UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-K

(Mark One)

☒  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended July 31, 2015

☐  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _______  to _______

Commission file number 333-170393

HIGH PERFORMANCE BEVERAGES COMPANY

(Exact Name of Registrant as Specified in its Charter)

Nevada	27-3566307
(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification No.)
5137 E. Armor St. Cave Creek, AZ	85331
(Address of Principal Executive Offices)	(Zip Code)

Registrant’s Telephone Number: 602.326.8290

Securities registered under Section 12(b) of the Act: None

Securities registered under Section 12(g) of the Act:  Common Stock par value $.001 per share

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

Yes ☐     . No ☒

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 ☒

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 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 ☐     . No ☒

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

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 definition of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. Check one:

Large accelerated filer	☐	.	Accelerated filer	☐
Non-accelerated filer	☐	(Do not check if a smaller reporting company)	Smaller reporting company	☒

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

Yes ☐     . No ☒

The aggregate market value of the voting stock held by non-affiliates of the registrant as of  January 31, 2015 was approximately $2,071,540 (based on the closing price reported on date closest to January 31, 2015 when trading took place on the OTC Markets of the registrant's Common Stock). Shares of Common Stock held by officers and directors and holders of 10% or more of the outstanding Common Stock have been excluded from the calculation of this amount because such persons may be deemed to be affiliates. This determination of affiliate status is not necessarily a conclusive determination for other purposes.

As of November 12, 2015, the number of outstanding shares of the registrant's Common Stock was 4,300,023,776.

DOCUMENTS INCORPORATED BY REFERENCE

The following documents are herewith incorporated by reference:

None

HIGH PERFORMANCE BEVERAGES COMPANY

TABLE OF CONTENTS

	PART I
ITEM 1	BUSINESS	1
ITEM 1A	RISK FACTORS	3
ITEM 1B	UNRESOLVED STAFF COMMENTS	9
ITEM 2	PROPERTIES	9
ITEM 3	LEGAL PROCEEDINGS	9
ITEM 4	MINE SAFETY DISCLOSURES	9
	PART II
ITEM 5	MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES	10
ITEM 6	SELECTED FINANCIAL DATA	10
ITEM 7	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	11
ITEM 7A	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	11
ITEM 8	FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA	11
ITEM 9	CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE	12
ITEM 9A	CONTROLS AND PROCEDURES	12
ITEM 9B	OTHER INFORMATION	12
	PART III
ITEM 10	DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE	13
ITEM 11	EXECUTIVE COMPENSATION	15
ITEM 12	SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS	16
ITEM 13	CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE	17
ITEM 14	PRINCIPAL ACCOUNTANT FEES AND SERVICES	17
	PART IV
ITEM 15	EXHIBITS AND FINANCIAL STATEMENT SCHEDULES	18

PART I

This Annual Report on Form 10-K of High Performance Beverages Company (referred to as the “Company,” “we” or “us”) (formerly Dethrone Royalty Holdings, Inc., formerly Exclusive Building Services, Inc.) includes forward-looking statements within the meaning of the Securities Exchange Act of 1934 (the “Exchange Act”). These statements are based on management's beliefs and assumptions, and on information currently available to management. Forward-looking statements include the information concerning possible or assumed future results of operations of set forth under the heading Management's Discussion and Analysis of Financial Condition and Results of Operations. Forward-looking statements also include statements in which words such as “expect,”  “anticipate,”  “intend,”  “plan,”  “believe,”  “estimate,”  “consider” or similar expressions are used.

Forward-looking statements are not guarantees of future performance. They reflect our current views and expectations based largely upon the information currently available to us and are subject to inherent   risks, uncertainties and assumptions. The Company's future results and shareholder values may differ materially from those expressed in these forward-looking statements. Readers are cautioned not to put undue reliance on any forward-looking statements. By making these forward-looking statements, we do not undertake to update them in any manner except as may be required by our disclosure obligations in filings that we make with the Securities and Exchange Commission (the “SEC”) under the Federal securities laws. Our actual results may differ materially from our forward-looking statements.

Item 1. BUSINESS

We were founded as an unincorporated DBA in February 1997 and were incorporated as a C corporation under the laws of the State of Nevada on October 11, 2010. On January 10, 2012, the Company incorporated a wholly-owned subsidiary, TO Sports Innovation, Inc. (“TO”), in Nevada. TO was inactive until March 15, 2012. Its name was changed to Dethrone Beverage, Inc. (“DB”).

On January 10, 2012, the Company incorporated a wholly-owned subsidiary, TO Sports Innovation, Inc. (“TO”), in Nevada. TO was inactive until March 15, 2012. Its name was changed to Dethrone Beverage, Inc. (“DB”).

In October 2013, the Dethrone License Agreement was terminated and the Company entered into a license agreement with Throwdown Industries Holdings, LLC, a Delaware limited liability company (“Throwdown Licensor”), pursuant to which the Licensor granted an exclusive, non-sublicenseable and non-assignable right to the Company to use its trademarks and other intellectual properties (“Throwdown Trademarks”) solely in connection with the development, manufacture, distribution, marketing and sale of sports performance drinks within the United States and Canada (the “Throwdown License”) as well as a one-time right of first refusal to license other types of beverages.

Effective November 14, 2013, the Company changed its name to High Performance Beverages Company in order to better reflect the direction and business of the Company.

On July 23, 2014, the Company filed a Certificate of Amendment with the Secretary of State of the State of Nevada to increase the number of authorized shares of common stock from 500,000,000 to 2,500,000,000 shares, effective immediately.

On August 27, 2015, the Company filed a Certificate of Amendment with the Secretary of State of the State of Nevada to increase the number of authorized shares of common stock from 2,500,000,000 to 5,000,000,000 shares, effective immediately.

Throwdown License

On October 10, 2013, the Company, entered into a license agreement (“Throwdown License Agreement”) with Throwdown Industries Holdings, LLC, a Delaware limited liability company (“Throwdown Licensor”), pursuant to which the Licensor granted an exclusive, non-sublicenseable and non-assignable right to the Company to use its trademarks and other intellectual properties (“Throwdown Trademarks”) solely in connection with the development, manufacture, distribution, marketing and sale of sports performance drinks within the United States and Canada (the “Throwdown License”) as well as a one-time right of first refusal to license other types of beverages. The Company’s rights under the Throwdown License Agreement are contingent upon Licensor’s prior written approval of any sports performance drinks developed or proposed by the Company to contain any of the Trademarks (“Throwdown Licensed Products”).

1

In consideration for the Throwdown License, the Company shall pay ten percent (10%) of the net revenue generated by all sales and other transfers of the Licensed Products during the term of the Throwdown License Agreement. Notwithstanding the foregoing, the Company shall pay the minimum royalties as set forth below:

		Minimum			Minimum
	Time Period:	Net Revenue			Quarterly Payments
(a)	Effective Date through 12/31/13	$	0.0			N/A
(b)	01/01/14 through 12/31/14	$	1,000,000.00		$	37,500.00
(c)	01/01/15 through 12/31/15	$	1,600,000.00	*	$	50,000.00
(d)	01/01/16 through 12/31/16	$	2,500,000.00	**	$	75,000.00

* 2015 minimum net revenue shall be the greater of 120% of the actual 2014 net revenue or $1,600,000.

** 2016 minimum net revenue shall be the greater of 110% of the actual 2015 net revenue or $2,500,000. During any extension term and beyond 2016, the annual minimum net revenue shall be at least 105% greater than the previous year.

In addition to the cash payment, the Company will also issue 5,437,603 shares of its common stock to the Throwdown Licensor. During each quarter of the term of the Agreement, the Throwdown Licensor shall have the option to convert a portion or all of the greater of the minimum quarterly payments or the actual earned royalties into shares of stock of the Company at an exercise price equal to the lesser of $0.03 per share or the VWAP for the ten (10) trading days prior to the end of the respective quarter during the term.

During the term of the Throwdown License Agreement, the Throwdown Licensor will not grant any license that will enable any third party to directly compete with the Company by selling other sports performance drinks within the United States and Canada. The Throwdown License Agreement has an initial term of three (3) years and is automatically extended for one (1) additional three (3) year period unless either party elects not to extend the term.

In the event the Throwdown Licensor creates an independent and formal relationship with one of the Company’s athlete endorsers, the Throwdown Licensor agrees to pay the Company twenty five percent (25%) of any compensation paid to the athlete endorser for athlete endorser participation.

Either party may terminate the Throwdown License Agreement upon thirty (30) days written notice if the other party is in material breach of the Throwdown License Agreement and fails to cure or take reasonable steps to cure the breach within the given time period in accordance with the Throwdown License Agreement. In addition, the Licensor has the right to terminate the Throwdown License Agreement immediately upon occurrence of certain events pursuant to the Throwdown License Agreement.

In connection with the Throwdown License Agreement, the Company entered into a series of lock-up agreements (“Lock-up Agreement”) with certain shareholders pursuant to which the shareholders agree that they shall not transfer or dispose of any securities of the Company beneficially owned by them without prior written consent of Throwdown while the Throwdown License Agreement and the Lock-up Agreement are in effect.

The Throwdown License Agreement was terminated in December 2014.  

2

Current Status

The Company retained Allen Flavors to create two new additional flavors which were launched in the early part of the first calendar quarter of 2015. The Company also implemented a newly developed look for their bottling and labeling as part of the new launch. In addition to a new product launch, the Company launched its first sweepstakes contest to be held from December 15, 2014 through January 31, 2015 to help market the new product launch. In September 2015, the Company began selling products online through Amazon.com

As discussed above, in October 2013, the Company entered into the Throwdown License Agreement, pursuant to which the Throwdown Licensor granted the Throwdown Trademarks solely in connection with the development, manufacture, distribution, marketing and sale of sports performance drinks within the United States and Canada as well as a one-time right of first refusal to license other types of beverages. The Throwdown License Agreement was terminated in December 2014.  

We entered into contracts with several professional sports personalities (Jonathan Quick, Aldon Smith, Haloti Nagata, Taj Gibson, Pablo Sandavol, Matt Moulson and Salvador Perez) to represent us by endorsing our products. All contracts cover three years and require us to issue an aggregate of 3,070,000 restricted shares of common stock over the lives of the contracts plus up to an additional 2,460,000 contingent shares based on performance criteria. During the year ended July 31, 2015 and 2014, we have recorded an aggregate marketing expense of $166,095 and $42,237 relating to the shares that are issuable and other marketing activities.

Competition

Most of our competitors, which include well-known companies and established brands like Gatorade, have significantly greater financial and marketing resources than do we. We will compete in the marketplace using the name recognition of the athletes who endorse our beverages and the taste of the beverage

There are no assurances that our approach will be successful.

Intellectual Property

We have no patents or trademarks.

Employees

At July 31, 2015, our officers, Toby McBride and Michael J. Holley, are part-time contractors to us. There are no written contracts or agreements with Messrs. McBride and Holley.  

Contractors and vendors will be used by us to conduct the manufacturing and distribution aspects of our business.

Item 1A. RISK FACTORS

Risks Related to the Business

The Company has virtually no financial resources. Our independent registered auditors’ report includes an explanatory paragraph stating that there is substantial doubt about our ability to continue as a going concern.

The Company has virtually no financial resources. We have negative working capital of $5,182,021 and a stockholders’ deficit of $10,988,928 at July 31, 2015. The reports of independent registered public accounting firms include an explanatory paragraph in their opinion on our financial statements as of and for the fiscal year ended July 31, 2015 and 2014 that states that this lack of resources causes substantial doubt about our ability to continue as a going concern. No assurances can be given that we will generate sufficient revenue or obtain necessary financing to continue as a going concern.

