition on the defined closing
date, and the other parties are ready and able to close, the breaching party will be assessed a $250,000 break-up fee. Extensive
additional covenants, conditions, representations, and warranties between the parties are included in the LOI. The foregoing is
a brief summary of the material terms of the LOI, which should be reviewed in its entirety for additional information.
On
August 4, 2015, we entered into a Secured Promissory Note (the “Note”) with JS. Under the Note, we intend to lend
up to $400,000 to JS in order to provide short-term financing pending our intended acquisition of JS. The Note calls for an initial
advance in the amount of $200,000 to be made as soon as practicable. Up to two additional advances of $100,000 each may be made
thirty and sixty days, respectively, from the date of the Note. The Note bears interest at a rate of ten percent per year and
is due in one year. Monthly payment of interest only are due beginning September 1, 2015. The Note is secured by substantially
all of the assets of JS. Through the date of this filing we have not provided financing associated with this commitment. Through the date of this filing we have not provided financing associated with this commitment.
Also
on August 4, 2015, we executed an Amendment to the LOI. The original LOI required that the parties settle on a purchase price
for affiliated company S&J Design Labs, LLC within thirty days of the LOI. The Amendment allows the parties until the closing
date of the acquisition to set a purchase price for S&J Design Labs, LLC.
Our
ability to close the acquisition of JS as contemplated by the LOI will be dependent upon us obtaining additional financing through
debt and/or equity financing arrangements. Although management is working to secure the additional capital required to close
the transaction, there is a risk that such additional financing will not be available to us on acceptable terms or in the amounts
required to close the planned acquisition.
Results
of Operations for the three months ended August 31, 2015 compared to the three months ended August 31, 2014.
Revenue
For
the three months ended August 31, 2015, revenue was $169 compared to $6,431 for the three months ended August 31, 2014. In the
current period sales have been largely put on hold while the Company focuses its efforts in other areas.
Advertising
and marketing – while there were no costs incurred in the current period ended August 31, 2015, for advertising and marketing,
in the prior period for the three months ended August 31, 2014 we incurred $61,193 of advertising and marketing costs in connection
with the promotion of our new line of business and products.
General
and administrative - for the three months ended August 31, 2015 general and administrative expense were $488,466 compared to $84,406
for the three months ended August 31, 2014.
Major
components of G&A expense consists of the following:
Compensation
expense – for the three months ended August 31, 2015, compensation expense for our CFO and CEO totaled $28,858 compared
to $18,360 for the three months ended August 31, 2014. Compensation is determined by the amount of time our officers spend working
directly on Company matters. In the current period that time has increased due to reporting requirements and efforts to acquire
J.S. Technologies, Inc.
Professional
fees – Professional fees for the three months ended August 31, 2015 were $28,974 compared to $16,424 for the three months
ended August 31, 2014. The increase is due to increased legal and audit fees associated with compliance and filing obligations.
Stock
for services – Stock is issued for various services by the company in lieu of cash compensation. For the three months ended
August 31, 2015 the Company incurred $331,292 of total non-cash expense as a result of issuing stock for services. No stock was
issued for services in the prior period.
Other
income and expense
During
the three months ended August 31, 2015 we incurred $28,208 of interest expense on loans, $164,685 of expense for amortization
of debt discount, expense for loss on issuance of convertible debt of $55,093, had a loss on the change in fair market value of
our derivative liability of $2,968 and interest revenue of $6,074, none of which we had in the prior year. With the exception
of the interest revenue these new revenues and expenses are a result of the convertible debt acquired.
Net
loss
The
Company had a net loss of $733,435 for the three months ended August 31, 2015 compared to a net loss of $140,266 for the three
months ended August 31, 2014. The increase in net loss is mainly due to the increases in non-cash expense for stock for services
and our other expenses associated with the convertible debt.
Results
of Operations for the nine months ended August 31, 2015 compared to the nine months ended August 31, 2014.
Revenue
For
the nine months ended August 31, 2015, revenue was $38,831 compared to $10,172 for the nine months ended August 31, 2014. For
the nine months ended August 31, 2014 we had just started to sell our new vape liquid. Revenue in the current period consists
of sales of our vape liquid as well as vape pens and accessories.
Advertising
and marketing – for the nine months ended August 31, 2015 advertising and marketing expense was $6,364 compared to $61,193
for the nine months ended August 31, 2014. In the prior year more funds were allocated to the promotion of our new vape business
and products. In the current year efforts and funds are being redirected to other areas of growing the business such as the pending
acquisition of J.S. Technologies, Inc.
General
and administrative - for the nine months ended August 31, 2015 general and administrative expense were $1,050,951 compared to
$123,538 for the nine months ended August 31, 2014.
Major
components of G&A expense consists of the following:
Compensation
expense – for the nine months ended August 31, 2015, compensation expense for our CFO and CEO totaled $65,593 compared to
$18,360 for the nine months ended August 31, 2014. Compensation is determined by the amount of time our officers spend working
directly on Company matters. In the current period that time has increased due to reporting requirements and efforts to acquire
J.S. Technologies, Inc.
Professional
fees – Professional fees for the nine months ended August 31, 2015 were $85,467 compared to $28,617 for the nine months
ended August 31, 2014. The increase is due to increased legal and audit fees associated with compliance and filing obligations.
Stock
for services – Stock is issued for various services by the company in lieu of cash compensation. For the nine months ended
August 31, 2015 the Company incurred $583,125 of total non-cash expense as a result of issuing stock for consulting services.
No stock was issued for services in the prior period.
Other
income and expense
During
the nine months ended August 31, 2015 we incurred $39,063 of interest expense on loans, $248,863 of expense for amortization of
debt discount, expense for loss on issuance of convertible debt of $356,402 and had a gain on the change in fair market value
of our derivative liability of $179,808 and interest revenue of $6,074, none of which we had in the prior year. With the exception
of the interest revenue these new revenues and expenses are a result of the convertible debt acquired.
Net
loss
The
Company had a net loss of $1,506,480 for the nine months ended August 31, 2015 compared to a net loss of $177,838 for the nine
months ended August 31, 2014. The increase in net loss is mainly due to the increases in non-cash expense for stock for services
and our other expenses associated with the convertible debt.
Liquidity
and Capital Resources
Our
management currently believes that we may not have sufficient working capital needed to meet our current fiscal obligations. In
order to continue to meet our fiscal obligations beyond the next twelve months, we plan to pursue various financing alternatives
including, but not limited to, raising capital through the equity markets and debt financing.
Should
we not be successful at raising capital through the issuance of capital stock, we may consider raising capital by the issuance
of debt. However, unless the appropriate features, such as convertible options, are attached to the debt instruments, this form
of financing is less desirable until such time as we may be in a position to reasonably foresee the generation of cash flow to
service and repay debt.
As
of August 31, 2015, we had an accumulated deficit of $1,941,636 and a net loss for the nine months ended August 31, 2015 of $1,506,480.
For the nine months ended August 31, 2015, net cash used in operating activities was $410,533, net cash used for investing activities
was $172,995 and we had net cash from financing activities of $581,937.
On
October 8, 2015, we entered into a Promissory Note (the “Note”) with Studio Capital, LLC. (“Studio”).
Under the Note, we borrowed the sum of $125,000. The Note featured an original issue discount of $25,000, resulting in net funding
to us of $100,000. The Note is due in six (6) months and does not bear interest. As additional consideration to Studio, we have
agreed to issue it five thousand (5,000) shares of our common stock. Our liability under the Note has been guaranteed by our Chairman,
Milton C. Ault III and by one of our shareholders, Steven Jon Smith.
Going
Concern
These
interim unaudited consolidated financial statements have been prepared on the going concern basis which assumes that adequate
sources of financing will be obtained as required and that our assets will be realized and liabilities settled in the ordinary
course of business. Accordingly, the interim unaudited consolidated financial statements do not include any adjustments related
to the recoverability of assets and classification of assets and liabilities that might be necessary should we not be unable to
continue as a going concern.
Off
Balance Sheet Arrangements
As
of August 31, 2015, there were no off balance sheet arrangements.
Critical
Accounting Policies
In
December 2001, the SEC requested that all registrants list their most “critical accounting polices” in the Management
Discussion and Analysis. The SEC indicated that a “critical accounting policy” is one which is both important to the
portrayal of a company’s financial condition and results, and requires management’s most difficult, subjective or
complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain.
Currently, we do not believe that any accounting policies fit this definition.
Recently
Issued Accounting Pronouncements
We
do not expect the adoption of recently issued accounting pronouncements to have a significant impact on our results of operations,
financial position or cash flow.
Item
3. Quantitative and Qualitative Disclosures About Market Risk
A
smaller reporting company is not required to provide the information required by this Item.
Item
4. Controls and Procedures
Management
has evaluated the effectiveness of our internal control over financial reporting as of August 31, 2015 based on the control criteria
established in a report entitled Internal Control – Integrated Framework published by the Committee of Sponsoring Organizations
of the Treadway Commission, known as COSO. Based on our assessment and those criteria, our management has concluded that the Company
has inadequate controls and procedures over financial reporting due to the lack of segregation of duties and lack of a formal
review process that includes multiple levels of review. Management believes that the material weakness in its controls and procedures
did not have an effect on our financial results.
Internal
control over financial reporting cannot provide absolute assurance of achieving financial reporting objectives because of its
inherent limitations. It is a process that involves human diligence and compliance and is subject to lapses in judgment and breakdowns
resulting from human failures. It also can be circumvented by collusion or improper management override.
Because
of such limitations, there is a risk that material misstatements may not be prevented or detected on a timely basis by internal
control over financial reporting. However, these inherent limitations are known features of the financial reporting process. Therefore,
it is possible to design into the process certain safeguards to reduce, though not eliminate, this risk. Management is responsible
for establishing and maintaining adequate internal control over our financial reporting.
This
report does not include an attestation of our registered public accounting firm regarding internal control over financial reporting,
pursuant to temporary rules of the Securities and Exchange Commission that permit us to provide only management’s report
in this annual report.
There
have not been any changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f)
under the Exchange Act) during the third quarter of FY 2015 that have materially affected, or are reasonably likely to materially
affect, our internal control over financial reporting.
Changes
in Internal Control over Financial Reporting
We
have not had any changes or disagreements with our accountants required to be disclosed pursuant to Item 304 of Regulation S-K.
PART
II – OTHER INFORMATION
Item
1. Legal Proceedings
We
are not a party to any pending legal proceeding. We are not aware of any pending legal proceeding to which any of our officers,
directors, or any beneficial holders of 5% or more of our voting securities are adverse to us or have a material interest adverse
to us.
Item
1A. Risk Factors
A
smaller reporting company is not required to provide the information required by this Item.
Item
2. Unregistered Sales of Equity Securities and Use of Proceeds -
December 10, 2015, the Company entered into
a Subscription Agreement with a third party, whereby it sold 25,000 shares of common stock for $5,000. Proceeds from the sale were
used for general operating expenses.
Item
3. Defaults upon Senior Securities
None
Item
4. Mine Safety Disclosures
Not
applicable.
Item
5. Other Information
None
Item
6. Exhibits
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.
|
Avalanche
International, Corp. |
|
|
Date: |
January
25, 2016 |
|
|
By: |
/s/
Philip Mansour
Philip
Mansour |
Title: |
Chief
Executive Officer and Director |
|
|
Date: |
January
25, 2016 |
|
|
By: |
/s/
Rachel Boulds
Rachel
Boulds |
Title: |
Chief
Financial Officer |
AVALANCHE
INTERNATIONAL CORP.
SECURED
PROMISSORY NOTE
Original
Principal Amount: US $125,000 |
Las
Vegas, Nevada |
Consideration
Paid at Close: US $100,000 |
December
2, 2015 |
This
Secured Promissory Note (the “Note”), dated as of December 2, 2015 is made by Avalanche International Corp., a Nevada
corporation, (“Maker”), in favor of Lori Livingston (“Holder”).
For
good and valuable consideration, the Maker hereby makes and delivers this Note in favor of Holder, and hereby agrees as follows:
1.
Principal Obligation and Interest; Due Date; Original Issue Discount. For value received, Maker promises to
pay to Holder or her assigns, at such place as Holder may designate in writing, in currently available funds of the United States,
the principal sum of One Hundred Twenty-five Thousand Dollars ($125,000). Except in the event of a default, Maker’s
obligation under this Note shall not accrue interest. The Original Issue Discount (“OID”) under this Note is $25,000.
Promptly upon the parties’ execution of this Note, Holder shall wire $100,000 (representing the amount of the Note, less
the OID) to the Maker as specified in Exhibit A. All sums due under this Note shall be paid in full on or before sixty
(60) days from the date of this Note (the “Due Date”).
2.
Warrant to be Issued as Additional Consideration. As additional consideration to Holder, the Maker shall issue to the
Holder a warrant to purchase up to 100,000 shares of the Company’s common stock at a price of $0.01 per share, exercisable
for a period of one year. Shares issuable under the Warrant shall have “piggy-back” registration rights as set forth
in the Warrant. The Warrant shall have the form and substance set forth in Exhibit B.
3.
Payment Terms; Use of Proceeds. The principal amount of this Note shall be due and payable, in whole or in several
parts, as applicable, upon the Maker’s receipt of any and all additional investments in the Maker subsequent to the date
of this Note, whether effected through the sale of capital stock of the Maker or by the Maker’s issuance of additional debt.
The net proceeds of all such investments in the Maker, when received by the Maker, shall be paid to Holder within twenty-four
(24) hours after the funds from such investments have cleared and become available to the Maker, until the principal amount of
this Note is paid in full. All funds currently held in an attorney escrow and intended for investment in the Maker shall not,
when so invested, be subject to this provision.
Maker
shall have the right to prepay all or any part of the principal under this Note without penalty.
Maker
is the Holder of a certain Secured Promissory Note dated July 28, 2015 and issued from JS Technologies, Inc. to Maker (the “JS
Note”). All proceeds of this Note shall be used by the Maker to fund an advance to JS Technologies, Inc. under the JS Note,
less any origination fee applicable thereunder.
4.
Grant of Security Interest. As collateral security for the prompt, complete, and timely satisfaction of all indebtedness,
liabilities, duties, and obligations of Maker to Holder evidenced by or arising under this Note, and all attorneys’ fees,
costs and expenses incurred by Holder in the collection or enforcement of the same (collectively, the “Obligations”),
Maker hereby pledges, assigns and grants to Holder a continuing security interest and lien in all of Maker’s right, title
and interest in and to that certain Secured Promissory Note dated July 28, 2015 and issued from JS Technologies, Inc. to Maker,
a true and correct copy of which is attached hereto as Exhibit C (the “Collateral”). As applicable,
the terms of this Note with respect to Maker’s granting of a security interest in the Collateral to Holder shall be deemed
to be a security agreement under applicable provisions of the Uniform Commercial Code (“UCC”), with Maker as
the debtor and Holder as the secured party.
5.
Perfection. Upon the execution and delivery of this Note, Maker authorizes Holder to file such financing statements
and other documents in such offices as shall be necessary or as Holder may reasonably deem necessary to perfect and establish
the priority of the liens granted by this Note, including any amendments, modifications, extensions or renewals thereof. Maker
agrees, upon Holder’s request, to take all such actions as shall be necessary or as Holder may reasonably request to perfect
and establish the priority of the liens granted by this Note, including any amendments, modifications, extensions or renewals
thereof.
6.
Representations and Warranties of Maker. Maker hereby represents and warrants the following to Holder:
a.
Maker and those executing this Note on its behalf have the full right, power, and authority to execute, deliver and perform the
Obligations under this Note, which are not prohibited or restricted under the articles of incorporation or bylaws of Maker. This
Note has been duly executed and delivered by an authorized officer of Maker and constitutes a valid and legally binding obligation
of Maker enforceable in accordance with its terms.
b.
The execution of this Note and Maker’s compliance with the terms, conditions and provisions hereof does not conflict with
or violate any provision of any agreement, contract, lease, deed of trust, indenture, or instrument to which Maker is a party
or by which Maker is bound, or constitute a default thereunder or result in the imposition of any lien, charge, encumbrance, claim
or security interest of any nature whatsoever upon any of the Collateral.
c.
The security interest granted hereby in and to the Collateral constitutes a present, valid, binding and enforceable security interest
as collateral security for the Obligations, and, except as to leased equipment or purchase-money encumbrances existing as of the
date of this Note as expressly disclosed to Holder in writing, such interests, upon perfection, will be senior and prior to any
liens, encumbrances, charges, title defects, interests and rights of any others with respect to such Collateral.
7.
Covenants of Maker. For so long as any Obligations remain outstanding:
a.
Maker shall not sell, assign or transfer any of the Collateral, or any part thereof or interest therein;
b.
Maker shall pay or cause to be paid promptly when due all taxes and assessments on the Collateral; and
c.
Maker shall keep Holder apprised, in writing, as to the current location of the Collateral, providing Holder with current information
with respect to the Collateral so the Holder may perfect and maintain the priority of its security interest therein.
8.
Use of Collateral. For so long as no event of default shall have occurred and be continuing under this Note, Maker
shall be entitled to use and possess the Collateral and to exercise its rights, title and interest in all contracts, agreements,
and licenses subject to the rights, remedies, powers and privileges of Holder under this Note and to such use, possession or exercise
not otherwise constituting an event of default. Notwithstanding anything herein to the contrary, Maker shall remain liable to
perform its duties and obligations under the contracts and agreements included in the Collateral in accordance with their respective
terms to the same extent as if this Note had not been executed and delivered; the exercise by Holder of any right, remedy, power
or privilege in respect of this Note shall not release the Maker from any of its duties and obligations under such contracts and
agreements; and Holder shall have no duty, obligation or liability under such contracts and agreements included in the Collateral
by reason of this Note, nor shall Holder be obligated to perform any of the duties or obligations of Maker under any such contract
or agreement or to take any action to collect or enforce any claim (for payment) under any such contract or agreement.
9.
Defaults. The following shall be events of default under this Note:
a.
Maker’s failure to remit any payment under this Note on before the date due, if such failure is not cured in full within
five (5) days of written notice of default;
b.
Maker’s failure to make final payment of all sums due and owing under this Note on or before the Due Date;
c.
Maker’s failure to perform or breach of any non-monetary obligation or covenant set forth in this Note or in any other written
agreement between Maker and Holder if such failure is not cured in full within ten (10) days following delivery of written notice
thereof from Holder to Maker;
d.
If Maker is dissolved, whether pursuant to any applicable articles of incorporation or bylaws, and/or any applicable laws, or
otherwise;
e.
The commencement by Maker of any action or proceeding which affects the Collateral or title thereto or the interest of Holder
therein, including, but not limited to eminent domain, insolvency, code enforcement or arrangements or proceedings involving a
bankrupt or decedent;
f.
The entry of a decree or order by a court having jurisdiction in the premises adjudging the Maker bankrupt or insolvent, or approving
as properly filed a petition seeking reorganization, arrangement, adjustment or composition of or in respect of the Maker under
the federal Bankruptcy Code or any other applicable federal or state law, or appointing a receiver, liquidator, assignee or trustee
of the Maker, or any substantial part if its property, or ordering the winding up or liquidation of its affairs, and the continuance
of any such decree or order unstayed and in effect for a period of twenty (20) days;
g.
Maker’s institution of proceedings to be adjudicated a bankrupt or insolvent, or the consent by it to the institution of
bankruptcy or insolvency proceedings against it, or its filing of a petition or answer or consent seeking reorganization or relief
under the federal Bankruptcy Code or any other applicable federal or state law, or its consent to the filing of any such petition
or to the appointment of a receiver, liquidator, assignee or trustee of the company, or of any substantial part of its property,
or its making of an assignment for the benefit of creditors or the admission by it in writing of its inability to pay its debts
generally as they become due, or the taking of corporate action by the Maker in furtherance of any such action; or
h.
