UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

For the Quarter ended February 29, 2016

For the transition period from ___________ to ___________

Commission File No. 000-55422

16000 N. 80^th Street, Suite E

Scottsdale, AZ 85260

480-371-1100

(Address and telephone number of principal executive offices)

________________________________________________ 

(former address)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to 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 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 ST (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). 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. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Exchange Act Rule 12b-2 of the Exchange Act). ¨ Yes x No

As of April 13, 2016, the registrant had 15,001,907 shares of common stock issued and outstanding.

Special Note Regarding Forward-Looking Statements

Information included in this Quarterly Report on Form 10-Q contains forward-looking statements that reflect the views of the management of the Company with respect to certain future events. Forward-looking statements made by penny stock issuers such as the Company are excluded from the safe harbor in Section 21E of the Securities Exchange Act of 1934 (the "Exchange Act"). Words such as "expects," "should," "may," "will," "believes," "anticipates," "intends," "plans," "seeks," "estimates" and similar expressions or variations of such words, and negatives thereof, are intended to identify forward-looking statements, but are not the exclusive means of identifying forward-looking statements in this report. These forward-looking statements are based on assumptions that may be incorrect, and there can be no assurance that matters anticipated in our forward-looking statements will come to pass. You are cautioned not to place undue reliance on forward-looking statements. You are also urged to review and consider carefully the various disclosures made in the Company's other filings with the Securities and Exchange Commission ("SEC"), including amendments to those filings, if any. Except as may be required by applicable laws, the Company undertakes no obligation to update publicly any forward-looking statements for any reason, even if new information becomes available or other events occur in the future.

*Please note that throughout this Quarterly Report, and unless otherwise noted, the words "we," "our," "us," the "Company," or "MIXX" refers to Mix 1 Life, Inc.

INDEX TO FINANCIAL STATEMENTS

MIX 1 LIFE, INC.

TABLE OF CONTENTS

Mix 1 Life, Inc.

BALANCE SHEETS

The accompanying notes are an integral part of these financial statements. 

Mix 1 Life, Inc.

STATEMENTS OF OPERATIONS

For the three and six months ended February 29, 2016 and 2015

(Unaudited)

The accompanying notes are an integral part of these financial statements.

Mix 1 Life, Inc.

STATEMENTS OF CASH FLOW

For the six months ended February 29, 2016 and 2015

(Unaudited)

The accompanying notes are an integral part of these financial statements.

MIX 1 LIFE, INC.

NOTES TO THE FINANCIAL STATEMENTS

FEBRUARY 29, 2016

(Unaudited)

Note 1 – Description of Business and Summary of Significant Accounting Policies

Mix 1 Life, Inc. ("the Company" or "Mix 1") was incorporated under the laws of the State of Nevada, U.S. on June 10, 2009.

Mix 1 products are designed for consumers looking for better options for on-the-go energy and natural products that provide the required nutrients for consumers' daily needs. We believe that our products will be able to reach the mainstream consumer market because of the broad range of occasions for consumers to drink our beverages, such as an energy enhancer, after a workout to restore the body, as meal replacements for breakfast, lunch or dinner, as snacks or meal supplements, as energy boosts to get through the workday, or for no occasion at all. Mix 1's products exist in high growth categories and leverage the consumer demand for health, nutrition and functional ingredients.

The accompanying unaudited interim financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission ("SEC") and should be read in conjunction with the audited financial statements and notes thereto contained in the Company's annual report filed with the SEC on its 10-K. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim periods presented have been reflected herein. The results of operations for our interim period are not necessarily indicative of the results to be expected for the full year. Notes to the financial statements that would substantially duplicate the disclosure contained in the audited financial statements for the year ended August 31, 2015, as reported in the Form 10-K, have been omitted.

There 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 limited cash and, as yet, has not generated sufficient revenues to finance operations, 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 existing cash on hand, sales, loans from investors and/or issuance of common shares.

Note 2 – Notes Payable

During the quarter the Company entered into two note payable agreements for a total of $116,500. In addition, the Company came to terms on an 8% convertible note agreement for $68,250 due December 2016.

Note 3 – Subsequent Events

We have evaluated events and transactions after the balance sheet date to the date these financial statements were released for filing. Except as stated above, we did not have any material subsequent events that would require disclosure in these financial statements.

