Form 10-Q - Quarterly report [Sections 13 or 15(d)]

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended January 31, 2016

o 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: 333-156059

Minerco, Inc.

(Exact name of registrant as specified in its charter)



Nevada		27-2636716
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

800 Bering Drive, Suite 201

Houston, TX 77057

(Address of principal executive offices)

(888) 473-5150

(Registrant’s telephone number, including area code)

_____________________________________________________

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (of for such shorter period that the registrant was required to submit and post such files). Yes þ No o

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



Large accelerated filer	o	Non-accelerated filer	o
Accelerated filer	o	Smaller reporting company	þ

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

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS:

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes o No o

APPLICABLE ONLY TO CORPORATE ISSUERS

As of March 21, 2016 the registrant had 80,838,717 outstanding shares of its common stock.

Table of Contents



PART I – FINANCIAL INFORMATION
	Page
Item 1. Financial Statements	3
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	19
Item 3. Quantitative and Qualitative Disclosures About Market Risk	28
Item 4. Controls and Procedures	28

PART II – OTHER INFORMATION

Item 1. Legal Proceedings	28
Item 2. Unregistered Sales of Equity Securities	28
Item 3. Defaults Upon Senior Securities	30
Item 4. Mine Safety Disclosures	30
Item 5. Other Information	30
Item 6. Exhibits	31

PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

The unaudited interim financial statements of Minerco, Inc. follow. All currency references in this report are to U.S. dollars unless otherwise noted.



	Index
Consolidated Balance Sheets (unaudited)	4
Consolidated Statements of Operations and Comprehensive Loss (unaudited)	6
Consolidated Statements of Cash Flows (unaudited)	7
Consolidated Notes to the Unaudited Financial Statements	8

Minerco, Inc.

Consolidated Balance Sheets

(unaudited)



	January 31, 2016		July 31, 2015
ASSETS
Cash	$	345	$	7,258
Accounts Receivable, Net	148,197		128,029
Inventory	187,875		304,746
Prepaid Expenses	4,896		5,896
Notes Receivable, Current	—		117,196
Current Assets	341,313		563,125
Other Assets
Property and Equipment, net	100,700		112,360
Prepaid Expenses, Noncurrent	—		250,000
Goodwill	607,891		607,891
Customer Relationships, net	144,198		148,077
Intangible Assets, net	380,417		98,048
Total Assets	$	1,574,519	$	1,779,501
LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current Liabilities
Accounts payable and accrued liabilities	$	2,788,836	$	2,460,186
Note Payable, net of unamortized discount $18,360 and $0	149,970		149,970
Accounts Payable – Related Party	509,677		453,705
Convertible debt, net unamortized discount $790,458 and $204,036	133,989		89,690
Capital Lease Obligations, Current	5,169		22,080
Line of Credit	89,707		12,660
Derivative liabilities	1,300,242		352,587
Short term Debt	1,990,308		2,175,000
Total Current Liabilities	6,967,898		5,715,878
Capital Lease Obligations, Noncurrent	—		1,758
Total Liabilities	6,967,898		5,717,636
Stockholders’ Deficit



Series A Convertible Preferred stock, $0.001 par value, 15,000,000 shares authorized, 150,000 outstanding at January 31, 2016 and at July 31, 2015	150			150
Series B Convertible Preferred stock, $0.001 par value, 2,000,000 shares authorized, 974,309 and 365,809 outstanding at January 31, 2016 and at July 31, 2015	974			366
Series C Convertible Preferred stock, $0.001 par value, 1,000,000 shares authorized, 836,543 outstanding at January 31, 2016 and at July 31, 2015	837			837
Common stock, $0.001 par value, 250,000,000 shares authorized, 62,146,225 and 34,962,336 outstanding at January 31, 2016 and at July 31, 2015	62,147			34,963
Additional paid-in capital	27,199,543			25,748,411
Accumulated deficit	(31,140,648		)	(28,128,489		)
Total Minerco stockholders’ Deficit	(3,876,997		)	(2,343,762		)
Noncontrolling Interest	(1,516,382		)	(1,594,373		)
Total Stockholders’ Deficit	(5,393,379		)	(3,938,135		)
Total Liabilities and Stockholders’ Deficit	$	1,574,519		$	1,779,501

The accompanying notes are an integral part of these unaudited consolidated financial statements

Minerco, Inc.