The Maker’s common stock is suspended or delisted for trading on the Over the Counter Bulletin Board market or such other
market on which such common stock is listed or quoted.
10. Rights
and Remedies of Holder. Upon the occurrence of an event of default by Maker under this Note, the principal amount due
under this Note shall immediately increase to 120% of the principal balance immediately prior to the occurrence of the event of
default (the “Default Effect”). In addition, upon the occurrence of an event of default by Maker under this Note,
interest shall accrue on all sums due under this Note, as adjusted to include the Default Effect, at the rate of twenty-nine percent
(29%) per annum (the “Default Rate”). The Default Effect, and the accrual of interest at the Default Rate, shall automatically
apply upon the occurrence of an event of default without the need for any party to give any notice or take any other action. In
addition to the Default Effect, the accrual of interest at the Default Rate, and all other rights and remedies at law or in equity,
Holder may also exercise any one or more of the following rights and remedies:
a.
Pursue and enforce all of the rights and remedies provided to a secured party with respect to the Collateral under the Uniform
Commercial Code.
b.
Make such appearance, disburse such sums, and take such action as Holder deems necessary, in its sole discretion, to protect Holder’s
interest, including but not limited to the disbursement of attorneys’ fees. Any amounts disbursed by Holder pursuant to
this Section shall become additional indebtedness of the Maker secured by the Collateral and shall be immediately due and payable.
Nothing contained in this Section shall require Holder to incur any expense or take any action.
c.
Require Maker to assemble the Collateral and make it available to the Maker at the place to be designated by the Holder which
is reasonably convenient to both parties. The Holder may sell all or any part of the Collateral as a whole or in part either by
public auction, private sale, or other method of disposition. The Holder may bid at any public sale on all or any portion of the
Collateral. Unless the Collateral threatens to decline speedily in value, Holder shall give Maker reasonable notice of the time
and place of any public sale or of the time after which any private sale or other disposition of the Collateral is to be made,
and notice given at least 10 days before the time of the sale or other disposition shall be conclusively presumed to be reasonable.
d.
Pursue any other rights or remedies available to Holder at law or in equity.
11. Full
Recourse. The liability of Maker for the Obligations shall not be limited to the Collateral, and Maker shall have full
liability therefor beyond the Collateral.
12. Assignability;
Lost Stolen of Mutilated Note. The Maker may not assign this Note. This Note will be binding upon the Maker and its successors
and will inure to the benefit of the Holder and her successors and assigns and may be assigned by the Holder to anyone of her
choosing without Maker’s approval. Upon receipt by the Maker of evidence reasonably satisfactory to the Maker of the loss,
theft, destruction or mutilation of this Note, and, in the case of loss, theft or destruction, of any indemnification undertaking
by the Holder to the Maker in customary form and, in the case of mutilation, upon surrender and cancellation of this Note, the
Maker shall execute and deliver to the Holder a new Note representing the outstanding principal amount due.
13.
Representation of Counsel. Holder acknowledges that she has consulted with or has had the opportunity to consult
with Holder’s legal counsel prior to executing this Note. This Note has been freely negotiated by Maker and Holder and any
rule of construction to the effect that any ambiguities are to be resolved against the drafting party shall not be employed in
the interpretation of this Note.
14.
Choice of Laws; Actions. This Note shall be constructed and construed in accordance with the internal substantive
laws of the State of Nevada, without regard to the choice of law principles of said State. Maker acknowledges that this Note has
been negotiated in Clark County, Nevada. Accordingly, the exclusive venue of any action, suit, counterclaim or cross claim arising
under, out of, or in connection with this Note shall be the state or federal courts in Clark County, Nevada. Maker hereby consents
to the personal jurisdiction of any court of competent subject matter jurisdiction sitting in Clark County, Nevada.
15.
Usury Savings Clause. Maker expressly agrees and acknowledges that Maker and Holder intend and agree that
this Note shall not be subject to the usury laws of any state other than the State of Nevada. Notwithstanding anything contained
in this Note to the contrary, if collection from Maker of interest at the rate set forth herein would be contrary to applicable
laws of such State, then the applicable interest rate upon default shall be the highest interest rate that may be collected from
Maker under applicable laws at such time.
16.
Costs of Collection. Should the indebtedness represented by this Note, or any part hereof, be collected at law,
in equity, or in any bankruptcy, receivership or other court proceeding, or this Note be placed in the hands of any attorney for
collection after default, Maker agrees to pay, in addition to the principal and interest due hereon, all reasonable attorneys’
fees, plus all other costs and expenses of collection and enforcement, including any fees incurred in connection with such proceedings
or collection of the Note and/or enforcement of Holder’s rights.
17.
Miscellaneous.
a.
This Note shall be binding upon Maker and shall inure to the benefit of Holder and its successors, assigns, heirs, and legal representatives.
b.
Any failure or delay by Holder to insist upon the strict performance of any term, condition, covenant or agreement of this Note,
or to exercise any right, power or remedy hereunder shall not constitute a waiver of any such term, condition, covenant, agreement,
right, power or remedy.
c.
Any provision of this Note that is unenforceable shall be severed from this Note to the extent reasonably possible without invalidating
or affecting the intent, validity or enforceability of any other provision of this Note.
d.
This Note may not be modified or amended in any respect except in a writing executed by the party to be charged.
e.
Neither party may assign this Note without the express written consent of the other party.
f.
Time is of the essence.
18. Notices.
All notices required to be given under this Note shall be given at the following address, which may be changed by the applicable
party on five (5) business days advance written notice:
To
Maker: Avalanche International, Corp.
5940
S. Rainbow Avenue
Las
Vegas, NV 89118
Attn:
Rachel Boulds, CFO
Email:rachel@AvalancheInternationalCorp.com
To
Holder: Lori Livingston
512
SE Salmon
Portland,
OR 97214
Attn:
Lori Livingston
Email:
Lori@transferonline.com
Notices
may be transmitted by personal delivery or by a recognized overnight courier with confirmation of delivery or by e-mail, and shall
be deemed given upon receipt by the Party to whom they are addressed.
19. Waiver
of Certain Formalities. All parties to this Note hereby waive presentment, dishonor, notice of dishonor and protest. All
parties hereto consent to, and Holder is hereby expressly authorized to make, without notice, any and all renewals, extensions,
modifications or waivers of the time for or the terms of payment of any sum or sums due hereunder, or under any documents or instruments
relating to or securing this Note, or of the performance of any covenants, conditions or agreements hereof or thereof or the taking.
Any such action taken by Holder shall not discharge the liability of any party to this Note.
IN
WITNESS WHEREOF, this Note has been executed effective the date and place first written above.
HOLDER: |
MAKER:
|
By:
/s/ Lori Livingston
Name:
Lori Livingston
|
AVALANCHE
INTERNATIONAL, CORP.
By: /s/ Philip E. Mansour
Name: Philip E. Mansour
Title: President and Chief Executive Officer |
Exhibit
A – Wire Instructions
Wire
Routing Transit Number: 121201694
SWIFT
Code: USBKUS44IMT
Bank
Name: US BANK
City,
State: Las Vegas, NV
Account
Number: 153 756 033 657
Title
of Account:
Avalanche
International, Corp.
5940
S. Rainbow Blvd.
Las
Vegas, NV 89118
Exhibit
B – Warrant
THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR REGISTERED
OR QUALIFIED UNDER ANY STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE SOLD, TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS SUCH
SALE, TRANSFER, PLEDGE OR HYPOTHECATION IS IN ACCORDANCE WITH SUCH ACT AND APPLICABLE STATE SECURITIES LAWS.
No.
of Shares of Common Stock: 100,000
WARRANT
to
Purchase Common Stock of
Avalanche
International Corp.
a
Nevada Corporation
This
Warrant certifies that Lori Livingston (“Purchaser”), is entitled to purchase from Avalanche International Corp.,
a Nevada corporation (the “Company”), one hundred thousand (100,000) shares of Common Stock (or any portion thereof)
at an exercise price of $0.01 per share of Common Stock, for a period of one (1) year from the date hereof, all on the terms and
conditions hereinafter provided.
Section
1. Certain Definitions. As used in this Warrant, unless the context otherwise requires: “Articles” shall
mean the Articles of Incorporation of the Company, as in effect from time to time. “Common Stock” shall mean
the Company’s authorized common stock, no par value per share.
“Exercise
Price” shall mean the exercise price per share of Common Stock set forth above, as adjusted from time to time pursuant
to Section 4 hereof.
“Securities
Act” shall mean the Securities Act of 1933, as amended.
“Warrant”
shall mean this Warrant and all additional or new warrants issued upon division or combination of, or in substitution for, this
Warrant. All such additional or new warrants shall at all times be identical as to terms and conditions and date, except as to
the number of shares of Common Stock for which they may be exercised.
“Warrant
Stock” shall mean the shares of Common Stock purchasable by the holder of this Warrant upon the exercise of such Warrant.
“Warrantholder”
shall mean the Purchaser, as the initial holder of this Warrant, and its nominees, successors or assigns, including any subsequent
holder of this Warrant to whom it has been legally transferred.
Section
2. Exercise of Warrant.
(a)
At any time during the one (1) year following the date hereof, the Purchaser may at any time and from time to time exercise this
Warrant, in whole or in part.
(b)
(i) The Warrantholder shall exercise this Warrant by means of delivering to the Company at its office identified in Section 14
hereof (i) a written notice of exercise, including the number of shares of Warrant Stock to be delivered pursuant to such exercise,
(ii) this Warrant and (iii) payment equal to the Exercise Price in accordance with Section 2(b)(ii). In the event that any exercise
shall not be for all shares of Warrant Stock purchasable hereunder, the Company shall deliver to the Warrantholder a new Warrant
registered in the name of the Warrantholder, of like tenor to this Warrant and for the remaining shares of Warrant Stock purchasable
hereunder, within ten (10) days of any such exercise. Such notice of exercise shall be in the Subscription Form set out at the
end of this Warrant.
(ii)
The Warrantholder may elect to pay the Exercise Price to the Company either by cash, certified check or wire transfer.
(c)
Upon exercise of this Warrant and delivery of the Subscription Form with proper payment relating thereto, the Company shall cause
to be executed and delivered to the Warrantholder a certificate or certificates representing the aggregate number of fully-paid
and nonassessable shares of Common Stock issuable upon such exercise.
(d)
The stock certificate or certificates for Warrant Stock to be delivered in accordance with this Section 2 shall be in such denominations
as may be specified in said notice of exercise and shall be registered in the name of the Warrantholder or such other name or
names as shall be designated in said notice. Such certificate or certificates shall be deemed to have been issued and the Warrantholder
or any other person so designated to be named therein shall be deemed to have become the holder of record of such shares, including
to the extent permitted by law the right to vote such shares or to consent or to receive notice as stockholders, as of the time
said notice is delivered to the Company as aforesaid.
(e)
The Company shall pay all expenses payable in connection with the preparation, issue and delivery of stock certificates under
this Section 2, including any transfer taxes resulting from the exercise of the Warrant and the issuance of Warrant Stock hereunder.
(f)
All shares of Warrant Stock issuable upon the exercise of this Warrant in accordance with the terms hereof shall be validly issued,
fully paid and nonassessable, and free from all liens and other encumbrances thereon, other than liens or other encumbrances created
by the Warrantholder.
(g)
In no event shall any fractional share of Common Stock of the Company be issued upon any exercise of this Warrant. If, upon any
exercise of this Warrant, the Warrantholder would, except as provided in this paragraph, be entitled to receive a fractional share
of Common Stock, then the Company shall deliver in cash to such holder an amount equal to such fractional interest.
Section
3. Piggyback Registration Rights. The Company agrees that if, at any time prior to the expiration date of this Warrant,
the Company shall authorize the filing of a registration statement under the Securities Act (other than a registration statement
on Form S-8, Form S-4 or any other form that does not include substantially the same information as would be required in a form
for the general registration of securities) in connection with the proposed offer of any of its securities by it or any of its
stockholders, the Company shall cause such registration statement to cover the shares of Common Stock of the Company issuable
to the Warrantholder upon exercise of this Warrant. The registration rights granted under this provision shall be subject to the
right of the Company, or its underwriters, to reduce the inclusion of such shares in light of market conditions or comment from
the Securities and Exchange Commission.
Section
4. Adjustment of Exercise Price and Warrant Stock.
(a)
If, at any time prior to the Expiration Date, the number of outstanding shares of Common Stock is (i) increased by a stock dividend
payable in shares of Common Stock or by a subdivision or split- up of shares of Common Stock, or (ii) decreased by a combination
of shares of Common Stock, then, following the record date fixed for the determination of holders of Common Stock entitled to
receive the benefits of such stock dividend, subdivision, split-up, or combination, the Exercise Price shall be adjusted to a
new amount equal to the product of (I) the Exercise Price in effect on such record date and (II) the quotient obtained by dividing
(x) the number of shares of Common Stock outstanding on such record date (without giving effect to the event referred to in the
foregoing clause (i) or (ii)), by (y) the number of shares of Common Stock which would be outstanding immediately after the event
referred to in the foregoing clause (i) or (ii), if such event had occurred immediately following such record date.
(b)
Upon each adjustment of the Exercise Price as provided in Section 4 (a), the Warrantholder shall thereafter be entitled to subscribe
for and purchase, at the Exercise Price resulting from such adjustment, the number of shares of Warrant Stock equal to the product
of (i) the number of shares of Warrant Stock existing prior to such adjustment and (ii) the quotient obtained by dividing (I)
the Exercise Price existing prior to such adjustment by (II) the new Exercise Price resulting from such adjustment.
(c)
If, at any time prior to the Expiration Date, there occurs an event which would cause the automatic conversion (“Automatic
Conversion”) of the Warrant Stock into shares of the Company’s common stock (“Common Stock”) in accordance
with the Articles, then any Warrant shall thereafter be exercisable, prior to the Expiration Date, into the number of shares of
Common Stock into which the Warrant Stock would have been convertible pursuant to the Charter if the Automatic Conversion had
not taken place.
(d)
Adjustment of Exercise Price for Certain Dilutive Issuances. If, at any time prior to the expiration date of this Warrant,
the Company issues or sells any Warrant to purchase Common Stock of the Company at an exercise price per share less than the Exercise
Price in effect on the date of such issuance or sale (a “Dilutive Issuance”), then immediately upon the Dilutive Issuance,
the Exercise Price hereunder will be reduced to equal the exercise price specified in the Warrant issued by the Company in such
Dilutive Issuance.
Section
5. Division and Combination. This Warrant may be divided or combined with other Warrants upon presentation at the aforesaid
office of the Company, together with a written notice specifying the names and denominations in which new Warrants are to be issued,
signed by the Warrantholder or its agent or attorney. The Company shall pay all expenses in connection with the preparation, issue
and delivery of Warrants under this Section 5, including any transfer taxes resulting from the division or combination hereunder.
The Company agrees to maintain at its aforesaid office books for the registration of the Warrants.
Section
6. Reclassification, Etc. In case of any reclassification or change of the outstanding Common of the Company (other than
as a result of a subdivision, combination or stock dividend), or in case of any consolidation of the Company with, or merger of
the Company into, another corporation or other business organization (other than a consolidation or merger in which the Company
is the continuing corporation and which does not result in any reclassification or change of the outstanding Common Stock of the
Company) at any time prior to the Expiration Date, then, as a condition of such reclassification, reorganization, change, consolidation
or merger, lawful provision shall be made, and duly executed documents evidencing the same from the Company or its successor shall
be delivered to the Warrantholder, so that the Warrantholder shall have the right prior to the Expiration Date to purchase, at
a total price not to exceed that payable upon the exercise of this Warrant, the kind and amount of shares of stock and other securities
and property receivable upon such reclassification, reorganization, change, consolidation or merger by a holder of the number
of shares of Common Stock of the Company which might have been purchased by the Warrantholder immediately prior to such reclassification,
reorganization, change, consolidation or merger, in any such case appropriate provisions shall be made with respect to the rights
and interest of the Warrantholder to the end that the provisions hereof (including provisions for the adjustment of the Exercise
Price and of the number of shares purchasable upon exercise of this Warrant) shall thereafter be applicable in relation to any
shares of stock and other securities and property thereafter deliverable upon exercise hereof.
Section
7. Reservation and Authorization of Capital Stock. The Company shall at all times reserve and keep available for issuance
such number of its authorized but unissued shares of Common Stock as will be sufficient to permit the exercise in full of all
outstanding Warrants.
Section
8. Stock and Warrant Books. The Company will not at any time, except upon dissolution, liquidation or winding up, close
its stock books or Warrant books so as to result in preventing or delaying the exercise of any Warrant.
Section
9. Limitation of Liability. No provisions hereof, in the absence of affirmative action by the Warrantholder to purchase
Warrant Stock hereunder, shall give rise to any liability of the Warrantholder to pay the Exercise Price or as a stockholder of
the Company (whether such liability is asserted by the Company or creditors of the Company).
Section
10. Transfer. Subject to compliance with the Securities Act and the applicable rules and regulations promulgated thereunder,
this Warrant and all rights hereunder shall be transferable in whole or in part. Any such transfer shall be made at the office
or agency of the Company at which this Warrant is exercisable, by the registered holder hereof in person or by its duly authorized
attorney, upon surrender of this Warrant together with the assignment hereof properly endorsed, and promptly thereafter a new
warrant shall be issued and delivered by the Company, registered in the name of the assignee. Until registration of transfer hereof
on the books of the Company, the Company may treat the Purchaser as the owner hereof for all purposes.
Section
11. Investment Representations; Restrictions on Transfer of Warrant Stock. Unless a current registration statement under
the Securities Act shall be in effect with respect to the Warrant Stock to be issued upon exercise of this Warrant, the Warrantholder,
by accepting this Warrant, covenants and agrees that, at the time of exercise hereof, and at the time of any proposed transfer
of Warrant Stock acquired upon exercise hereof, such Warrantholder will deliver to the Company a written statement that the securities
acquired by the Warrantholder upon exercise hereof are for the account of the Warrantholder or are being held by the Warrantholder
as trustee, investment manager, investment advisor or as any other fiduciary for the account of the beneficial owner or owners
for investment and are not acquired with a view to, or for sale in connection with, any distribution thereof (or any portion thereof)
and with no present intention (at any such time) of offering and distributing such securities (or any portion thereof).
Section
12. Loss, Destruction of Warrant Certificates. Upon receipt of evidence satisfactory to the Company of the loss, theft,
destruction or mutilation of any Warrant and, in the case of any such loss, theft or destruction, upon receipt of indemnity and/or
security satisfactory to the Company or, in the case of any such mutilation, upon surrender and cancellation of such Warrant,
the Company will make and deliver, in lieu of such lost, stolen, destroyed or mutilated Warrant, a new Warrant of like tenor and
representing the right to purchase the same aggregate number of shares of Common Stock.
Section
13. Amendments. The terms of this Warrant may be amended, and the observance of any term herein may be waived, but only
with the written consent of the Company and the Warrantholder.
Section
14. Notices Generally. Any notice, request, consent, other communication or delivery pursuant to the provisions hereof
shall be in writing and shall be sent by one of the following means: (i) by registered or certified first class mail, postage
prepaid, return receipt requested; (ii) by facsimile transmission with confirmation of receipt; (iii) by nationally recognized
courier service guaranteeing overnight delivery; or (iv) by personal delivery, and shall be properly addressed to the Warrantholder
at the last known address or facsimile number appearing on the books of the Company, or, except as herein otherwise expressly
provided, to the Company at its principal executive office, or such other address or facsimile number as shall have been furnished
to the party giving or making such notice, demand or delivery.
Section
15. Successors and Assigns. This Warrant shall bind and inure to the benefit of and be enforceable by the parties hereto
and their respective permitted successors and assigns.