END NOTES TO FINANCIALS

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

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

Information included in this Quarterly Report Form 10-Q contains forward-looking statements that reflect the views of the management of the Company with respect to certain future events. Forward-looking statements made by penny stock issuers such as the Company are excluded from the safe harbor in Section 21E of the Securities Exchange Act of 1934. Words such as "expects," "should," "may," "will," "believes," "anticipates," "intends," "plans," "seeks," "estimates" and similar expressions or variations of such words, and negatives thereof, are intended to identify forward-looking statements, but are not the exclusive means of identifying forward-looking statements in this report. These forward-looking statements are based on assumptions that may be incorrect, and there can be no assurance that matters anticipated in our forward-looking statements will come to pass.

You are cautioned not to place undue reliance on forward-looking statements. You are also urged to review and consider carefully the various disclosures made in the Company's other filings with the Securities and Exchange Commission, including any amendments to those filings. Except as may be required by applicable laws, the Company undertakes no obligation to update publicly any forward-looking statements for any reason, even if new information becomes available or other events occur in the future.

GENERAL

Corporate History

The Company was incorporated in the State of Nevada on June 10, 2009 under the name Antaga International Corp. We are in the business of formulation and distribution of nutritional supplements which are designed to have a positive effect on health, well-being and improve physical and mental performance.

On August 27, 2013, the Company entered into a Definitive Agreement (the "Definitive Agreement") with Mix1 LLC, an Arizona company, "Mix1." Pursuant to the Definitive Agreement, the Company acquired 100% of certain assets owned by Mix1, including, but not limited to, access to the Mix1 brand name, product formulas, packaging design specifications, vendor/supplier lists, market research reports, product sales sheets, social media assets, other work product and full rights to market and sell such assets and conduct business with the assets (the "Acquisition"). In exchange for the assets, the Company issued 3,333,333, post reverse, new shares of common stock to Mix1. On September 12, 2013, the Company changed its name to Mix1 Life, Inc. to reflect its new business. On November 1, 2013, the Company changed its trading symbol from "ANTR.OB" to "MIXX.OB". The Company is now focused on the continued development, marketing, sale and distribution of Mix1 brand.

On March 31, 2015, we entered into an Asset Purchase Agreement with Shadow Beverages and Snack, LLC, an Arizona limited liability company ("Shadow") for the purchase of the "No Fear" brand asset ("No Fear") from Shadow. Shadow's interest in the No Fear brand is in the form of an exclusive Trademark and License Agreement between Shadow and No Fear International wherein Shadow was granted exclusive licensing and distribution of the No Fear drink within the United States of America. The Company acquired One Hundred Percent (100%) of Shadow's interest in the No Fear brand only for an aggregate purchase price of Twelve Million Twenty Three Thousand Nine Hundred and Six ($12,023,906) USD.

Our Business

Mix1 products are designed for consumers looking for better options for on-the-go energy and natural products that provide the required nutrients for consumers' daily needs. We believe that our products will be able to reach the mainstream consumer market because of the broad range of occasions for consumers to drink our beverages, such as before a workout as an energy enhancer, after a workout to restore the body, as meal replacements for breakfast, lunch or dinner, as snacks or meal supplements, as energy boosts to get through the workday, or for no occasion at all.

Our business strategy over the next five years is to increase distribution of our products to national markets and expanding our distribution to international markets, to diversify and expand our current product portfolio and to increase our management and number of employees to effectively manage the growth of our business and increase our sales and marketing forces.

Mix1's mission:

"Create products with high-quality ingredients that are truly functional. We believe all natural products are better than artificial ones and are the key to leading a healthy balanced life. As a company we want to improve people's lives by promoting active lifestyles and overall health. These beliefs are what lead to creating Mix1. Never again will you miss getting the necessary nutrients because you were too busy to eat. We strive to help you make healthy choices during your busy day in order to help you feel your best not only today, but every day."

OUR BRANDS

Mix 1's brands exist in high growth categories and leverage the consumer demand for health, nutrition and functional ingredients. Our brands are delivering incremental volume and margin growth for our distributors while enhancing category margins for customers. That win-win formula provides Mix 1 Life Inc. with volume, revenue and industry level gross profit.