3

The Company is and will continue to be completely dependent on the services of our senior officers, Toby McBride and Michael Jay Holley, the loss of whose services may cause our business operations currently contemplated to cease, and we will need to engage and retain qualified employees and consultants to further implement our strategy.

The Company’s operations and business strategy are completely dependent upon the knowledge and business connections of Toby McBride and Michael Jay Holley. They are under no contractual obligation to remain employed by us. If either or both should choose to leave us for any reason or if either becomes ill and is unable to work for an extended period of time before we have hired additional personnel, our operations will likely fail. Even if we are able to find additional personnel, it is uncertain whether we could find someone who could develop our business along the lines described in this prospectus. We will fail without the services of Messrs. McBride and Holley or an appropriate replacement(s).

We intend to acquire key-man life insurance on the lives of Messrs. McBride and Holley naming us as the beneficiary when and if we obtain the resources to do so and if they are insurable. We have not yet procured such insurance, and there is no guarantee that we will be able to obtain such insurance in the future. Accordingly, it is important that we are able to attract, motivate and retain highly qualified and talented personnel and independent contractors.

Many of our likely competitors have significantly greater financial and marketing resources than do we.

Many of our likely competitors have significantly greater financial and marketing resources than do we. Many of these competitors have sophisticated management, are in a position to purchase inventory at the lowest prices and have the ability to advertise in a wide variety of media, including television. There are no assurances that our brand will be successful.

We are subject to the periodic reporting requirements of the Exchange Act that will require us to incur audit fees and legal fees in connection with the preparation of such reports. These additional costs could reduce or eliminate our ability to earn a profit.

We are required to file periodic reports with the SEC pursuant to the Exchange Act and the rules and regulations promulgated thereunder. In order to comply with these requirements, our independent registered public accounting firm will have to review our financial statements on a quarterly basis and audit our financial statements on an annual basis. Moreover, our legal counsel will have to review and assist in the preparation of such reports. The costs charged by these professionals for such services cannot be accurately predicted at this time because factors such as the number and type of transactions that we engage in and the complexity of our reports cannot be determined at this time and will have a major effect on the amount of time to be spent by our auditors and attorneys. However, the incurrence of such costs will obviously be an expense to our operations and thus have a negative effect on our ability to meet our overhead requirements and earn a profit. If we cannot provide reliable financial reports or prevent fraud, our business and operating results could be harmed, investors could lose confidence in our reported financial information, and the trading price of our common stock, if a market ever develops, could drop significantly.

In no case will the proceeds of this offering be sufficient to assist us in any way to meet any portion of these incremental costs of being public.

4

Toby McBride and Michael Jay Holley, our principal officers, have no significant experience managing a public company and no meaningful accounting or financial reporting education or experience and, accordingly, our ability to meet Exchange Act reporting requirements on a timely basis will be dependent to a significant degree upon others.

Messrs. McBride and Holley have no significant experience managing a public company and no meaningful financial reporting education or experience. They are and will be heavily dependent on engaging and dealing with outside professional advisors, primarily lawyers and financial advisors/accountants who are and will not be affiliated with our independent auditors. We have no formal arrangements with professionals and cannot provide any assurances that we will be able to establish arrangements with professionals on terms or costs that are acceptable or affordable to us.

Our internal controls may be inadequate, which could cause our financial reporting to be unreliable and lead to misinformation being disseminated to the public.

Our management is responsible for establishing and maintaining adequate internal control over financial reporting. As defined in Exchange Act Rule 13a-15(f), internal control over financial reporting is a process designed by, or under the supervision of, the principal executive and principal financial officer and effected by the board of directors, 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 Company;

- 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 Company are being made only in accordance with authorizations of management and/or directors of the Company; and

- provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company's assets that could have a material effect on the financial statements. 

Our internal controls may be inadequate or ineffective, which could cause our financial reporting to be unreliable and lead to misinformation being disseminated to the public. Investors relying upon this misinformation may make an uninformed investment decision.

Having only two directors limits our ability to establish effective independent corporate governance procedures and increases the control of our president over operations and business decisions.

We have only two directors, who are also our principal executive officers. Accordingly, we cannot establish board committees comprised of independent members to oversee functions like compensation or audit issues. In addition, a tie vote of board members is decided in favor of the chairman, which gives him significant control over all corporate issues, including all major decisions on operations and corporate matters such as approving business combinations.

Until we have a larger board of directors that would include some independent members, if ever, there will be limited oversight of our president’s decisions and activities and little ability for minority shareholders to challenge or reverse those activities and decisions, even if they are not in the best interests of minority shareholders.

Risks Related to Our Common Stock 

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

We have no committed source of financing. Wherever possible, our board of directors will attempt to use non-cash consideration to satisfy obligations. In many instances, we believe that the non-cash consideration will consist of restricted shares of our common stock. Our board of directors has authority, without action or vote of the shareholders, to issue all or part of the authorized but unissued shares. In addition, if a trading market develops for our common stock, we may attempt to raise capital by selling shares of our common stock, possibly at a discount to market. These actions will result in dilution of the ownership interests of existing shareholders may further dilute common stock book value, and that dilution may be material.

5

The interests of shareholders may be hurt because we can issue shares of our common stock to individuals or entities that support existing management with such issuances serving to enhance existing management’s ability to maintain control of our Company.

Messrs. McBride and Holley own a significant majority of outstanding shares. In addition, our board of directors has authority, without action or vote of the shareholders, to issue all or part of the authorized but unissued common shares. Such issuances may be issued to parties or entities committed to supporting existing management and the interests of existing management which may not be the same as the interests of other shareholders. Although transactions, other than those described in this prospectus, are not currently being contemplated or discussed, our ability to issue shares without shareholder approval serves to enhance existing management’s ability to maintain control of our Company or participate in other transactions, including entering into possible business combinations, without the support of other shareholders.

Our two principal officers control all corporate activities and can approve all transactions, including mergers, without the approval of other shareholders.

Messrs. McBride and Holley have a sufficient number of shares to control all corporate activities and can approve transactions, including possible mergers, issuance of shares and r compensation levels, without the approval of other shareholders. Their decisions may not be in the best interests of other shareholders.

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

Our Articles of Incorporation at Article XI provide for indemnification as follows: "No director or officer of the Corporation shall be personally liable to the Corporation or any of its stockholders for damages for breach of fiduciary duty as a director or officer; provided, however, that the foregoing provision shall not eliminate or limit the liability of a director or officer: (i) for acts or omissions which involve intentional misconduct, fraud or knowing violation of law; or (ii) the payment of dividends in violation of Section 78.300 of the Nevada Revised Statutes. Any repeal or modification of an Article by the stockholders of the Corporation shall be prospective only, and shall not adversely affect any limitation of the personal liability of a director or officer of the Corporation for acts or omissions prior to such repeal or modification."

We have been advised that, in the opinion of the SEC, indemnification for liabilities arising under federal securities laws is against public policy as expressed in the Securities Act of 1933 and is, therefore, unenforceable. In the event that a claim for indemnification for liabilities arising under federal securities laws, other than the payment by us of expenses incurred or paid by a director, officer or controlling person in the successful defense of any action, suit or proceeding, is asserted by a director, officer or controlling person in connection with our activities, we will (unless in the opinion of our counsel, the matter has been settled by controlling precedent) submit to a court of appropriate jurisdiction, the question whether indemnification by us is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue. The legal process relating to this matter if it were to occur is likely to be very costly and may result in us receiving negative publicity, either of which factors is likely to materially reduce the market and price for our shares, if such a market ever develops.

6

The market for shares of our common stock are subject to the penny stock regulations and restrictions pertaining to low priced stocks that will create a lack of liquidity and make trading difficult or impossible.

Our shares will be considered a “penny stock.”  Rule 3a51-1 of the Exchange Act establishes the definition of a "penny stock," for purposes relevant to us, as any equity security that has a minimum bid price of less than $5.00 per share or with an exercise price of less than $5.00 per share, subject to a limited number of exceptions which are not available to us. This classification will severely and adversely affects any market liquidity for our common stock.

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

Company management believes that the market for penny stocks has suffered from patterns of fraud and abuse. Such patterns include:

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

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

- "Boiler room" practices involving high pressure sales tactics and unrealistic price projections by sales persons;

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

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

Our trading market may be restricted by virtue of state securities “Blue Sky” laws that prohibit trading absent compliance with individual state laws. These restrictions may make it difficult or impossible to sell shares in those states.

There is currently no established public market for our common stock, and there can be no assurance that any established public market will develop in the foreseeable future. Transfer of our common stock may also be restricted under the securities or securities regulations laws promulgated by various states and foreign jurisdictions, commonly referred to as “Blue Sky” laws. Absent compliance with such individual state laws, our common stock may not be traded in such jurisdictions. Because the securities registered hereunder have not been registered for resale under the blue sky laws of any state, the holders of such shares and persons who desire to purchase them in any trading market that might develop in the future, should be aware that there may be significant state blue sky law restrictions upon the ability of investors to sell the securities and of purchasers to purchase the securities. These restrictions prohibit the secondary trading of our common stock. We currently do not intend to and may not be able to qualify securities for resale in at least 17 states which do not offer manual exemptions (or may offer manual exemptions but may not to offer one to us if we are considered to be a shell company at the time of application) and require shares to be qualified before they can be resold by our shareholders. Accordingly, investors should consider the secondary market for our securities to be a limited one.

7

Our board of directors has the authority, without stockholder approval, to issue preferred stock with terms that may not be beneficial to common stockholders and with the ability to affect adversely stockholder voting power and perpetuate their control over us.

Our articles of incorporation allow us to issue shares of preferred stock without any vote or further action by our stockholders. Our board of directors has the authority to fix and determine the relative rights and preferences of preferred stock. Our board of directors also has the authority to issue preferred stock without further stockholder approval, including large blocks of preferred stock. As a result, our board of directors could authorize the issuance of a series of preferred stock that would grant to holders the preferred right to our assets upon liquidation, the right to receive dividend payments before dividends are distributed to the holders of common stock and the right to the redemption of the shares, together with a premium, prior to the redemption of our common stock.

We do not expect to pay cash dividends in the foreseeable future.

We have never paid cash dividends on our common stock. We do not expect to pay cash dividends on our common stock at any time in the foreseeable future. The future payment of dividends directly depends upon our future earnings, capital requirements, financial requirements and other factors that our board of directors will consider. Since we do not anticipate paying cash dividends on our common stock, return on your investment, if any, will depend solely on an increase, if any, in the market value of our common stock.

Because we are not subject to compliance with rules requiring the adoption of certain corporate governance measures, our stockholders have limited protection against interested director transactions, conflicts of interest and similar matters.

The Sarbanes-Oxley Act of 2002, as well as rule changes proposed and enacted by the SEC, the New York and American Stock Exchanges and the Nasdaq Stock Market, as a result of Sarbanes-Oxley, require the implementation of various measures relating to corporate governance. These measures are designed to enhance the integrity of corporate management and the securities markets and apply to securities that are listed on those exchanges or the Nasdaq Stock Market. Because we are not presently required to comply with many of the corporate governance provisions and because we chose to avoid incurring the substantial additional costs associated with such compliance any sooner than legally required, we have not yet adopted these measures.

Because none of our directors are independent directors, we do not currently have independent audit or compensation committees. As a result, these directors have the ability, among other things, to determine their own level of compensation. Until we comply with such corporate governance measures, regardless of whether such compliance is required, the absence of such standards of corporate governance may leave our stockholders without protections against interested director transactions, conflicts of interest, if any, and similar matters and investors may be reluctant to provide us with funds necessary to expand our operations.