Section
16. Governing Law. In all respects, including all matters of construction, validity and performance, this Warrant and the
obligations arising hereunder shall be governed by, and construed and enforced in accordance with the laws of the State of Nevada.
IN
WITNESS WHEREOF, the Company has caused this Warrant to be signed in its name by its President.
Dated:
December 2, 2015
Avalanche
International Corp.
a
Nevada Corporation
By:/s/
Phil Mansour
Phil
Mansour, President
SUBSCRIPTION
FORM
(to
be executed only upon exercise of Warrant)
To:
Avalanche International Corp.
5940
S. Rainbow Avenue
Las
Vegas, NV 89118
The
undersigned, pursuant to the provisions set forth in the attached Warrant (No. 1 ), hereby irrevocably elects to purchase shares
of the Common Stock covered by such Warrant and herewith makes payment of $ , representing the full purchase price for
such shares at the price per share provided for in such Warrant.
Dated:
Name:
Signature:
Address:
Exhibit
C – JS Note
SECURED
PROMISSORY NOT
US
$400,000 |
Las
Vegas, Nevada
July
28, 2015 |
This
Promissory Note (the "Note"),
dated as of July 28, 20 l S is
made by JS Technologies, Inc., a California corporation, ("Maker"),
in favor of Avalanche International, Corp., a Nevada corporation ("Holder").
For
good and valuable consideration, the Maker hereby makes and delivers this Note in favor of Holder, and hereby agrees as follows:
1.
Principal Obligation and Interest.
For value received, Maker promises to pay to Holder at such
place as Holder may designate in writing, in currently available funds of the United States, all sums advanced by Holder to Maker
under this Note up to a maximum principal sum of Four Hundred Thousand Dollars ($400,000). Maker's
obligation under this Note shall accrue interest at the rate of ten percent (l 0%) per annum from the date hereof until paid in
full. Interest shall be computed on the basis of a 365-day year or 366-day year, as applicable and actual days lapsed.
2.
Initial and Subsequent Advances. An initial advance from Holder to Maker in the amount of $200,000 shall be made as
soon as practicable following the execution of this Note. The initial advance shall include an origination fee of $20,000, which
shall become a part of the principal balance of this Note, together with $180,000 to be advanced to the Maker. In the sole discretion
of the Maker, up to two (2) additional advances of up to $100,000 each may be made to the Maker by the Holder. The first such
additional advance may be made thirty (30) days after the parties' execution of this Note. The second such additional advance
may be made sixty (60) days after the parties' execution of this Note.
3.
Payment Terms.
Beginning
on September 1, 2015, Maker shall remit to Holder monthly payments of interest only on the principal balance then due and outstanding.
All unpaid principal, together with any then unpaid and accrued interest and other amounts payable hereunder, shall be due and
payable in full on or before the date which is one year from the date hereof.
All
payments shall be applied first to interest, then to principal and shall be credited to the Maker's account on the date that such
payment is physically received by the Holder.
Maker
shall have the right to prepay all or any part of the principal under this Note without penalty.
4.
Grant of Security Interest.
As collateral security for the prompt, complete,
and timely satisfaction of all present and future indebtedness, liabilities, duties, and obligations of Maker to Holder evidenced
by or arising under this Note, and including, without limitation, all principal and interest payable under this Note, any future
advances added to the principal amount due hereunder, and all attorneys' fees, costs and expenses incurred by Holder in the collection
or enforcement of the same (collectively, the "Obligations"), Maker hereby pledges, assigns and grants to Holder a continuing
security interest and lien in all of Maker's right, title and interest in and to the property, whether now owned or hereafter
acquired by Maker and whether now existing or hereafter coming into
existence or acquired, including
the proceeds of any disposition
thereof, described
on Exhibit
"A"
attached hereto and incorporated
herein by this reference (collectively ,
the "Collateral
").
As applicable, the
terms of this Note with respect to Maker's
granting of a security interest
in the Collateral to Holder shall be deemed to be a security agreement under applicable provisions of the Uniform Commercial Code
("UCC"),
with Maker as the debtor and
Holder as the secured party.
5.
Perfection. Upon the execution
and delivery of this Note, Maker
authorizes Holder to file such financing statements and other documents in such offices as shall be necessary
or as Holder may reasonably deem necessary to perfect and establish the priority of the liens granted by this Note, including
any amendments, modifications,
extensions or renewals thereof.
Maker agrees, upon Holder's request, to take all such actions as shall be necessary or as Holder may reasonably request to perfect
and establish the priority of the liens granted by this Note,
including any amendments,
modifications,
extensions or renewals thereof.
6.
Representations and Warranties of Maker. Maker hereby represents and warrants the following to Holder:
a.
Maker and those executing this Note on its behalf have the full right, power,
and authority to execute,
deliver and perform the Obligations
under this Note, which
are not prohibited or restricted under the articles of incorporation or bylaws of Maker. This Note has been duly executed and
delivered
by an authorized officer of Maker and constitutes a valid and legally binding obligation of Maker enforceable in accordance with
its terms.
b.
The execution of this Note and Maker's
compliance with the terms, conditions
and provisions hereof does not conflict with or violate
any provision of any agreement, contract,
lease,
deed of trust, indenture,
or instrument to which Maker
is a party or by which Maker is bound,
or constitute a default thereunder
or result in
the imposition of any lien, charge,
encumbrance, claim or security
interest of any nature whatsoever upon any of the Collateral.
c.
The security interest granted hereby in and to the Collateral constitutes a present,
valid,
binding and enforceable security
interest as collateral security for the Obligations, and, except as to leased equipment or purchase-money
encumbrances existing
as of the date of this Note as expressly disclosed to Holder in writing, such interests,
upon perfection ,
will be senior and prior to any
liens, encumbrances,
charges,
title defects, interests and
rights of any others with respect to such Collateral.
7.
Covenants of Maker. For so Jong as any Obligations remain outstanding:
a.
Maker shall not sell, assign
or transfer any of the Collateral, or any part thereof or interest therein;
b.
Maker shall pay or cause to be paid promptly when due all taxes and assessments on the Collateral; and
c.
Maker shall keep Holder apprised, in writing, as to the current location of all of the Collateral, providing Holder with current
information including any identifying serial numbers with respect to the Collateral so the Holder may perfect and maintain the
priority of its security interest therein.
8.
Use of Collateral. For so long as no event of default shall have occurred and be continuing under this Note, Maker
shall be entitled to use and possess the Collateral and to exercise its rights, title and interest m all contracts, agreements,
and licenses subject to the rights,
remedies,
powers and privileges of Holder
under this Note and to such use, possession or exercise not otherwise constituting an event of default. Notwithstanding anything
herein to the contrary, Maker shall remain liable to perform its duties and obligations under the contracts and agreements included
in the Collateral in accordance with their respective terms to the same extent as if this Note had not been executed and delivered;
the exercise by Holder of any right,
remedy,
power or privilege in respect
of this Note shall not release the Maker from any of its duties and obligations under such contracts and agreements; and Holder
shall have no duty, obligation or liability under such contracts and agreements included in the Collateral by reason of this Note,
nor shall Holder be obligated to perform any of the duties or obligations of Maker under any such contract or agreement or to
take any action to collect or enforce any claim (for payment) under any such contract or agreement.
9.
Defaults. The following shall be events of default under this Note:
a.
Maker's failure to remit any payment under this Note on before the date due, if such failure is not cured in full within five
(5) days of written notice of default;
b.
Maker's failure to perform or breach of any non-monetary obligation or covenant set forth in this Note or in any other written
agreement between Maker and Holder if such failure is not cured in full within ten (l 0) days following delivery of written notice
thereof from Holder to Maker;
c.
If Maker is dissolved, whether pursuant to any applicable articles of incorporation or bylaws, and/or any applicable laws, or
otherwise;
d.
The commencement by Maker of any action or proceeding which affects the Collateral or title thereto or the interest of Holder
therein, including, but not limited to eminent domain, insolvency, code enforcement or arrangements or proceedings involving a
bankrupt or decedent;
e.
The entry of a decree or order by a court having jurisdiction in the premises adjudging the Maker bankrupt or insolvent, or approving
as properly filed a petition seeking reorganization, arrangement, adjustment or composition of or in respect of the Maker under
the federal Bankruptcy Code or any other applicable federal or state law, or appointing a receiver, liquidator, assignee or trustee
of the Maker, or any substantial part if its property, or ordering the winding up or liquidation of its affairs, and the continuance
of any such decree or order unstayed and in effect for a period of twenty (20) days;
f.
Maker's institution of proceedings to be adjudicated a bankrupt or insolvent, or the consent by it to the institution of bankruptcy
or insolvency proceedings against it, or its filing of a petition or answer or consent seeking reorganization or relief under
the federal Bankruptcy Code or any other applicable federal or state law, or its consent to the filing of any such petition or
to the appointment of a receiver, liquidator, assignee or trustee of the company, or of any substantial part of its property,
or its making of an assignment for the benefit of creditors or the admission by it in writing of its inability to pay its debts
generally as they become due, or the taking of corporate action by the Maker in furtherance of any such action; or
10.
Rights and Remedies of Holder. Upon the occurrence of an event of default by Maker under this Note or at any time before
default when the Holder reasonably feels insecure, then, in addition to all other rights and remedies at law or in equity, Holder
may exercise any one or more of the following rights and remedies:
a.
Accelerate the time for payment
of all amounts payable under this Note by written notice thereof to Maker,
whereupon all such amounts shall
be immediately due and payable.
b.
Pursue and enforce all of the
rights and remedies provided to a secured party with respect to the Collateral under the Uniform Commercial Code.
c.
Make such appearance, disburse
such sums, and take such action as Holder deems necessary, in its sole discretion, to protect Holder's
interest, including but not limited to (i) disbursement of attorneys' fees, (ii) entry upon the Maker's property to make repairs
to the Collateral, and (iii) procurement of satisfactory insurance. Any amounts disbursed by Holder pursuant to this Section,
with interest thereon, shall become additional indebtedness of the Maker secured by the Collateral and shall be immediately due
and payable and shall bear interest from the date of disbursement at the default rate stated in this Note. Nothing contained in
this Section shall require Holder to incur any expense or take any action.
d.
Require Maker to assemble the
Collateral and make it available to the Maker at the place to be designated by the Holder which is reasonably convenient to both
parties. The Holder may sell all or any part of the Collateral as a whole or in part either by public auction, private sale, or
other method of disposition. The Holder may bid at any public sale on all or any portion of the Collateral. Unless the Collateral
threatens to decline speedily in value, Holder shall give Maker reasonable notice of the time and place of any public sale or
of the time after which any private sale or other disposition of the Collateral is to be made, and notice given at least 10 days
before the time of the sale or other disposition shall be conclusively presumed to be reasonable.
e.
Pursue any other rights or remedies
available to Holder at law or in equity.
11.
Full Recourse.
The liability of Maker for the Obligations shall
not be limited to the Collateral, and Maker shall have full liability therefor beyond the Collateral.
12.
Waiver of Certain Defenses.
Maker acknowledges that its obligations under this Note are separate and independent from the rights and obligations of the parties
to that certain Letter of Intent dated June 12, 2015 by and amongst the Maker, the Holder, and certain other parties (the "LOI").
With regard to any legal action
or other proceeding for the collection of amounts due under this Note, Maker hereby waives any defense to such action or proceeding
based on set-off, recoupment, or any other theory arising under or related to an alleged breach of the LOI by the Holder or others.
13.
Representation of Counsel.
Maker acknowledges that it has consulted with
or have had the opportunity to consult with Maker's legal counsel prior to executing this Note. This Note has been freely negotiated
by Maker and Holder and any rule of construction to the effect that any ambiguities are to be resolved against the drafting party
shall not be employed in the interpretation of this Note.
14.
Choice of Laws; Actions.
This Note shall be constructed and construed
in accordance with the internal substantive laws of the State of Nevada, without regard to the choice of law principles of said
State. Maker acknowledges that this Note has been negotiated in Clark County, Nevada. Accordingly, the exclusive venue of any
action, suit, counterclaim or cross claim arising under, out of, or in connection with this
Note shall be the state or federal courts in Clark County,
Nevada. Maker hereby consents
to the personal jurisdiction of any court of competent subject matter jurisdiction sitting in Clark County, Nevada.
15.
Usury Savings Clause.
Maker expressly agrees and acknowledges
that Maker and Holder intend and agree that this Note shall not be subject to the usury laws of any state other than the State
of Nevada. Notwithstanding
anything contained in this
Note to the contrary, if collection from Maker
of interest at the rate set forth
herein would be contrary to applicable laws
of such State, then the applicable
interest rate upon default shall be the highest interest rate that may be collected from Maker under applicable laws at such time.
16.
Costs of Collection.
Should the indebtedness represented by this
Note, or any part hereof be
collected at law, in equity, or in any bankruptcy, receivership or other court proceeding, or this Note be placed in the hands
of any attorney for collection after default, Maker agrees to pay, in addition to the
principal and interest due hereon,
all reasonable attorneys' fees,
plus all other costs and expenses
of collection and enforcement, including any fees incurred in connection with such proceedings or collection of the Note
and/or enforcement of Holder's
rights.
17.
Miscellaneous.
a.
This Note shall be binding upon Maker and shall inure to the benefit of Holder and its successors, assigns, heirs, and legal representatives.
b.
Any failure or delay by Holder to insist upon the strict performance of any term, condition, covenant or agreement of this Note,
or to exercise any right, power or remedy hereunder shall not constitute a waiver of any such term, condition, covenant, agreement,
right, power or remedy.
c.
Any provision of this Note that is unenforceable shall be severed from this Note to
the extent reasonably possible
without invalidating or affecting the intent, validity or enforceability of any other provision of this Note.
d.
This Note may not be modified or amended in any respect except in a writing executed by the party to be charged.
e.
Neither party may assign this Note without the express written consent of the other party.
f.
Time is of the essence.
18.
Notices. All
notices required to be given under this Note shall be given at the
following address, which may
be changed by the applicable party on five (5) business days advance written notice:
To
Maker: |
JS
Technologies, Inc.
601
A Crane Street
Lake
Elsinore, CA 92530
Attn:
President and Chief Financial Officer |
To
Holder: |
Avalanche
International Co.
5940
S. Rainbow Blvd
Las
Vegas, NY 891 18
Attn:
President |
Notices
may be transmitted by personal delivery or by a recognized overnight courier with confirmation of delivery, and shall be deemed
given upon receipt by the Party to whom they are addressed.
19.
Waiver of Certain Formalities. All parties to this Note hereby waive presentment, dishonor, notice of dishonor and
protest. All parties hereto consent to, and Holder is hereby expressly authorized to make,
without notice,
any and all renewals,
extensions,
modifications or waivers of the
time for or the terms of payment of any sum or sums due hereunder,
or under any documents or instruments
relating to or securing this Note, or of the performance of any covenants, conditions or agreements hereof or thereof or the taking.
Any such action taken by Holder
shall not discharge the liability of any party to this Note.
IN
WITNESS WHEREOF, this Note has been executed effective the date and place first written above.
“Maker”:
J.S. Technologies, Inc.
By:
/s/ John Suhr
Its:
President
Print
Name: John Suhr
Date:
8/4/15
Exhibit
"A"
Collateral
Each
and all of the following in which J.S.
Technologies, Inc.,
a California corporation,
has any
right,
title,
or interest,
regardless of the manner in which
such items are formally held or titled;
all as defined in the Nevada
Uniform Commercial Code - Secured Transactions (Nevada Revised Statutes ("NRS")
§ § 104.9101 et. seq.) as of the date of the Note,
and as the same may be amended
hereafter:
(1)
Accounts, as
defined in NRS 104.9102(l)(a)
(2)
Cash proceeds, as
defined in NRS 104.9102(1)(1)
(3)
Chattel paper, as defined in NRS 104.9102(
1)(k)
(4)
Commercial tort claims, as
defined in NRS 104.9102(l)(m)
(5)
Commodity accounts and commodity contracts,
as defined in NRS 104.9102(1)(n)
and NRS 104.9102(1)(0),
respectively ,
(6)
Deposit accounts, as
defined in NRS 104.9102(1)(cc)
(7)
Documents, as
defined in NRS 104.9102(1)(dd)
(8)
Electronic chattel paper, as defined in NRS 1049102(1)(ee)
(9)
Equipment, as
defined in NRS 104.9102(l)(gg)
(10)
General intangibles, as defined in NRS 104.9102(1)(pp) (except all Suhr and Suhr-related marks,
which are specifically excluded
herefrom)
(11)
Goods, as defined in NRS 104.9102(1)(rr)
(12)
Instruments, as defined in NRS 104.9102(1)(uu)
(13)
Inventory, as defined in NRS 104.9102(l)(vv)
(14)
Investment property, as defined in NRS 104.9102(l)(ww)
(15)
Letter-of-credit right, as
defined in NRS 104.9102( 1)(yy)
(16)
Noncash proceeds,
as defined in NRS 104.9102(1)(fff)
(17)
Payment intangible, as defined
in NRS 104.9102(1)(iii)
(18)
Proceeds,
as defined in NRS 104.9102(1)(lll)
(19)
Promissory notes, as defined
in NRS 104.9102(1)(mmm)
(20)
Record, as defined in NRS 104.9102(1)(qqq)
(21)
Software, as defined in NRS 104.9102(l)(www)
(22)
Supporting obligations, as defined
in NRS 104.9102(1)(yyy)
(23)
Tangible chattel paper, as defined
in NRS 104.9102(l )(zzz)
(24)
The following, as defined in
NRS 104.9102(2):
certificated securities, contracts
for sale, leases, lease agreements, lease contracts, leasehold interests,
letters of credit, negotiable
instruments, notes, proceeds of letters of credit, securities, security certificates, security entitlements, and uncertificated
securities.
In
addition, the Collateral shall include all copyrights, all patents and patent applications (including the inventions and improvements
described and claimed therein together with the reissues, divisions, continuations, renewals, extensions and continuations in-part
thereof), all
trade names, trademarks (except all Suhr and Suhr-related marks, which are specifically excluded herefrom) and service marks,
logos, trademark and service mark registrations (including all renewals of trademark and service mark registrations, and all rights
corresponding thereto throughout the world together, in each case, with the goodwill of the business connected with the use of,
and symbolized by, each such trade name, trademark and service mark, but excluding any such registration that would be rendered
invalid, abandoned, void or
unenforceable by reason of its being included as part of the Collateral), all inventions, processes, production methods, proprietary
information, know-how and trade secrets, all licenses or user or other agreements granted to the Maker with respect to any of
the foregoing, in each case whether now or hereafter owned or used (including the licenses or other agreements with respect to
any of the foregoing).
AMENDMENT
TO SECURED CONVERTIBLE
PROMISSORY NOTE
This
Amendment to Secured
Convertible Promissory Note
(this "Amendment
") is entered into
as of January
22, 2016 (the "Effective Date"),
by and between TYPENEX Co INVESTMENT, LLC, a Utah limited liability company ("Lender"),
and AVALANCHE INTERNATIONAL, CORP., a Nevada
corporation ("Borrower"). Capitalized
terms used in this Amendment without definition shall have
the meanings given to them in the Note
(as defined below).
A.
Borrower previously
issued to Lender
a Secured Convertible
Promissory Note dated May
29, 2015 in
the original principal
amount of $252,500.00 (the "Note," and together with all other
documents entered into in
conjunction therewith, the "Transaction Documents").
| B. | Borrower
has requested
to amend
the Note
as set
forth herein. |
C.
Lender has agreed,
subject to the terms,
amendments, conditions and understandings
expressed in this
Amendment, to make
such amendments to the
Note.
NOW,
THEREFORE, for good
and valuable consideration,
the receipt and
sufficiency of which is hereby
acknowledged, the parties
agree as follows:
1.