NO FEAR ENERGY

Category – Energy Drinks

Consumer Positioning – Youthful and Super Aggressive

Brand Performance Drivers – Exploding Category and Monster Fighter

mix1

Category – Protein Shake

Consumer positioning – Nutrition Based, All Natural

Brand Performance Drivers – Started in 2009 – High growth category

Our Product and Brand

Since acquisition, we have reformulated and re-packaged three Mix1 shake flavors (Blueberry Vanilla, Strawberry Banana and Chocolate) in order to strengthen our mass consumer appeal. Additionally, we recently partnered with a large specialty beverage manufacturer on the production of our three flavors. Our first production run of the reformulated beverages was in May 2014, and we distribute to a targeted set of retailers in the western United States. We began distribution of the Mix 1 products in June 2014. Our objective during 2014 was to bring the Mix1 brand back into circulation via direct store delivery ("DSD") and natural distributors in many of the same markets and stores that previously carried Mix1 (including national retail chains). We expect significant revenue growth beginning in 2016 as we expand distribution, sales and marketing activities.

The Company has re-engineered the existing Mix1 products to improve their taste, quality, look and nutritional content. Our improvements include:

New Formulas: Using the existing Mix1 product formulas, we developed new formulas in collaboration with doctors to increase the protein content of our drinks and decrease the amount of calories, carbohydrates and sugars per serving.

New Flavors: We developed new flavors including Chocolate, Blueberry Vanilla and Strawberry Banana, which we launched in the second half of 2014. Our 99% lactose-free formulations are thick and creamy, and we have eliminated the "chalky" after-taste that typically accompanies other high-protein beverages. We developed a Mixed Berry flavor that we intend to rollout in the third quarter of 2014. We also have four additional formulas for new flavors currently under development.

New Bottle: We changed the shape of our bottle from a square Tetra Pak to a taller, more functional twelve ounce Polyethylene terephthalate "PET" bottle to make our product more appealing to consumers and to stand out among our competitors.

New Packaging: We created a new label for our bottles with better graphics and more information about the nutritional content of our drinks.

New Products: We are currently developing protein powders based on our new product formulas which we intend to launch in 2015-2016.

Image of our new and improved Mix1 products which launched in 2014

We plan to meaningfully expand Mix1's offerings beyond our Chocolate, Blueberry Vanilla and Strawberry Banana flavors. In 2016, we plan to introduce a multi-pack for sale in the grocery channel and will prepare product for sale in the wholesale club and mass channels.

Target Market and Industry

Since 2005, Mix1 has strived to create a strong lifestyle beverage brand with highly engaged and passionate customers. Our brand awareness is particularly strong in Colorado and California, areas where Mix1 previously had its highest sales volumes. Today, awareness and passion for Mix1 remains strong, even during our transition and re-launch period. We have an active social media fan base, and we receive frequent requests from prior customers awaiting the reintroduction of Mix1 beverages.

Mix1 products are designed for consumers looking for better options for on-the-go energy and natural products that provide the required nutrients for consumers' daily needs. We believe that our products will be able to reach the mainstream consumer market because of the broad range of occasions for consumers to drink our beverages, such as before a workout as an energy enhancer, after a workout to restore the body, as meal replacements for breakfast, lunch or dinner, as snacks or meal supplements, as energy boosts to get through the workday, or for no occasion at all.

Our target customer is the rapidly growing segment of men and women ages 24 to 49 focused on living a healthy lifestyle. Many of these individuals make wellness a priority and prefer natural and organic foods. Mix1's natural ingredient list, fruit-forward flavors and brand image are key differentiating factors in the protein drink category, which separates us from our primary competitors (e.g., Muscle Milk). We believe these factors will also attract new customers to the category.

With our lifestyle-focused product line specially formulated to appeal to a wide range of users, Mix1 represents the next generation of functional beverages. Most ready-to-drink protein beverages have a narrow marketing focus that targets one of two niche consumer groups. Performance-focused products (i.e., Muscle Milk, Myoplex, Pure Protein) target serious gym-goers and skew heavily male. Nutrition-focused products (i.e., Boost, Ensure, Slim Fast, Special K) target weight management and skew older and heavily female. We believe that there is a large area of opportunity not currently being adequately served and that our mix1 product line addresses this market opportunity.

Smoothie and cold-pressed juice consumption has dramatically increased as consumers seek healthier "on-the-go" meal and snack options, and we believe our shakes provide the best ready-to-drink alternative to smoothies made in a blender. More so than other protein shakes, Mix1 beverages may be consumed as a meal replacement for breakfast and lunch or a mid-day snack, making our shakes a routine purchase. This repeat and balanced consumption pattern is expected to lead to long-term and loyal customers, which is expected to enable us to ultimately become a "lifestyle" beverage brand.

