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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

 Washington, D.C. 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 September 30, 2011


 

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

 

       For the Transition Period From ____to _____

 

Commission File Number: 000-52670

 

PANACHE BEVERAGE INC.

(Exact name of small business issuer as specified in its charter) 

 

 

Florida 20-2089854
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)  

 

 

40 W. 23rd Street, 2nd Floor, New York, NY 10001

(Address of principal executive offices)

 

(347) 436-8383

(Issuer's telephone number)

 

Indicate by check mark if the registrant is a well-know seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes [ ] No [x]

 

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act

Yes [ ] No [x]

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes [x] No [ ]

 

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

Yes [ ] No [ ]

 

 

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 if Regulation S-K (229.405 of this Chapter) is not contained herein, and will not be contained, to the best of the registrant’s knowledge, in definitive proxy of information statements incorporated by reference in Part III of this Form 10-Q or any amendments to this Form 10-Q.

Yes [ ] No [x]

 

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

 

Large accelerated filer  £ 
Non-accelerated filer  £ (Do not check if a smaller reporting company)
Accelerated filer  £
Smaller reporting company  S

  

 

Indicate by check mark whether the registrant is a shell company (as defined in rule 12b-2 of the exchange act).

Yes [ ] No [x]

 

Number of shares of common stock, par value $.001, outstanding as of November 21, 2011: 24,537,891

 

 

CAUTIONARY STATEMENT REGARDING FORWARD LOOKING INFORMATION

 

The discussion contained in this 10-Q under the Securities Exchange Act of 1934, as amended, contains forward-looking statements that involve risks and uncertainties. The issuer's actual results could differ significantly from those discussed herein. These include statements about our expectations, beliefs, intentions or strategies for the future, which we indicate by words or phrases such as "anticipate," "expect," "intend," "plan," "will," "we believe," "the Company believes," "management believes" and similar language, including those set forth in the discussions under "Notes to Consolidated Financial Statements" and "Management's Discussion and Analysis or Plan of Operation" as well as those discussed elsewhere in this Form 10-Q. We base our forward-looking statements on information currently available to us, and we assume no obligation to update them. Statements contained in this Form 10-Q that are not historical facts are forward-looking statements that are subject to the "safe harbor" created by the Private Securities Litigation Reform Act of 1995.

 

(1)

 

  TABLE OF CONTENTS  
   
PART I. FINANCIAL INFORMATION  
   
   
   
ITEM 1. FINANCIAL STATEMENTS 3
   
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 14
   
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK     18
   

ITEM 4. CONTROLS AND PROCEDURES

 

ITEM 4T. CONTROLS AND PROCEDURES

18

 

18

   
PART II. OTHER INFORMATION  
   
ITEM 1. LEGAL PROCEEDINGS 20
   
ITEM 1A. RISK FACTORS      20
   
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS 20
   
ITEM 3. DEFAULTS UPON SENIOR SECURITIES      20
   
ITEM 4. (REMOVED AND RESERVED)      20
   
ITEM 5. OTHER INFORMATION  20
   
ITEM 6. EXHIBITS 20
   
SIGNATURES 21
   
INDEX TO EXHIBITS 22

 

(2)

 

ITEM 1. FINANCIAL STATEMENTS

 

 

PANACHE BEVERAGE INC. AND SUBSIDIARIES

UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2011

 

 

 

(3)

 

Index to Unaudited Consolidated Financial Statements

 

    Pages
     
     
     
Unaudited Consolidated Balance Sheets   5
     
Unaudited Consolidated Statements of Operations   6
     
Unaudited Consolidated Statements of Cash Flows   7
     
Notes to Unaudited Consolidated Financial Statements   8– 13
     

 

(4)

 

 

PANACHE BEVERAGE INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
AS OF SEPTEMBER 30, 2011 AND DECEMBER 31, 2010
(UNAUDITED)
       
    9/30/2011    12/31/2010 
ASSETS          
Current Assets          
Cash and cash equivalents  $29,466   $67,975 
Accounts receivable, net   521,173    267,440 
Inventory   49,201    96,190 
Prepayment and deposits   1,431,455    2,248,655 
Loan receivable   4,000    —   
Total Current Assets   2,035,295    2,680,260 
           
Fixed assets, net   15,304    24,214 
           
TOTAL ASSETS  $2,050,599   $2,704,474 
           
LIABILITIES AND STOCKHOLDERS' EQUITY          
           
LIABILITIES          
Current Liabilities          
Accounts payable  $428,309   $250,873 
Notes payable   32,716    84,765 
Notes payable - related parties   28,000      
Officer compensation payable   —      52,501 
Contingent liabilities   191,778    191,778 
Accrued interest   83,350    37,550 
Accrued expenses and other payable   283,462    77,641 
Total Current Liabilities   1,047,615    695,108 
           
Long-Term Liabilities          
Notes payable   192,802    247,500 
Notes payable - related parties   342,046    245,059 
Total Long-Term Liabilities   534,848    492,559 
           
Total Liabilities   1,582,463    1,187,667 
           
MINORITY INTEREST   144,617    501,105 
           
STOCKHOLDERS' EQUITY          
Common stock, par value $0.001; 200,000,000 shares authorized; 24,537,891 and 22,354,500 shares issued and outstanding as of September 30, 2011 and December 31, 2010, respectively   24,538    22,355 
Additional paid-in capital   1,882,136    1,808,102 
Common stock warrants   15,768    15,768 
Accumulated deficit   (1,598,923)   (830,523)
Total Stockholders' Equity   323,519    1,015,702 
           
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY  $2,050,599   $2,704,474 
           
           
The accompanying notes are an integral part of these  consolidated  financial statements

 

 

(5)

 

PANACHE BEVERAGE INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2011 AND 2010
(UNAUDITED)
             
   For the three months ended  For the nine months ended
   9/30/2011  9/30/2010  9/30/2011  9/30/2010
REVENUES                    
Sales  $526,587   $61,948   $1,278,622   $765,156 
Cost of Goods Sold   (329,741)   (27,523)   (917,135)   (339,826)
GROSS PROFIT   196,846    34,425    361,487    425,330 
                     