Recitals. Each
of the parties
hereto acknowledges and
agrees that the
recitals set forth above
in this Amendment
are true and
accurate and are hereby incorporated
into and made a part of this Amendment.
2.
Limitations on
Conversions. From and
after the Effective
Date of this
Amendment, and for
a period of ninety (90) days
thereafter (the "Conversion
Limitation Period"), Lender agrees that the aggregate Conversion Amount of
all Lender Conversions made by Lender during (a) the first thirty (30)
days of the Conversion Limitation Period, (b) the second thirty
(30) days of the Conversion Limitation
Period, and (c) the third thirty (30) days of
the Conversion Limitation Period (each such thirty (30) day period, a "Conversion
Limitation Month") (and, for the avoidance of doubt, Lender may
submit any number of Lender Conversion
Notices during any Conversion
Limitation Month so long as the aggregate Conversion Amount in all such Lender Conversion
Notices submitted during such Conversion
Limitation Month does not
exceed the applicable Maximum Monthly Conversion Amount (as defined hereafter)),
determined based on the date(s)
any Lender Conversion Notices are delivered to Borrower, will
not exceed an amount equal to ten percent (10%) of the Conversion Eligible Outstanding Balance of
the Note as of the date of this Amendment (the "Maximum Monthly
Conversion Amount"); provided, however, that if the aggregate
Conversion Amount for all
Lender Conversion Notices submitted by Lender
in a Conversion Limitation Month is less
than the Maximum Monthly Conversion Amount for the
applicable Conversion Limitation Month, then in the following Conversion Limitation
Month or Conversion Limitation Months the Maximum Monthly Conversion Amount shall increase
by an amount
equal to the difference between
the Maximum Monthly Conversion Amount for the Conversion
Limitation Month in which Lender's aggregate Conversion Amounts were less than
the Maximum Monthly Conversion Amount
and the aggregate of Lender's Conversion
Amounts submitted for
Conversion
during such Conversion
Limitation Month. For
illustration purposes only,
if the Maximum Monthly
Conversion Amount were
$25,000.00 for a given Conversion Limitation
Month and the aggregate of all Conversion Amounts submitted by Lender during such
Conversion Limitation Month were $20,000.00, then the Maximum Monthly Conversion Amount
for the next Conversion Limitation Month would
increase to $30,000.00. Notwithstanding the foregoing, Lender's obligations set forth in this Section 2 shall immediately
and automatically terminate upon the earlier of (x) the conclusion of the Conversion Limitation Period,
(y) the occurrence of an Event of Default under the Note or Borrower's breach
of this Amendment or the Transaction Documents at any time after the Effective Date
of this Amendment, or (z) Borrower's failure to comply with its covenants set forth in Section 4 below.
3.
Prepayment. Notwithstanding anything
to the contrary in
the Note, Borrower
and Lender acknowledge and
agree that Borrower
may at any time
on or after the Effective
Date for so long as the Note remains
outstanding prepay the
Outstanding Balance of the Note in
accordance with the provisions set forth
in Section 1 of the Note.
4.
Filing Obligations. Borrower
covenants and agrees
that on or
before January 27, 2016,
it shall have
filed all reports
required to be filed with
the United States Securities and Exchange Commission pursuant to Sections 13
or 15(d) of the Securities Exchange Act of 1934,
as amended, and shall have ensured that
adequate current public information with respect to Borrower, as required
in accordance with Rule 144 of the Securities Act of 1933, as amended, is publicly
available.
5.
Affirmation of Conversion
Eligible Outstanding Balance.
The Conversion
Eligible Outstanding Balance
of the Note
as of the
Effective Date of this Amendment is hereby deemed and affirmed to be
equal to $125,000.00. For the avoidance of doubt, the foregoing Conversion Eligible
Outstanding Balance includes application of
the Default Effect with respect to two (2) Major Defaults. Accordingly, Borrower and
Lender further acknowledge and confirm
that Lender may still apply the Default Effect with respect
to one (1) Major Default and three (3) Minor Defaults following the Effective
Date.
6.
Conditionality of Amendment. Borrower
understands and
agrees that the
limitation on Lender
Conversions set forth
in Section 2 above and all other
amendments to the Note set forth in
this Amendment are conditioned on and subject to Borrower's compliance with its covenant
set forth in Section 4 above as well
as Borrower's continued compliance with the
terms of the Note and the other Transaction Documents. Borrower further understands
and agrees that such amendment shall immediately
and automatically terminate (and be deemed
to be void ab initio for all purposes) and all of the original terms of the Note
shall be immediately restored as if the Note was
never amended by this Amendment if Borrower fails to file all required reports
on or before January 27, 2016,
as set forth in more detail in Section
4 above, or upon the occurrence of any Event of Default under the Note
or any other Transaction Document after the date hereof.
Notwithstanding the foregoing, the affirmation of the Conversion Eligible
Outstanding Balance set forth in Section 5 above shall survive any termination of this
Amendment.
7.
Representations and
Warranties. In order
to induce Lender
to enter into
this Amendment, Borrower,
for itself, and
for its affiliates, successors
and assigns, hereby acknowledges, represents, warrants and
agrees as follows:
(a)
Borrower has full
power and authority
to enter into
this Amendment and to
incur and perform
all obligations and
covenants contained herein, all
of which have been duly authorized by all proper
and necessary action. No consent,
approval, filing or registration with or notice to any governmental
authority is required as a condition to the validity
of this Amendment or the performance of any of the obligations of Borrower
hereunder.
(b)
There is no
fact known to
Borrower or which
should be known
to Borrower which Borrower has not
disclosed to Lender on or
prior to the date of this
Amendment which would or could materially
and adversely affect the understanding of Lender
expressed in this Amendment or any representation, warranty, or recital contained
in this Amendment.
(c)
Except as expressly
set forth in
this Amendment, Borrower
acknowledges and agrees that neither
the execution and
delivery of this Amendment nor
any of the terms, provisions, covenants, or agreements contained in
this Amendment shall in any manner release, impair, lessen,
modify, waive, or otherwise affect the liability and obligations of Borrower
under the terms of the Transaction Documents.
(d)
Borrower has
no defenses, affirmative
or otherwise, rights
of setoff, rights
of recoupment, claims,
counterclaims, actions or
causes of action of any
kind or nature whatsoever against Lender, directly or
indirectly, arising out of, based upon, or in
any manner connected with, the transactions
contemplated hereby, whether known or unknown, which occurred,
existed, was taken, permitted,
or begun prior to the
execution of this
Amendment and occurred, existed, was taken, permitted or begun in accordance
with, pursuant to, or by
virtue of any of the terms or
conditions of the Transaction
Documents. To the extent any such
defenses, affirmative
or otherwise, rights of setoff,
rights of recoupment, claims, counterclaims,
actions or causes of action exist or
existed, such defenses, rights, claims, counterclaims, actions and causes of action
are hereby waived, discharged and released. Borrower hereby
acknowledges and agrees that the
execution of this Amendment
by Lender shall not constitute an acknowledgment of
or admission by Lender of the existence
of any claims or of liability for any matter or
precedent upon which any claim
or liability may be asserted.
(e)
Borrower represents
and warrants that
as of the
date hereof no
Events of Default or
other material breaches
exist under the Transaction Documents or have occurred prior to the date hereof.
8.
Certain Acknowledgments.
Each of the
parties acknowledges and
agrees that no property
or cash consideration
of any kind
whatsoever has been
or shall be given by Lender
to Borrower in connection with any amendment to the Note granted herein.
9.
Other Terms
Unchanged. The Note,
as amended by
this Amendment, remains
and continues in full
force and effect,
constitutes legal, valid, and
binding obligations of each of
the parties, and is in all respects
agreed to, ratified, and confirmed.
Any reference to the Note after the date of this Amendment is deemed to be a reference to the Note as amended by this Amendment.
If there is a conflict between the terms of this
Amendment and the Note, the terms of this
Amendment shall control. No forbearance
or waiver may be
implied by this Amendment. Except
as expressly set forth herein, the execution, delivery, and performance of this Amendment shall
not operate as a waiver of, or
as an amendment to, any right, power,
or remedy of Lender under
the Note, as
in effect prior to the date hereof.
10.
No Reliance. Borrower
acknowledges and agrees
that neither Lender
nor any of
its officers, directors,
members, managers, equity
holders, representatives or
agents has made any representations
or warranties to Borrower or any of its agents, representatives, officers, directors,
or employees except as expressly set
forth in this Amendment and
the Transaction Documents and, in making
its decision to enter into the transactions contemplated by
this Amendment, Borrower is not relying on any representation, warranty, covenant
or promise of Lender or its officers,
directors, members, managers, equity holders, agents
or representatives other than as set forth in this Amendment.
11.
Counterparts. This Amendment may
be executed in
any number of
counterparts, each of which
shall be deemed an
original, but all
of which together
shall constitute one instrument. The parties hereto confirm that any electronic
copy of another party's executed counterpart of this Amendment (or
such party's signature page thereof) will
be deemed to be an executed original
thereof.
12.
Further Assurances. Each
party shall do
and perform or
cause to be
done and performed, all
such further acts
and things, and shall execute
and deliver all such other agreements, certificates, instruments and documents,
as the other party may reasonably request in order to carry out the intent and accomplish the purposes of this Amendment and
the consummation of the transactions contemplated hereby.
[Remainder
of page intentionally left
blank]
IN
WITNESS WHEREOF, the
undersigned have executed
this Amendment as
of the date set
forth above.
|
BORROWER:
AVALANCHE
INTERNATIONAL, CORP.
By:
/s/ Phillip Mansour
Name:
Phillip Mansour
Title:
CEO |
|
LENDER:
TYPENEX
CO-INVESTMENT, LLC
By:
Red Cliffs Investments, Inc., its Manager
By:
/s/ John M. Fife
John
M. Fife, President |
[Signature
Page to Amendment
to Secured Convertible
Promissory Note]
FIRST
AMENDMENT TO 8%
CONVERTIBLE REDEEMABLE NOTE
For
good and valuable
consideration , AVALANCHE INTERNATIONAL,
CORP., a Nevada
corporation, (the "Company"),
and LG CAPITAL FUNDING, LLC (the "Holder") hereby agree that the 8%
Convertible Redeemable Note issued from the Company to
the Holder and dated November 3, 2014 (the "Note") shall be amended as follows:
1.
Beginning on the
date hereof and
for a period
of ninety (90)
days thereafter, Holder shall,
in any thirty (30)
day period, convert no more than
ten percent (10%) of the principal amount of
the Note due and owing on the date
hereof to common stock of the Company .
2.
At any time
after the expiration
of the ninety
(90) day period
described above, the Company
may repay the
Note in accordance with the terms,
requirements, and premiums for such
payment, as set forth
in Section 4(c) of the Note, which
are applicable to a repayment made between
91 to 180 days after issuance of the Note.
3.
In consideration for
the above, the
Company shall issue to the
Holder a 3 year warrant
to purchase 75,000
share of Common Stock at an exercise
price of $0.30 per share. The warrant shall
contain cashless exercise provisions and be subject to forward and reverse stock splits. Upon receipt of the warrant by the
Holder and s1gnature on this Agreement by the Holder. this Agreement this
Agreement shall take effect.
All
other terms of
the Note not
modified by the
terms of this
Amendment shall remain in full
force and effect.
IN
WITNESS WHEREOF, this
First Amendment to 8%
Convertible Redeemable Note has
been executed effective
January 20, 2016.
"Company":
AVALANCHE
INTERNATIONAL, CORP.
By:
/s/ Phillip Mansour
Its:
President
Print
Name: Phillip Mansour
“Holder”:
LG
CAPITAL FUNDING, LLC
By:
/s/ Joseph Lerman
Its:
Manager
Print
Name: Joseph Lerman
FIRST
AMENDMENT TO 8%
CONVERTIBLE REDEEMABLE NOTES
For
good and valuable
consideration, AVALANCHE INTERNATIONAL,
CORP., a Nevada corporation,
(the "Company"),
and UNION CAPITAL, LLC (the
"Holder") hereby agree that the 8% Convertible Redeemable Notes issued
from the Company to the Holder and dated May 11, 2015 (a front end note and
a back end note, which are collectively, be
referred to as the "Notes'') shall be amended as
follows:
1. Beginning
on the date
hereof and for
a period of ninety
(90) days thereafter,
Holder shall, in any
thirty (30) day period, convert no
more than ten percent (10%) of the
principal amount of the Note due
and owing on the date hereof to common stock
of the Company.
2. At
any time after
the expiration of
the ninety (90)
day period described
above, the Company may
prepay the Note
in accordance with
the terms, requirements, and premiums for such prepayment, as set
forth in Section 4(c) of the
Note, which are applicable to a prepayment made between 151 to 180 days after
issuance of the Note.
3. The
conversion discount set
forth in Section
4(a) of the
Notes shall be
increased by 5% from
60% to 55%
(resulting in an
effective conversion discount of
45% instead of 40%)
4. The
lookback period set
forth in Section
4(a) of the
Notes shall be
increased from twenty (20) days
to twenty five
(25) days.
5. The
prepay premium set
forth in Section
4(c) of the
front end (144)
note shall be increased
to 150% during the 90
day extension period. Once the back end
note has been cash funded, the prepay premium will also increase to 150% during
the 90 day extension period.
6. The
parties also agree
that the term
of collateralized note
issued by the
Holder to the Company
on May 11,
2015 shall be extended until May 11, 2016.
All
other terms of
the Note not
modified by the
terms of this
Amendment shall remain
in full force and
effect.
IN
WITNESS WHEREOF,
this First
Amendment to 8%Convertible
Redeemable Note has been
executed effective January
22, 2016.
"Company":
AVALANCHE
INTERNATIONAL, CORP.
By:
/s/ Phillip Mansour
Its:
President
Print
Name: Phillip Mansour
“Holder”:
UNION
CAPITAL, LLC
By:
/s/ Yakov D. Borenstein
Its:
Member
Print
Name: Yakov D. Borenstein
FIRST
AMENDMENT TO 8% CONVERTIBLE REDEEMABLE NOTES
For
good and valuable consideration, AVALANCHE INTERNATIONAL, CORP., a Nevada corporation, (the “Company”),
and ADAR BAYS, LLC (the “Holder”) hereby agree that the 8% Convertible Redeemable Notes issued from
the Company to the Holder and dated May 11, 2015 (a front end note and a back end note, which are collectively, be referred to
as the “Notes”) shall be amended as follows:
1.
Beginning on the date hereof and for a period of ninety (90) days thereafter, Holder shall, in any thirty (30) day period, convert
no more than ten percent (10%) of the principal amount of the Note due and owing on the date hereof to common stock of the Company.
2.
At any time after the expiration of the ninety (90) day period described above, the Company may prepay the Note in accordance
with the terms, requirements, and premiums for such prepayment, as set forth in Section 4(c) of the Note, which are applicable
to a prepayment made between 151 to 180 days after issuance of the Note.
3.
The conversion discount set forth in Section 4(a) of the Notes shall be increased by 5% from 60% to 55% (resulting in an effective
conversion discount of 45% instead of 40%)
4.
The lookback period set forth in Section 4(a) of the Notes shall be increased from twenty (20) days to twenty five (25) days.
5.
The prepay premium set forth in Section 4(c) of the front end (144) note shall be increased to 150% during the 90 day extension
period. Once the back end note has been cash funded, the prepay premium will also increase to 150% during the 90 day extension
period.
6.
The parties also agree that the term of collateralized note issued by the Holder to the Company on January 12, 2016 shall be extended
until May 12, 2016.
All
other terms of the Note not modified by the terms of this Amendment shall remain in full force and effect.
IN
WITNESS WHEREOF, this First Amendment to 8% Convertible Redeemable Note has been executed effective January 25,
2016.
“Company”:
AVALANCHE
INTERNATIONAL, CORP.