Projected Mix1 Consumers and Usage

We believe that our Mix1 natural, high-protein shakes will benefit from two large and sustainable trends: strong consumer demand for natural/organic foods and beverages, and increasing consumer awareness around the health benefits of protein consumption. Mintel reported in January 2013 that protein ingredients in beverages as meal supplements or replacements posted 37% growth over the past five years. ^[1] Also, nearly half (46%) of all consumers of these beverages state that high-protein is a primary selection attribute. ^[2]

Our core target market includes consumers who want a fully functional, ready to drink beverage made from all natural ingredients that provides a complete and balanced mix of nutrients for everyday occasions. This target market is large and growing. The functional beverage market was estimated to grow to $16 billion by 2015; the sports nutrition market was $19.6 billion in 2007 and was estimated to grow 51% to $29.6 billion by 2015.

According to market research performed under the direction of Mix1 prior to the Acquisition, we found that what consumers are primarily looking for in a beverage are health benefits, a reasonable price, good taste, high quality, nutritional data, low amounts of sugar, high amounts of protein, flavors offered and natural ingredients. We believe that Mix1 products will attract new consumers to the healthy beverage industry and drive incremental beverage growth by meeting the emerging demand for great tasting, high quality, health and wellness lifestyle beverages at a reasonable cost and offering multiple unique occasions for consumers to enjoy our products.

Historically, small and innovative companies have created tremendous market opportunities in the beverage industry. For example, Gatorade was an industry leader in sports drinks, Snapple was an innovator in new age beverages, Red Bull capitalized on the energy drink market, and Vitamin Water was a market mover in the enhanced water industry. Like these companies, the Company seeks to be an industry leader in the mainstream functional beverage market. We believe that one of the greatest strengths of the Mix1 brand is that our beverages fall into several different product categories including nutritional drinks, sports drinks, meal replacements, meal supplements, low calorie drinks, energy drinks, natural beverages, and more. Unlike some of our competitors, our brand is not limited by any one product category and as a result, we believe we will be able to attract a broad range of mainstream consumers.

_____________________

[1] US consumers have a healthy appetite for high protein food. The US leads the way in global launches of high protein products. (2013, January 18). Retrieved June 24, 2014, from http://www.mintel.com/press-centre/food-and-drink/us-consumers-have-a-healthy-appetite-for-high-protein-food-the-us-leads-the-way-in-global-launches-of-high-protein-products.

[2] Id.

Distribution

Prior to the Acquisition, Mix1 products were sold, either to distributors or directly to retailers, across the United States through multiple channels from natural health food stores, traditional grocery stores, big box stores, club stores, specialty outlets and drug stores, such as Kroger, GNC, Whole Foods Market, 7 Eleven, H-E-B, FredMeyer, QFC, King Soopers, United Supermarkets, Wild Oats Markets, Inc., Target, Henry's, Albertsons, Ralphs, Costco, Central Market, Fry's, Smith's Food and Drug Stores, and many others.

The Company will continue to seek additional channels of distribution for its products to include convenience, wholesale club and mass retailers. The Company will first focus on distributing its products regionally, starting in Arizona, Colorado, California and other western states, and will then seek to expand its distribution channels across the U.S. and then internationally.

Manufacturing

We outsource the manufacturing, bottling and packaging of our products to a third party located in the U.S. on an order-by-order basis. The Company does not have any long-term contracts with this third party for their services. Further, this third party does not work exclusively for the Company and may be limited in their ability to meet our production needs. Once the products have been manufactured, bottled and packaged, they are sent directly to our distributors and retailers based on their purchase orders.

Supplies of Raw Materials

The ingredients for our products are sourced from several different suppliers located primarily in North America and Europe on an order-by-order basis. Some of the ingredients in our products are not readily available in large quantities or are available on a limited or seasonal basis only. Further, the limited availability of some of these ingredients could cause significant fluctuations in their costs. Our management researches and develops our sources of ingredients used in the manufacturing of our products. The ingredients that we source are sent to our manufacturer in the U.S. to create our products. The Company does not have any long-term contracts with our suppliers and we cannot be assured that they will be able to meet our demands.