OPERATING EXPENSES                    
Advertising and promotion   108,030    428,442    982,617    471,368 
Automobile   949    144    3,967    506 
Bad debt   —      —      2,026    729 
Bank and finance charges   21,004    2,485    33,011    8,055 
Commissions   15,533    6,889    31,173    38,995 
Consulting fee   113,572    24,502    213,143    216,927 
Depreciation   2,310    2,021    6,930    2,021 
General and administrative   42,212    35,711    112,050    108,365 
Insurance   2,342    3,314    13,500    10,734 
Professional fees   54,913    27,969    129,597    33,457 
Rent   5,700    2,475    13,125    6,600 
Selling expenses   3,500    25,049    10,092    2,003 
Stock based compensation   434,678    —      434,678    —   
Telephone and utilities   9,032    6,794    17,328    16,395 
Travel, meals and entertainment   47,386    79,038    118,131    118,544 
TOTAL OPERATING EXPENSES   861,160    644,832    2,121,369    1,034,701 
                     
LOSS FROM OPERATIONS   (664,314)   (610,407)   (1,759,883)   (609,371)
                     
OTHER INCOME (EXPENSE)                    
Interest expense   (8,996)   (14,400)   (38,849)   (36,300)
Shell expenses   (75,000)   —      (75,000)   —   
Other income  (expenses)   —      (45,800)   (52,706)   (45,800)
TOTAL OTHER INCOME (EXPENSE)   (83,996)   (60,200)   (166,555)   (82,100)
                     
LOSS BEFORE PROVISION FOR INCOME TAXES
AND MINORITY INTEREST
   (748,310)   (670,607)   (1,926,437)   (691,471)
                     
PROVISION FOR INCOME TAXES   —      —      —      —   
MINORITY INTEREST   52,341    220,136    462,339    257,324 
                     
NET LOSS  $(695,969)  $(450,471)  $(1,464,098)  $(434,147)
                     
NET LOSS PER SHARE: BASIC AND DILUTED  $(0.03)  $(0.02)  $(0.06)  $(0.02)
                     
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING: BASIC AND DILUTED   24,705,206    22,354,500    23,138,069    22,354,500 
                     
                     
The accompanying notes are an integral part of these  consolidated  financial statements                    

 

(6)

 

PANACHE BEVERAGE INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2011 AND 2010
(UNAUDITED)
       
   For the nine months ended
   9/30/2011  9/30/2010
CASH FLOWS FROM OPERATING ACTIVITIES:      
Net loss for the period  $(1,464,098)  $(434,147)
Adjustments to reconcile net loss to net cash used by operating activities:          
Minority interest   (462,339)   (257,324)
Bad debt expense   2,026    729 
Depreciation   6,930    2,021 
Common stock issued for services rendered   434,678    —   
Changes in assets and liabilities:          
Accounts receivable   (255,759)   (384,147)
Inventory   46,989    188,696 
Prepayment and deposits   817,200    (2,868,394)
Accounts payable   177,436    (76,713)
Officer compensation payable   (52,501)   18,970 
Accrued expenses and other payable   205,820    46,334 
Accrued interest   45,800    26,700 
Contingent liabilities 0   191,778 
Net cash (used in) provided by operating activities   (497,818)   (3,545,496)
           
CASH FLOWS FROM INVESTING ACTIVITIES:          
Disposal of equipments   1,980    —   
Purchase of property and equipment   —      (29,397)
Net cash (used in) investing activities   1,980    (29,397)
           
CASH FLOWS FROM FINANCING ACTIVITIES:          
Proceeds from notes payable - related parties   96,988    316,267 
Proceeds from notes payable   28,000    84,765 
Payments to notes payable   (110,747)   —   
Proceeds from stock issuance   230,000    —   
Contribution to paid-in capital   213,088    3,127,783 
Net cash provided by (used in) financing activities   457,329    3,528,815 
           
Net increase (decrease) in cash and cash equivalents   (38,509)   (46,079)
           
Cash and Cash Equivalents, Beginning of Period   67,975    52,394 
           
Cash and Cash Equivalents, End of Period  $29,466   $6,316 
           
SUPPLEMENTAL CASH FLOW INFORMATION:          
Cash paid for interest    47,398     6,305 
Cash paid for income taxes  $—     $—   
           
SUPPLEMENTAL NON-CASH INVESTING AND FINANCING INFORMATION:          
Common stock issued for services rendered  $434,678   $—   
           
           
The accompanying notes are an integral part of these  consolidated  financial statements

 

(7)

 

NOTE - 1 BASIS OF PRESENTATION

 

The accompanying unaudited consolidated financial statements have been prepared in accordance with both generally accepted accounting principles for interim financial information, and the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. The accompanying unaudited consolidated financial statements reflect all adjustments (consisting of normal recurring accruals) that are, in the opinion of management, considered necessary for a fair presentation of the results for the interim periods presented. Interim results are not necessarily indicative of results for a full year.

 

The unaudited consolidated financial statements and related disclosures have been prepared with the presumption that users of the interim financial information have read or have access to the Company’s annual audited consolidated financial statements for the preceding fiscal year. Accordingly, these unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements and the related notes for the years ended December 31, 2010 and 2009 thereto contained in the Annual Report on Form 10-K for the year ended December 31, 2010.

 

NOTE - 2 ORGANIZATION AND BUSINESS BACKGROUND

 

Panache Beverage Inc. (the “Company”) was incorporated in the State of Florida on December 28, 2004 under the name as Biometrix International Inc. On May 30, 2007, the Company changed its name to BMX Development Corp. On September 6, 2011, the Company filed an Articles of Amendment to the Articles of Incorporation with the Florida Secretary of State to change its name to Panache Beverage Inc. and believed the new name would more accurately reflect its business after a stock exchange transaction with Panache LLC, a New York Limited Liability Company.