By:
/s/ Phillip Mansour
Its:
President
Print
Name: Phillip Mansour
“Holder”:
ADAR
BAYS, LLC
By:
/s/ Samuel Eisenberg
Its:
Member
Print
Name: Samuel Eisenberg
CERTIFICATION
I,
Philip Mansour, certify that;
1. |
|
I
have reviewed this quarterly report on Form 10-Q for the quarter ended August 31, 2015 of Avalanche International,
Corp.; |
2. |
|
Based on my knowledge,
this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period
covered by this report; |
3. |
|
Based on my knowledge,
the financial statements, and other financial information included in this report, fairly present in all material respects
the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this
report; |
4. |
|
The registrant’s
other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules
13a-15(f) and 15d-15(f)) for the registrant and have: |
a. |
|
Designed such disclosure
controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure
that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others
within those entities, particularly during the period in which this report is being prepared; |
b. |
|
Designed such internal
control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision,
to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements
for external purposes in accordance with generally accepted accounting principles; |
c. |
|
Evaluated the effectiveness
of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness
of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d. |
|
Disclosed in this report
any change in the registrant’s internal control over financial reporting that occurred during the registrant’s
most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected,
or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. |
|
The registrant’s
other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting,
to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing
the equivalent functions): |
a. |
|
All significant deficiencies
and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely
to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b. |
|
Any fraud, whether or not
material, that involves management or other employees who have a significant role in the registrant’s internal control
over financial reporting. |
Date:
January 25, 2016
/s/
Philip Mansour
By:
Philip Mansour
Title:
Chief Executive Officer
CERTIFICATION
I,
Rachel Boulds, certify that;
1. |
|
I
have reviewed this quarterly report on Form 10-Q for the quarter ended August 31, 2015 of Avalanche International,
Corp.; |
2. |
|
Based on my knowledge,
this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period
covered by this report; |
3. |
|
Based on my knowledge,
the financial statements, and other financial information included in this report, fairly present in all material respects
the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this
report; |
4. |
|
The registrant’s
other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules
13a-15(f) and 15d-15(f)) for the registrant and have: |
a. |
|
Designed such disclosure
controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure
that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others
within those entities, particularly during the period in which this report is being prepared; |
b. |
|
Designed such internal
control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision,
to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements
for external purposes in accordance with generally accepted accounting principles; |
c. |
|
Evaluated the effectiveness
of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness
of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d. |
|
Disclosed in this report
any change in the registrant’s internal control over financial reporting that occurred during the registrant’s
most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected,
or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. |
|
The registrant’s
other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting,
to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing
the equivalent functions): |
a. |
|
All significant deficiencies
and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely
to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b. |
|
Any fraud, whether or not
material, that involves management or other employees who have a significant role in the registrant’s internal control
over financial reporting. |
Date:
January 25, 2016
/s/ Rachel Boulds
By:
Rachel Boulds
Title:
Chief Financial Officer
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
In
connection with the quarterly Report of Avalanche International Corp (the “Company”) on Form 10-Q for the
quarter ended August 31, 2015 filed with the Securities and Exchange Commission (the “Report”), I, Phillip
Mansour, Chief Executive Officer of the Company, and I, Rachel Boulds, Chief Financial Officer of the Company, certify,
pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
| 1. | The
Report fully complies with the requirements of Section 13(a) of the Securities Exchange
Act of 1934; and |
| 2. | The
information contained in the Report fairly presents, in all material respects, the consolidated
financial condition of the Company as of the dates presented and the consolidated result
of operations of the Company for the periods presented. |
By: |
/s/ Philip Mansour |
Name: |
Philip Mansour |
Title: |
Principal Executive
Officer and Director |
Date: |
January 25, 2016 |
By: |
/s/
Rachel Boulds |
Name: |
Rachel Boulds |
Title: |
Principal Financial
Officer |
Date: |
January 25, 2016 |
This
certification has been furnished solely pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
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v3.3.1.900
Condensed Consolidated Balance Sheets - USD ($)
|
Aug. 31, 2015 |
Nov. 30, 2014 |
Current Assets: |
|
|
Cash |
$ 656
|
$ 2,247
|
Accounts receivable, related party |
17,190
|
|
Loan and interest receivable |
12,798
|
|
Loan and interest receivable, related party |
167,326
|
|
Inventory |
2,680
|
$ 25,900
|
Total current assets |
200,650
|
28,147
|
Other assets |
705
|
526
|
Total assets |
201,355
|
28,673
|
Current Liabilities: |
|
|
Accounts payable and accrued expenses |
$ 129,731
|
87,217
|
Accounts payable, related party |
|
88,572
|
Due to related parties |
$ 12,709
|
$ 6,927
|
Derivative liability |
717,796
|
|
Convertible notes payable, net of discount of $328,700 and $9,040, respectively |
239,085
|
$ 54,210
|
Loans payable |
33,934
|
18,300
|
Total current liabilities |
1,133,255
|
$ 255,226
|
Long Term Liabilities |
|
|
Convertible note payable, net of discount of $23,300 |
37,227
|
|
Total liabilities |
1,170,482
|
$ 255,226
|
Stockholders Equity (Deficit): |
|
|
Common stock, $0.001 par value; 75,000,000 shares authorized; 5,703,816 and 5,144,400 shares issued and outstanding, respectively |
$ 5,705
|
$ 5,144
|
Preferred stock, $0.001 par value; 10,000,000 shares authorized |
|
|
Class A Preferred stock, $0.001 par value; 50,000 shares designated, 29,380 and 14,000 shares issued and outstanding, respectively |
$ 29
|
$ 14
|
Additional paid-in capital |
966,775
|
203,445
|
Accumulated deficit |
(1,941,636)
|
(435,156)
|
Total stockholders equity (deficit) |
(969,127)
|
(226,553)
|
Total liabilities and stockholders equity |
$ 201,355
|
$ 28,673
|
X |
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v3.3.1.900
Condensed Consolidated Balance Sheets (parenthetical) - USD ($)
|
Aug. 31, 2015 |
Nov. 30, 2014 |
Balance Sheet Related Disclosures [Abstract] |
|
|
Common stock, par value |
$ 0.001
|
$ 0.001
|
Common stock, shares authorized |
75,000,000
|
75,000,000
|
Common stock, shares issued and outstanding |
5,703,816
|
5,144,400
|
Class A preferred stock, par value |
$ 0.001
|
$ 0.001
|
Class A preferred stock, shares authorized |
50,000
|
50,000
|
Class A preferred stock, shares issued and outstanding |
29,380
|
14,000
|
Preferred stock, par value |
$ 0.001
|
$ 0.001
|
Preferred stock, share authorized |
10,000,000
|
10,000,000
|
Preferred stock, shares issued and outstanding |
|
|
Convertible notes payable, discount |
$ 328,700
|
$ 9,040
|
Convertible notes payable, long-term, discount |
$ 23,300
|
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v3.3.1.900
Condensed Consolidated Statements of Operations - USD ($)
|
3 Months Ended |
9 Months Ended |
Aug. 31, 2015 |
Aug. 31, 2014 |
Aug. 31, 2015 |
Aug. 31, 2014 |
Income Statement [Abstract] |
|
|
|
|
Revenue |
$ 169
|
$ 6,431
|
$ 38,831
|
$ 10,172
|
Cost of revenue |
258
|
1,098
|
29,550
|
3,279
|
Gross margin |
$ (89)
|
5,333
|
9,281
|
6,893
|
Operating Expenses: |
|
|
|
|
Advertising and marketing |
|
61,193
|
6,364
|
61,193
|
General and administrative |
$ 488,466
|
84,406
|
1,050,951
|
123,538
|
Total operating expense |
488,466
|
145,599
|
1,057,315
|
184,731
|
Net loss from operations |
(488,555)
|
$ (140,266)
|
(1,048,034)
|
$ (177,838)
|
Other income (expense): |
|
|
|
|
Interest income |
6,074
|
|
6,074
|
|
Interest expense |
(28,208)
|
|
(39,063)
|
|
Interest expense debt discount |
(164,685)
|
|
(248,863)
|
|
Loss on issuance of convertible debt |
(55,093)
|
|
(356,402)
|
|
Change in fair value on derivative liability |
(2,968)
|
|
179,808
|
|
Total other expense |
(244,880)
|
|
(458,446)
|
|
Loss before income tax |
$ (733,435)
|
$ (140,266)
|
$ (1,506,480)
|
$ (177,838)
|
Provision for income taxes |
|
|
|
|
Net Loss |
$ (733,435)
|
$ (140,266)
|
$ (1,506,480)
|
$ (177,838)
|
Loss per common share Basic and diluted |
$ (0.13)
|
$ (0.03)
|
$ (0.28)
|
$ (0.04)
|
Weighted average common shares Basic and diluted |
5,651,549
|
5,075,478
|
5,442,147
|
5,071,839
|
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v3.3.1.900
Condensed Consolidated Statements of Cash Flows - USD ($)
|
9 Months Ended |
Aug. 31, 2015 |
Aug. 31, 2014 |
Cash flows from operating activities: |
|
|
Net loss for the period |
$ (1,506,480)
|
$ (177,838)
|
Adjustments to reconcile net loss to net cash used by operating activities: |
|
|
Share based compensation |
680,487
|
|
Debt discount amortization |
248,863
|
|
Loss on issuance of convertible debt |
356,402
|
|
Gain on derivative liability |
717,796
|
|
Changes in operating assets and liabilities: |
|
|
Accounts receivable |
(17,190)
|
$ (154)
|
Inventory |
23,220
|
$ (13,180)
|
Other assets |
8,860
|
|
Accounts payable and accrued expense |
37,696
|
$ 67,469
|
Accounts payable related party |
$ (88,572)
|
41,240
|
Other liabilities |
|
$ 4,771
|
Accrued interest |
$ 28,401
|
|
Accrued compensation |
(2,412)
|
$ 1,860
|
Net cash used in operating activities |
$ (410,533)
|
$ (75,832)
|
Cash flows from investing activities: |
|
|
Loan and interest receivable |
$ (12,798)
|
|
Loan and interest receivable, related party |
(160,197)
|
|
Net cash used by investing activities |
(172,995)
|
|
Cash flows from financing activities: |
|
|
Proceeds from convertible notes payable |
508,000
|
|
Proceeds from other loans |
21,305
|
|
Payments of note payable |
(32,050)
|
|
Advances from related parties |
58,366
|
|
Repayment of related party advances |
(52,584)
|
|
Proceeds from issuance of common stock |
2,000
|
$ 28,000
|
Proceeds from issuance of preferred stock |
76,900
|
60,000
|
Net cash provided by financing activities |
581,937
|
88,000
|
Increase (decrease) in cash |
(1,591)
|
$ 12,168
|
Cash, beginning of period |
2,247
|
|
Cash, end of period |
$ 656
|
$ 12,168
|
Supplemental Disclosures: |
|
|
Cash paid for interest |
|
|
Cash paid for income tax |
|
|
Non-Cash Investing and Financing Information: |
|
|
Common stock issued for conversion of debt |
$ 4,518
|
|
Derivative liability recorded in connection with convertible debt |
$ 717,796
|
|
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v3.3.1.900
ORGANIZATION AND DESCRIPTION OF BUSINESS
|
9 Months Ended |
Aug. 31, 2015 |
Accounting Policies [Abstract] |
|
ORGANIZATION AND DESCRIPTION OF BUSINESS |
Avalanche
International, Corp. (the Company) was incorporated under the laws of the State of Nevada on April 14, 2011. The
company had plans to distribute crystallized glass tile in the North American markets to wholesale customers. On May 14, 2014,
the Company entered into an Agreement of Conveyance, Transfer and Assignment of Assets and Assumption of Obligations (the Agreement)
with our sole officer and director, John Pulos. Pursuant to the Agreement, the Company transferred all assets to Mr. Pulos. In
exchange for this assignment of assets, Mr. Pulos agreed to assume and cancel all liabilities due to him. In conjunction with
the change in management, it was decided to abandon this line of business and become a holding company with operations at the
subsidiary levels only. The Company formed its first wholly owned subsidiary, Smith and Ramsay Brands, LLC (SRB),
on May 19, 2014. The Company acquired certain perpetual license, know how, product, name license and other capabilities from Smith
and Ramsay, LLC, a Nevada company. Smith and Ramsay Brands, LLC is a manufacturer and distributor of flavored liquids for electronic
vaporizers and eCigarettes and distributor of vape accessories. SRB manufactures its premium signature brand of eLiquid, Smith
and Ramsay, a line that features all natural flavors produced in the United States. SRB rolled out its flagship product to
targeted areas in the fall of 2014, following its pre-launch phase. The Smith and Ramsay line was manufactured, packaged and strategically
distributed on a limited basis to generate revenue in test markets. The Companys goal is to maintain a high standard of
quality and to insure the production and warehouse environments, processes and procedures continue to meet or exceed guidelines
of the FDA, and are in line with International Organization for Standardization (ISO) and Current Good Manufacturing
Practices (cGMP).
Basis
of Unaudited Interim Financial Information
The
accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles
generally accepted in the United States of America (GAAP) and the rules of the Securities and Exchange Commission
("SEC") for interim financial information and the SEC instructions to Form 10-Q, accordingly, they do not include all of the information
and footnotes required by U.S. GAAP for completed financial statements. In the opinion of management, all adjustments necessary
in order for the financial statements to not be misleading have been reflected herein. Operating results for the interim period
ended August 31, 2015 are not necessarily indicative of the results that can be expected for the full year. These unaudited interim
condensed consolidated financial statements should be read in conjunction with the consolidated financial statements of the Company
for the year ended November 30, 2014.
Use
of Estimates
In
preparing financial statements in conformity with U.S. GAAP, management is required to make estimates and assumptions that affect
the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial
statements, as well as the reported amounts of expenses during the reporting period. Due to inherent uncertainty involved in making
estimates, actual results reported in future periods may be affected by changes in these estimates. On an ongoing basis, the Company
evaluates its estimates and assumptions. These estimates and assumptions include valuing equity securities in share-based payment
arrangements, estimating the fair value of equity instruments recorded as derivative liabilities, and estimating the useful lives
of amortizable assets and whether impairment charges may apply.
Principles
of Consolidation
The
consolidated financial statements include the accounts of Avalanche International, Corp. and its wholly-owned subsidiary Smith
and Ramsay Brands, LLC. All significant intercompany accounts and transactions have been eliminated.
Reclassification
The
Company reclassified debt issuance costs from current assets to short-term debt, net on the condensed consolidated balance sheets
for all periods presented pursuant to early adoption of Accounting Standards Update ("ASU") No. 2015-03 - Simplifying the Presentation
of Debt Issuance Costs.
Convertible
Instruments
The
Company bifurcates conversion options from their host instruments and account for them as free standing derivative financial instruments
if certain criteria are met. The criteria include circumstances in which (a) the economic characteristics and risks of the embedded
derivative instrument are not clearly and closely related to the economic characteristics and risks of the host contract, (b)
the hybrid instrument that embodies both the embedded derivative instrument and the host contract is not re-measured at fair value
under otherwise applicable generally accepted accounting principles with changes in fair value reported in earnings as they occur
and (c) a separate instrument with the same terms as the embedded derivative instrument would be considered a derivative instrument.
An exception to this rule is when the host instrument is deemed to be conventional, as that term is described under applicable
GAAP.
When
the Company has determined that the embedded conversion options should not be bifurcated from their host instruments, the Company
records, when necessary, discounts to convertible notes for the intrinsic value of conversion options embedded in debt instruments
based upon the differences between the fair value of the underlying common stock at the commitment date of the note transaction
and the effective conversion price embedded in the note. Debt discounts under these arrangements are amortized over the term of
the related debt to their stated date of redemption. The Company also records, when necessary, deemed dividends for the intrinsic
value of conversion options embedded in preferred shares based upon the differences between the fair value of the underlying common
stock at the commitment date of the transaction and the effective conversion price embedded in the preferred shares.
Recent
Accounting Pronouncements
The
Company has implemented all new accounting pronouncements that are in effect. These pronouncements did not have any material
impact on the financial statements unless otherwise disclosed, and the Company does not believe that there are any other new accounting
pronouncements that have been issued, that might have a material impact on its financial position or results of operations.
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- DefinitionThe entire disclosure for all significant accounting policies of the reporting entity.
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v3.3.1.900
GOING CONCERN
|
9 Months Ended |
Aug. 31, 2015 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] |
|
GOING CONCERN |
The
consolidated financial statements have been prepared on a going concern basis which assumes the Company will be able to realize
its assets and discharge its liabilities in the normal course of business for the foreseeable future. The Company has an accumulated
deficit of $1,941,636 as of August 31, 2015 and a net loss of $1,506,480 for the nine months ended August 31, 2015, raising substantial
doubt about the Companys ability to continue as a going concern. The ability to continue as a going concern is dependent
upon the Company generating profitable operations in the future and/or to obtain the necessary financing to meet its obligations
and repay its liabilities arising from normal business operations when they come due. Management intends to finance operating
costs over the next twelve months with loans and/or private placement of common stock.
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- DefinitionThe entire disclosure when substantial doubt is raised about the ability to continue as a going concern. Includes, but is not limited to, principal conditions or events that raised substantial doubt about the ability to continue as a going concern, management's evaluation of the significance of those conditions or events in relation to the ability to meet its obligations, and management's plans that alleviated or are intended to mitigate the conditions or events that raise substantial doubt about the ability to continue as a going concern.
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v3.3.1.900
LOAN RECEIVABLE
|
9 Months Ended |
Aug. 31, 2015 |
Receivables [Abstract] |
|
LOAN RECEIVABLE |
On
June 5, 2015, the Company executed a Promissory Note Sale Agreement with Black Mountain Equities, Inc. The agreement transferred
and assigned the Convertible Note, dated March 5, 2014 issued by IDS Industries, Inc. (now Aja Cannafacturing, Inc.) to Black
Mountain Equities, Inc. The Note was transferred in consideration of payment of $12,500. On the same day the Company executed
a Promissory Note with Aja Cannafacturing, Inc. for $12,500. The note is unsecured, accrues interest at 10% and is due December
31, 2015. This loan is currently in default and being renegotiated.
|
X |
- DefinitionThe entire disclosure for financing receivables. Examples of financing receivables include, but are not limited to, loans, trade accounts receivables, notes receivable, credit cards, and receivables relating to a lessor's right(s) to payment(s) from a lease other than an operating lease that is recognized as assets.
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v3.3.1.900
RELATED PARTY TRANSACTIONS
|
9 Months Ended |
Aug. 31, 2015 |
Related Party Transactions [Abstract] |
|
RELATED PARTY TRANSACTIONS |
During
the nine months ended August 31, 2015, the Company sold $34,017 in products to Vape Nation, generating 87.6% of its revenue. Vape
Nation, is 50% owned by MCKEA Holdings, LLC. MCKEA Holdings, LLC is the majority member of Philou Ventures, LLC, which is our
controlling shareholder. Kristine L. Ault is the Manager of MCKEA Holdings, LLC and the wife to the Chairman of Avalanche International,
Corp.
Cross
Click Media, Inc. (Cross Click) performs sales, marketing, and investor relation services for the Company. MCKEA
Holdings, LLC is the controlling shareholder of Cross Click Media, Inc. MCKEA Holdings, LLC is also the majority member of Philou
Ventures, LLC, which is our controlling shareholder.
Cross
Click performed services on behalf of the Company in the amount of $53,679 and $60,000 for the three months ended August
31, 2015 and 2014 and $97,000 and $60,000 for the nine months ended August 31, 2015 and 2014, which are included in advertising
and marketing expense in the statement of operations.
Loan
receivable, related party
On June 5, 2015, the Company executed
a Promissory Note Sale Agreement with Black Mountain Equities, Inc. The agreement transferred and assigned the Convertible Note,
dated March 5, 2014 issued by Cross Click Media, Inc. to Black Mountain Equities, Inc. The Note was transferred in consideration
of payment of $12,500. On the same day the Company executed a Promissory Note with Cross Click Media, Inc. for $12,500. The note
is unsecured, accrues interest at 10% and is due December 31, 2015.
In
addition, the Company loaned Cross Click approximately $202,500. Approximately $54,000 of accounts payable for
services performed by Cross Click Media, Inc. was used to reduce to the loan receivable. The loan is due in one year
and bears interest at 12%. As of August 31, 2015 principal and interest of approximately $161,000 was
outstanding. Principal and interest from the loan of approximately $167,000 are included in Loan Receivable, related
party on the balance sheet. This loan is currently in default and being renegotiated.
Interest
income of $6,062 was included in the statement of operations for the three and nine months ended August 31, 2015.
|
X |
- DefinitionThe entire disclosure for related party transactions. Examples of related party transactions include transactions between (a) a parent company and its subsidiary; (b) subsidiaries of a common parent; (c) and entity and its principal owners; and (d) affiliates.
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v3.3.1.900
LOANS PAYABLE
|
9 Months Ended |
Aug. 31, 2015 |
Accounting Policies [Abstract] |
|
LOANS PAYABLE |
On
November 26, 2014, the Company executed a Promissory Note with Argent Offset, LLC for $12,500. The note included a $500 loan fee,
accrued interest at 10%, compounded monthly, and was due December 5, 2014. A late payment fee of $500 per day was to be incurred
from December 6, 2014 through December 7, 2014 and then increases to $1,000 per day. On February 1, 2015, the Company entered
into a Temporary Forbearance Agreement with Argent. Under the forbearance agreement, the Company agreed to pay a forbearance fee
of $7,500. The new loan will bear interest at an annual rate of 10% until due on August 1, 2015. Further, we have agreed to pay
12.5% of any new funds invested in the company until the amount due is paid in full. As of August 31, 2015, $11,500 has been repaid
on this loan and an additional $8,129 added, leaving a balance of $17,129 and accrued interest of $1,301. This loan is currently
in default and being renegotiated.
During
the third quarter of fiscal year 2015 Argent Offset, LLC advanced the Company $4,305 to pay for certain operating expenses. The
advances are unsecured, non-interest bearing and due on demand.
On
March 17, 2015, the Company executed a Promissory Note for $10,750 with Strategic IR, Inc. The note bears interest at 10% per
annum and is due on or before April 16, 2015. The note includes a one-time loan fee of $1,750 for a total due of $12,500. On April
16, 2015, the interest increased to 21% since the note has not yet been repaid. Accrued interest as of August 31, 2015, is $936.
This note is currently in default.
On
August 10, 2015, the Company executed a Short Term Promissory Note for $5,000 with a third party. The note required a $250 loan
fee, was unsecured, accrued interest at 10% and was due August 19, 2015. The note and $23 of accrued interest was repaid in full
on August 27, 2015.
|
|
Issue
Date |
|
Maturity
Date |
|
Stated
Interest Rate |
|
Principle
Balance Outstanding 8/31/2015 |
Argent
Offset, LLC |
|
11/26/14 |
|
8/1/15 |
|
|
10 |
% |
|
$ |
17,129 |
|
Argent
Offset, LLC |
|
various |
|
demand |
|
|
n/a |
|
|
|
4,305 |
|
Strategic
IR, Inc. |
|
3/17/15 |
|
4/16/2015 |
|
|
21 |
% |
|
|
12,500 |
|
|
|
|
|
|
|
|
|
|
|
$ |
33,934 |
|
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- DefinitionDisclosure of accounting policy for loan commitments accounted for as derivatives, including the methods and assumptions used to estimate fair value and any associated hedging strategies.