No Fear Acquisition

On March 31, 2015, the Company completed the purchase of the "No Fear" beverage brand from Shadow Beverage and Snack, LLC, an Arizona limited liability company. The purchase included Shadow's interest in the No Fear brand in the form of an exclusive Trademark License Agreement dated December 5, 2011, the First and Second amendments to that agreement that bear no date, and the third amendment dated December 23, 2013 between Shadow and No Fear International wherein Shadow had exclusive licensing and distribution of the No Fear brand drink within the United States of America. The Company acquired one hundred percent (100%) of Shadow's interest in the No Fear brand for an aggregate purchase price of Twelve Million Twenty Three Thousand Nine Hundred and Six ($12,023,906) USD.

The Energy Drink Epidemic

It all started with a growing addiction to coffee. Americans drink a total of 400 million cups of coffee per day, more than one cup per person. Recently, the trend has been toward more straightforward energy drinks or shots.

Consider this comparison: Monster Beverage which, like Red Bull, is one of the leaders in the energy drink market -- has seen its revenue grow 20 times (2,000 percent) in the last 10 years. Starbucks has grown two-and-three-quarters times (274 percent) during the same period.

5-Hour Energy leads the energy-shot front, selling 1.5 billion energy shots since it was launched in 2004. The company behind the product, Living Essentials, had sales of $1 billion last year and pocketed $600 million in profit.

Right now, Red Bull, Monster, and 5-Hour Energy command the largest and most lucrative market share in the energy drink space, and that's not likely to change.

Since both Red Bull and 5-Hour Energy's parent, Living Essentials, are privately held, investors are left with Monster Beverage for exposure to energy drinks. Now they have Mix 1 Life, Inc.

Soda sales in the United States have declined for nine consecutive years and were down 3% in 2013. However, energy drink sales are growing rapidly and were up 5.5% in 2013.

According to research by IBISWorld, energy drink sales generate $6.8 billion in annual revenue in the United States. The same research predicts annual growth of 9.7% for the industry through 2019.

Energy-drink makers say their products are safe and haven't caused any deaths. NO Fear ounce by ounce, has roughly half the caffeine of a Starbucks coffee. In addition to caffeine, energy drinks typically include other ingredients such as taurine and ginseng that the companies market as providing additional energy kicks.

$9 billion U.S. energy-drink market in 2013, according to the data service Euromonitor. The total market $27.5 billion global energy-drinks.

Product and Brand

This philosophy is still evident With No Fear Energy Drink today as consumers are reminded that… No Fear gives you the drive to do what YOU want to do. This powerful message is delivered every time a consumer sees the name…NO FEAR.

No Fear truly is a Lifestyle brand that speaks directly to the key energy consumer demographic.

IT'S AN ATTITUDE

IT'S A LIFESTYLE

IT'S A STATE OF MIND

Target Market and Industry

No Fear Spans Multiple Energy Demos. Provides an Alternative Young User Brand. Brings Back an Established User.

The Energy Beverage Category is big – and getting bigger. The 2^nd largest beverage category expected to double in the next 5 years. 1/3 of consumers over the age of 18 regularly consume energy drinks. Energy growth will continue in double digits. New users are entering and adopting the category, Usage occasions are increasing, and Innovation supports sustained growth.

Competition

The beverage industry is highly competitive. There are a large number of widely recognized brands, such as Monster, AMP, Rockstar, and Red Bull.

RESULTS OF OPERATIONS

Operating and Net Loss

Our net loss for the three month period ended February 29, 2016 was $4,399,430 as compared to a net loss of $1,386,753 during the three month period ended February 28, 2015. Our net loss for the six month period ended February 29, 2016 was $4,669,509 as compared to a net loss of $2,412,597 during the six month period ended February 28, 2015. Our net loss for the year ended August 31, 2015 was $17,736,766 compared to a net loss of $1,995,519 for the year ended August 31, 2014. The Company generated net sales of $231,941 for the three months ended February 29, 2016 as compared to $504,375 for the three months ended February 28, 2015. The Company generated net sales of $496,782 for the six months ended February 29, 2016 as compared to $746,850 for the six months ended February 28, 2015.

Total operating expenses for the three month period ended February 29, 2016, were $1,346,128 and is comprised of selling and marketing, corporate general and administrative expenses, and depreciation and amortization expenses. In comparison, total operating expenses for the three month period ended February 28, 2015 were $1,230,177. Total operating expenses for the six month period ended February 29, 2016 were $2,493,867 as compared to $2,192,568 for the six months ended February 28, 2015.