We intend to comply with all corporate governance measures relating to director independence as and when required. However, we may find it very difficult or be unable to attract and retain qualified officers, directors and members of board committees required to provide for our effective management as a result of Sarbanes-Oxley Act of 2002. The enactment of the Sarbanes-Oxley Act of 2002 has resulted in a series of rules and regulations by the SEC that increase responsibilities and liabilities of directors and executive officers. The perceived increased personal risk associated with these recent changes may make it more costly or deter qualified individuals from accepting these roles.

8

You may have limited access to information regarding our business because our obligations to file periodic reports with the SEC could be automatically suspended under certain circumstances.

As of effectiveness of our registration statement on August 18, 2011, we are required to file periodic reports with the SEC which will be immediately available to the public for inspection and copying. Except during the year that our registration statement becomes effective, these reporting obligations may (in our discretion) be automatically suspended under Section 15(d) of the Exchange Act if we have less than 300 shareholders and do not file a registration statement on Form 8A (which we have no current plans to file). If this occurs after the year in which our registration statement becomes effective, we will no longer be obligated to file periodic reports with the SEC and your access to our business information would then be even more restricted. After this registration statement on Form S-1 becomes effective, we will be required to deliver periodic reports to security holders. However, we will not be required to furnish proxy statements to security holders and our directors, officers and principal beneficial owners will not be required to report their beneficial ownership of securities to the SEC pursuant to Section 16 of the Exchange Act until we have both 500 or more security holders and greater than $10 million in assets. This means that your access to information regarding our business will be limited.

For all of the foregoing reasons and others set forth herein, an investment in the Company’s securities in any market which may develop in the future involves a high degree of risk. Any person considering an investment in such securities should be aware of these and other risk factors set forth in this Form 10-K.

Item 1B. UNRESOLVED STAFF COMMENTS

None.

Item 2. PROPERTIES

Our office and mailing address is 5137 E. Armor St., Cave Creek, AZ 85331. The space is provided to us by Mr. Holley. Mr. Holley incurs no incremental costs as a result of our using the space. Therefore, he does not charge us for its use. There is no written lease agreement.

Item 3. LEGAL PROCEEDINGS 

We are not a party to any pending or, to our knowledge, threatened litigation of any type.

Item 4. MINE SAFETY DISCLOSURES

Not applicable.

9

Part II

Item 5. MARKET FOR COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND PURCHASES OF EQUITY SECURITIES

Market Information

Our common stock is traded on the Over the counter market, OTCPK, under the symbol TBEV

The following table sets forth the high and low bid quotations for our common stock as reported on the OTC markets for the periods indicated.

	High		Low
Fiscal 2014	$		$
First Quarter		0.0325		0.012
Second Quarter		0.02		0.0049
Third Quarter		0.0195		0.0025
Fourth Quarter		0.013		0.00012
Fiscal 2015		$		$
First Quarter		0.0064		0.0004
Second Quarter		0.0011		0.0004
Third Quarter		0.01		0.0002
Fourth Quarter		0.0008		0.0002

Holders

 As of the close of business on November 17, 2015, there were 44 stockholders of record of our common stock, and 4,300,023,776 shares were issued and outstanding.

Dividends

We have never paid any cash dividends on shares of our common stock and do not anticipate that we will pay dividends in the foreseeable future. We intend to apply any earnings to fund the development of our business. The purchase of shares of common stock is inappropriate for investors seeking current or near term income.

Recent sales of unregistered securities.

On September 3, 2014, the Company issued 500,000 shares of its $0.001 par value common stock to a consultant for services rendered to the Company.

On October 22, 2014, the Company issued 100,000 shares of its $0.001 par value preferred stock to the officers of the Company for services rendered to the Company.

On March 3, 2015, the Company issued 12,000,000 shares of its $0.001 par value common stock to a consultant for services rendered to the Company.

On April 2, 2015, the Company issued 2,900,000 shares of its $0.001 par value common stock to a professional athlete in exchange for product endorsements.

No underwriter participated in the issuance of our shares, and no underwriting discounts or commissions were paid to anyone.

Item 6. SELECTED FINANCIAL DATA

We are considered to be a smaller reporting company, as defined by Rule 229.10(f)(1), and, therefore, are not required to provide the information required by this Item.

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Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Our independent registered auditors included an explanatory paragraph in their opinion on our financial statements as of and for the fiscal year ended July 31, 2015 that states that our lack of resources causes substantial doubt about our ability to continue as a going concern.

Results of Operations for the years ended July 31, 2015 and 2014

Revenue decreased by $1,481, from $1,481 during the year ended July 31, 2014 to zero dollars during the year ended July 31, 2015, due to the expiration of the product produced in the prior year. The Company was focusing on developing new formulas for new products during 2015 and did not generate any revenue.

General, administrative and other expenses consist of professional fees, office supplies and travel expenses relating to the introduction of the new product line. The increase of $491,095 during the year ended July 31, 2015, from $584,253 at July 31, 2014 to $1,075,348 at July 31, 2015, is primarily due to an increase in royalties and licenses of approximately $143,500, an increase in SEC filing costs of $15,699, a potential litigation settlement for $220,000, and investment finders’ fees of $130,000.

Marketing costs relate to the costs of press releases and meetings with individuals considered important to the marketplace introduction of our new product line. The increase of $123,857 during the year ended July 31, 2015, from $42,237 at July 31, 2014 to $166,095 at July 31, 2015, is primarily due to marketing costs incurred to promote the new products and a test marketing program run in January 2015 and sponsorship opportunities throughout the year.

Product development costs consist of costs for developing new products, planning for product packaging, samples and similar introductory costs. The increase of $249,407 during the year ended July 31, 2015, from $0 at July 31, 2014 to $249,407 at July 31, 2015, is due to the development of new drink flavors, production of test runs and contract manufacturing costs.

Compensation decreased by $726,309, from $1,236,631 during the year ended July 31, 2014 to $510,322 during the year ended July 31, 2015. The decrease was primarily due to a decrease in share-based compensation of $1,008,410, related to the issuance of 5,437,603 shares of common stock with a market value of $924,392 in connection with the Throwdown License endorsement contract during the year ended July 31, 2014, which was not incurred in the year ending July 31, 2015, a decrease in athlete endorsement share-based compensation of $156,995, from $159,696 in the prior year to $2,701 in the current year, share-based compensation paid to consultants totaling $58,300 during the year ended July 31, 2015, an increase in cash compensation expense to operations staff of $199,157, and an increase in cash compensation paid to Messrs. Holley and McBride of $60,050.

Other expense increased by $924,913 during the year ended July 31, 2015 to $2,842,245 compared to the year ended July 31, 2014, when other expense was $1,917,332. The increase is due to an increase in interest expense of $1,556,304, partially offset by a change in derivative liability of $678,979 and decrease in other expenses of $36,177.

Net loss for the year ended July 31, 2015 increased by $1,064,445, to $4,843,417 during the year ended July 31, 2015, from $3,778,972 during the fiscal year ended July 31, 2014, primarily due to increased interest expense.

Liquidity and Capital Resources

We have financed our operations through the private placement of debt and issuance of common stock.

We will continue to seek financing as necessary but cannot give any assurances that we will be successful in doing so.

We are a public company and, as such, have incurred and will continue to incur additional significant expenses for legal, accounting and related services. Once we become a public entity, subject to the reporting requirements of the Exchange Act of 1934, we will incur ongoing expenses associated with professional fees for accounting, legal and a host of other expenses including annual reports and proxy statements, if required.

Seasonality

We do not yet have a basis to determine whether our business will be seasonal.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements as defined in Item 303(a)(4)(ii) of Regulation S-K, obligations under any guarantee contracts or contingent obligations. We also have no other commitments, other than the costs of being a public company that will increase our operating costs or cash requirements in the future.

Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Pursuant to Item 305(e) of Regulation S-K (§ 229.305(e)), the Company is not required to provide the information required by this Item.

Item 8. FINANCIAL STATEMENTS

Our consolidated financial statements as of July 31, 2015 and 2014, and for the fiscal years then ended, start on page F-1.

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Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS

On August 3, 2015, the Company was notified by RBSM LLP (“RBSM”) that RBSM resigned as the Registrant’s independent registered public accounting firm. RBSM was engaged by the Company on February 2, 2015. RBSM did not issue an audit report on the Company’s financial statements. Since RBSM did not issue any report on the Company’s financial statements, none exist that contain an adverse opinion or disclaimer of opinion, or were not qualified or modified as to uncertainty, audit scope or accounting principles.

On August 3, 2015, the Company engaged GBH CPAs, PC (“GBH”) as its independent registered public accounting firm for the Company’s fiscal year ending July 31, 2015. The decision to engage GBH as the Company’s independent registered public accounting firm was approved by the Company’s Board of Directors.

Item 9A. CONTROLS AND PROCEDURES

Management’s Annual Report on Internal Control over Financial Reporting

(a) Evaluation of Disclosure Controls and Procedures

The Company’s Chief Executive Officer, in his role as CEO and Chief Financial Officer, has evaluated the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of July 31, 2015. Based upon such evaluation, the Chief Executive Officer has concluded that, as of July 31, 2015, the Company’s disclosure controls and procedures were not effective.

Management’s Report on Internal Control Over Financial Reporting

Under the supervision and with the participation of our Chief Executive Officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting as of July 31, 2015 based on the framework stated by the Committee of Sponsoring Organizations of the Treadway Commission. Furthermore, due to our financial situation, we will be implementing further internal controls as we become operative so as to fully comply with the standards set by the Committee of Sponsoring Organizations of the Treadway Commission.

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act. Our internal control system was designed 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. Because of inherent limitations, a system of 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 due to change in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Based on its evaluation as of July 31, 2015 weakness is a deficiency, or a combination of control 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.

The material weakness relates to the monitoring and review of work performed by our Chief Executive Officer and lack of segregation of duties. In the preparation of audited financial statements, footnotes and financial data all of our financial reporting is carried out by our Chief Executive Officer, and we do not have an audit committee to monitor or review the work performed. The lack of segregation of duties results from lack of accounting staff with accounting technical expertise necessary for an effective system of internal control. As soon as our finances allow, we will hire sufficient accounting staff and implement appropriate procedures for monitoring and review of work performed by our Chief Executive Officer.

This annual 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 our registered public accounting firm pursuant to temporary rules of the SEC that permit us to provide only management’s report in this Annual Report on Form 10-K.

(b) Changes in Internal Control Over Financial Reporting

No change in the Company’s internal control over financial reporting occurred during the year ended July 31, 2015, that materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

Item 9B. OTHER INFORMATION

No event occurred during the fourth quarter of the fiscal year ended July 31, 2015 that would have required disclosure in a report on Form 8-K.

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PART III

Item 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.

Our management consists of:

Name	Age	Title
Toby McBride	45	Chief Executive Officer, Treasurer and Chairman
Michael Holley	38	President and director

Toby McBride has over 19 years of experience in the beverage industry. He has been involved in the launch of product brands, Sobe, Arizona Iced Tea and Xyience. He began his career with Whole Foods as a National Buyer and left Whole Foods to join Sobe.

Michael Holley has been in the beverage industry for over 17 years. He has been involved in the launch of product brands, Arizona Iced Tea and Xyience. He began his career in the wine and spirits industry launching new products and calling on key accounts.

Possible Potential Conflicts

The market on which our shares of common stock are quoted does not currently have any director independence requirements.

No member of management will be required by us to work on a full time basis. Accordingly, certain conflicts of interest may arise between us and our officer(s) and director(s) in that they may have other business interests in the future to which they devote their attention, and they may be expected to continue to do so although management time must also be devoted to our business. As a result, conflicts of interest may arise that can be resolved only through their exercise of such judgment as is consistent with each officer's understanding of his/her fiduciary duties to us.

Currently we have only two officers and directors and will seek to add additional officer(s) and/or director(s) as and when the proper personnel are located and terms of employment are mutually negotiated and agreed, and we have sufficient capital resources and cash flow to make such offers.