 

On August 19, 2011, the Company completed a stock exchange transaction with Panache LLC (“Panache”).  Panache was incorporated as a limited liability company in the State of New York in November 2004.  Panache is an alcoholic beverage company specializing in development, global sales and marketing of spirits brands, and currently owns 65% ownership of Wodka LLC, a New York Limited Liability Company.

 

The stock exchange transaction involved two simultaneous transactions:

 

The majority shareholder of the Company delivered 2,560,000 shares of the Company’s common stock to the Panache Members in exchange for total payments of $125,000 in cash and;

 

The Company issued to the Panache Members an amount equal to 17,440,000 new investment shares of common stock of the Company pursuant to Rule 144 under the Securities Act of 1933, as amended, in exchange for one hundred percent (100%) of the issued and outstanding membership interest units of Panache from the Panache Members.

 

Upon completion of the exchange, Panache became wholly-owned subsidiary of the Company, and Wodka LLC, Panache’s 65%-owned subsidiary, became 65%-owned subsidiary of the Company, and the former members of Panache then owned approximately 90% of the issued and outstanding shares of the Company.

 

(8)

 

NOTE - 2 ORGANIZATION AND BUSINESS BACKGROUND (CONT’D)

 

The stock exchange transaction has been accounted for as a reverse acquisition and recapitalization of the Company whereby Panache is deemed to be the accounting acquirer (legal acquiree) and the Company to be the accounting acquiree (legal acquirer).  The accompanying consolidated financial statements are in substance those of Panache and Wodka, with the assets and liabilities, and revenues and expenses, of the Company being included effective from the date of stock exchange transaction.  The Company is deemed to be a continuation of the business of Panache.  Accordingly, the accompanying consolidated financial statements include the following:

 

(1)           The balance sheet consists of the net assets of the accounting acquirer at historical cost and the net assets of the accounting acquiree at historical cost; 

(2)           The financial position, results of operations, and cash flows of the accounting acquirer for all periods presented as if the recapitalization had occurred at the beginning of the earliest period presented and the operations of the accounting acquiree from the date of stock exchange transaction.

 

The Company, Panache and Wodka are hereinafter referred to as (the “Company”).

 

NOTE - 3 RECENTLY ISSUED ACCOUNTING STANDARDS

 

The Company has reviewed all recently issued, but not yet effective, accounting pronouncements and does not believe the future adoption of any such pronouncements may be expected to cause a material impact on its consolidated financial condition or the consolidated results of its operations.

 

In May 2011, FASB issued Accounting Standards Update No. 2011-04, “Fair Value Measurements (Topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs” (“ASU 2011-04”).  ASU 2011-04 changes the wording used to describe many of the requirements in U.S. GAAP for measuring fair value and for disclosing information about fair value measurements to ensure consistency between U.S. GAAP and IFRS. ASU 2011-04 also expands the disclosures for fair value measurements that are estimated using significant unobservable (Level 3) inputs. This new guidance is to be applied prospectively.  The Company anticipates that the adoption of this standard will not materially expand its financial statement note disclosures.

 

NOTE - 4 ACCOUNTS RECEIVABLE

 

The Company’s revenues are on open credit terms and governed by the terms specified in the contracts. The Company evaluates the need of an allowance for doubtful accounts based on specifically identified amounts that management believes to be uncollectible. If actual collections experience changes, revisions to the allowance may be required. The Company did not experience significant losses from uncollectible accounts in the past; accordingly, the management believed bad debt expenses of $2,026 were reasonable to be recognized during the nine months ended September 30, 2011 in the accompanying consolidated income statements.

  As of
  9/30/2011   12/31/2010
           
Gross trade accounts receivable from customers $ 523,199   268,169
Allowance for doubtful customer accounts   (2,026)     (729)
  $ 521,173   $ 267,440
           

 

(9)

 

NOTE - 5 PREPAYMENT 

 

As of September 30, 2011 and December 31, 2010, the Company had prepayment of $1,431,455 and $2,248,655, respectively, consisted of the following:

                As of  
    9/30/2011     12/31/2010  
             
Prepaid advertisement     1,427,655       2,240,155  
Other miscellaneous prepayment     3,800       8,500  
      1,431,455       2,248,655  

 

 

NOTE - 6 FIXED ASSETS

 

Fixed assets primarily consisted of the billboard materials and an office equipment of $1,980, which was disposed during the nine months ended September 30, 2011.

  As of
  9/30/2011   12/31/2010
Cost:          
Billboard $ 27,720   27,720
Furniture and fixtures   0     1,980
    27,720     29,700
Less: Accumulated depreciation   (12,416)     (5,486)
Net $ 15,304   $ 24,214

 

 

         

 

NOTE - 7 LOAN PAYABLE – CURRENT PORTION

 

The Company had outstanding balances on its short-term notes payable of the following amounts at the respective dates:

  As of
  9/30/2011   12/31/2010
           
Natwest Finance Limited, 24% interest per annum, due in October 2011(1)

 

$

32,716  

 

84,765
Miami Marketing Group, 2% interest per annum, due on demand (2)   28,000     0
  $ 60,716   $ 84,765

 

 

(1) The Company has a short-term loan payable to Natwest Finance Limited at an interest rate of 24% per annum and due in October 2011. The balance of this loan was $32,716 and $84,765 as of September 30, 2011 and December 31, 2010, respectively. Accordingly, the Company recorded interest expenses of $5,640 during the nine months ended September 30, 2011. The $32,716 was paid in full when due.

 

(2) The Company has a short-term loan payable to Miami Marketing Group, a related party of the Company, at an interest rate of 2% per annum and due on demand. The loan commenced on August 1, 2011, the balance of which was $28,000 as of September 30, 2011. Accordingly, the Company recorded interest expenses of $93 during the nine months ended September 30, 2011.