Consolidated Statements of Operations and Comprehensive Loss

(unaudited)



	Three Months Ended January 31, 2016 (Successor)			Six Months Ended January 31, 2016 (Successor)			Three Months Ended January 31, 2015 (Successor)			October 25, 2014 through January 31, 2015 (Successor)			August 1, 2014 Through October 24, 2014 (Predecessor)
Sales:
Products	$	196,021		$	450,534		$	696,690		$	724,314		$	409,803
Services	—			66,000			44,295			44,295			66,000
Total Sales	196,021			516,534			740,985			768,609			475,803
Cost of Goods Sold	160,609			449,085			605,736			626,151			335,197
Gross Profit	35,412			67,449			135,249			142,458			140,606
Selling and Marketing	11,000			58,991			128,376			128,376			—
General and Administrative	792,328			1,670,403			1,010,364			1,038,415			272,959
Total Operating Expenses	803,328			1,729,394			1,138,740			1,166,791			272,959
Net Loss from Operations	(767,916		)	(1,661,945		)	(1,003,491		)	(1,024,333		)	(132,353		)
Other Income (Expenses):
Interest Expense, net	(242,583		)	(417,668		)	(179,042		)	(180,029		)	(17,465		)
Gain/(Loss) on Derivative Liability	(110,901		)	(399,981		)	(476,187		)	(476,187		)	—
Contract Term Fees	—			—			2,000			2,000			—
Gain/(Loss) on Debt for Equity Swap	(187,200		)	(364,109		)	(462,202		)	(462,202		)	—
Total Other Expenses	(540,684		)	(1,181,758		)	(1,115,431		)	(1,116,418		)	(17,465		)
Net loss	(1,308,600		)	(2,843,703		)	(2,118,922		)	(2,140,751		)	(149,818		)
Net loss attributable to Noncontrolling interest	(42,579		)	(138,108		)	(162,123		)	(176,410		)	—
Net loss attributable to Minerco	(1,266,021		)	(2,705,595		)	(1,956,799		)	(1,964,341		)	(149,818		)
Preferred Stock Dividends	194,328			306,564			(28,107		)	(12,985		)	—
Net loss attributable to common shareholders	$	(1,460,349	)	$	(3,012,159	)	$	(1,928,692	)	$	(1,951,356	)	$	(149,818	)
Total Other Comprehensive Income (Loss)
Unrealized gain (loss) on AFS securities	—			—			(22,275		)	(19,294		)	9,356
Total Other Comprehensive Income (Loss)	—			—			(22,275		)	(19,294		)	9,356
Other Comprehensive Income (Loss) attributable to noncontrolling interest	—			—			(18,284		)	(15,578		)	—
Other Comprehensive Income (Loss) attributable to Minerco	$	—		$	—		(3,991		)	(3,716		)	$	9,356
Total Comprehensive Income (Loss)	$	(1,460,349	)	$	(3,012,159	)	$	(1,932,683	)	$	(1,955,072	)	$	(140,462	)
Net Loss Per Common Share – Basic and Diluted	$	(0.03	)	$	(0.07	)	(0.06		)	(0.06		)	$	(0.08	)
Weighted Average Common Shares Outstanding	49,538,915			45,132,238			30,245,081			30,081,768			1,680,000

The accompanying notes are an integral part of these unaudited consolidated financial statements

Minerco, Inc.

Consolidated Statements of Cash Flows

(unaudited)



	Six Months ended January 31, 2016 (Successor)			The Period October 25, 2014 to January 31, 2015(Successor)			The Period August 1, 2014 to October 24, 2014 (Predecessor)
Cash Flows from Operating Activities
Net income (loss) for the period	$	(2,843,703	)	$	(2,140,751	)	$	(149,818	)
Adjustments to reconcile net loss to net cash used in operating activities:
Unrealized Gain on AFS	—			(19,294		)	(9,356		)
Bad Debt Expense	—			—			—
Depreciation and Amortization	19,044			13,500			11,021
Loss on derivative liability	399,981			476,187			—
Stock based compensation - employee	602,992			186,276			—
Stock based compensation - third party	36,668			—			—
Accretion Expense	263,941			115,397			—
Loss on debt for equity exchange	364,109			462,202			—
Changes in operating assets and liabilities:
Accounts receivable	(20,168		)	(530,854		)	(125,038		)
Inventory	116,871			(34,797		)	166,736
Prepaid expenses and other current assets	1,000			16,610			—
Accounts payable	(8,138		)	(61,628		)	(5,016		)
Investments	—			19,293			9,355
Accounts payable - related parties	55,972			442,250			—
Accrued expenses	92,472			545,457			—
Net Cash Used in Operating Activities	(918,959		)	(510,152		)	(102,116		)