Code of Business Conduct and Ethics

In September 2010 we adopted a Code of Ethics and Business Conduct which is applicable to our future employees and which also includes a Code of Ethics for our chief executive and principal financial officers and any persons performing similar functions. A code of ethics is a written standard designed to deter wrongdoing and to promote:

- honest and ethical conduct,

- full, fair, accurate, timely and understandable disclosure in regulatory filings and public statements,

- compliance with applicable laws, rules and regulations,

- the prompt reporting violation of the code, and

- accountability for adherence to the code.

A copy of our Code of Business Conduct and Ethics has been filed with the Securities and Exchange Commission as Exhibit 14.1 to our Registration Statement which was declared effective on August 18, 2011.

Board of Directors

All directors hold office until the completion of their term of office, which is not longer than one year, or until their successors have been elected. Both directors’ terms of office expire on August 31, 2016. All officers are appointed annually by the board of directors and, subject to existing employment agreements (of which there are currently none) and serve at the discretion of the board. Currently, directors receive no compensation for their role as directors but may receive compensation for their role as officers.

As long as we have an even number of directors, tie votes on issues are resolved in favor of the chairman’s vote.

Involvement in Certain Legal Proceedings

Except as described below, during the past five years, no present director, executive officer or person nominated to become a director or an executive officer of the Company:

1. had a petition under the federal bankruptcy laws or any state insolvency law filed by or against, or a receiver, fiscal agent or similar officer appointed by a court for the business or property of such person, or any partnership in which he was a general partner at or within two years before the time of such filing, or any corporation or business association of which he was an executive officer at or within two years before the time of such filing;

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2. was convicted in a criminal proceeding or subject to a pending criminal proceeding (excluding traffic violations and other minor offenses);

3. was subject to any order, judgment or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining him/her from or otherwise limiting his/her involvement in any of the following activities:

i. acting as a futures commission merchant, introducing broker, commodity trading advisor commodity pool operator, floor broker, leverage transaction merchant, any other person regulated by the Commodity Futures Trading Commission, or an associated person of any of the foregoing, or as an investment adviser, underwriter, broker or dealer in securities, or as an affiliated person, director or employee of any investment company, bank, savings and loan association or insurance company, or engaging in or continuing any conduct or practice in connection with such activity;

ii. engaging in any type of business practice; or

iii. engaging in any activity in connection with the purchase or sale of any security or commodity or in connection with any violation of federal or state securities laws or federal commodities laws; or

4. was the subject of any order, judgment or decree, not subsequently reversed, suspended or vacated, of an federal or state authority barring, suspending or otherwise limiting for more than 60 days the right of such person to engage in any activity described in paragraph (3) (i), above, or to be associated with persons engaged in any such activity; or

5. was found by a court of competent jurisdiction (in a civil action), the SEC or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and for which the judgment has not been reversed, suspended or vacated.

Committees of the Board of Directors

Concurrent with having sufficient members and resources, the Company’s board of directors will establish an audit committee and a compensation committee. We believe that we will need a minimum of five directors to have effective committee systems. The audit committee will review the results and scope of the audit and other services provided by the independent auditors and review and evaluate the system of internal controls. The compensation committee will manage any stock option plan we may establish and review and recommend compensation arrangements for the officers. No final determination has yet been made as to the memberships of these committees or when we will have sufficient members to establish committees.

All directors will be reimbursed by the Company for any expenses incurred in attending directors' meetings provided that the Company has the resources to pay these fees. The Company will consider applying for officers and directors liability insurance at such time when it has the resources to do so.

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Item 11. EXECUTIVE COMPENSATION

The following table shows, for the fiscal years ended July 31, 2015 and 2014, compensation awarded to or paid to, or earned by, our Chief Executive Officer (the “Named Executive Officer”).

SUMMARY COMPENSATION TABLE
Name and  principal position  (a)	Year  (b)		Salary ($)  (c)		Bonus ($) (d)		Stock Awards ($) (e)		Option Awards ($) (f)		Non-Equity Incentive Plan Compensation ($) (g)		Nonqualified Deferred Compensation Earnings ($)  (h)		All Other Compensation ($) (i)		Total ($)  (j)
Toby McBride, CEO, CFO and		2015		-		-		50		-		-		-		53,000		53,050
Director		2014		-		-		-		-		-		-		22,500		22,500
Michael Holley, President and		2015		-		-		50		-		-		-		52,000		52,050
Director		2014		-		-		-		-		-		-		22,500		22,500

There is no formal employment arrangement with Messrs. McBride or Holley at this time. Their compensation is not been fixed or based on any percentage calculations. They will make all decisions determining the amount and timing of their compensation and, for the immediate future, will receive the level of compensation that permits us to have sufficient resources to meet our obligations. Their compensation amounts will be formalized if and when their annual cash compensation exceeds $150,000.

All compensation has been paid in cash and was based on the amount of cash available to pay compensation after other expenses had been paid.

Grants of Plan-Based Awards Table

None of our named executive officers received any grants of stock, option awards or other plan-based awards. The Company has never issued these types of awards.

Options Exercised and Stock Vested Table

None of our named executive officers has ever been granted or exercised any stock options,

Outstanding Equity Awards at Fiscal Year-End Table

The Company entered into endorsement agreements with several professional sports personalities (Jonathan Quick, Aldon Smith, Haloti Nagata, Taj Gibson, Matt Moulson, Brian Braham, Kenneth Druan, Andrew Depaula and Salvador Perez) to represent us by endorsing our products. All contracts cover three years and require us to issue an aggregate of 3,350,000 restricted shares of common stock over the lives of the contracts plus up to an additional 5,160,000 contingent shares based on performance criteria. During the year ended July 31, 2015, we have recorded an aggregate marketing expense of $166,095 relating to the shares that are issuable and other marketing activities.

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Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

The following table sets forth certain information regarding beneficial ownership of the Company’s Common Stock as of November 17, 2015 by (i) each person who is known by us to beneficially own more than 5% of the Company’s Common Stock; (ii) each of the Company’s officers and directors; and (iii) all of the Company’s officers and directors as a group.

Beneficial ownership has been determined in accordance with the rules and regulations of the SEC and includes voting or investment power with respect to the shares. Unless otherwise indicated, the persons named in the table below have sole voting and investment power with respect to the number of shares indicated as beneficially owned by them. Common stock beneficially owned and percentage ownership is based on 4,300,023,776 shares outstanding on the Record Date and assuming the exercise of any options or warrants or conversion of any convertible securities held by such person, which are presently exercisable or will become exercisable within 60 days of the Record Date.

Title Of  Class		Beneficial Owner of  Shares (1)	Amount of  Beneficial  Ownership		Ownership Percent of Class (2)	Total Voting Percent of Class (2)
	Common	Toby McBride		2,812,500	*		25.5	%
	Common	Michael Holley		2,812,500	*		25.5	%
		All Directors and Officers as a group (2 persons)		5,625,000	*		51.0	%

*Less than 1%

(1)	Except as otherwise indicated, the address of each beneficial owner is the Company’s address.
(2)	Applicable percentage ownership is based on the voting rights of the Company’s preferred stock, whereby the holders of the preferred stock vote together as a block and the block of preferred shares represents 51% of the voting shares. Mr. McBride and Mr. Holley jointly own 100% of the preferred shares issued and outstanding.

Shareholder Matters

As an issuer of "penny stock," the protection provided by the federal securities laws relating to forward looking statements does not apply to us as long as our shares continue to be penny stocks. Although the federal securities law provide a safe harbor for forward-looking statements made by a public company that files reports under the federal securities laws, this safe harbor is not available to issuers of penny stocks. As a result, we will not have the benefit of this safe harbor protection in the event of any claim that the material provided by us, including this Annual Report on Form 10-K, contained a material misstatement of fact or was misleading in any material respect because of our failure to include any statements necessary to make the statements not misleading.

As a Nevada corporation, we are subject to the Nevada Revised Statutes ("NRS" or "Nevada law"). Certain provisions of Nevada law create rights that might be deemed material to our shareholders. Other provisions might delay or make more difficult acquisitions of our stock or changes in our control or might also have the effect of preventing changes in our management or might make it more difficult to accomplish transactions that some of our shareholders may believe to be in their best interests.

Directors' Duties. Section 78.138 of the Nevada law allows our directors and officers, in exercising their powers to further our interests, to consider the interests of our employees, suppliers, creditors and customers. They can also consider the economy of the state and the nation, the interests of the community and of society and our long-term and short-term interests and shareholders, including the possibility that these interests may be best served by our continued independence. Our directors may resist a change or potential change in control if they, by a majority vote of a quorum, determine that the change or potential change is opposed to or not in our best interest. Our board of directors may consider these interests or have reasonable grounds to believe that, within a reasonable time, any debt which might be created as a result of the change in control would cause our assets to be less than our liabilities, render us insolvent, or cause us to file for bankruptcy protection

Amendments to Bylaws - Our articles of incorporation provide that the power to adopt, alter, amend, or repeal our bylaws is vested exclusively with the board of directors. In exercising this discretion, our board of directors could conceivably alter our bylaws in ways that would affect the rights of our shareholders and the ability of any shareholder or group to effect a change in our control; however, the board would not have the right to do so in a way that would violate law or the applicable terms of our articles of incorporation.

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Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE

Our office and mailing address is 5137 E. Armor St., Cave Creek, AZ 85331. The space is provided to us by Mr. Holley who incurs no incremental costs as a result of our using the space. Therefore, he does not charge us for its use. There is no written lease agreement.

Director Independence; Committees of the Board of Directors

Our Board of Directors is comprised of two individuals, one of whom is integral to the operations of our company, we do not have a majority of independent directors as that term is defined under Rule 4200(a) (15) of the NASDAQ Marketplace Rules, even though that definition does not currently apply to us, because we are not listed on the NASDAQ. We anticipate that if we expand our Board of Directors in the future, that we will seek to include members who are independent.  Our securities are not quoted on an exchange that has requirements that a majority of our Board members be independent and we are not currently otherwise subject to any law, rule or regulation requiring that all or any portion of our Board of Directors include “independent” directors.

Our Board of Directors has not established any committees, including an Audit Committee, a Compensation Committee or a Nominating Committee, or any committee performing a similar function. The functions of those committees are being undertaken by the entire board as a whole. Our board of directors does not believe that it is necessary to have such committees because it believes the functions of such committees can be adequately performed by our Board of Directors as a whole.  Further, since our securities are not listed on an exchange, we are not subject to any qualitative requirements mandating the establishment of any particular committees.

We do not have a policy regarding the consideration of any director candidates which may be recommended by our shareholders, including the minimum qualifications for director candidates, nor has our Board of Directors established a process for identifying and evaluating director nominees. We have not adopted a policy regarding the handling of any potential recommendation of director candidates by our shareholders, including the procedures to be followed. Our Board has not considered or adopted any of these policies as we have never received a recommendation from any stockholder for any candidate to serve on our Board of Directors. Given the nature of our operations and lack of directors and officers insurance coverage, we do not anticipate that any of our shareholders will make such a recommendation in the near future. While there have been no nominations of additional directors proposed, in the event such a proposal is made, all members of our Board will participate in the consideration of director nominees.

None of our directors is an "audit committee financial expert" within the meaning of Item 407(d)(5) of Regulation S-K. In general, an "audit committee financial expert" is an individual member of the audit committee or Board of Directors who:

● understands generally accepted accounting principles and financial statements,

● is able to assess the general application of such principles in connection with accounting for estimates, accruals and reserves,

● has experience preparing, auditing, analyzing or evaluating financial statements comparable to the breadth and complexity to our financial statements,

● understands internal controls over financial reporting, and

● understands audit committee functions.