 

(10)

 

NOTE - 8 LOAN PAYABLE – LONG-TERM

 

The Company had outstanding balances on its long-term notes payable of the following amounts at the respective dates:

  As of
  9/30/2011   12/31/2010
           
Matt Reines, 12% interest per annum , due on December 31, 2012(1)

 

$

7,802  

 

14,200
Tony Radisich, 24% interest per annum, due on December 31, 2012 (2)   185,000     233,300
  $ 192,802   $ 247,500

 

(1) The Company has a long-term loan payable to a non-affiliate. The balance of this loan was $7,802 and $14,200 as of September 30, 2011 and December 31, 2010, respectively. Accordingly, the Company recorded interest expenses of $864 during the nine months ended September 30, 2011.

 

(1) The Company has a long-term loan payable to a non-affiliate. The balance of this loan was $185,000 and $233,300 as of September 30, 2011 and December 31, 2010, respectively. Accordingly, the Company recorded interest expenses of $33,030 during the nine months ended September 30, 2011, respectively.

 

 

NOTE - 9 LOAN PAYABLE – RELATED PARITIES

 

The Company had outstanding balances of $342,046 and $245,059 due to the related parties as of September 30, 2011 and December 31, 2011, respectively. The funds borrowed from the related parties were to fund the Company’s operations and due on December 31, 2012. Accordingly, the Company recorded interest expenses of $5,131 during the nine months ended September 30, 2011.

 

NOTE - 10 CONTINGENT LIABILITIES

 

The Company had a pending settlement with Incubrands Spirits Group (“Incubrands”) in connection with an equity agreement (the “Agreement”), dated April 30, 2007. Pursuant to the Agreement, Incubrands claimed commission fees of $191,778 incurred during the agreement period. Accordingly, the Company recognized contingent loss of $191,778 in 2009 and the balance of contingent liabilities was $191,778 as of September 30, 2011.

 

NOTE - 11 MINORITY INTEREST

 

As of September 30, 2011 and December 31, 2010, the outstanding balance of minority interest was $144,617 and $501,105, respectively, due to the 35% ownership of Wodka LLC, a New York Limited Liability Company owned by the minority shareholders.

 

(11)

 

 

NOTE - 12 WARRANTS

 

The Company issued 18,500 stock warrants as part of the sale of common shares under a private placement to unrelated third parties in 2009. The warrants have been fair valued at $15,768. The fair market value was calculated using the Black-Scholes options pricing model at grant date using the following assumptions. A stock price of $2.05, exercise price of $2.00, risk-free interest rate of 1.28%, 0% dividend yield, 60% volatility rate, and an expected life of 3 years.

 

NOTE - 13 CAPITAL TRANSACTIONS

 

On August 19, 2011, the Company completed a stock exchange transaction with the Panache Members, pursuant to which 17,440,000 new investment shares of common stock of the Company were issued to the Panache Members in exchange for one hundred percent (100%) of the issued and outstanding membership interest units of Panache from the Panache Members. The issuance of 17,440,000 shares represented approximately 90% of the Company’s then outstanding common stock and resulted in a change in control of the Company.

 

On August 25, 2011, the Board of Directors of the Company approved the issuance of 460,000 shares of the Company’s Common Stock at a price of $.50 per share, in exchange for cash payment of total $230,000. The transaction was independently negotiated between the Company and the investors. The Company evaluated the transaction based on the fact that the Company had nominal trading volume for its stock, and had significant accumulated deficit at the time of issuance. The proceeds from this issuance mitigated the Company’s cash pressure in short term.

 

NOTE - 14 STOCK BASED COMPENSATION

 

On June 1, 2011, the Company issued 1,143,391 shares of common stock to Columbus Partners LLC for business advisory services. The fair value of this stock issuance was determined by the fair value of the Company’s common stock on the grant date, at a price of $0.20 per share. Accordingly, the Company recognized the stock-based compensation of $228,678 during the nine months ended September 30, 2011.

 

On June 9, the Company issued 520,000 shares of common stock to Greentree Financial Group, Inc for business advisory services. The fair value of this stock issuance was determined by the fair value of the Company’s common stock on the grant date, at a price of $0.20 per share. Accordingly, the Company recognized the stock-based compensation of $104,000 during the nine months ended September 30, 2011.

 

On September 2, 2011, the Company issued 60,000 shares of common stock to WALL STREET RESOURCES, INC. for public relations services. The fair value of this stock issuance was determined by the fair value of the Company’s common stock on the grant date, at a price of $1.70 per share. Accordingly, the Company recognized the stock-based compensation of $102,000 during the nine months ended September 30, 2011.

 

 

NOTE - 15 LOSS PER SHARE

 

Basic net loss per share is computed using the weighted average number of common shares outstanding during the three and nine months ended September 30, 2011, respectively.  There was no dilutive earning per share as of September 30, 2011 due to net losses during the periods.  

 

(12)

 

NOTE - 15 LOSS PER SHARE (CONT’D)

 

The following table sets forth the computation of basic net loss per share for the periods indicated:

 

        Three months ended         Nine months ended  
    9/30/2011     9/30/2010     9/30/2011     9/30/2010  
                         
Numerator:                                
-        Net loss   $ (695,969 )   $ (450,471 )   $ (1,464,098 )   $ (434,147 )
Denominator:                                
-        Weighted average common shares outstanding     24,705,206       22,354,500       23,138,069       22,354,500  
                                 
Basic net loss per share    $ (0.03 )   $ (0.02 )   $ (0.06 )   $ (0.02 )

 

NOTE - 16 CONCENTRATION AND RISK

 

Major customers

The Company had two customers consisting of 100% revenues of the Company for the nine months ended September 30, 2011 and three customers consisting of 100% revenues of the Company for the nine months ended September 30, 2010. The detailed information was set forth in the tables as followings.