Cash Flow from Investing Activities
Cash paid for purchase of intangible asset	(35,874		)	—			—
Net Cash Used in Investing Activities	(35,874		)	—			—

Cash Flows from Financing Activities
Proceeds from Convertible Notes	470,000			—			—
Repayments of Convertible Notes	(60,458		)	—			—
Repayments of note payable	(40,000		)	(9,300		)	(27,500		)
Proceeds from short term debt	480,000			700,000			—
Proceeds from note payable	40,000			5,812			150,000
Member Contributions	—			—			26,750
Proceeds from line of credit	125,000			—			—
Payments to line of credit	(47,953		)	(34,133		)	(31,467		)
Repayments of Capital Lease Obligations	(18,669		)	(15,521		)	(14,717		)
Net Cash Provided by Financing Activities	947,920			646,858			103,066
Net change in cash	(6,913		)	136,706			950
Cash, Beginning of Period	7,258			950			—
Cash, End of Period	$	345		$	137,656		$	950
Supplemental disclosures of cash flow information
Cash paid for interest	$	102,106		$	—		$	16,082
Cash paid for income taxes	—			—			—



Non Cash investing and Financing activities:
Net liabilities of Successor	$	—	$	2,768,739		$	—
Net liabilities of Predecessor	—		1,611,274			—
Increase in fair value of assets due to Acquisition	—		(42,573		)	—
Exchange Accounts Payable for Series B Convertible Preferred	20,000		—			—
Reclass Prepaids to Intangibles	250,000		—			—
Convertible Debt and accrued interest converted into common shares	163,421		—			—
Debt and accrued interest Converted into Shares	322,336		171,218			—
Debt Discount recorded for derivative liability	850,363		—			—
Reclass derivative liability to equity	302,690		782,853			—
Conversion of Series B Convertible Preferred stock to Common Shares	7,063		183,500			—
Exchange Common for Series B Convertible Preferred Stock	525		—			—
Exchange Note Receivable for Athena interest	117,196		—			—
Shares Issued for Athena Acquisition	122,693		—			—
Dividend Declared	306,564		—			—
Conversion of Series B Convertible Preferred stock into Series C	—		500			—

The accompanying notes are an integral part of these unaudited consolidated financial statements

Minerco, Inc.

Consolidated Notes to the Financial Statements

(unaudited)

1. Basis of Presentation

The accompanying unaudited interim financial statements of Minerco, Inc. (“Minerco” or the “Company”), have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission (the “SEC”), and should be read in conjunction with the audited financial statements and notes thereto contained in Minerco’s Annual Report filed with the SEC on Form 10-K. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim periods presented have been reflected herein. The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year. Consolidated Notes to the Financial Statements which substantially duplicate the disclosure contained in the audited financial statements for fiscal 2015 as reported in Minerco’s Form 10-K have been omitted.

On October 24, 2014, through its subsidiary, Athena Brands, Inc. (“Athena”), the Company entered into an Agreement (the “Membership Interest Purchase Agreement”) with Avanzar Sales and Distribution, LLC, a California Limited Liability Company (“Avanzar”) to acquire an initial thirty percent (30%) equity position and fifty-one percent (51%) voting interest of Avanzar for the Purchase Price of $500,000 with an option to acquire an additional twenty-one percent (21%) interest and Second Option to acquire up to seventy-five percent (75%) of Avanzar (the "Acquisition"). The Acquisition broadens the Company's base in the consumer packaged goods industry through vertical integration. The acquisition was accounted for in accordance with ASC 805, Business Combinations.

The Acquisition has been accounted for in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) for business combinations and accordingly, the Company’s assets and liabilities, excluding deferred income taxes, were recorded using their fair value as of October 24, 2014. Under SEC rules, Avanzar is considered the predecessor business to Minerco given Avanzar’s significant size compared to Minerco at the date of acquisition

The basis of presentation is not consistent between the successor and predecessor entities and the financial statements are not presented on a comparable basis. As a result, the accompanying consolidated statements of operations, cash flows and comprehensive income (loss) are presented for two different reporting entities:

Successor — relates to the financial periods and balance sheets succeeding the Membership Interest Purchase Agreement; and

Predecessor — relates to the financial periods preceding the Acquisition (prior to October 24, 2014).