We believe that the members of our Board of Directors are collectively capable of analyzing and evaluating our financial statements and understanding internal controls and procedures for financial reporting.  We believe that retaining an independent director who would qualify as an “audit committee financial expert” would be overly costly and burdensome and is not warranted in our circumstances.

Item 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

Audit Fees: We have incurred fees for audit services for the annual audit of the Company’s financial statements included as part of our Form 10-K filing and audit related services including the quarterly reviews associated with our Form 10-Q filings as follows:

	2015		2014
LL Bradford	$	45,000	$	28,077
GBH CPAs, PC		2,500		-
	$	47,500	$	28,077

Tax Services Fees: Tax fees consist of fees billed for professional services for tax compliance. These services include assistance regarding federal, state, and local tax compliance. Tax fees were not incurred during the fiscal years ended July 31, 2015 and 2014.

All Other Fees: Other fees, which were not incurred, would include fees for products and services other than the services reported above.

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PART IV

Item 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

Exhibit No.	Description
3.1	Articles of Incorporation (Incorporated by reference to Exhibit 3.1 to the Registration Statement on Form S-1 filed with the SEC on November 5, 2010)
3.2	Certificate of Amendment (Incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K filed with the SEC on July 29, 2014)
3.3	Articles of Incorporation (Incorporated by reference to Exhibit 3.1 to the Registration Statement on Form S-1 filed with the SEC on November 5, 2010)
3.4	Certified Articles of Merger (Incorporated by reference to Exhibit 3.1 to the Registration Statement on Form S-1 filed with the SEC on November 20, 1013)
3.5	Restated Articles of Incorporation (Incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K filed with the SEC on November 14, 2013)
4.1	Form of Amended and Restated Senior Secured Convertible Promissory Note (Incorporated by reference to Exhibit 10.1 to the Quarterly Report on Form 10-Q filed with the SEC on June 25, 2013)
4.2	8% Convertible Note (Incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K filed with the SEC on August 29, 2013)
4.3	8% Convertible Note (Incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K filed with the SEC on October 4, 2013)
4.4	Original Issue Discount Convertible Promissory Note (Incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K filed with the SEC on January 27, 2014)
4.5	Original Issue Discount Convertible Promissory Note (Incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K filed with the SEC on February 20, 2014)
4.6	10% Convertible Redeemable Note (Incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K filed with the SEC on March 12, 2014)
4.7	Original Issue Discount Convertible Promissory Note (Incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K filed with the SEC on April 4, 2014)
4.8	Form of 8% Convertible Promissory Note (Incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K filed with the SEC on June 16, 2014)
10.1	License Agreement (Incorporated by reference to Exhibit 10.4 to the Current Report on Form 8-K filed with the SEC on March 20, 2012)
10.2	Spinoff Agreement (Incorporated by reference to Exhibit 10.5 to the Current Report on Form 8-K filed with the SEC on March 27, 2012)
10.3	Securities Purchase Agreement (Incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed with the SEC on August 29, 2013)
10.4	Securities Purchase Agreement (Incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed with the SEC on October 4, 2013)
10.5	License Agreement by and between Throwdown Industries Holdings, LLC and Dethrone Royalty Holding, Inc. dated October 10, 2013 (Incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed with the SEC on October 15, 2014)
10.6	Form Lock-Up Agreement (Incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K filed with the SEC on October 15, 2014)
10.7	Form of SPA (Incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed with the SEC on October 29, 2014)
10.8	Form of Master Note (Incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K filed with the SEC on October 29, 2014)
10.9	Form of Warrant (Incorporated by reference to Exhibit 10.3 to the Current Report on Form 8-K filed with the SEC on October 29, 2014)
10.10	Securities Purchase Agreement (Incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed with the SEC on March 12, 2014)
10.11	Securities Purchase Agreement (Incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed with the SEC on June 16, 2014)
14.1	Code of Ethics (Incorporated by reference to Exhibit 14.1 to the Registration Statement on Form S-1 filed with the SEC on November 5, 2010)
21.1	List of Subsidiaries

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31	Certification by Chief Executive Officer and Treasurer pursuant to Sarbanes-Oxley Section 302
32	Certification by Chief Executive Officer and Treasurer pursuant to 18 U.S.C. Section 1350
EX-101.INS	XBRL Instance Document *
EX-101.SCH	XBRLTaxonomy Extension Schema Document *
EX-101.CAL	XBRL Taxonomy Extension Calculation Linkbase *
EX-101.DEF	XBRL Taxonomy Extension Definition Linkbase *
EX-101.LAB	XBRL Taxonomy Extension Labels Linkbase *
EX-101.PRE	XBRL Taxonomy Extension Presentation Linkbase *

* Filed herein.

** To be filed by amendment

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

High Performance Beverages Company
By:	/s/ Toby McBride
	Toby McBride
	Chief Executive Officer, President (Principal Executive Officer), Treasurer (Principal Accounting and Financial Officer) and Chairman of the Board
	November 17, 2015

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the following persons on behalf of the registrant and in the capacities and on the dates indicated:

SIGNATURE	TITLE	DATE
/s/ Toby McBride	Chief Executive Officer, President (Principal Executive Officer),	November 17, 2015
Toby McBride	Treasurer (Principal Accounting
	and Financial Officer) and Chairman of the Board
/s/ Michael Holley	President and Director	November 17, 2015
Michael Holley

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FINANCIAL STATEMENTS

As of and for the years ended July 31, 2015 and 2014

TABLE OF CONTENTS

REPORTS OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMS	F-2
CONSOLIDATED BALANCE SHEETS	F-4
CONSOLIDATED STATEMENTS OF OPERATIONS	F-5
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT	F-6
CONSOLIDATED STATEMENTS OF CASH FLOWS	F-7
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS	F-8

F-1

Report of Independent Registered Public Accounting Firm

To the Board of Directors

High Performance Beverages Company

Cave Creek, Arizona

We have audited the accompanying consolidated balance sheet of High Performance Beverages Company ("the Company") as of July 31, 2015 and the related consolidated statements of operations, shareholders' deficit, and cash flows for the year then ended. The Company’s management is responsible for these financial statements. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.  We believe that our audit provides a reasonable basis for our opinion.

In our opinion, such financial statements present fairly, in all material respects, the consolidated financial position of the Company as of July 31, 2015 and the consolidated results of its operations and its cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America.

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 3 to the consolidated financial statements, the Company has an accumulated deficit, negative shareholders' equity, and a working capital deficiency at July 31, 2015, which raised substantial doubt about its ability to continue as a going concern. Management's plans concerning this matter are also described in Note 3. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

/s/ GBH CPAs, PC

GBH CPAs, PC

Houston, Texas

www.gbhcpas.com

November 17, 2015

F-2

Report of Independent Registered Public Accounting Firm

To the Board of Directors

High Performance Beverages Company

Cave Creek, Arizona

We have audited the accompanying consolidated balance sheet of High Performance Beverages Company ("the Company") as of July 31, 2014 and the related consolidated statements of operations, shareholders' deficit, and cash flows for the year then ended. The Company’s management is responsible for these financial statements. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.  We believe that our audit provides a reasonable basis for our opinion.

In our opinion, such financial statements present fairly, in all material respects, the consolidated financial position of the Company as of July 31, 2014 and the consolidated results of its operations and its cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America.

The accompanying financial statements have been prepared assuming that High Performance Beverages Company will continue as a going concern. As discussed in Note 3 to the consolidated financial statements, High Performance Beverages Company has an accumulated deficit, negative shareholders' equity, and a working capital deficiency at July 31, 2014, which raised substantial doubt about its ability to continue as a going concern. Management's plans concerning this matter are also described in Note 3. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

/s/ LL Bradford & Company, LLC

LL Bradford & Company, LLC

Houston, Texas

January 23, 2015

F-3

HIGH PERFORMANCE BEVERAGES COMPANY

CONSOLIDATED BALANCE SHEETS

AS OF JULY 31, 2015 AND 2014

	July 31, 2015			July 31, 2014
ASSETS
Current Assets
Cash and cash equivalents	$	144,093		$	10,485
Prepaid expense		-			27,000
Total Current Assets		144,093			37,485
Total Assets	$	144,093		$	37,485
LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current Liabilities
Accounts payable and accrued expenses	$	759,190		$	212,216
Note payable		6,900			6,900
Convertible notes payable, net		3,356,418			993,385
Derivative liabilities		1,203,607			1,189,287
Total Liabilities		5,326,115			2,401,788
Stockholders’ Deficit
Preferred stock: $0.001 par value; 1,000,000 shares authorized; 100,000 shares issued and outstanding at July 31, 2015		100			-
Common stock: $0.001 par value; 5,000,000,000 shares authorized; 2,400,411,602 and 476,910,212 shares issued and outstanding at July 31, 2015 and 2014, respectively		2,400,411			47,691
Stock payable		148,066			220,286
Additional paid-in capital		3,258,329			3,513,231
Accumulated deficit		(10,988,928	)		(6,145,511	)
Total Stockholders’ Deficit		(5,182,022	)		(2,364,303	)
Total Liabilities and Stockholders’ Deficit	$	144,093		$	37,485

See accompanying notes to the consolidated financial statements.

F-4

HIGH PERFORMANCE BEVERAGES COMPANY

CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE YEARS ENDED JULY 31, 2015 AND 2014

	2015			2014
REVENUES	$	-		$	1,481
COST OF REVENUES		-			-
GROSS PROFIT		-			1,481
OPERATING EXPENSES
General, administrative and other		1,075,348			584,253
Marketing		166,095			42,237
Product development		249,407			-
Compensation		510,322			1,236,631
TOTAL OPERATING EXPENSES		2,001,172			1,863,121
OPERATING LOSS		2,001,172			1,861,640
OTHER (INCOME) EXPENSE
Interest income		(223	)		-
Interest expense		2,403,172			796,868
Change in fair value of derivative liabilities		439,296			1,084,287
Other expense		-			36,177
TOTAL OTHER EXPENSE		2,842,245			1,917,332
NET LOSS	$	(4,843,417	)	$	(3,778,972	)
NET LOSS PER SHARE: BASIC AND DILUTED	$	(0.01	)	$	(0.02	)
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING: BASIC AND DILUTED		745,738,421			171,066,620

See accompanying notes to the consolidated financial statements.

F-5

HIGH PERFORMANCE BEVERAGES COMPANY

STATEMENTS OF STOCKHOLDERS’ DEFICIT

FOR THE YEARS ENDED JULY 31, 2015 AND 2014

			Preferred				Common		Additional
	Preferred		Stock		Common		Stock		Paid-in			Stock			Accumulated
	Stock		Amount		Stock		Amount		Capital			Payable			Deficit			Total
Balance, July 31, 2013		-	$	-		10,397,000	$	10,397	$	1,755,705		$	220,839		$	(2,366,539	)	$	(379,598	)
Common stock issued for services rendered		-		-		761,260		761		6,852			-			-			7,613
Common stock issued for endorsement contracts		-		-		6,550,000		6,550		1,118,664			(21,739	)		-			1,103,475
Common stock issued for conversion of note payable and accrued interest		-		-		29,982,761		29,983		73,162			21,186			-			124,331
BCF Discount on notes payable		-		-		-		-		402,139			-			-			402,139
Reclassification of derivative from liability to equity		-		-						156,709									156,709
Net loss		-		-		-		-		-						(3,778,972	)		(3,778,972	)
Balance, July 31, 2014		-		-		47,691,021	$	47,691	$	3,513,231		$	220,286		$	(6,145,511	)	$	(2,364,303	)
Common stock issued for services rendered		-		-		15,400,000		15,400		124,706			(81,806	)		-			58,300
Preferred stock issued for services rendered		100,000		100		-		-		-			-			-			100
Common stock issued for conversion of note payable and accrued interest		-		-		2,142,568,328		2,142,568		(1,445,069	)		9,586			-			707,085
Common stock issued for exercise of warrants		-		-		194,752,253		194,752		(194,752	)		-			-			-
Reclassification of derivative from liability to equity		-		-						1,260,213									1,260,213
Net loss		-		-		-		-		-						(4,843,417	)		(4,843,417	)
Balance, July 31, 2015		100,000	$	100		2,400,411,602	$	2,400,411	$	3,258,329		$	148,066		$	(10,988,928	)	$	(5,182,022	)

See accompanying notes to the consolidated financial statements.