For the nine months ended September 30, 2011

Customers   Revenues          

Accounts

Receivable

 
                         
DSWE NYC 80% Aprox   $ 1,022,898       80 %   $ 0  
Pure Beverages Australia 20& Aprox     255,724       20 %      0  
                         
Total:   $ 1,278,622       100 %   $ 0  

 

For the nine months ended September 30, 2010

Customers  Revenues     Accounts
Receivable
                
Windmill Phoenix LLC 60%  $459,094    60%  $0 
Pure Beverages Australia 20& Aprox   153,031    20%   0 
Premier Beverages Florida 20%   153,031    20%   0 
                
Total:  $765,156    100%  $0 

 

Credit risk

Financial instruments that potentially subject the Company to significant concentrations of credit risk consist principally of cash and trade accounts receivable. The Company performs ongoing credit evaluations of its customers’ financial condition, but does not require collateral to support such receivables.

 

NOTE - 17 GOING CONCERN

 

These consolidated financial statements have been prepared assuming that Company will continue as a going concern, which contemplates the realization of assets and the discharge of liabilities in the normal course of business for the foreseeable future.

 

As of September 30, 2011, the Company had an accumulated deficit of $1,598,923. Management has taken certain action and continues to implement changes designed to improve the Company’s financial results and operating cash flows. The actions involve certain cost-saving initiatives and growing strategies, including (a) reductions in operating expenses; and (b) expansion of the business model into new markets. Management believes that these actions will enable the Company to improve future profitability and cash flow in its continuing operations through December 31, 2012. As a result, the financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the outcome of the Company’s ability to continue as a going concern.

 

(13)

 

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION

 

Forward Looking Statements

 

Certain statements in this report, including statements of our expectations, intentions, plans and beliefs, including those contained in or implied by "Management's Discussion and Analysis" and the Notes to Consolidated Financial Statements, are "forward-looking statements", within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), that are subject to certain events, risks and uncertainties that may be outside our control. The words “believe”, “expect”, “anticipate”, “optimistic”, “intend”, “will”, and similar expressions identify forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date on which they are made. We undertake no obligation to update or revise any forward-looking statements. These forward-looking statements include statements of management's plans and objectives for our future operations and statements of future economic performance, information regarding our expansion and possible results from expansion, our expected growth, our capital budget and future capital requirements, the availability of funds and our ability to meet future capital needs, the realization of our deferred tax assets, and the assumptions described in this report underlying such forward-looking statements. Actual results and developments could differ materially from those expressed in or implied by such statements due to a number of factors, including, without limitation, those described in the context of such forward-looking statements, our expansion strategy, our ability to achieve operating efficiencies, our dependence on distributors, capacity, suppliers, industry pricing and industry trends, evolving industry standards, domestic and international regulatory matters, general economic and business conditions, the strength and financial resources of our competitors, our ability to find and retain skilled personnel, the political and economic climate in which we conduct operations and the risk factors described from time to time in our other documents and reports filed with the Securities and Exchange Commission (the "Commission"). Additional factors that could cause actual results to differ materially from the forward-looking statements include, but are not limited to: 1) our ability to successfully develop and deliver our products on a timely basis and in the prescribed condition; 2) our ability to compete effectively with other companies in the same industry; 3) our ability to raise sufficient capital in order to effectuate our business plan; and 4) our ability to retain our key executives.

 

History

 

As used herein the terms "We", the "Company", "Panache", the "Registrant," or the "Issuer" refers to Panache Beverage Inc., its subsidiaries and predecessors, unless indicated otherwise. We were incorporated in the State of Florida on December 28, 2004 under the name as Biometrix International Inc. On May 30, 2007, we changed our name to BMX Development Corp. On September 6, 2011, we filed an Articles of Amendment to the Articles of Incorporation with the Florida Secretary of State to change our name to Panache Beverage Inc. and believed the new name would more accurately reflect our business after a stock exchange transaction with Panache LLC, a New York Limited Liability Company.

 

As of August 19, 2011, we entered into a Plan of Exchange (the “Agreement”), between and among us, Michael J. Bongiovanni (“Mr. Bongiovanni”), an individual shareholder and our former President / former Chief Executive Officer, Panache LLC (“Panache”), a New York Limited Liability Company, James Dale, an individual member and Manager of Panache, and the individual members of Panache (collectively the “Panache Members”).

 

Pursuant to the terms of the Agreement, two simultaneous transactions were consummated at closing, as follows: (i) Mr. Bongiovanni delivered 2,560,000 shares of our common stock to Mr. James Dale in exchange for total payments of $125,000 in cash and (ii) we issued to the Panache Members an amount equal to 17,440,000 new investment shares of our common stock pursuant to Rule 144 under the Securities Act of 1933, as amended, in exchange for one hundred percent (100%) of the issued and outstanding membership interest units of Panache from the Panache Members. Upon completion of the exchange, Panache became our wholly-owned subsidiary. Panache is currently 65% owner of Wodka LLC, a New York Limited Liability Company. All of these conditions to closing have been met, and we, Panache, the Panache Members and our Majority Shareholders declared the exchange transaction consummated on August 19, 2011. The transaction was treated for accounting purposes as a capital transaction and recapitalization by the accounting acquirer (Panache) and as a re-organization by the accounting acquiree (the Company).

 

(14)

 

Business Description of the Company

 

We began operating as a services provider regarding motor cycle repair and maintenance for customers located in and around the Charlotte, North Carolina area. Subsequent to the stock exchange transaction, we have continued operations of Panache, an alcoholic beverage company specializing in development, global sales and marketing of spirits brands, and no longer be engaged in the business of motor cycle repair services.

 

Panache was formed in November 2004 by James Dale as the import company of record for the premium vodka, 42 BELOW NZ. At that time, 42 BELOW was a publically traded company but lack of traction in the most important liquor market in the world, including the United States. Panache provided the marketing solution for 42 BELOW, and it became a brand available in 19 strategically selected states and was over-performing in top tier image accounts a year later. By mid-2005 42 BELOW was a major player in the business and was being noticed in the United States by major suppliers.

 

After noticing that 42 BELOW has replaced Grey Goose in numerous key accounts, Bacardi added 42 BELOW to a list of top threats to Grey Goose in the US. Shortly thereafter 42 BELOW was formally approached for global acquisition. At this stage Panache was responsible for over 50% of the total annual cases sold globally and was among the key driving factors in the success of the brand. These agreements were purchased as part of the settlement and purchase of the 42 BELOW Public Company in December 2006.