The weighted average number of shares outstanding was 13,442,767 for the three month period ended February 29, 2016 as compared to 11,441,513 for the three month period ended February 28, 2015. The weighted average number of shares outstanding was 13,304,365 for the six month period ended February 29, 2016 as compared to 11,297,073 for the six month period ended February 28, 2015. The weighted average number of shares outstanding was 12,059,705 for the year ended August 31, 2015 as compared to 10,013,939 for the year ended August 31, 2014.

Financial Condition

As of February 29, 2016, our total assets were $21,817,914 as compared to $22,755,843 as of August 31, 2015, and our total liabilities as of February 29, 2016 were $13,357,462 as compared to $11,242,547 as of August 31, 2015.

As of February 29, 2016, the Company had a cash overdraft of $29,593 compared to a cash overdraft of $1,601 at August 31, 2015.

Total stockholders' equity was $8,457,452 as of February 29, 2016 as compared to $11,513,296 as of August 31, 2015.

Cash Flows from Operating Activities

We have not generated positive cash flows from operating activities. For the six month period ended February 29, 2016, net cash flows used in operating activities was $395,453. For the six month period ended February 28, 2015, net cash flows used in operating activities was $1,557,849.

Cash Flows from Investing Activities

For the six month period ended February 29, 2016, net cash flows used in investing activities was $7,139. For the six month period ended February 28, 2015, net cash flows used in investing activities was $11,500.

Cash Flows from Financing Activities

We have financed our operations primarily from either advancements or the issuance of equity and debt instruments. For the six month period ended February 29, 2016, there was $402,250 net cashed provided by financing activities, consisting of $68,250 in convertible note proceeds and $334,000 in note payable proceeds. For the six month period ended February 28, 2015, there was $1,520,151 net cash provided by financing activities, consisting of $884,000 in convertible note proceeds, $637,350 from the sale of common stock, offset by $1,199 in note payable payments.

For the year ended August 31, 2015, net cash provided by financing activities was $3,313,228, $1,617,501 in convertible note proceeds, $1,493,249 generated from the sale of common stock, and $209,904 from notes payable proceeds. 

Liquidity and Capital Resources

As of February 29, 2016, the Company had a cash overdraft of $29,593 compared to a cash overdraft of $1,601 at August 31, 2015.

We expect that working capital requirements will continue to be funded through a combination of our existing funds and further issuances of securities, and future credit facilities or corporate borrowings. Our working capital requirements are expected to increase in line with the growth of our business.

Advances, debt instruments and sale of stock are expected to be adequate to fund our operations over the next twelve months. We have no lines of credit or other bank financing arrangements. Generally, we have financed operations to date through the proceeds of the private placement of equity and debt instruments.

In connection with our business plan, management anticipates additional increases in operating expenses and capital expenditures relating to: (i) acquisition of inventory; (ii) developmental expenses associated with a start-up business; and (iii) marketing expenses. We intend to finance these expenses with further issuances of securities and debt issuances. Thereafter, we expect we will need to raise additional capital and generate revenues to meet long-term operating requirements. Additional issuances of equity or convertible debt securities will result in dilution to our current shareholders. Further, such securities might have rights, preferences or privileges senior to our common stock. Additional financing may not be available upon acceptable terms, or at all. If adequate funds are not available or are not available on acceptable terms, we may not be able to take advantage of prospective new business endeavors or opportunities, which could significantly and materially restrict our business operations.

Material Commitments

As of the date of this Quarterly Report, we do not have any material commitments.

Purchase of Significant Equipment

We do not intend to purchase any significant equipment during the next twelve months.

Critical Accounting Policies

Our financial statements and accompanying notes have been prepared in accordance with United States generally accepted accounting principles applied on a consistent basis. The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods.

We regularly evaluate the accounting policies and estimates that we use to prepare our financial statements. A complete summary of these policies is included in the notes to our financial statements. In general, management's estimates are based on historical experience, on information from third party professionals, and on various other assumptions that are believed to be reasonable under the facts and circumstances. Actual results could differ from those estimates made by management.

Going Concern

We have not attained profitable operations and are dependent upon obtaining financing to pursue any extensive activities. For these reasons, our auditors stated in their report on our audited financial statements that they have substantial doubt that we will be able to continue as a going concern without further financing.

Future Financings

We will continue to rely on equity sales of our common shares in order to continue to fund our business operations. Issuances of additional shares will result in dilution to existing stockholders. There is no assurance that we will achieve any additional sales of the equity securities or arrange for debt or other financing to fund our operations.