F-6

HIGH PERFORMANCE BEVERAGES COMPANY

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED JULY 31, 2015 AND 2014

	2015			2014
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(4,843,417	)	$	(3,778,972	)
Adjustments to reconcile net loss to net cash used in operating activities:
Shared-based compensation		58,400			1,084,088
Amortization of deferred financing costs		-			174,857
Change in derivative liability		(439,296	)		1,084,287
Amortization of debt discounts		1,629,462			346,926
Shares issued and liabilities accrued for penalty expense		1,205,294			315,567
Non-cash interest expense from derivative liability in excess of face value of convertible notes		115,283			-
Changes in assets and liabilities:
Decrease in prepaid expenses		27,000			-
Decrease in inventory		-			31,034
Increase in accounts payable and accrued expenses		632,349			162,462
CASH USED IN OPERATING ACTIVITIES		(1,614,925	)		(579,751	)
CASH FLOWS FROM FINANCING ACTIVITIES
Repayments of debt		-			(1,100	)
Proceeds from issuances of convertible notes payable		1,748,533			579,416
Proceeds from issuance of notes payable		-			8,000
CASH PROVIDED BY FINANCING ACTIVITIES		1,748,533			586,316
NET INCREASE IN CASH		133,608			6,565
Cash and cash equivalents, beginning of the year		10,485			3,920
Cash and cash equivalents, end of the year	$	144,093		$	10,485
SUPPLEMENTAL CASH FLOWS INFORMATION:
Cash paid for interest	$	-		$	-
Cash paid for income taxes	$	-		$	-
NON-CASH INVESTING AND FINANCING ACTIVITIES
Common stock issued for conversion of convertible notes payable and interest	$	707,085		$	257,190
Common stock issued for exercise of warrants	$	194,752		$	-
Debt discounts from fair value of derivative liabilities	$	1,260,213		$	1,189,287
Debt discount for issued convertible notes payable	$	1,597,112		$	402,139

See accompanying notes to the consolidated financial statements.

F-7

HIGH PERFORMANCE BEVERAGES COMPANY

Notes to the Consolidated Financial Statements

NOTE 1 - ORGANIZATION

High Performance Beverages Company (formerly known as Dethrone Royalty Holdings, Inc. and Exclusive Building Services, Inc.) (the “Company”) was founded as an unincorporated DBA in February 1997 and was incorporated as a C corporation under the laws of the State of Nevada on October 11, 2010.

In October 2013, the Company entered into a license agreement with Throwdown Industries Holdings, LLC, a Delaware limited liability company (“Throwdown Licensor”), pursuant to which the Licensor granted an exclusive, non-sublicenseable and non-assignable right to the Company to use its trademarks and other intellectual properties (“Throwdown Trademarks”) solely in connection with the development, manufacture, distribution, marketing and sale of sports performance drinks within the United States and Canada (the “Throwdown License Agreement”) as well as a one-time right of first refusal to license other types of beverages. The Throwdown License was terminated in December 2014.  

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Accounting

The Company’s consolidated financial statements are prepared using the accrual method of accounting.   These consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary, Dethrone Beverage, Inc.  All significant inter-company balances and transactions have been eliminated upon consolidation.

F-8

HIGH PERFORMANCE BEVERAGES COMPANY

Notes to the Consolidated Financial Statements

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont'd)

Use of Estimates and Assumptions

Preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect certain reported amounts and disclosures.  Accordingly, actual results could differ from those estimates.  

Cash and Cash Equivalents

For purposes of the balance sheet and statement of cash flows, the Company considers all highly liquid instruments with maturity of three months or less at the time of issuance to be cash equivalents.

Inventory

Inventories are stated at the lower of cost or market value under the first-in, first-out method. The Company regularly assesses slow-moving, excess and obsolete inventory and maintains balance sheet reserves in amounts required to reduce the recorded value of inventory to lower of cost or market.

Fair Value Considerations

The Company follows ASC 820, “Fair Value Measurements and Disclosures,” as amended by Financial Accounting Standards Board (FASB) Financial Staff Position (FSP) No. 157 and related guidance. Those provisions relate to the Company’s financial assets and liabilities carried at fair value and the fair value disclosures related to financial assets and liabilities. ASC 820 defines fair value, expands related disclosure requirements, and specifies a hierarchy of valuation techniques based on the nature of the inputs used to develop the fair value measures. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, assuming the transaction occurs in the principal or most advantageous market for that asset or liability.

There are three levels of inputs to fair value measurements - Level 1, meaning the use of quoted prices for identical instruments in active markets; Level 2, meaning the use of quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active or are directly or indirectly observable; and Level 3, meaning the use of unobservable inputs. The Company uses Level 1 inputs for its fair value measurements whenever there is an active market, with actual quotes, market prices, and observable inputs on the measurement date. The Company uses Level 2 inputs for fair value measurements whenever there are quoted prices for similar securities in an active market or quoted prices for identical securities in an inactive market. The Company uses observable market data whenever available.

Derivative Liabilities

The Company, in accordance with ASC 815-40-25 and ASC 815-10-15 Derivatives and Hedging and ASC 480-10-25 Liabilities-Distinguishing Liabilities from Equity, the embedded derivate associated with convertible notes payable are accounted for as liabilities during the term of the related notes payable.

Revenue Recognition

 The Company recognizes revenue when it is realized or realizable and earned less estimated future doubtful accounts.  The Company considers revenue realized or realizable and earned when all of the following criteria are met: (i) persuasive evidence of an arrangement exists, (ii) the services have been rendered to the customer, (iii) the sales price is fixed or determinable, and (iv) collectability is reasonably assured.

Stock-based Compensation

The Company measures the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award (with limited exceptions). Incremental compensation costs arising from subsequent modifications of awards after the grant date must be recognized. The Company has not adopted a stock option plan and has not granted any stock options.

F-9

HIGH PERFORMANCE BEVERAGES COMPANY

Notes to the Consolidated Financial Statements

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont'd)

Income Taxes

A deferred tax asset or liability is recorded for all temporary differences between financial and tax reporting and net operating loss carry forwards.  Deferred tax expense (benefit) results from the net change during the year of deferred tax assets and liabilities.

Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized.  Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.

Loss per Share

Basic and diluted net income per common share has been calculated by dividing the net income for the period by the basic and diluted weighted average number of common shares. As of July 31, 2015 and 2014, independent third parties held 14,439,441 and 21,504,486 warrants outstanding, respectively, which have a dilutive effect.

Subsequent Events

The Company evaluates subsequent events from the date of the balance sheet through the date when the financial statements are issued. 

Recently Issued Accounting Pronouncements

The Company has implemented all new accounting pronouncements that are in effect and that may impact its financial statements and does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.

Reclassifications

Certain comparative figures have been reclassified to conform to the current year presentation.

F-10

HIGH PERFORMANCE BEVERAGES COMPANY

Notes to the Consolidated Financial Statements

NOTE 3 - GOING CONCERN

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As reflected in the accompanying consolidated financial statements, the Company had negative net working capital and a net stockholders’ deficit at July 31, 2015 and had no reliable source of ongoing debt or equity financing.

The Company is emphasizing a new product line involving the manufacture and sale of sports performance or energy drinks along with any other non-alcoholic beverage under the trade name High Performance Beverages Company. However, there are uncertainties as to whether the Company will obtain sufficient financing to introduce and distribute the planned product or, if distributed, there will be sufficient market demand for the products.

The consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.  

F-11

HIGH PERFORMANCE BEVERAGES COMPANY

Notes to the Consolidated Financial Statements

NOTE 4 - CONVERTIBLE NOTES PAYABLE

Convertible notes payable consisted of the following:

	July 31,		July 31,
Description	2015		2014
On November 15, 2012, the Company entered into a Senior Secured Promissory Note with an unaffiliated party under which the Company received a one-year loan with a principal balance of $100,000. This note bears interest at 20% per annum with interest payments due quarterly. In addition, the Company issued 2,500,000 shares of restricted common stock to the lender and Mr. Holley and McBride pledged their 56,250,000 shares of the Company’s common stock as collateral and transferred 1,000,000 shares of free trading shares to the lender. If the Company goes into default of the provisions of the note, it becomes convertible into the Company’s common stock at a price of $0.001 per share (100 million shares). On June 20, 2013, the Company and the lender entered into an amended and restated Senior Secured Convertible Promissory Note which amended certain terms of this note. Pursuant to the amended note, the Company’s repayment of the principal balance of the amended note is secured by all the assets of the Company. In addition, the provisions of this note whereby Messrs. Holley and McBride pledged 56,250,000 of their shares of common stock of the Company were removed.  As of July 31, 2015, this note was in default.	$	100,000	$	100,000
On February 27, 2013, the Company entered into a $335,000 convertible loan agreement. This agreement provides for a $35,000 original issue discount. The lender, at its discretion, may provide funds up to $300,000 to the Company. It provided $60,000 at the closing of this agreement on April 30, 2013. All loans under this agreement are payable in full one year after the funds are issued, together with a prorated portion of the original issue discount. All amounts outstanding under this agreement become convertible, at the lender’s discretion, into shares of the Company’s common stock starting 180 days from the execution date of this agreement. The conversion rate per share is the lower of (i) $0.044 or (ii) 60% of the lowest trade price during the 25 trading days prior to a conversion notice. The lender has agreed that it will not execute any short trades and, at no time, will hold more than 4.9% of the Company’s outstanding common stock. If the Company repays all amounts outstanding under the agreement within 90 days of the execution date, there will be no interest amounts due. If it does not pay all amounts due within 90 days of the execution date, it cannot make any other prepayments of the amounts outstanding without the consent of the lender. In addition, there will be a one-time interest charge of 12% of the amounts outstanding. The Company must also register all shares that are issuable under the agreement in any Registration Statement that it files with the SEC for any purpose. The Company has not filed a Registration Statement since this note was issued. As of July 31, 2015, this note was in default.		35,720		77,726
On April 30, 2013, the Company sold an 18% Senior Convertible Debenture in the principal amount of $60,000. The debenture matured on April 30, 2014 and has an interest rate of 18% per annum payable monthly and on each conversion date. The conversion price of the debenture is 65% of the average of the lowest three closing bid prices of the common stock for the twenty trading days immediately prior to the conversion date. Upon an event of default (as defined in the debenture), the outstanding principal amount of the debenture plus accrued but unpaid interest, liquidated damages and other amounts owing on the debenture through the date of the acceleration shall become at the debenture holder’s election immediately due and payable in cash at the mandatory default amount (as defined in the debenture). Commencing five days after the occurrence of an event of default that results in the eventual acceleration of the debenture, the interest rate on the debenture shall accrue at an interest rate equal to the lesser of 22% per annum or the maximum rate permitted under applicable law.   As of July 31, 2015, this note was in default.		37,554		46,254

F-12

HIGH PERFORMANCE BEVERAGES COMPANY

Notes to the Consolidated Financial Statements

NOTE 4 - CONVERTIBLE NOTES PAYABLE (cont'd)