 

During this time Panache was developing its current pipeline brands Alchemia Vodka and Alibi Bourbon with an eye toward developing a value brand, which became Wodka.

 

Today, Panache has developed a unique set of wholesale and retail relationships as well as sales and marketing infrastructure and proprietary partnerships enabling it develop, roll out and exit its brands.

 

Panache is now focused on two additional brands, complimenting Wodka Vodka in its portfolio: Alchemia Infused Vodka and Alibi American Whiskey. Staying true to its credo, Panache developed Alchemia in parallel to the explosion of the epicurean craze. The premium, Polish rye vodka, is distilled three times and then infused, in oak barrels, with fresh ingredients to make its unique Chocolate, Ginger and Wild Cherry infusions. Alchemia’s infusions are a fresh escape for consumers who have been offered very little from a spirits world rife with the artificially flavored vodkas presently taking up store shelves and back bars. Panache is focused on making Alchemia a staple for any consumer whose palate demands just little more than chemical additives. Showing its propensity to stir up a little controversy, Panache is finishing test marketing for its latest creation, Alibi American Whiskey. While we could focus on the fact that Alibi is affordable premium Whiskey, distilled from Rye, aged four years in new American oak barrel — we think that's rather mundane. Alibi is an elixir for the flawed human spirit in all of us, a tonic for sin and an excuse for vulnerability. We created the spirit because we know mankind needs an out, a way to feel better about those poor decisions that will invariably be made. Everyone needs an Alibi. Panache Spirits’ goal is to continue to develop its portfolio of unique and diverse brands and is always working on the development of its next great brand.

 

RESULTS OF OPERATIONS FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2011 AND 2010

 

Revenues

 

Gross revenues were $526,587 and $1,278,622 for the three and nine months ended September 30, 2011, respectively, increased by $464,639 or 750%, and by $513,466 or 67%, compared to gross revenues of $61,948 and $765,156 for the same periods ended September 30, 2010, respectively. We generate our revenues from sales of distilled spirits. The revenues are recognized when persuasive evidence of a sale exists, transfer of title has occurred, the selling price is fixed or determinable and collectability is reasonably assured. Our sales arrangements are not subject to warranty. We did not record any product returns during both three-month and nine-month periods ended September 30, 2011.

 

The increase in revenues during the three and nine months ended September 30, 2011 compared to the same periods in 2010 was due primarily to implementing our marketing strategies successfully in New York State. Different from traditional spirits wholesalers, we have developed a unique set of wholesale and retail relationships as well as sales and marketing infrastructure and proprietary partnerships enabling it develop, roll out and exit its brands. We hold a ‘build and exit’ business mentality – our expertise lies in the strategic development and early growth of our brands establishing our assets as viable acquisition candidates for the major global spirits companies including Diageo, Bacardi, Future Brands, Pernod Ricard and Moet Hennessey. Our goal is to sell brands individually as they mature while continuing to pipeline new brands in to our portfolio.

 

We expect sales to increase during 2012 as we have generated sales of $875,000 since the end of the third quarter of 2011. In addition, we believe our customer base will be developed through extending the marketing and sales strategy from New York State to other key regions throughout the US. Unlike traditional growth plans, we must maintain our current marketing philosophy and avoid scaling the business through traditional block and tackle methods employed by the major spirits companies.

 

Cost of Goods Sold

 

Cost of goods sold included expenses directly related to selling our products. Product delivery, broker fees and direct labor would be examples of cost of goods sold items. We had $329,741 in cost of goods sold, or approximately 63% of revenues, and had $917,135 in cost of goods sold, or approximately 72% of revenues, during the three and nine months ended September 30, 2011, respectively. Comparatively, we had $27,523 in cost of goods sold, or approximately 44% of revenues, and had $339,826 in cost of goods sold, or approximately 44% of revenues, during the three and nine months ended September 30, 2010, respectively.

 

The increase in cost of goods sold during the three and nine months ended September 30, 2011 was attributable to the increase in revenues during the periods as discussed above. Cost of goods sold as percentage of revenues increased because we sold less Alchemia products in 2011, which had higher profit margin. In addition distillery costs increased in 2011 which were not effectively shifted onto customers at that time. However, our product prices have increased since August 1, 2011 and will continue to increase, driving our profit margin higher in the future. The gross margin of distilled spirits products typically ranges between 30-50%. We expect to reduce the cost of goods sold through collaboration with more non-related suppliers, which will also help us to reduce the risk of concentration.

 

(15)

 

Expenses

 

Operating expenses for the three and nine months ended September 30, 2011 were $861,160 and $2,121,369, respectively, compared to $644,832 and $1,034,701 for the same periods ended September 30, 2010, respectively. The increase in operating expenses during the three and nine months ended September 30, 2011 was attributable to the non-cash consulting expenses of $434,678 incurred in the third quarter of 2011. The non-cash consulting expenses were the result of issuing total 1,723,391 shares of common stock for services. The shares were valued based on the market price on the dates of the stock grant, which was $.20 per share for 1,663,791 shares, and $1.70 per share for 60,000 shares, resulting in total expenses of $434,678 for services rendered. The increase in operating expenses during the nine months ended September 30, 2011 was also due to the increase in advertising and promotion expense, which was $982,617 in 2011, increased by $511,249 or 108%, compared to $471,368 during the same period ended September 30, 2011.

 

Net Income / (Loss)

 

We had net loss of $695,969 and $1,464,098 for the three and nine months ended September 30, 2011, respectively, increased by $245,498 or 54%, and by $1,029,951 or 237%, compared to net losses of $450,471 and $434,147 for the three and nine months ended September 30, 2010, respectively. The increase in net loss during the three and nine months ended September 30, 2011 was due to the increase in gross profit insufficiently covering the increase in operating expenses during the periods as discussed above.

 

There can be no assurance that we will achieve or maintain profitability, or that any revenue growth will take place in the future.