Off-Balance Sheet Arrangements

We have no significant off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to stockholders.

Contractual Obligations

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.

CRITICAL ACCOUNTING POLICIES

We have adopted various accounting policies that govern the application of accounting principles generally accepted in the United States ("GAAP"). We describe our significant accounting policies in the notes to our audited financial statements filed with our Form 10-K for the fiscal year ended August 31, 2015, filed with the SEC on December 16, 2015, and incorporated by reference herein.

Some of the accounting policies involve significant judgments and assumptions by us that have a material impact on the carrying value of our assets and liabilities. We consider these accounting policies to be critical accounting policies. The judgment and assumptions we use are based on historical experience and other factors that we believe to be reasonable under the circumstances. Because of the nature of the judgments and assumptions we make, actual results could differ from these judgments and estimates and could materially affect the carrying values of our assets and liabilities and our results of operations.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable.

ITEM 4. CONTROLS AND PROCEDURES

Management's Report on Disclosure Controls and Procedures

Management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Exchange Act Rule 13a-15(f)). The Company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, 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. Under the supervision and with the participation of management, including the Chief Executive Officer and Chief Financial Officer, the Company conducted an evaluation of the effectiveness of the Company's internal control over financial reporting as of February 29, 2016 using the criteria established in "Internal Control - Integrated Framework " issued by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO").

A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company's annual or interim financial statements will not be prevented or detected on a timely basis. In its assessment of the effectiveness of internal control over financial reporting as of February 29, 2016, the Company determined that there were control deficiencies that constituted material weaknesses, as described below.

Accordingly, the Company concluded that this control deficiency resulted in a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis by the company's internal controls.

As a result of the material weaknesses described above, management has concluded that the Company did not maintain effective internal control over financial reporting as of February 29, 2016 based on criteria established in Internal Control—Integrated Framework issued by COSO.

Changes in Internal Control over Financial Reporting

There has been no change in our internal control over financial reporting identified in connection with our evaluation we conducted of the effectiveness of our internal control over financial reporting as of February 29, 2016, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

This quarterly report does not include an attestation report of the Company's registered public accounting firm regarding internal control over financial reporting. Management's report was not subject to attestation by the Company's registered public accounting firm pursuant to temporary rules of the SEC that permit the Company to provide only management's report in this quarterly report.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

We know of no material, existing or pending legal proceedings against our company, nor are we involved as a plaintiff in any material proceeding or pending litigation. There are no proceedings in which our directors, officers or any affiliates, or any registered or beneficial shareholder is an adverse party or has a material interest adverse to our interest.

ITEM 1A. RISK FACTORS

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.

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

1. Quarterly Issuances:

None.

2. Subsequent Issuances:

On March 15, 2016, the Company authorized the aggregate issuance of 1,713,108 restricted shares of common stock as follows: 20,004 restricted shares of common stock to six parties as compensation for services rendered to the Company as a member of the Board of Directors during the quarters ended November 30, 2015 and February 29, 2016 at a cost basis of $1.50 per share; 69,770 shares of restricted common stock to seventeen parties as payment for interest owed by the Company, cost basis $3.00-$6.00 per share; 615,000 restricted shares of common stock to four parties as interest on loan agreements, cost basis $0.50 per share; 345,000 restricted shares of common stock to ten employees of the Company as a payroll bonus, cost basis $0.50 per share; 83,334 restricted common shares pursuant to a subscription agreement, cost basis $3.00 per share; 325,000 restricted common stock shares as interest on a loan agreement dated July 9, 2015, and addendum number 1 thereto (7 months through May 31, 2016), cost basis $0.50 per share, and 100,000 restricted common stock shares as pledge collateral for the loan agreement dated July 9, 2015; 125,000 restricted common stock shares as a consulting fee to one party, cost basis $0.50 per share; and, 40,000 restricted common shares as payment on an account payable converted into stock at a cost basis of $0.75 per share.

 ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

On November 24, 2015, the Company authorized the issuance of 200,000 restricted shares of common stock to one party for past due royalty payments equaling $500,000 owed under a Trade Mark License Agreement which was assigned to the Company pursuant to the Asset Purchase Agreement with Shadow Beverages dated March 31, 2015.

ITEM 6. EXHIBITS

* Pursuant to Regulation S-T, this interactive data file is deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, and otherwise is not subject to liability under these sections.

SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

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