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v3.3.1.900
CONVERTIBLE NOTES PAYABLE
|
9 Months Ended |
Aug. 31, 2015 |
Debt Disclosure [Abstract] |
|
CONVERTIBLE NOTES PAYABLE |
The
following is a summary of outstanding convertible promissory notes as of November 30, 2014:
|
Issue
Date |
Maturity
Date |
Stated
Interest Rate |
Conversion
Terms |
Principle
Balance Outstanding 11/30/2014 |
LG
Capital Funding, LLC |
11/3/2014 |
11/3/2015 |
8% |
Not
yet convertible |
63,250 |
|
Face
Value |
Initial
Discount |
Accumulated
Amortization |
Carrying
Value |
LG
Capital Funding, LLC |
63,250 |
9,040 |
- |
54,210 |
The
following is a summary of outstanding convertible promissory notes as of August 31, 2015:
|
|
Issue
Date |
|
Maturity
Date |
|
Stated
Interest Rate |
|
Conversion
Terms (1) |
|
Principle
Balance Outstanding 8/31/2015 |
LG
Capital Funding, LLC |
|
|
11/3/2014 |
|
|
11/3/2015 |
|
|
8 |
% |
|
$ |
0.24 |
|
|
|
$ 59,000
(2) |
|
Dr.
Gary Gelbfish |
|
|
3/27/2015 |
|
|
9/23/2015 |
|
|
10 |
% |
|
|
0.37 |
|
|
|
100,000 |
|
JMJ
Financial |
|
|
4/29/2015 |
|
|
4/29/2017 |
|
|
12 |
% |
|
|
0.24 |
|
|
|
33,000 |
|
Union
Capital, LLC |
|
|
5/11/2015 |
|
|
5/11/2016 |
|
|
8 |
% |
|
|
0.24 |
|
|
|
115,000 |
|
Adar
Bays, LL |
|
|
5/12/2015 |
|
|
5/12/2016 |
|
|
8 |
% |
|
|
0.24 |
|
|
|
115,000 |
|
Typenex
Co-Investment, LLC |
|
|
5/29/2015 |
|
|
6/29/2016 |
|
|
10 |
% |
|
|
0.50 |
|
|
|
87,500 |
|
Black
Mountain Equities, Inc. |
|
|
6/4/2015 |
|
|
6/4/2016 |
|
|
8 |
% |
|
|
0.28 |
|
|
|
55,000 |
|
Lord
Abstract, LLC |
|
|
6/30/2015 |
|
|
6/30/2016 |
|
|
10 |
% |
|
|
0.24 |
|
|
|
8,800 |
|
GCEF
Opportunity Fund, LLC |
|
|
6/30/2015 |
|
|
6/30/2016 |
|
|
10 |
% |
|
|
0.24 |
|
|
|
27,500 |
|
JMJ
Financial |
|
|
8/27/2015 |
|
|
8/27/2017 |
|
|
12 |
% |
|
|
0.24 |
|
|
|
27,500 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
628,300 |
|
|
(1) |
Conversion terms vary
between a 30% - 40% discount on lowest or closing prices for a specified time period preceding conversion. |
|
(2) |
Converted $4,250 of
principle to common stock. |
Accrued
interest on the above notes was $26,285 and $374 as of August 31, 2015 and November 30, 2014, respectively.
Debt
discount expense including original issue discounts for the three and nine months ended August 31, 2015 was $164,685 and $248,863,
respectively. Carrying value, of all convertible notes, net of debt discounts as of August 31, 2015 is $276, 312.
Based
on the fair value of the embedded conversion options on the day of issuance a loss of $55,093 and $356,402 for the three months
and nine months ended August 31, 2015 was recorded in the statement of operations.
Principal amounts payable for convertible
notes payable and due to related parties for the following fiscal years is as follows:
Twelve
months ended November 30, |
|
|
|
2015 |
|
|
$ |
205,655 |
|
|
2016 |
|
|
|
408,800 |
|
|
2017 |
|
|
|
60,500 |
|
|
2018 |
|
|
|
|
|
|
2019 |
|
|
|
|
|
|
Total Future Maturities |
|
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v3.3.1.900
FAIR VALUE MEASUREMENTS
|
9 Months Ended |
Aug. 31, 2015 |
Fair Value Disclosures [Abstract] |
|
FAIR VALUE MEASUREMENTS |
The
Company believes its valuation methods are appropriate and consistent with other market participants, the use of different methodologies
or assumptions to determine the fair value of certain financial instruments could result in a different estimate of fair value
at the reporting date.
The
following table classifies the Companys liabilities measured at fair value on a recurring basis into the fair value hierarchy
as of August 31, 2015:
|
|
Fair
value measured at August 31, 2015 |
|
|
|
|
|
|
|
Quoted prices in active |
|
|
|
Significant other |
|
|
|
Significant |
|
|
|
|
Fair value at |
|
|
|
markets |
|
|
|
observable inputs |
|
|
|
unobservable inputs |
|
|
|
|
August
31, 2015 |
|
|
|
(Level
1) |
|
|
|
(Level
2) |
|
|
|
(Level
3) |
|
Derivative
liability |
|
$ |
717,796 |
|
|
$ |
|
|
|
$ |
|
|
|
$ |
717,796 |
|
There
were no transfers between Level 1, 2 or 3 during the nine month period ended August 31, 2015.
The
following table presents changes in Level 3 liabilities measured at fair value for the nine month period ended August 31, 2015.
Both observable and unobservable inputs were used to determine the fair value of positions that the Company has classified within
the Level 3 category. Unrealized gains and losses associated with liabilities within the Level 3 category include
changes in fair value that were attributable to both observable (e.g., changes in market interest rates) and unobservable (e.g.,
changes in unobservable long-dated volatilities) inputs.
|
|
Derivative
Liability |
|
Balance November
30, 2014 |
$ |
|
|
Initial
valuation |
|
627,559 |
|
Change
in fair value on derivative |
|
(182,776 |
) |
Balance May
31, 2015 |
|
444,783 |
|
Initial
valuation |
|
270,045 |
|
Change
in fair value on derivative |
|
2,968 |
|
Balance
August 31, 2015 |
$ |
717,796 |
|
A
summary of quantitative information about significant unobservable inputs (Level 3 inputs) used in measuring the Companys
derivative liabilities that are categorized within Level 3 of the fair value hierarchy for the nine months ended August 31, 2015
is as follows:
Date
of valuation |
August
31, 2015 |
|
Inception |
Stock
price |
$ |
0.50 |
|
|
|
$2.46
0.50 |
|
Conversion price |
|
.24 0.28 |
|
|
|
.24 1.20 |
|
Volatility (annual) |
|
116% - 373% |
|
|
|
111% - 159% |
|
Risk-free rate |
|
.05% - .75% |
|
|
|
.08% - .56% |
|
Years to maturity |
|
.18 - 2 |
|
|
|
.5 - 2 |
|
The
development and determination of the unobservable inputs for Level 3 fair value measurements and fair value calculations are the
responsibility of the Companys management.
|
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- DefinitionThe entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.
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v3.3.1.900
COMMON STOCK
|
9 Months Ended |
Aug. 31, 2015 |
Equity [Abstract] |
|
COMMON STOCK |
The
Company is authorized to issue 75,000,000 common shares with a par value of $0.001 per share.
Private
placements
On
December 15, 2014, the Company issued 1,600 shares of common stock at a price of $1.25 per share for total cash proceeds of $2,000.
Share
based compensation
On
March 27, 2015, we issued 50,000 shares of common stock to Dr. Gary Gelbfish in connection with the issuance of a convertible
promissory note. The fair value of the common stock issued was determined to be $41,349 based its fair value relative to the fair
value of the debt issued.
During
the nine months ended August 31, 2015, the Company issued 440,000 shares of common stock to service providers for total non-cash
compensation of $583,125. All shares were valued based on the closing price of the stock on the date of grant.
During
the nine months ended August 31, 2015, the Company issued 48,990 shares of common stock, in connection with the issuance of convertible
promissory notes, for total non-cash compensation of $56,063. All shares were valued based on the closing price of the stock on
the date of grant.
Convertible
debt conversion
On
August 19, 2015, the Company issued 18,826 shares of common stock to LG Capital Funding, LLC in conversion of $4,250 of principal
and $268 of accrued interest.
|
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v3.3.1.900
PREFERRED STOCK
|
9 Months Ended |
Aug. 31, 2015 |
Equity [Abstract] |
|
PREFERRED STOCK |
The
Company is authorized to issue 10,000,000 preferred shares with a par value of $0.001 per share.
On
July 31, 2014, the Board of Directors designated a series of preferred stock titled Class A Convertible Preferred Stock consisting
of 50,000 shares. Each share of Class A Convertible Preferred Stock (preferred stock) has a stated value of $5.00
per share. The holders of preferred stock have no voting rights. The holders are entitled to receive cumulative dividends at a
rate of 10% of the stated value per annum, payable twice a year, subject to the availability of funds and approval by the Board
of Directors. In the discretion of the Board of Directors dividends may be paid with common stock. In the event of liquidation
or dissolution of the Company each holder of preferred stock shall be entitled to be paid in cash $5 per share plus cumulative
dividends if any
On
January 30, 2015, the Company issued 15,380 shares of preferred stock at a price of $5.00 per share for total cash proceeds of
$76,900.
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v3.3.1.900
LOSS PER SHARE APPLICABLE TO COMMON SHAREHOLDERS
|
9 Months Ended |
Aug. 31, 2015 |
Earnings Per Share [Abstract] |
|
LOSS PER SHARE APPLICABLE TO COMMON SHAREHOLDERS |
The
following table sets forth the computations of loss per share amounts applicable to common stockholders for the three and nine
months ended August 31, 2015 and 2014. Potentially dilutive shares were excluded from the computation as of August 31, 2015 and
2014 since they would have been anti-dilutive.
|
Three Months Ended
August 31, |
|
Nine Months Ended
August 31, |
|
2015 |
|
2014 |
|
2015 |
|
2014 |
Loss
applicable to common stockholders |
$ |
(733,435 |
) |
|
$ |
(140,266 |
) |
|
$ |
(1,506,480 |
) |
|
$ |
(177,838 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
and diluted loss per common share |
$ |
(0.13 |
) |
|
$ |
(0.03 |
) |
|
$ |
(0.28 |
) |
|
$ |
(0.04 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
average common shares outstanding (1): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
and diluted shares |
|
5,651,549 |
|
|
|
5,075,478 |
|
|
|
5,442,147 |
|
|
|
5,071,839 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Potentially
dilutive securities (2): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Convertible
notes (3) |
|
2,254,942 |
|
|
|
|
|
|
|
2,254,942 |
|
|
|
|
|
Convertible
preferred stock (3) |
|
528,193 |
|
|
|
|
|
|
|
528,193 |
|
|
|
|
|
|
(1) |
Excludes
nonvested restricted stock and restricted stock units. |
|
(2) |
Excludes
grants with performance and market conditions as the necessary conditions have not been satisfied. |
|
(3) |
The
impact of the convertible notes and the convertible preferred stock on earnings per share is antidilutive in a period of loss. |
|
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v3.3.1.900
LETTER OF INTENT AND COMMITMENTS
|
9 Months Ended |
Aug. 31, 2015 |
Commitments and Contingencies Disclosure [Abstract] |
|
LETTER OF INTENT AND COMMITMENTS |
On
June 12, 2015, we entered into a binding Letter of Intent (the LOI) for the purchase of all of the issued and outstanding
capital stock of J.S. Technologies, Inc., a California corporation (JS). JS is the manufacturer of Suhr brand
guitars and related electronics and accessories. Under the LOI, we have agreed to purchase all of the issued and outstanding
capital stock in JS for a total purchase price of $11,000,000. The purchase price will be paid, at the option of the individual
JS stockholders, in either cash, new convertible preferred stock, or a combination of both. The new convertible preferred
stock to be issued as payment toward the purchase price will have a stated value of $4.00 per share, will accrue dividends at
a rate of six percent per year, and will be convertible to common stock at a price of $1.00 per share of common stock. All
shares of the new preferred stock issued and outstanding at thirty-six months after closing will be automatically converted to
common stock.
The
anticipated closing date of the acquisition will be in in 120 days from the date of the LOI and will be documented by a definitive
agreement to be prepared by the parties. The transaction must close by the later of: (i) 120 days from the date of the LOI,
or (ii) 60 days after delivery of audited financial statements and auditor reviewed subsequent quarters for JS, which is a condition
to closing. There are numerous additional conditions to closing of the acquisition, including, but not limited to: (i) execution
of the definitive agreement by not less than 65% of JSs stockholders and compliance with JSs bylaws and a buy/sell
agreement governing its common stock, (ii) our readiness and ability to pay the required portion of the purchase price to each
JS stockholder who is ready and willing to sell its shares, and (iii) concurrent closing of an additional agreement under which
we will purchase S&J Design Labs, LLC, the affiliated company which owns the building and equipment used in JSs operations.
As of the date of this filing the auditor reviews of the subsequent quarters have not yet been completed. Both parties have
agreed to extend the closing until all conditions have been met.
The
LOI also contains a no-shop provision for the time between the date of the LOI and the defined closing date. In
addition, if we or any of the JS stockholders signing the LOI fail and refuse to close the acquisition on the defined closing
date, and the other parties are ready and able to close, the breaching party will be assessed a $250,000 break-up fee. Extensive
additional covenants, conditions, representations, and warranties between the parties are included in the LOI. The foregoing is
a brief summary of the material terms of the LOI, which should be reviewed in its entirety for additional information.
On
August 4, 2015, we entered into a Secured Promissory Note (the Note) with JS. Under the Note, we intend to lend up
to $400,000 to JS in order to provide short-term financing pending our intended acquisition of JS. The Note calls for an initial
advance in the amount of $200,000 to be made as soon as practicable. Up to two additional advances of $100,000 each may be made
thirty and sixty days, respectively, from the date of the Note. The Note bears interest at a rate of ten percent per year and
is due in one year. Monthly payment of interest only are due beginning September 1, 2015. The Note is secured by substantially
all of the assets of JS. Through the date of this filing we have not provided financing associated with this commitment.
Also
on August 4, 2015, we executed an Amendment to the LOI. The original LOI required that the parties settle on a purchase price
for affiliated company S&J Design Labs, LLC within thirty days of the LOI. The Amendment allows the parties until the closing
date of the acquisition to set a purchase price for S&J Design Labs, LLC.
Our
ability to close the acquisition of JS as contemplated by the LOI will be dependent upon us obtaining additional financing through
debt and/or equity financing arrangements. Although management is working to secure the additional capital required to close
the transaction, there is a risk that such additional financing will not be available to us on acceptable terms or in the amounts
required to close the planned acquisition.
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v3.3.1.900
RESTATEMENT
|
9 Months Ended |
Aug. 31, 2015 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] |
|
RESTATEMENT |
The
consolidated financial statements for the year ended November 30, 2014 and for the three and nine months ended August 31, 2014
have been amended to expense the previously capitalized licensing fee. An analysis of those restated numbers are as follows.
|
November
30, 2014 |
|
|
As
Reported |
|
Adjustment |
|
As
Restated |
Product
license |
$ |
29,250 |
$ |
(29,250) |
$ |
- |
Total
assets |
|
66,963 |
|
(29,250) |
|
37,713 |
|
|
|
|
|
|
|
Accumulated
deficit |
|
(405,906) |
|
(29,250) |
|
(435,156) |
Total
stockholders equity (deficit) |
|
(197,303) |
|
(29,250) |
|
(226,553) |
Total
liabilities and stockholders equity |
|
66,963 |
|
29,250 |
|
37,713 |
|
For
the Three Months Ended
August
31, 2014 |
|
For
the Nine Months Ended
August
31, 2014 |
|
|
As
Reported |
|
Adjustment |
|
As
Restated |
|
As
Reported |
|
Adjustment |
|
As
Restated |
General
and administrative |
$ |
70,906 |
$ |
13,500 |
$ |
84,406 |
$ |
107,788 |
$ |
15,750 |
$ |
123,538 |
Total
Operating Expenses |
|
132,099 |
|
13,500 |
|
145,599 |
|
168,981 |
|
15,750 |
|
184,731 |
Net
loss from operations |
$ |
(126,766) |
$ |
(13,500) |
$ |
(140,266) |
$ |
(162,088) |
$ |
(15,750) |
$ |
(177,838) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For
the Three Months Ended
May
30, 2015 |
|
For
the Six Months Ended
May
30, 2015 |
|
|
As
Reported |
|
Adjustment |
|
As
Restated |
|
As
Reported |
|
Adjustment |
|
As
Restated |
General
and administrative |
$ |
363,769 |
$ |
11,250 |
$ |
375,019 |
$ |
537,735 |
$ |
24,750 |
$ |
562,485 |
Total
Operating Expenses |
|
363,769 |
|
11,250 |
|
375,019 |
|
544,099 |
|
24,750 |
|
568,849 |
Net
loss from operations |
$ |
(570,226) |
$ |
(11,250) |
$ |
(581,476) |
$ |
(748,295) |
$ |
(24,750) |
$ |
|
X |
- DefinitionDisclosure of accounting policy for subsidiaries or other investments that are consolidated, including the accounting treatment for intercompany accounts or transactions and any noncontrolling interest.
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v3.3.1.900
SUBSEQUENT EVENTS
|
9 Months Ended |
Aug. 31, 2015 |
Subsequent Events [Abstract] |
|
SUBSEQUENT EVENTS |
On
September 8, 2015, the Company issued 22,239 shares of common stock to LG Capital Funding, LLC in conversion of $5,000 of principal
and $338 of accrued interest.
On
September 21, 2015, pursuant to individual Notices of Conversion executed by each of the holders of its Class A Convertible Preferred
Stock, the Corporation exchanged all 29,380 shares of its issued and outstanding Class A Convertible Preferred Stock, as well
as accrued dividends thereon in the amount of $11,556, for a total of 528,193 shares common stock.
On
October 8, 2015, the Company entered into a Promissory Note (the Note) with Studio Capital, LLC. (Studio).
Under the Note, the Company borrowed the sum of $125,000. The Note featured an original issue discount of $25,000, resulting in
net funding to the Company of $100,000. The Note is due in six (6) months and does not bear interest. As additional consideration
to Studio, the Company agreed to issue it five thousand (5,000) shares of common stock.
On
October 8, 2015, the Company issued 30,000 shares of common stock to an individual for consideration of personally guaranteeing
the Promissory Note to Studio Capital, LLC.
On
December 2, 2015, the Company entered into a Promissory Note (the Note) with a third party. Under the Note, the
Company borrowed the sum of $125,000. The Note featured an original issue discount of $25,000, resulting in net funding to the
Company of $100,000. The Note is due in sixty (60) days and does not bear interest. As additional consideration to the investor,
the Company agreed to issue a warrant to purchase up to 100,000 shares of the Companys common stock at a price of $0.01
per share, exercisable for a period of one year.
December
10, 2015, the Company entered into a Subscription Agreement with a third party, whereby it sold 25,000 shares of common stock
for $5,000.