On October 10, 2013, the Company entered into a securities purchase agreement (the “SPA”) with an investor, pursuant to which the investor purchased a master promissory note (the “Master Note”) with a principal balance of $48,000 for a purchase price of $40,000 at an original issuance discount of $4,000.  The Company also agreed to pay $4,000 worth of legal, accounting and due diligence costs to the investor.   Pursuant to the Master Note, the investor has the right, solely in the investor’s discretion, to subsequently purchase up to eight (8) additional promissory notes (each, an “Additional Note”, the Master Note and each Additional Note collectively, the “Notes”), at any time from the date of issuance of the Master Note until October 10, 2014.  Each Additional Note shall have a principal balance of $22,000 and shall have a purchase price of $20,000, at an original issue discount of $2,000.   Pursuant to the Master Note, if the Company repays the entire balance of each Note prior to the prepayment opportunity date (as defined in the Master Note), the Company shall pay an interest rate equal to 0% per annum.  If the Company does not repay the entire balance of each Note prior to the prepayment opportunity date each Note shall have a one-time interest charge equal to 12% , applied to the outstanding balance of each note.   Each note is convertible, at any time after the date six months from the purchase price date (as defined in the Master Note), into shares of the Company’s common stock at an exercise price equal to (i) the outstanding balance divided by (ii) 60% of the lowest intra-day trade price in the twenty-five (25) trading days immediately preceding the conversion, subject to certain adjustment as further described in the Master Note. As of July 31, 2015, this note was in default.	72,027	128,461
On January 8, 2014, the Company sold an Original Issue Discount Convertible Promissory Note in the principal amount of $75,000, for cash consideration of $50,000. This note matured on July 8, 2014 and all overdue principal entailed a late fee at the rate of 22% per annum. The Company had the option to prepay this note for $100,000 at any time prior to the maturity date. This note may be converted into common stock of the Company at any time after the maturity date at a fixed price of $0.0001 per share. However, if the stock price of the Company loses the bid at any time before the maturity date, the conversion price shall be $0.00001 per share. This note shall not be converted to the extent that such conversion would result in beneficial ownership by the holder and its affiliates to own more than 4.99% of the issued and outstanding shares of the Company’s common stock. Such limitations on conversion may be waived by the noteholder upon with not less than 61 days’ prior notice to the Company. As of July 31, 2015, this note was in default.	68,671	72,196

F-13

HIGH PERFORMANCE BEVERAGES COMPANY

Notes to the Consolidated Financial Statements

NOTE 4 - CONVERTIBLE NOTES PAYABLE (cont'd)

On February 11, 2014, the Company sold an Original Issue Discount Convertible Promissory Note in the principal amount of $75,000 for cash consideration of $50,000. This note matured on August 11, 2014 and all overdue principal will entail a late fee at the rate of 22% per annum. The Company had the option to prepay this note for $75,000 at any time prior to May 11, 2014.   This note may be converted into common stock of the Company at any time after the maturity date at a fixed price of $0.0001 per share. However, if the stock price of the Company loses the bid, loses DTC eligibility, or gets “chilled for deposit” at any time before the maturity date, the conversion price shall be $0.00001 per share. This note shall not be converted to the extent that such conversion would result in beneficial ownership by the holder and its affiliates to own more than 4.99% of the issued and outstanding shares of the Company’s common stock. Such limitations on conversion may be waived by the noteholder upon with not less than 61 days’ prior notice to the Company. As of July 31, 2015, this note was paid in full.	-	75,000
On February 25, 2014, the Company sold a 10% Convertible Redeemable Note in the principal amount of $22,000 pursuant to a Securities Purchase Agreement. This note matured on February 28, 2015 and has an interest rate of 10% per annum. This note may be converted into common stock of the Company at any time beginning on the 180th day of the date of this Note at a price equal to 50% of the lowest closing bid price of the common stock as reported on OTCQB, for the fifteen prior trading days. In the event the Company experiences a DTC “Chill” on its shares, the conversion price shall be decreased to 40% instead of 50% while that “Chill” is in effect. As of July 31, 2015, this note was paid in full.	-	22,000
On March 25, 2014, the Company sold a note with a principal balance of $75,000 for a purchase price of $50,000 and an original issuance discount of $25,000. This note matured on September 25, 2014.   This note may be converted into common stock of the Company at any time after the maturity date at a fixed price of $0.0001 per share. However, if the stock price of the Company loses the bid, loses DTC eligibility, or gets “chilled for deposit” at any time before the maturity date, the conversion price shall be $0.00001 per share. This note shall not be converted to the extent that such conversion would result in beneficial ownership by the holder and its affiliates to own more than 4.99% of the issued and outstanding shares of the Company’s common stock. Such limitations on conversion may be waived by the noteholder upon with not less than 61 days’ prior notice to the Company. As of July 31, 2015, this note was in default.	75,000	75,000

F-14

HIGH PERFORMANCE BEVERAGES COMPANY

Notes to the Consolidated Financial Statements

NOTE 4 - CONVERTIBLE NOTES PAYABLE (cont'd)

On March 31, 2014, the Company sold a note with a principal balance of $42,000 for a purchase price of $30,000.  This note matured on September 30, 2014.  Interest accrued at the rate of 15% per annum, compounding daily.  At any time from the date hereof until no payment and/or repayment of funds due to the holder of this note, all principal, accrued but unpaid interest and all other payments due under this note shall be convertible into shares of common stock of the Company, at a conversion price of $.0001 at the option of the holder, in whole at any time and from time to time.   As of July 31, 2015, this note was in default.	6,496	67,146
On April 1, 2014, the Company sold a note with a principal balance of $21,000 for a purchase price of $15,000.  This note matured on October 1, 2014.  Interest accrued at the rate of 15% per annum, compounding daily.  At any time from the date hereof until no payment and/or repayment of funds due to the holder of this note, all principal, accrued but unpaid interest and all other payments due under this note shall be convertible into shares of common stock of the Company, at a conversion price of $.0001 at the option of the noteholder, in whole at any time and from time to time.   On June 18, 2015, the Company settled the final balance of this note with the noteholder for $20,000 in cash and issued 15,000,000 shares subsequent to the yearend. As of July 31, 2015, this note was paid in full.	-	21,000
On June 3, 2014, the Company sold a note with a principal purchase price of $10,000.  This note matured on June 2, 2015.  Interest accrued at the rate of 8% per annum, compounding daily.  At any time from the date hereof until no payment and/or repayment of funds due to the holder of this note, all principal, accrued but unpaid interest and all other payments due under the note shall be convertible into shares of common stock of the Company, at a conversion price of $.0001 at the option of the noteholder, in whole at any time and from time to time.   As of July 31, 2015, this note was paid in full.	1,500	10,000
On June 6, 2014, the Company sold a note with a principal purchase price of $60,000.  This note matured on June 5, 2015. Interest accrues at the rate of 8% per annum, compounding daily.  At any time from the date hereof until no payment and/or repayment of funds due to the noteholder, all principal, accrued but unpaid interest and all other payments due under this note shall be convertible into shares of common stock of the Company, at a conversion price of $.0001 at the option of the noteholder, in whole at any time and from time to time. As of July 31, 2015, this note was in default.	39,756	60,000

F-15

HIGH PERFORMANCE BEVERAGES COMPANY

Notes to the Consolidated Financial Statements

NOTE 4 - CONVERTIBLE NOTES PAYABLE (cont'd)

On June 4, 2014, a new lender assumed a $60,000 portion of existing debt.  Pursuant to the original agreement, if the Company does not repay the entire balance of the maturity date, June 15, 2014, the note shall accrue interest at 22% per annum.   The note is convertible into shares of the Company’s common stock at an exercise price equal to (i) the outstanding balance divided by (ii) 60% of the lowest intra-day trade price in the twenty-five (25) trading days immediately preceding the conversion, subject to certain adjustment as further described in the original note.   As of July 31, 2014, the Company was in default on this note.	472,568	176,718
On June 6, 2014, the Company sold a note with a principal purchase price of $60,000.  This note matured on June 5, 2015.  Interest accrues at the rate of 8% per annum, compounding daily.  This note is convertible into shares of the Company’s common stock at an exercise price equal to (i) the outstanding balance divided by (ii) 60% of the lowest intra-day trade price in the five (5) trading days immediately preceding the conversion, subject to certain adjustment as further described in the original note.   As of July 31, 2015, this note was in default.	36,510	60,000
On July 2, 2014, a new lender assumed a $70,000 portion of existing debt. Pursuant to the original note agreement, if the Company does not repay the entire balance of the maturity date, July 2, 2015, the note shall accrue interest at 22% per annum. This note is convertible into shares of the Company’s common stock at an exercise price equal to (i) the outstanding balance divided by (ii) 60% of the lowest intra-day trade price in the twenty-five (25) trading days immediately preceding the conversion, subject to certain adjustment as further described in the original note (the “Conversion Price”). As of July 31, 2015, this note was paid in full.	-	57,000
On August 15, 2014, the Company sold a non interest bearing note with a principal purchase price of $66,000.  This note is due on August 15, 2015.  This note is convertible into shares of the Company’s common stock at an exercise price equal to (i) the outstanding balance divided by (ii) 50% of the lowest trade price in the twenty-five (25) trading days immediately preceding the conversion, subject to certain adjustment as further described in the original note.	68,000	-

F-16

HIGH PERFORMANCE BEVERAGES COMPANY

Notes to the Consolidated Financial Statements

NOTE 4 - CONVERTIBLE NOTES PAYABLE (cont'd)

On August 26, 2014, a new Investor purchased from an original noteholder, a convertible note with a face value of $48,000 dated October 8, 2013, with a present balance of $62,234, including accrued interest. The terms of the original note remain the same. Pursuant to the Master Note, the Investor held the right, solely in the Investor’s discretion, to subsequently purchase up to eight (8) additional promissory notes (each, an “Additional Note”, the Master Note and each additional note collectively, the “Notes”), at any time from the date of issuance of the Master Note until October 10, 2014.  Each Additional Note had a principal balance of $22,000 and had a purchase price of $20,000, and an original issue discount of $2,000. Pursuant to the Master Note, if the Company repays the entire balance of each of the Notes prior to the prepayment opportunity date (as defined in the Master Note), the Company shall pay an interest rate equal to 0% per annum.  If the Company does not repay the entire balance of each Note prior to the prepayment opportunity date each Note shall have a one-time interest charge equal to 12%, applied to the outstanding balance of each note. Each of the notes is convertible, at any time after the date six months from the Purchase Price Date (as defined in the Master Note), into shares of the Company’s common stock at an exercise price equal to (i) the outstanding balance divided by (ii) 60% of the lowest intra-day trade price in the twenty-five (25) trading days immediately preceding the conversion, subject to certain adjustment as further described in the Master Note. As of July 31, 2015, this note was in default.	705,946	-
On August 27, 2014, the Company sold a 12% Convertible Redeemable Note in the principal amount of $160,000 pursuant to a Securities Purchase Agreement. This note matured on March 27, 2015.   This note may be converted into common stock of the Company at any time beginning on the 1st day of the date of this Note at a price equal to the lesser of (i) $0.01 or (ii) 60% of the lowest intraday bid price of the common stock as reported on OTCQB, for the five prior trading days. As of July 31, 2015, this note was in default.	233,707	-
On October 2, 2014, the Company sold a note with a principal purchase price of $58,000.  This note matured on May 2, 2015.  Interest accrues at the rate of 12% per annum, compounding daily. This note is convertible into shares of the Company’s common stock at an exercise price equal to (i) the outstanding balance divided by (ii) 40% of the lowest bid price for the thirty (30) trading days immediately preceding the conversion, subject to certain adjustment as further described in the note agreement. As of July 31, 2015, this note was in default.	25,730	-