 

Liquidity and Capital Resources

 

Cash flows used in operating activities were $497,818 and $3,545,496 for the nine months ended September 30, 2011 and 2010, respectively. Negative cash flows from operations for the nine months ended September 30, 2011 were due primarily to the net loss of $1,464,098, plus the increase in accounts receivable in the amount of $255,759 and the decrease in officer compensation payable by $52,501, partially offset by the decrease in prepayment by $817,200, and the increase in accounts payable and accrued expenses by $177,436 and $205,820, respectively. Negative cash flows from operations for the nine months ended September 30, 2010 were due primarily to the net loss of 434,147, plus the increase in accounts receivable and prepayment in the amount of $384,147 and $2,868,394, respectively, partially offset by the decrease in inventories by $188,696 and the increase in liability in dispute by $191,778.

 

Cash flows provided by investing activities were $1,980 during the nine months ended September 30, 2011 attributable to disposal of property and equipment. Comparatively, cash flows of $29,397 used in investing activities during the comparable period in 2010 were due primarily to the purchase of the billboard materials in amount of $27,720.

 

Cash flows provided by financing activities were $457,329 and $3,528,815 during the nine months ended September 30, 2011 and 2010, respectively. Positive cash flows from financing activities during the nine months ended September 30, 2011 were due primarily to proceeds of $230,000 from sales of shares at a price of fifty cents ($.50) per share. We also had proceeds from note payable in an amount of $124,988, of which $96,988 from related party. The positive cash flows were offset by repayments of $110,747 to third party loans in 2011. Positive cash flows from financing activities during the nine months ended September 30, 2010 were due primarily to capital contribution in amount of $3,127,783 and proceeds from related party loan in the amount of $316,267.

 

(16)

 

We project that we will need additional capital to fund operations over the next 12 months. We anticipate we will need an additional $1,000,000 for the year of 2012.

 

Overall, we have funded our cash needs from inception through September 30, 2011 with a series of debt and equity transactions, primarily with related parties. If we are unable to receive additional cash from our related parties, we may need to rely on financing from outside sources through debt or equity transactions. Our related parties are under no legal obligation to provide us with capital infusions. Failure to obtain such financing could have a material adverse effect on operations and financial condition.

    

We had cash of $29,466 on hand as of September 30, 2011. Currently, we may not be able to sustain our capital needs because we do not have enough cash to fund our operations for the next six months. This is based on current negative cash flows from operating activities and net losses during the periods. We will then need to obtain additional capital through equity or debt financing to sustain operations for an additional year. Our current level of operations would require capital of approximately $1,000,000 per year starting in 2010. Modifications to our business plans may require additional capital for us to operate. For example, if we are unable to raise additional capital in the future we may need to curtail our number of product offers or limit our marketing efforts to the most profitable geographical areas. This may result in lower revenues and market share for us. In addition, there can be no assurance that additional capital will be available to us when needed or available on terms favorable to us.

 

On a long-term basis, liquidity is dependent on continuation and expansion of operations, receipt of revenues, and additional infusions of capital and debt financing. Our current capital and revenues are insufficient to fund such expansion. If we choose to launch such an expansion campaign, we will require substantially more capital. The funds raised from this offering will also be used to market our products and services as well as expand operations and contribute to working capital. However, there can be no assurance that we will be able to obtain additional equity or debt financing in the future, if at all. If we are unable to raise additional capital, our growth potential will be adversely affected and we will have to significantly modify our plans. For example, if we unable to raise sufficient capital to develop our business plan, we may need to:

 

·

 

Curtail new product launches

·

 

Limit our future marketing efforts to areas that we believe would be the most profitable.

Demand for the products and services will be dependent on, among other things, market acceptance of our products, our brands recognition, distilled spirits market in general, and general economic conditions, which are cyclical in nature. Inasmuch as a major portion of our activities is the receipt of revenues from the sales of our products, our business operations may be adversely affected by our competitors and prolonged recession periods.

        

Our success will be dependent upon implementing our plan of operations and the risks associated with our business plans. We specialize in development, global sales and marketing of spirits brands. We plan to strengthen our position in these markets. We also plan to expand our operations through aggressively marketing our products and our concept. 

 

(17)

 

 

ITEM 3. QUANTITATIVE ANDQUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

The information to be reported under this item is not required of smaller reporting companies.

 

ITEM 4. CONTROLS AND PROCEDURES.

 

We maintain disclosure controls and procedures designed to ensure that information required to be disclosed in reports filed under the Securities Exchange Act of 1934 (“Exchange Act”) is recorded, processed, summarized and reported within the specified time periods. Our Chief Executive Officer and its Principal Accounting Officer (collectively, the “Certifying Officers”) are responsible for maintaining our disclosure controls and procedures. The controls and procedures established by us are designed to provide reasonable assurance that information required to be disclosed by the issuer in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Commission’s rules and forms.

 

As of the end of the period covered by this report, the Certifying Officers evaluated the effectiveness of our disclosure controls and procedures. Based on the evaluation, the Certifying Officers concluded that our disclosure controls and procedures were effective to provide reasonable assurance that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the applicable rules and forms, and that it is accumulated and communicated to our management, including the Certifying Officers, as appropriate to allow timely decisions regarding required disclosure.

 

The Certifying Officers have also concluded, based on their evaluation of our controls and procedures that as of September 30, 2011, our internal controls over financial reporting are effective and provide a reasonable assurance of achieving their objective.

 

The Certifying Officers have also concluded that there was no change in our internal controls over financial reporting identified in connection with the evaluation that occurred during our fourth fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

 

(18)

 

ITEM 4T. CONTROLS AND PROCEDURES

 

(a) Conclusions regarding disclosure controls and procedures. Disclosure controls and procedures are the Company’s controls and other procedures that are designed to ensure that information required to be disclosed by the Company in the reports that the Company files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by the Company in the reports that it files under the Exchange Act is accumulated and communicated to the Company’s management, including its Chief Executive Officer and Principal Accounting Officer, as appropriate to allow timely decisions regarding required disclosure. Management is responsible for establishing and maintaining adequate internal control over financial reporting.