In
January of 2016, the Company entered into Amendments to its promissory notes with Adar Bays, Union Capital, LG Capital, and Typenex
(the Amendments).In general, each of the Amendments stipulates that the lender will, for a period of ninety (90)
days, convert no more than ten percent (10%) of the principal amount due under their notes in any thirty (30) day period. In addition,
the specific Amendments also provide as follows:
| · | The Adar Bays and Union
Capital Amendments each provide that the conversion discount shall be increased by 5%, such that these notes are convertible at
55%, rather than 60%, of market price as defined in the notes. Further, the pricing period, or look-back for determining
the conversion price has been extended from 20 days to 25 days, and the pre-payment penalty has been increased to 150%. |
| · | The LG Capital Amendment
also calls for additional consideration to LG Capital in the form of warrants to purchase 75,000 shares of our common stock at
a price of $0.30 per share, exercisable for 3 years. Also, we will be permitted to re-pay the LG Capital note with the applicable
penalty set forth in the note for a pre-payment made between 91 and 180 days after issue. |
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v3.3.1.900
ORGANIZATION AND DESCRIPTION OF BUSINESS (Policies)
|
9 Months Ended |
Aug. 31, 2015 |
Accounting Policies [Abstract] |
|
Basis of Unaudited Interim Financial Information |
The
accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles
generally accepted in the United States of America (GAAP) and the rules of the Securities and Exchange Commission
("SEC") for interim financial information and the SEC instructions to Form 10-Q, accordingly, they do not include all of the information
and footnotes required by U.S. GAAP for completed financial statements. In the opinion of management, all adjustments necessary
in order for the financial statements to not be misleading have been reflected herein. Operating results for the interim period
ended August 31, 2015 are not necessarily indicative of the results that can be expected for the full year. These unaudited interim
condensed consolidated financial statements should be read in conjunction with the consolidated financial statements of the Company
for the year ended November 30, 2014.
|
Use of Estimates |
In
preparing financial statements in conformity with U.S. GAAP, management is required to make estimates and assumptions that affect
the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial
statements, as well as the reported amounts of expenses during the reporting period. Due to inherent uncertainty involved in making
estimates, actual results reported in future periods may be affected by changes in these estimates. On an ongoing basis, the Company
evaluates its estimates and assumptions. These estimates and assumptions include valuing equity securities in share-based payment
arrangements, estimating the fair value of equity instruments recorded as derivative liabilities, and estimating the useful lives
of amortizable assets and whether impairment charges may apply.
|
Principles of Consolidation |
The
consolidated financial statements include the accounts of Avalanche International, Corp. and its wholly-owned subsidiary Smith
and Ramsay Brands, LLC. All significant intercompany accounts and transactions have been eliminated.
|
Reclassificaiton |
The
Company reclassified debt issuance costs from current assets to short-term debt, net on the condensed consolidated balance sheets
for all periods presented pursuant to early adoption of Accounting Standards Update ("ASU") No. 2015-03 - Simplifying the Presentation
of Debt Issuance Costs.
|
Convertible Instruments |
The
Company bifurcates conversion options from their host instruments and account for them as free standing derivative financial instruments
if certain criteria are met. The criteria include circumstances in which (a) the economic characteristics and risks of the embedded
derivative instrument are not clearly and closely related to the economic characteristics and risks of the host contract, (b)
the hybrid instrument that embodies both the embedded derivative instrument and the host contract is not re-measured at fair value
under otherwise applicable generally accepted accounting principles with changes in fair value reported in earnings as they occur
and (c) a separate instrument with the same terms as the embedded derivative instrument would be considered a derivative instrument.
An exception to this rule is when the host instrument is deemed to be conventional, as that term is described under applicable
GAAP.
When
the Company has determined that the embedded conversion options should not be bifurcated from their host instruments, the Company
records, when necessary, discounts to convertible notes for the intrinsic value of conversion options embedded in debt instruments
based upon the differences between the fair value of the underlying common stock at the commitment date of the note transaction
and the effective conversion price embedded in the note. Debt discounts under these arrangements are amortized over the term of
the related debt to their stated date of redemption. The Company also records, when necessary, deemed dividends for the intrinsic
value of conversion options embedded in preferred shares based upon the differences between the fair value of the underlying common
stock at the commitment date of the transaction and the effective conversion price embedded in the preferred shares.
|
Recent Accounting Pronouncements |
The
Company has implemented all new accounting pronouncements that are in effect. These pronouncements did not have any material
impact on the financial statements unless otherwise disclosed, and the Company does not believe that there are any other new accounting
pronouncements that have been issued, that might have a material impact on its financial position or results of operations.
|
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v3.3.1.900
LOANS PAYABLE (Tables)
|
9 Months Ended |
Aug. 31, 2015 |
Loans Payable Tables |
|
Schedule of Short Term Loans Payable |
|
|
Issue
Date |
|
Maturity
Date |
|
Stated
Interest Rate |
|
Principle
Balance Outstanding 8/31/2015 |
Argent
Offset, LLC |
|
11/26/14 |
|
8/1/15 |
|
|
10 |
% |
|
$ |
17,129 |
|
Argent
Offset, LLC |
|
various |
|
demand |
|
|
n/a |
|
|
|
4,305 |
|
Strategic
IR, Inc. |
|
3/17/15 |
|
4/16/2015 |
|
|
21 |
% |
|
|
12,500 |
|
|
|
|
|
|
|
|
|
|
|
$ |
33,934 |
|
|
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v3.3.1.900
CONVERTIBLE NOTES PAYBLE (Tables)
|
9 Months Ended |
Aug. 31, 2015 |
Convertible Notes Payble Tables |
|
Schedule of Convertible Notes Payable |
|
Issue
Date |
Maturity
Date |
Stated
Interest Rate |
Conversion
Terms |
Principle
Balance Outstanding 11/30/2014 |
LG
Capital Funding, LLC |
11/3/2014 |
11/3/2015 |
8% |
Not
yet convertible |
63,250 |
|
Face
Value |
Initial
Discount |
Accumulated
Amortization |
Carrying
Value |
LG
Capital Funding, LLC |
|
|
Issue
Date |
|
Maturity
Date |
|
Stated
Interest Rate |
|
Conversion
Terms (1) |
|
Principle
Balance Outstanding 8/31/2015 |
LG
Capital Funding, LLC |
|
|
11/3/2014 |
|
|
11/3/2015 |
|
|
8 |
% |
|
$ |
0.24 |
|
|
|
$ 59,000
(2) |
|
Dr.
Gary Gelbfish |
|
|
3/27/2015 |
|
|
9/23/2015 |
|
|
10 |
% |
|
|
0.37 |
|
|
|
100,000 |
|
JMJ
Financial |
|
|
4/29/2015 |
|
|
4/29/2017 |
|
|
12 |
% |
|
|
0.24 |
|
|
|
33,000 |
|
Union
Capital, LLC |
|
|
5/11/2015 |
|
|
5/11/2016 |
|
|
8 |
% |
|
|
0.24 |
|
|
|
115,000 |
|
Adar
Bays, LL |
|
|
5/12/2015 |
|
|
5/12/2016 |
|
|
8 |
% |
|
|
0.24 |
|
|
|
115,000 |
|
Typenex
Co-Investment, LLC |
|
|
5/29/2015 |
|
|
6/29/2016 |
|
|
10 |
% |
|
|
0.50 |
|
|
|
87,500 |
|
Black
Mountain Equities, Inc. |
|
|
6/4/2015 |
|
|
6/4/2016 |
|
|
8 |
% |
|
|
0.28 |
|
|
|
55,000 |
|
Lord
Abstract, LLC |
|
|
6/30/2015 |
|
|
6/30/2016 |
|
|
10 |
% |
|
|
0.24 |
|
|
|
8,800 |
|
GCEF
Opportunity Fund, LLC |
|
|
6/30/2015 |
|
|
6/30/2016 |
|
|
10 |
% |
|
|
0.24 |
|
|
|
27,500 |
|
JMJ
Financial |
|
|
8/27/2015 |
|
|
8/27/2017 |
|
|
12 |
% |
|
|
0.24 |
|
|
|
27,500 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
628,300 |
|
|
Schedule of Maturities of Convertible Notes Payable |
Twelve
months ended November 30, |
|
|
|
2015 |
|
|
$ |
205,655 |
|
|
2016 |
|
|
|
408,800 |
|
|
2017 |
|
|
|
60,500 |
|
|
2018 |
|
|
|
|
|
|
2019 |
|
|
|
|
|
|
Total Future Maturities |
|
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v3.3.1.900
FAIR VALUE MEASUREMENTS (Tables)
|
9 Months Ended |
Aug. 31, 2015 |
Fair Value Disclosures [Abstract] |
|
Schedule of Fair Value of Liabilities |
|
|
Fair
value measured at August 31, 2015 |
|
|
|
|
|
|
|
Quoted prices in active |
|
|
|
Significant other |
|
|
|
Significant |
|
|
|
|
Fair value at |
|
|
|
markets |
|
|
|
observable inputs |
|
|
|
unobservable inputs |
|
|
|
|
August
31, 2015 |
|
|
|
(Level
1) |
|
|
|
(Level
2) |
|
|
|
(Level
3) |
|
Derivative
liability |
|
$ |
717,796 |
|
|
$ |
|
|
|
$ |
|
|
|
$ |
717,796 |
|
|
Schedule of Fair Value Liabilities Gains & Losses |
|
|
Derivative
Liability |
|
Balance November
30, 2014 |
$ |
|
|
Initial
valuation |
|
627,559 |
|
Change
in fair value on derivative |
|
(182,776 |
) |
Balance May
31, 2015 |
|
444,783 |
|
Initial
valuation |
|
270,045 |
|
Change
in fair value on derivative |
|
2,968 |
|
Balance
August 31, 2015 |
$ |
717,796 |
|
|
Schedule of Fair Value Inputs |
Date
of valuation |
August
31, 2015 |
|
Inception |
Stock
price |
$ |
0.50 |
|
|
|
$2.46
0.50 |
|
Conversion price |
|
.24 0.28 |
|
|
|
.24 1.20 |
|
Volatility (annual) |
|
116% - 373% |
|
|
|
111% - 159% |
|
Risk-free rate |
|
.05% - .75% |
|
|
|
.08% - .56% |
|
Years to maturity |
|
.18 - 2 |
|
|
|
.5 - 2 |
|
|
X |
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v3.3.1.900
LOSS PER SHARE APPLICABLE TO COMMON SHAREHOLDERS (Tables)
|
9 Months Ended |
Aug. 31, 2015 |
Earnings Per Share [Abstract] |
|
Schedule of Earnings per Share Basic |
|
Three Months Ended
August 31, |
|
Nine Months Ended
August 31, |
|
2015 |
|
2014 |
|
2015 |
|
2014 |
Loss applicable to common stockholders |
$ |
(733,435 |
) |
|
$ |
(140,266 |
) |
|
$ |
(1,506,480 |
) |
|
$ |
(177,838 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted loss per common share |
$ |
(0.13 |
) |
|
$ |
(0.03 |
) |
|
$ |
(0.28 |
) |
|
$ |
(0.04 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares outstanding (1): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted shares |
|
5,651,549 |
|
|
|
5,075,478 |
|
|
|
5,442,147 |
|
|
|
5,071,839 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Potentially dilutive securities (2): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Convertible notes (3) |
|
2,254,942 |
|
|
|
|
|
|
|
2,254,942 |
|
|
|
|
|
Convertible preferred stock (3) |
|
528,193 |
|
|
|
|
|
|
|
528,193 |
|
|
|
|
|
|
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v3.3.1.900
RESTATEMENT (Tables)
|
9 Months Ended |
Aug. 31, 2015 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] |
|
Schedule of Consolidated Balance Sheet |
|
November
30, 2014 |
|
|
As
Reported |
|
Adjustment |
|
As
Restated |
Product
license |
$ |
29,250 |
$ |
(29,250) |
$ |
- |
Total
assets |
|
66,963 |
|
(29,250) |
|
37,713 |
|
|
|
|
|
|
|
Accumulated
deficit |
|
(405,906) |
|
(29,250) |
|
(435,156) |
Total
stockholders equity (deficit) |
|
(197,303) |
|
(29,250) |
|
(226,553) |
Total
liabilities and stockholders equity |
|
66,963 |
|
29,250 |
|
37,713 |
|
Schedule of Consolidated Statement of Operations |
|
For
the Three Months Ended
August
31, 2014 |
|
For
the Nine Months Ended
August
31, 2014 |
|
|
As
Reported |
|
Adjustment |
|
As
Restated |
|
As
Reported |
|
Adjustment |
|
As
Restated |
General
and administrative |
$ |
70,906 |
$ |
13,500 |
$ |
84,406 |
$ |
107,788 |
$ |
15,750 |
$ |
123,538 |
Total
Operating Expenses |
|
132,099 |
|
13,500 |
|
145,599 |
|
168,981 |
|
15,750 |
|
184,731 |
Net
loss from operations |
$ |
(126,766) |
$ |
(13,500) |
$ |
(140,266) |
$ |
(162,088) |
$ |
(15,750) |
$ |
(177,838) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For
the Three Months Ended
May
30, 2015 |
|
For
the Six Months Ended
May
30, 2015 |
|
|
As
Reported |
|
Adjustment |
|
As
Restated |
|
As
Reported |
|
Adjustment |
|
As
Restated |
General
and administrative |
$ |
363,769 |
$ |
11,250 |
$ |
375,019 |
$ |
537,735 |
$ |
24,750 |
$ |
562,485 |
Total
Operating Expenses |
|
363,769 |
|
11,250 |
|
375,019 |
|
544,099 |
|
24,750 |
|
568,849 |
Net
loss from operations |
$ |
(570,226) |
$ |
(11,250) |
$ |
(581,476) |
$ |
(748,295) |
$ |
(24,750) |
$ |
|
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|
3 Months Ended |
9 Months Ended |
|
Aug. 31, 2015 |
Aug. 31, 2014 |
Aug. 31, 2015 |
Aug. 31, 2014 |
Nov. 30, 2014 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] |
|
|
|
|
|
Accumulated deficit |
$ (1,941,636)
|
|
$ (1,941,636)
|
|
$ (435,156)
|
Net loss |
$ (733,435)
|
$ (140,266)
|
$ (1,506,480)
|
$ (177,838)
|
|
X |
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v3.3.1.900
RELATED PARTY TRANSACTIONS (Details Narrative) - USD ($)
|
3 Months Ended |
9 Months Ended |
|
Aug. 31, 2015 |
Aug. 31, 2014 |
Aug. 31, 2015 |
Aug. 31, 2014 |
Nov. 30, 2014 |
Product sold |
|
|
$ 34,017
|
|
|
Revenue |
|
|
87.60%
|
|
|
Loan and interest receivable, related party |
$ 167,326
|
|
$ 167,326
|
|
|
Interest income |
$ 6,074
|
|
$ 6,074
|
|
|
Accounts payable, related party |
|
|
|
|
$ 88,572
|
CrossClick Media |
|
|
|
|
|
Services |
$ 53,679
|
$ 60,000
|
$ 97,000
|
$ 60,000
|
|
Loan |
|
|
$ 202,500
|
|
|
Loan, term |
|
|
1 year
|
|
|
Loan, Interest Rate |
|
|
12.00%
|
|
|
Loan and interest receivable, related party |
167,000
|
|
$ 167,000
|
|
|
Interest income |
6,062
|
|
$ 6,062
|
|
|
Debt Instrument, Interest Rate |
|
|
12.00%
|
|
|
Accounts payable, related party |
54,000
|
|
$ 54,000
|
|
|
Prom Note #2 |
|
|
|
|
|
Loan, Interest Rate |
|
|
10.00%
|
|
|
Date of Agreement |
|
|
Jun. 05, 2015
|
|
|
Debt Instrument |
$ 12,500
|
|
$ 12,500
|
|
|
Debt Instrument, Interest Rate |
|
|
10.00%
|
|
|
Debt Instrument, Maturity Date |
|
|
Dec. 31, 2015
|
|
|
Prom Note Sale Agmt #2 |
|
|
|
|
|
Date of Agreement |
|
|
Jun. 05, 2015
|
|
|
Payment for Loan Receivable |
|
|
$ 12,500
|
|
|
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v3.3.1.900
LOANS PAYABLE (Details Narrative) - USD ($)
|
6 Months Ended |
9 Months Ended |
12 Months Ended |
|
|
|
|
May. 31, 2015 |
Aug. 31, 2015 |
Aug. 31, 2014 |
Nov. 30, 2014 |
Aug. 31, 2019 |
Aug. 31, 2018 |
Aug. 31, 2017 |
Aug. 31, 2016 |
Accrued interest |
|
$ 26,285
|
|
$ 374
|
|
|
|
|
Promissory Note Balance |
|
276,312
|
|
|
|
|
$ 60,500
|
$ 408,800
|
Advances from related parties |
|
$ 58,366
|
|
|
|
|
|
|
Strategic IR Amdt #1 |
|
|
|
|
|
|
|
|
Interest |
|
21.00%
|
|
|
|
|
|
|
Prom Note #3 |
|
|
|
|
|
|
|
|
Date issuance |
|
Aug. 10, 2015
|
|
|
|
|
|
|
Promissory note |
|
$ 5,000
|
|
|
|
|
|
|
Loan fee |
|
$ 250
|
|
|
|
|
|
|
Maturity date |
|
Aug. 19, 2015
|
|
|
|
|
|
|
Interest |
|
10.00%
|
|
|
|
|
|
|
Accrued interest |
|
$ 23
|
|
|
|
|
|
|
Repayment |
|
$ 5,023
|
|
|
|
|
|
|
Argent Offset |
|
|
|
|
|
|
|
|
Date issuance |
|
Nov. 26, 2014
|
|
|
|
|
|
|
Promissory note |
|
$ 12,500
|
|
|
|
|
|
|
Loan fee |
|
$ 500
|
|
|
|
|
|
|
Maturity date |
|
Dec. 05, 2014
|
|
|
|
|
|
|
Interest |
|
10.00%
|
|
|
|
|
|
|
Advances from related parties |
|
$ 4,305
|
|
|
|
|
|
|
Argent Offset Amdt #1 |
|
|
|
|
|
|
|
|
Date issuance |
|
Feb. 01, 2015
|
|
|
|
|
|
|
Maturity date |
|
Aug. 01, 2015
|
|
|
|
|
|
|
Interest |
|
12.50%
|
|
|
|
|
|
|
Accrued interest |
|
$ 1,301
|
|
|
|
|
|
|
Forbearance fee |
|
7,500
|
|
|
|
|
|
|
Promissory Note Balance |
|
17,129
|
|
|
|
|
|
|
Repayment |
|
11,500
|
|
|
|
|
|
|
Strategic IR |
|
|
|
|
|
|
|
|
Date issuance |
Mar. 17, 2015
|
|
|
|
|
|
|
|
Promissory note |
|
10,750
|
|
|
|
|
|
|
Loan fee |
|
$ 1,750
|
|
|
|
|
|
|
Maturity date |
Apr. 16, 2015
|
|
|
|
|
|
|
|
Interest |
|
10.00%
|
|
|
|
|
|
|
Accrued interest |
$ 936
|
|
|
|
|
|
|
|
Promissory Note Balance |
|
$ 12,500
|
|
|
|
|
|
|
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CONVERTIBLE NOTES PAYABLE - Schedule of Convertible Notes Payable (Details) - USD ($)
|
9 Months Ended |
|
|
|
|
|
Aug. 31, 2015 |
Aug. 31, 2019 |
Aug. 31, 2018 |
Aug. 31, 2017 |