F-17

HIGH PERFORMANCE BEVERAGES COMPANY

Notes to the Consolidated Financial Statements

NOTE 4 - CONVERTIBLE NOTES PAYABLE (cont'd)

On October 17, 2014, the Company sold a 1% Convertible Redeemable Note in the principal amount of $500,000 pursuant to a Securities Purchase Agreement.  This note matured on April 17, 2015.   This note may be converted into common stock of the Company at any time beginning on the 1st day of the date of this note at a price equal to 56% of the lowest intraday bid price of the common stock as reported on OTCQB, for the five prior trading days. As of July 31, 2015, this note was in default.		500,000		-
On November 28, 2014, the Company executed a convertible note payable in the amount of $800,000, which matured on May 28, 2015, bearing interest at 1% per annum. This note is convertible into the Company’s common stock at a variable conversion price equal to 56% of the market value at the time of conversion. As of July 31, 2015, this note was in default.		800,000		-
On March 11, 2015, the Company executed a convertible note payable in the amount of $100,000 payable on September 5, 2015 bearing interest at 1% per annum. This note is convertible into the Company’s common stock at a variable conversion price equal to 56% of the market value at the time of conversion.   This note is currently in default.		100,000		-
Total		3,379,185		1,048,501
Less: Debt discount		(1,652,229	)	(402,139	)
Plus: Amortization of discounts		1,629,462		347,023
Total convertible notes payable	$	3,356,418		993,385

F-18

HIGH PERFORMANCE BEVERAGES COMPANY

Notes to the Consolidated Financial Statements

NOTE 5 - DERIVATIVE LIABILITY

The convertible notes payable issued by the Company contain a variable conversion feature (the Variable Conversion Feature) that gives rise to a derivative liability. The Company has measured its derivative liability at fair value and recognized the derivative value as a current liability and recorded the derivative value on its consolidated balance sheet. The derivative is valued primarily using models based on unobservable inputs that are supported by little to no market activity. These inputs represent management’s best estimate of what market participants would use in pricing the liability at the measurement date and thus are classified as Level 3. Changes in the fair values of the derivative are recognized as earnings or losses in the current period.

The fair values of derivative liabilities related to the Variable Conversion Feature for the years ended July 31, 2015 and 2014 were estimated on the transaction dates and balance sheet dates under the following assumptions:

	July 31, 2014			Issuances / changes		July 31, 2015
Shares of common stock issuable upon exercise of debt		502,650,890			2,142,548,268		11,029,762,479
Estimated market value of common stock on measurement date	$	0.0039		$	0.0001	$	0.0003
Exercise price	$	0.00234		$	0.02262	$	0.0007
Risk free interest rate		0.12	%		0.09% - 0.36%		0.33	%
Expected dividend yield		0.00	%		0.00%		0.00	%
Expected volatility		114.29	%		15.55% - 384.93%		384.93	%
Expected exercise term in years		1.00			1.00		0.8333

The changes in fair values of the derivative liabilities related to the convertible notes payable for the years ended July 31, 2015 and 2014 are summarized as follows:

Fair value of derivative liabilities at July 31, 2013	$	242,430
Fair value of derivative liabilities related to new notes		1,206,095
Conversion of derivative liabilities		(156,709	)
Change in fair value of derivative liabilities		(102,529	)
Fair value of derivative liabilities at July 31, 2014		1,189,287
Fair value of derivative liabilities related to new notes		1,713,829
Conversion of derivative liabilities		(1,260,213	)
Change in fair value of derivative liabilities		(439,296	)
Fair value of derivative liabilities at July 31, 2015	$	1,203,607

NOTE 6 - EQUITY

The Company is authorized to issue 5,000,000,000 shares of common stock and 1,000,000 shares of preferred stock.

In connection with the sale of a debenture on April 30, 2013, the Company issued a warrant to purchase 3,726,708 shares of the Company’s common stock at an exercise price of $.03 per share to the purchaser (subject to adjustment as provided in the debenture). The warrant is exercisable on a cash or a cashless basis (as provided in the warrant). The warrant terminates three years from the initial exercise date and on such date the warrant shall be automatically exercised via cashless exercise. The fair market value of the warrant was $37,267 on the date of issuance. As of July 31, 2014, the warrant was fully exercised.

In connection with the sale of a convertible note on October 8, 2013, the Company issued a warrant to purchase 17,777,778 shares of the Company’s common stock based upon the following formula: $112,000 divided by the conversion price, as defined in the warrant on the date of issuance, which was $0.0063 per share. The warrant is exercisable on a cash or cashless basis (as provided in the warrant). The warrant terminates five years from the date of issuance. The fair market value of the warrant on the date of issuance was $317,865 using the Black-Scholes formula assuming volatility of 134.68%, and a discount rate of 0.11%.

F-19

HIGH PERFORMANCE BEVERAGES COMPANY

Notes to the Consolidated Financial Statements

NOTE 6 - EQUITY (cont'd)

A summary of warrant activity for the year ended July 31, 2015 and 2014 is presented below:

						Weighted
				Weighted		average
				average		remaining		Aggregate
				exercise		contractual		intrinsic
	Warrants			price		life (years)		value
Outstanding on July 31, 2013		-			-		-		-
Granted		21,504,486		$	.01815		3.5	$	-
Exercised		(3,726,708	)		.03		-		-
Outstanding on July 31, 2014		17,777,778		$	0.0063		4.189	$	-
Granted		-			-		-		-
Exercised		(3,338,337	)		-		-		-
Outstanding on July 31, 2015		14,439,441		$	0.0063		3.189	$	-

During the year ended July 31, 2015,

● the Company issued 194,752,253 shares of common stock related to the cashless exercise of 3,338,337 warrants during the year.

● the Company issued 100,000 shares of preferred stock in the form of compensation to the officers of the Company. The stock was valued at $100. 

● the Company issued 15,400,000 shares of common stock for compensation for services rendered. The stock was valued at $58,300.

● the Company issued 2,142,548,268 shares of common stock related to the conversion of $707,065 in principal and interest related to convertible notes payable.

During the year ended July 31, 2014,

● the Company issued 761,260 shares of common stock for compensation for services rendered. The stock was valued at $7,613.

● the Company issued 6,550,000 of common stock for endorsement contracts. The stock was valued at $1,103,475.

● the Company issued 29,982,761 shares of common stock related to conversions of convertible debt during the year. The stock was valued at $124,331.

NOTE 7 - RELATED PARTY TRANSACTIONS

The Company neither owns nor leases any real or personal property. The Company's office is provided by an officer who incurs no incremental costs as a result of the Company using the space. Therefore, he does not charge for its use. There is no written lease agreement, and no obligation for him to continue this arrangement.

There were no other related party transactions for the years ended July 31, 2015 and 2014.

F-20

HIGH PERFORMANCE BEVERAGES COMPANY

Notes to the Consolidated Financial Statements 

NOTE 8 - COMMITMENTS AND CONTINGENCIES

Throwdown License Agreement

On October 10, 2013, the Company entered into a license agreement (“Throwdown License Agreement”) with Throwdown Industries Holdings, LLC, a Delaware limited liability company (“Licensor”), pursuant to which the Licensor granted an exclusive, non-sublicenseable and non-assignable right to the Company to use its trademarks and other intellectual properties (“Trademarks”) solely in connection with the development, manufacture, distribution, marketing and sale of sports performance drinks within the United States and Canada (the “License”) as well as a one-time right of first refusal to license other types of beverages. The Company’s rights under the License Agreement are contingent upon Licensor’s prior written approval of any sports performance drinks developed or proposed by the Company to contain any of the Trademarks (“Licensed Products”).

In consideration for the License, the Company shall pay ten percent (10%) of the net revenue generated by all sales and other transfers of the Licensed Products during the term of the License Agreement. Notwithstanding the foregoing, the Company shall pay the minimum royalties as set forth below:

		Minimum			Minimum
	Time Period:	Net Revenue			Quarterly Payments
(a)	Effective Date through 12/31/13	$	-			-
(b)	01/01/14 through 12/31/14	$	1,000,000		$	37,500
(c)	01/01/15 through 12/31/15	$	1,600,000	*	$	50,000
(d)	01/01/16 through 12/31/16	$	2,500,000	**	$	75,000

*    2015 minimum net revenue shall be the greater of 120% of the actual 2014 net revenue or $1,600,000.

** 2016 minimum net revenue shall be the greater of 110% of the actual 2015 net revenue or $2,500,000. During any extension term and beyond 2016, the annual minimum net revenue shall be at least 105% greater than the previous year.

In addition to the cash payment, the Company will also issue 5,437,603 shares of its common stock to the Licensor. During each quarter of the term of the Throwdown License Agreement, the Licensor shall have the option to convert a portion or all of the greater of the minimum quarterly payments or the actual earned royalties into shares of stock of the Company at an exercise price equal to the lesser of $0.03 per share or the VWAP for the ten (10) trading days prior to the end of the respective quarter during the term.

In December 2014, both parties to the contract agreed to terminate the licensing agreement.

Pending and Threatened Litigation 

As of July 31, 2015, the Company was involved in a civil lawsuit pending in the United States District Court. The Plaintiffs sought damages ranging from $4,814,500 to $25,000,000 arising from the alleged breach of terms for certain marketing services. Plaintiffs asserted their claims based on the legal theories of breach of contract and fraud. The Company had moved to dismiss all but one of the claims for breach of contract asserted in the complaint, which motion was still pending at July 31, 2015. Management denied the remaining claim and vigorously defended against it. In August 2015, the litigation was settled in exchange for the issuance of 100,000,000 shares of the Company’s common stock, having a fair market value of $220,000. The Company has accrued a liability of $220,000 at July 31, 2015.

On September 17, 2015, the Company entered into a Settlement Agreement with a lender. In accordance with the Settlement Agreement, the Company agreed to issue to the lender a convertible promissory note in the principal amount of $240,500, in exchange for the return and cancellation of certain outstanding debt held by the lender. The debt was comprised of an aggregate of $240,500 of principal and interest on i) a convertible debenture in the original principal amount of $60,000 issued to the lender on April 30, 2013, ii) a senior secured convertible promissory note with an original principal balance of $100,000, which the lender had assumed from an individual on June 17, 2013, and iii) a convertible note with an original principal amount of $42,000 issued to the lender on March 31, 2014.

The Company is also involved in the following lawsuits:

On or about January 29, 2015, Alpha Capital Anstalt (“Alpha”) filed a complaint against the Company for damages in connection with a note that they alleged was in default by the Company, which was answered on or about April 3, 2015. See Case 1:15-cv-00639-CM filed in the United States District Court, Southern District. It is still pending, discovery is complete, and Alpha has filed and served a motion for summary judgment. The Company plans to file and opposition, and the case will likely be settled in the meantime.

F-21

HIGH PERFORMANCE BEVERAGES COMPANY

Notes to the Consolidated Financial Statements

NOTE 9 - SUBSEQUENT EVENTS

Subsequent to July 31, 2015,

● the Company issued 1,261,232,871 shares of common stock to holders of convertible notes upon the conversion of $271,104 in principal, $13,425 in accrued interest and $2,040 in fees.

● the Company issued 500,000,000 shares of common stock to a warrant holder upon the cashless conversion of 221,159 warrants.

● the Company issued 100,000,000 shares of common stock to settle a lawsuit with a vendor. The fair market value of the shares on the date of issuance was $220,000.

In September 2015, the Company issued 10,000,000 shares to consultants for services rendered. The fair market value of the shares on the date of issuance was $25,000.

In September 2015, the Company issued 6,000,000 shares to professional athletes in exchange for product endorsements. The fair market value of the shares on the date of issuance was $9,500.

F-22