Unless otherwise indicated, the “Company” as used throughout the remainder of the notes, refers to both the Successor and Predecessor.

2. Going Concern

These financial statements have been prepared on a going concern basis, which implies the Company will continue to realize its assets and discharge its liabilities in the normal course of business. During the six months ended January 31, 2016, the Company has an accumulated deficit of $31,140,648, net loss of $2,843,703 and revenue of $516,534. The continuation of the Company as a going concern is dependent upon the Company's continued financial support from its shareholders, the ability of the Company to obtain necessary equity financing to continue operations, and the attainment of profitable operations. These factors raise substantial doubt regarding the Company’s ability to continue as a going concern. These financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

The Company intends to fund operations through revenue from operations and equity and debt financing arrangements, which may be insufficient to fund its capital expenditures, working capital and other cash requirements for the year ending July 31, 2016.

3. Intangible Assets

Finite lived Intangible Assets, net, at January 31, 2016 and July 31, 2015 consists of:



	January 31, 2016			July 31, 2015
VitaminFizz Name Licensing Rights	$	30,000		$	30,000
VitaminFizz Brand Purchase	285,874			—
Vitamin Creamer	75,000			75,000
Less accumulated amortization	(10,457		)	(6,952		)
Intangible Assets, net	$	380,417		$	98,048

The Company had amortization expense of $1,752, $0, and $3,505 during the during period from October 25, 2014 to January 31, 2015, the period from August 1, 2014 to October 24, 2014 and six months ended January 31, 2016 respectively.

Customer Relationships, net, at January 31, 2016 and July 31, 2015 consists of:



	January 31, 2016			July 31, 2015
Customer Relationships	177,036			177,036
Less accumulated amortization	(32,838		)	(28,959		)
Customer Relationships, net	$	144,198		$	148,077

The Company recorded amortization of expense of $3,879 during the six months ended January 31, 2016.

VITAMINFIZZ ® BRAND PURCHASE

On November 21, 2013, through its subsidiary, Athena, the Company entered into an Agreement with VITAMINFIZZ, L.P ("Licensor"), a California Limited Partnership where the Company acquired the exclusive rights in North America to use VitaminFIZZ® on and in connection with the marketing, distribution and sale of the Brand. On June 25, 2014, we amended the agreement, through our subsidiary, Athena ("Licensee"), we entered into an Agreement with the licensor where the Licensee acquires the exclusive worldwide rights to use VitaminFIZZ® on and in connection with the marketing, distribution and sale of the Brand. Athena agreed to pay a licensing fee of $250,000 which was originally classified as prepaid royalties.

On September 28, 2015, the Company, through its subsidiary Athena, and VitaminFIZZ Brands, LP ("VF Brands") entered into an Asset Purchase Agreement for the VitaminFIZZ Brand (the "Brand") to purchase certain intellectual property and tangible assets from VF Brands including but not limited to the trademark "VitaminFIZZ," formulation, website, design logos and other trade secrets relating to the VitaminFIZZ Brand for a purchase price of $550,000 which includes the $250,000 in prepaid royalties paid in June 2014, the assumption by VF Brands of certain of Athena's debts payable in the amount $214,126 and the rest $85,874 will be capitalized into Brand when paid. The balance to be distributed at the discretion of VF Brands in 4 installments over 120 days. As of January 31, 2016, $250,000 was paid to VF Brands and $214,126 of Athena's debts were assumed by VF Brands. The difference of $35,874 was capitalized into Brands and the last installment of $50,000 was paid on February 3, 2016 and the acquisition was completed. Upon acquisition of the Brand, the brand licensing agreement dated November 21, 2013, as amended June 25, 2014 was terminated. Pursuant to this transaction we reclassified $250,000 from originally classified under Prepaid Expenses, Noncurrent under the Licensing Agreement to Intangible Assets.