Aug. 31, 2016 |
Nov. 30, 2014 |
Debt Instrument, Discount |
$ 328,700
|
|
|
|
|
$ 9,040
|
Debt Instrument, Carrying Amount |
$ 276,312
|
|
|
$ 60,500
|
$ 408,800
|
|
LG Capital Funding |
|
|
|
|
|
|
Date of Issuance |
Nov. 03, 2014
|
|
|
|
|
|
Maturity date |
Nov. 03, 2015
|
|
|
|
|
|
Interest Rate |
8.00%
|
|
|
|
|
|
Debt Instrument |
$ 63,250
|
|
|
|
|
|
Debt Instrument, Discount |
9,040
|
|
|
|
|
|
Debt Instrument, Carrying Amount |
$ 54,210
|
|
|
|
|
|
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CONVERTIBLE NOTES PAYABLE - Schedule of Maturities of Convertible Notes Payable (Details) - USD ($)
|
Aug. 31, 2019 |
Aug. 31, 2018 |
Aug. 31, 2017 |
Aug. 31, 2016 |
Aug. 31, 2015 |
Convertible Notes Payable - Schedule Of Maturities Of Convertible Notes Payable Details |
|
|
|
|
|
Debt Instrument, Carrying Amount |
|
|
$ 60,500
|
$ 408,800
|
$ 276,312
|
Total Future Maturities |
|
|
|
|
$ 674,955
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CONVERTIBLE NOTES PAYABLE (Details Narrative) - USD ($)
|
3 Months Ended |
9 Months Ended |
12 Months Ended |
|
|
|
|
Aug. 31, 2015 |
Aug. 31, 2014 |
Aug. 31, 2015 |
Aug. 31, 2014 |
Nov. 30, 2014 |
Aug. 31, 2019 |
Aug. 31, 2018 |
Aug. 31, 2017 |
Aug. 31, 2016 |
Accrued interest |
|
|
$ 26,285
|
|
$ 374
|
|
|
|
|
Debt Instrument, Carrying Amount |
$ 276,312
|
|
276,312
|
|
|
|
|
$ 60,500
|
$ 408,800
|
Original issue discount, value |
164,685
|
|
248,863
|
|
|
|
|
|
|
Loss on issuance of convertible debt |
$ (55,093)
|
|
$ (356,402)
|
|
|
|
|
|
|
Union Capital |
|
|
|
|
|
|
|
|
|
Date of Issuance |
|
|
May 11, 2015
|
|
|
|
|
|
|
Interest Rate |
8.00%
|
|
8.00%
|
|
|
|
|
|
|
Maturity Date |
|
|
May 11, 2016
|
|
|
|
|
|
|
Convertible rate |
|
|
24.00%
|
|
|
|
|
|
|
Accrued interest |
|
|
$ 681
|
|
|
|
|
|
|
Debt Instrument, Carrying Amount |
$ 115,000
|
|
$ 115,000
|
|
|
|
|
|
|
Adar Bays |
|
|
|
|
|
|
|
|
|
Date of Issuance |
|
|
May 12, 2015
|
|
|
|
|
|
|
Promissory note |
$ 115,000
|
|
$ 115,000
|
|
|
|
|
|
|
Interest Rate |
8.00%
|
|
8.00%
|
|
|
|
|
|
|
Maturity Date |
|
|
May 12, 2016
|
|
|
|
|
|
|
Convertible rate |
|
|
24.00%
|
|
|
|
|
|
|
Accrued interest |
|
|
$ 655
|
|
|
|
|
|
|
Debt Instrument, Carrying Amount |
$ 115,000
|
|
$ 115,000
|
|
|
|
|
|
|
LG Capital Funding |
|
|
|
|
|
|
|
|
|
Date of Issuance |
|
|
Nov. 03, 2014
|
|
|
|
|
|
|
Promissory note |
$ 63,250
|
|
$ 63,250
|
|
|
|
|
|
|
Interest Rate |
8.00%
|
|
8.00%
|
|
|
|
|
|
|
Maturity Date |
|
|
Nov. 03, 2015
|
|
|
|
|
|
|
Convertible rate |
|
|
24.00%
|
|
|
|
|
|
|
Debt Instrument, Carrying Amount |
$ 54,210
|
|
$ 54,210
|
|
|
|
|
|
|
Dr. Gelbfish |
|
|
|
|
|
|
|
|
|
Date of Issuance |
|
|
Mar. 27, 2015
|
|
|
|
|
|
|
Promissory note |
$ 100,000
|
|
$ 100,000
|
|
|
|
|
|
|
Interest Rate |
10.00%
|
|
10.00%
|
|
|
|
|
|
|
Maturity Date |
|
|
Sep. 23, 2015
|
|
|
|
|
|
|
Convertible rate |
|
|
37.00%
|
|
|
|
|
|
|
JMJ Financial |
|
|
|
|
|
|
|
|
|
Date of Issuance |
|
|
Apr. 29, 2015
|
|
|
|
|
|
|
Interest Rate |
12.00%
|
|
12.00%
|
|
|
|
|
|
|
Maturity Date |
|
|
Apr. 29, 2017
|
|
|
|
|
|
|
Debt Instrument, Carrying Amount |
$ 33,000
|
|
$ 33,000
|
|
|
|
|
|
|
Typenex #2 |
|
|
|
|
|
|
|
|
|
Date of Issuance |
|
|
May 29, 2015
|
|
|
|
|
|
|
Interest Rate |
10.00%
|
|
10.00%
|
|
|
|
|
|
|
Maturity Date |
|
|
Jun. 29, 2016
|
|
|
|
|
|
|
Convertible rate |
|
|
50.00%
|
|
|
|
|
|
|
Debt Instrument, Carrying Amount |
$ 87,500
|
|
$ 87,500
|
|
|
|
|
|
|
GCEF Fund |
|
|
|
|
|
|
|
|
|
Date of Issuance |
|
|
Jun. 30, 2015
|
|
|
|
|
|
|
Interest Rate |
10.00%
|
|
10.00%
|
|
|
|
|
|
|
Maturity Date |
|
|
Jun. 30, 2016
|
|
|
|
|
|
|
Convertible rate |
|
|
24.00%
|
|
|
|
|
|
|
Debt Instrument, Carrying Amount |
$ 27,500
|
|
$ 27,500
|
|
|
|
|
|
|
Black Mountain |
|
|
|
|
|
|
|
|
|
Date of Issuance |
|
|
Jun. 04, 2015
|
|
|
|
|
|
|
Interest Rate |
8.00%
|
|
8.00%
|
|
|
|
|
|
|
Maturity Date |
|
|
Jun. 04, 2016
|
|
|
|
|
|
|
Convertible rate |
|
|
28.00%
|
|
|
|
|
|
|
Debt Instrument, Carrying Amount |
$ 55,000
|
|
$ 55,000
|
|
|
|
|
|
|
Lord Abstract |
|
|
|
|
|
|
|
|
|
Date of Issuance |
|
|
Jun. 30, 2015
|
|
|
|
|
|
|
Interest Rate |
10.00%
|
|
10.00%
|
|
|
|
|
|
|
Maturity Date |
|
|
Mar. 30, 2016
|
|
|
|
|
|
|
Convertible rate |
|
|
24.00%
|
|
|
|
|
|
|
Debt Instrument, Carrying Amount |
$ 8,800
|
|
$ 8,800
|
|
|
|
|
|
|
JMJ Financial #2 |
|
|
|
|
|
|
|
|
|
Date of Issuance |
|
|
Aug. 27, 2015
|
|
|
|
|
|
|
Interest Rate |
12.00%
|
|
12.00%
|
|
|
|
|
|
|
Maturity Date |
|
|
Aug. 27, 2017
|
|
|
|
|
|
|
Convertible rate |
|
|
24.00%
|
|
|
|
|
|
|
Debt Instrument, Carrying Amount |
$ 27,500
|
|
$ 27,500
|
|
|
|
|
|
|
X |
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- DefinitionFair value, before effects of master netting arrangements, of a financial liability or contract with one or more underlyings, notional amount or payment provision or both, and the contract can be net settled by means outside the contract or delivery of an asset. Includes liabilities elected not to be offset. Excludes liabilities not subject to a master netting arrangement.
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FAIR VALUE MEASUREMENTS - Schedule of Fair Value Liabilities Gains & Losses (Details) - USD ($)
|
3 Months Ended |
6 Months Ended |
9 Months Ended |
12 Months Ended |
Aug. 31, 2015 |
Aug. 31, 2014 |
May. 31, 2015 |
Aug. 31, 2015 |
Aug. 31, 2014 |
Nov. 30, 2014 |
Fair Value Disclosures [Abstract] |
|
|
|
|
|
|
Derivative Liability, Beginning Balance |
$ 2,968
|
|
|
|
$ 627,559
|
$ 627,559
|
Change in Fair Value of Derivative |
2,968
|
|
$ 270,045
|
$ (179,808)
|
|
$ (182,776)
|
Derivative Liability, Ending Balance |
$ 717,796
|
|
$ 2,968
|
$ 717,796
|
|
|
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COMMON STOCK (Details Narrative)
|
9 Months Ended |
|
Aug. 31, 2015
USD ($)
$ / shares
shares
|
Aug. 31, 2014
USD ($)
|
Nov. 30, 2014
$ / shares
shares
|
Common stock, Par Value | $ / shares |
$ 0.001
|
|
$ 0.001
|
Common stock, Shares | shares |
75,000,000
|
|
75,000,000
|
Common Stock, Proceeds |
$ 2,000
|
$ 28,000
|
|
Stock Split |
2
|
|
|
Shares Issued for Services, Shares | shares |
251,833
|
|
|
Shares Issued for Services |
$ (251,833)
|
|
|
Prepaid Stock for Services |
$ 188,417
|
|
|
Shares Issued, Conversion of Notes, Shares | shares |
2,254,942
|
|
|
Shares Issued, Conversion of Notes |
$ 4,518
|
|
|
Dr. Gelbfish |
|
|
|
Date of Issuance |
Mar. 27, 2015
|
|
|
Shares Issued for Services, Shares | shares |
50,000
|
|
|
Shares Issued for Services |
$ 41,349
|
|
|
LG Capital Funding |
|
|
|
Common Stock Issued, Shares | shares |
18,826
|
|
|
Date of Issuance |
Aug. 19, 2015
|
|
|
Debt Instrument, Converted Amount |
$ 4,250
|
|
|
Debt Instrument, Interest Accrued, Converted Amount |
$ 268
|
|
|
Service Providers |
|
|
|
Shares Issued for Services, Shares | shares |
440,000
|
|
|
Shares Issued for Services |
$ 583,125
|
|
|
Prom Note Conversions |
|
|
|
Shares Issued, Conversion of Notes, Shares | shares |
48,990
|
|
|
Shares Issued, Conversion of Notes |
$ 56,063
|
|
|
X |
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v3.3.1.900
PREFERRED STOCK (Details Narrative) - USD ($)
|
9 Months Ended |
|
Aug. 31, 2015 |
Nov. 30, 2014 |
Preferred stock, par value |
$ 0.001
|
$ 0.001
|
Preferred stock, share authorized |
10,000,000
|
10,000,000
|
Preferred stock Class A, shares |
50,000
|
|
Preferred stock Class A, price per share |
$ 5.00
|
|
Finiks Capital |
|
|
Date of Issuance |
Jan. 30, 2015
|
|
Preferred stock issued, shares |
15,380
|
|
Preferred stock issued, price per share |
$ 5.00
|
|
Preferred stock, value |
$ 76,900
|
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v3.3.1.900
LOSS PER SHARE APPLICABLE TO COMMON SHAREHOLDERS - Schedule of Earnings per Share Basic (Details) - USD ($)
|
3 Months Ended |
9 Months Ended |
Aug. 31, 2015 |
Aug. 31, 2014 |
Aug. 31, 2015 |
Aug. 31, 2014 |
Earnings Per Share [Abstract] |
|
|
|
|
Net Loss |
$ (733,435)
|
$ (140,266)
|
$ (1,506,480)
|
$ (177,838)
|
Loss per common share Basic and diluted |
$ (0.13)
|
$ (0.03)
|
$ (0.28)
|
$ (0.04)
|
Weighted average common shares outstanding: |
|
|
|
|
Weighted average common shares Basic and diluted |
5,651,549
|
5,075,478
|
5,442,147
|
5,071,839
|
Potentially dilutive securities: |
|
|
|
|
Convertible notes |
2,254,942
|
|
2,254,942
|
|
Convertible preferred stock |
528,193
|
|
528,193
|
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v3.3.1.900
LETTER OF INTENT AND COMMITMENTS (Details Narrative)
|
9 Months Ended |
Aug. 31, 2015
USD ($)
|
JS Tech |
|
Date of Agreement |
Jun. 12, 2015
|
Business Acquisition, Purchase Price |
$ 11,000,000
|
Business Acquisition, Terms |
The
purchase price will be paid, at the option of the individual JS stockholders, in either cash, new convertible preferred stock,
or a combination of both. The new convertible preferred stock to be issued as payment toward the purchase price will have
a stated value of $4.00 per share, will accrue dividends at a rate of six percent per year, and will be convertible to common
stock at a price of $1.00 per share of common stock. All shares of the new preferred stock issued and outstanding at thirty-six
months after closing will be automatically converted to common stock.
The
anticipated closing date of the acquisition will be in in 120 days from the date of the LOI and will be documented by a definitive
agreement to be prepared by the parties. The transaction must close by the later of: (i) 120 days from the date of the LOI,
or (ii) 60 days after delivery of audited financial statements and auditor reviewed subsequent quarters for JS, which is a condition
to closing. There are numerous additional conditions to closing of the acquisition, including, but not limited to: (i) execution
of the definitive agreement by not less than 65% of JSs stockholders and compliance with JSs bylaws and a buy/sell
agreement governing its common stock, (ii) our readiness and ability to pay the required portion of the purchase price to each
JS stockholder who is ready and willing to sell its shares, and (iii) concurrent closing of an additional agreement under which
we will purchase S&J Design Labs, LLC, the affiliated company which owns the building and equipment used in JSs operations.
As of the date of this filing the auditor reviews of the subsequent quarters have not yet been completed. Both parties have
agreed to extend the closing until all conditions have been met.
The
LOI also contains a no-shop provision for the time between the date of the LOI and the defined closing date. In
addition, if we or any of the JS stockholders signing the LOI fail and refuse to close the acquisition on the defined closing
date, and the other parties are ready and able to close, the breaching party will be assessed a $250,000 break-up fee. Extensive
additional covenants, conditions, representations, and warranties between the parties are included in the LOI. The foregoing is
a brief summary of the material terms of the LOI, which should be reviewed in its entirety for additional information.
|
JS Tech Note |
|
Date of Agreement |
Aug. 04, 2015
|
Debt Instrument |
$ 400,000
|
Debt Instrument, Initial Advance |
$ 200,000
|
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v3.3.1.900
RESTATEMENT- Schedule of Consolidated Balance Sheet (Details) - USD ($)
|
Aug. 31, 2015 |
Nov. 30, 2014 |
Total assets |
$ 201,355
|
$ 28,673
|
Accumulated deficit |
(1,941,636)
|
(435,156)
|
Total stockholders equity (deficit) |
(969,127)
|
(226,553)
|
Total liabilities and stockholders equity |
201,355
|
$ 28,673
|
As Reported |
|
|
Product license |
29,250
|
|
Total assets |
66,963
|
|
Accumulated deficit |
(405,906)
|
|
Total stockholders equity (deficit) |
(197,303)
|
|
Total liabilities and stockholders equity |
66,963
|
|
Adjustment |
|
|
Product license |
(29,250)
|
|
Total assets |
(29,250)
|
|
Accumulated deficit |
(29,250)
|
|
Total stockholders equity (deficit) |
(29,250)
|
|
Total liabilities and stockholders equity |
$ 29,250
|
|
As Restated |
|
|
Product license |
|
|
Total assets |
$ 37,713
|
|
Accumulated deficit |
(435,156)
|
|
Total stockholders equity (deficit) |
(226,553)
|
|
Total liabilities and stockholders equity |
$ 37,713
|
|
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v3.3.1.900
RESTATEMENT- Schedule of Consolidated Statement of Operations (Details) - USD ($)
|
3 Months Ended |
6 Months Ended |
9 Months Ended |
Aug. 31, 2015 |
May. 31, 2015 |
Aug. 31, 2014 |
May. 31, 2015 |
Aug. 31, 2015 |
Aug. 31, 2014 |
General and administrative |
$ 488,466
|
|
$ 84,406
|
|
$ 1,050,951
|
$ 123,538
|
Total operating expense |
488,466
|
|
145,599
|
|
1,057,315
|
184,731
|
Net loss from operations |
$ (488,555)
|
|
(140,266)
|
|
$ (1,048,034)
|
(177,838)
|
As Reported |
|
|
|
|
|
|
General and administrative |
|
$ 363,769
|
70,906
|
$ 537,735
|
|
107,788
|
Total operating expense |
|
363,769
|
132,099
|
544,099
|
|
168,981
|
Net loss from operations |
|
(570,226)
|
(126,766)
|
(748,295)
|
|
(162,088)
|
Adjustment |
|
|
|
|
|
|
General and administrative |
|
11,250
|
13,500
|
24,750
|
|
15,750
|
Total operating expense |
|
11,250
|
13,500
|
24,750
|
|
15,750
|
Net loss from operations |
|
(11,250)
|
(13,500)
|
(24,750)
|
|
(15,750)
|
As Restated |
|
|
|
|
|
|
General and administrative |
|
375,019
|
84,406
|
562,485
|
|
123,538
|
Total operating expense |
|
375,019
|
145,599
|
568,849
|
|
184,731
|
Net loss from operations |
|
$ (581,476)
|
$ (140,266)
|
$ (773,045)
|
|
$ (177,838)
|
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SUBSEQUENT EVENTS (Details Narrative) - USD ($)
|
3 Months Ended |
9 Months Ended |
|
Aug. 31, 2015 |
Aug. 31, 2015 |
Nov. 30, 2014 |
Debt Instrument, Original Issue Discount |
$ 164,685
|
$ 248,863
|
|
Common stock, shares issued |
5,703,816
|
5,703,816
|
5,144,400
|
Preferred stock Class A, shares |
50,000
|
50,000
|
|
Union Capital Amdt #1 |
|
|
|
Date of Agreement |
|
Jan. 22, 2016
|
|
Convertible rate |
|
55.00%
|
|
Debt Instrument Description |
|
Further, the pricing period,
or look-back for determining the conversion price has been extended from 20 days to 25 days, and the pre-payment
penalty has been increased to 150%.
|
|
Adar Bays Amdt |
|
|
|
Date of Agreement |
|
Jan. 25, 2016
|
|
Debt Instrument Description |
|
Further, the pricing period,
or look-back for determining the conversion price has been extended from 20 days to 25 days, and the pre-payment
penalty has been increased to 150%.
|
|
Studio Capital |
|
|
|
Date of Agreement |
|
Oct. 08, 2015
|
|
Debt Instrument |
$ 100,000
|
$ 100,000
|
|
Debt Instrument, Term |
|
6 months
|
|
Debt Instrument, Borrowing Capacity |
$ 125,000
|
$ 125,000
|
|
Debt Instrument, Original Issue Discount |
|
$ 25,000
|
|
Common stock, shares issued |
5,000
|
5,000
|
|
Studio Capital Guarantee |
|
|
|
Issuance Date |
|
Oct. 08, 2015
|
|
Common stock, shares issued |
30,000
|
30,000
|
|
Convertible Prom Note #1 |
|
|
|
Issuance Date |
|
Sep. 08, 2015
|
|
Common stock, shares issued |
22,239
|
22,239
|
|
Debt Instrument, Converted Amount |
|
$ 5,000
|
|
Debt Instrument, Interest Accrued, Converted Amount |
|
$ 338
|
|
Class A Convertible Note |
|
|
|
Issuance Date |
|
Sep. 21, 2015
|
|
Common stock, shares issued |
528,193
|
528,193
|
|
Debt Instrument, Converted Amount |
|
$ 11,556
|
|
Preferred stock Class A, shares |
29,380
|
29,380
|
|
Prom Note #4 |
|
|
|
Date of Agreement |
|
Dec. 02, 2015
|
|
Debt Instrument |
$ 125,000
|
$ 125,000
|
|
Debt Instrument, Original Issue Discount |
|
$ 25,000
|
|
Warrant |
|
100,000
|
|
Warrant, price per share |
$ 0.01
|
$ 0.01
|
|
Warrant, period |
|
1 year
|
|
LG Capital Funding Amdt |
|
|
|
Date of Agreement |
|
Jan. 20, 2016
|
|
Warrant |
|
75,000
|
|
Warrant, price per share |
$ 0.30
|
$ 0.30
|
|
Warrant, period |
|
3 years
|
|
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xbrli:dateItemType |
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X |
- Details
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Data Type: |
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Period Type: |
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- Details
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Period Type: |
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Avalanche (CE) (USOTC:AVLP)
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