 

Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of our disclosure controls and procedures, as such term is defined under Rule 13a-14(c) promulgated under the Exchange Act as of September 30, 2011, and, based on their evaluation, as of the end of such period, the our disclosure controls and procedures were effective as of the end of the period covered by the Quarterly Report,

 

(b) Management’s Report On Internal Control Over Financial Reporting. It is management’s responsibilities to establish and maintain adequate internal controls over the Company’s financial reporting. Internal control over financial reporting is defined in Rule 13a-15(f) or 15d-15(f) promulgated under the Exchange Act as a process designed by, or under the supervision of, the issuer’s principal executive and principal financial officers and effected by the issuer’s management and other personnel, 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 and includes those policies and procedures that:

 

• Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the issuer; and

 

• Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles and that receipts and expenditures of the issuer are being made only in accordance with authorizations of management of the issuer; and

 

• Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the issuer’s assets that could have a material effect on the financial statements.

  

As of the end of the period covered by the Quarterly Report, an evaluation was carried out under the supervision and with the participation of our management, including our Chief Executive Officer and Principal Accounting Officer, of the effectiveness of our internal control over financial reporting.

 

Management assessed the effectiveness of our internal control over financial reporting as of September 30, 2011. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control-Integrated Framework.

 

Based on that evaluation, our Chief Executive Officer and Principal Accounting Officer have concluded that, as of the end of such period, internal controls over financial reporting were effective as of the end of the period covered by the Report.

 

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. Because of the inherent limitations of internal control, 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 safeguards to reduce, though not eliminate, this risk.

 

This Quarterly Report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by our registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit us to provide only management’s report in this Quarterly Report.

 

(c) Changes in internal control over financial reporting. There were no changes in our internal control over financial reporting identified in connection with the evaluation required by paragraph (d) of Exchange Act Rules 13a-15 or 15d-15 that occurred during our last fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 

(19)

 

 

PART II. OTHER INFORMATION

 

ITEM 1.      LEGAL PROCEEDINGS

 

None.

 

ITEM 1A. RISK FACTORS

 

The information to be reported under this item has not changed since the previously filed 10K, for the year ended December 31, 2010.

 

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

 

On August 19, 2011, the Company completed a stock exchange transaction with the Panache Members, pursuant to which 17,440,000 new investment shares of common stock of the Company were issued to the Panache Members in exchange for one hundred percent (100%) of the issued and outstanding membership interest units of Panache from the Panache Members. The issuance of 17,440,000 shares represented approximately 90% of the Company’s then outstanding common stock and resulted in a change in control of the Company.

 

On August 25, 2011, the Board of Directors of the Company approved the issuance of 460,000 shares of the Company’s Common Stock at a price of $.50 per share, in exchange for cash payment of total $230,000. The transaction was independently negotiated between the Company and the investors. The Company evaluated the transaction based on the fact that the Company had nominal trading volume for its stock, and had significant accumulated deficit at the time of issuance. The proceeds from this issuance mitigated the Company’s cash pressure in short term.

 

On June 1, 2011, the Company issued 1,143,391 shares of common stock to Columbus Partners LLC for business advisory services. The fair value of this stock issuance was determined by the fair value of the Company’s common stock on the grant date, at a price of $0.20 per share. Accordingly, the Company recognized the stock-based compensation of $228,678 during the nine months ended September 30, 2011.

 

On June 9, the Company issued 520,000 shares of common stock to Greentree Financial Group, Inc for business advisory services. The fair value of this stock issuance was determined by the fair value of the Company’s common stock on the grant date, at a price of $0.20 per share. Accordingly, the Company recognized the stock-based compensation of $104,000 during the nine months ended September 30, 2011.

 

On September 2, 2011, the Company issued 60,000 shares of common stock to WALL STREET RESOURCES, INC. for public relations services. The fair value of this stock issuance was determined by the fair value of the Company’s common stock on the grant date, at a price of $1.70 per share. Accordingly, the Company recognized the stock-based compensation of $102,000 during the nine months ended September 30, 2011.

 

ITEM 3.      DEFAULTS UPON SENIOR SECURITIES

 

None.

 

ITEM 4.      (REMOVED AND RESERVED)

 

None.

 

ITEM 5.      OTHER INFORMATION

 

None.

 

ITEM 6. EXHIBITS

 

31.1 Certification of Chief Executive Officer

31.2 Certification of Chief Financial Officer

32.1 Statement required by 18 U.S.C. Section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002.

32.2 Statement required by 18 U.S.C. Section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002

 

Reports on Form 8-K

 

1.      On January 13, 2011, we filed a current report on Form 8-K to announce the engagement with Silberstein Ungar, PPLC as our principal independent public accountant to audit our balance sheets as of December 31, 2010 and 2009, and the related statements of operations, stockholders’ equity (deficit), and cash flows for the years then ended.

 

2.      On August 17, 2011, we filed a current report on Form 8-K to announce that we entered into a letter of intent agreement with Panache LLC, a New York Limited Liability Company, James Dale, an individual member and Manager of Panache, and the individual members of Panache whereby a change in control of our company will occur, subject to a due diligence process.

 

3.      On August 24, 2011, we filed a current report on Form 8-K to announce the completion of the Plan Of Exchange with Panache LLC, the change in control of our company and the changes in our management.

 

4.      On September 27, 2011, we filed an amendment to the current report on Form 8-K/A to amend the Form 8-K we filed on August 24, 2011.

 

(20)

 

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, there unto duly authorized.

 

 

  PANACHE BEVERAGE INC.
     
Date: Date: November 21, 2011 By:   /s/ James Dale
 

James Dale

Chief Executive Officer

 

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INDEX TO EXHIBITS

 

Exhibit No.   Description
     
31.1   Certification of Chief Executive Officer
     
31.2   Certification of Acting Principal Accounting Officer
     
32.1  

Statement required by 18 U.S.C. Section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002.

 

32.2   Statement required by 18 U.S.C. Section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002

 

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