4. Property and Equipment, Net

Equipment, net, at January 31, 2016 and July 31, 2015 consists of:



	Useful Life	January 31, 2016			July 31, 2015
Furniture and Fixtures	5 years	$	6,297		$	6,297
Computer and Equipment	3 years	2,413			2,413
Leasehold Improvements	Remaining life of lease	830			830
Capital Leases	Term of lease	266,017			266,017
Accumulated Depreciation		(173,849		)	(163,197		)
Property and Equipment, net		$	100,700		$	112,360

Depreciation expense was $0, $11,021 and $11,660 for the period October 25, 2014 to January 31, 2015, for the period August 1 to October 24, 2014 and six months ended January 31, 2016 respectively.

5. Inventory

Inventory, at January 31, 2016 and July 31, 20145 consists of:



	January 31, 2016		July 31, 2015
Raw Materials	$	—	$	—
Work in progress	—		—
Finished Goods	187,875		304,746
Inventory, net	$	187,875	$	304,746

6. Fair Value of Financial Instruments

ASC 820, “Fair Value Measurements”, requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 establishes a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. ASC 820 prioritizes the inputs into three levels that may be used to measure fair value:

Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities.

Level 2 applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data.

Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities.

The Company’s financial instruments consist principally of cash, accounts payable and accrued liabilities, and due to related party. Pursuant to ASC 820, the fair value of the Company's cash equivalents is determined based on “Level 1” inputs, which consist of quoted prices in active markets for identical assets. The Company believes that the recorded values of all of the other financial instruments approximate their current fair values because of their nature and respective maturity dates or durations.

The following table sets forth by level with the fair value hierarchy the Company’s financial assets and liabilities measured at fair value on January 31, 2016.



	Level 1		Level 2		Level 3		Total
Assets	$	—	$	—	$	—	$	—
Liabilities
Derivative Financial Instruments	$	—	$	—	$	1,300,242	$	1,300,242

The following table sets forth by level with the fair value hierarchy the Company’s financial assets and liabilities measured at fair value on July 31, 2015.



	Level 1		Level 2		Level 3		Total
Assets	$	—	$	—	$	—	$	—
Liabilities
Derivative Financial Instruments	$	—	$	—	$	352,587	$	352,587

7. Convertible note payable and derivative liabilities

During the six months ended January 31, 2016, the Company exchanged $380,363 in principal and accrued interest under its line of credit with Post Oak for two convertible promissory notes in the amount of $380,363. The notes carry an interest rate of 8%. The notes are convertible at a variable conversion price of 50% of the market price and calculated using the lowest trading days during the preceding 20 days before conversion. The total principal due at July 31, 2015 was $293,726 with an unamortized discount of $204,036 resulting in a balance of $89,690 at July 31, 2015. The Company had conversions of $159,184 in principal and $4,237 in accrued interest during the six months ended January 31, 2016. Total principal due at January 31, 2016 is $924,447 with an unamortized discount of $790,458 with a resulting balance of $133,989.

Due to their being no explicit limit to the number of shares to be delivered upon settlement of the above conversion options embedded in the Convertible Promissory Notes, the options are classified as derivative liabilities and recorded at fair value.

During the six months ended January 31, 2016, the Company received proceeds of $470,000 from the issuance of convertible notes. During the six months ended January 31, 2016, the Company repaid $60,458 of convertible notes. The notes carry an interest rate of 8%. The notes are convertible at a variable conversion price of 50% of the market price and calculated using the lowest trading days during the preceding 20 days before conversion.

Derivative Liability:

As of January 31, 2016, the fair values of the conversion options on the convertible notes were determined to be $1,300,242 using a Black-Scholes option-pricing model. Upon the issuance dates of the Convertible Promissory Notes, $850,363 was recorded as debt discount and $1,058,367 was recorded as day one loss on derivative liability. During the six months ended January 31, 2016, there was a loss on mark-to-market of the conversion options of $658,385. As of January 31, 2016 and July 31, 2015, the aggregate unamortized discount is $790,458 and $204,036, respectively. During the six months ended January 31, 2016, the loss on derivative liability was $399,981.

The following table summarizes the derivative liabilities included in the consolidated balance sheet at January 31, 2016:



Balance at July 31, 2015	$	352,587
Debt discount	850,363
Day one loss on fair value	1,058,367
Loss on change in fair value	(658,385		)
Write off due to Conversion	(302,690		)
Balance at January 31, 2016	$	1,300,242

Pursuant to ASC 815, “Derivatives and Hedging,” the Company recognized the fair value of the embedded conversion feature of all the notes. The initial fair value of the derivative liability was determined using the Black Scholes option pricing model with a quoted market price of $0.02 to $0.30, a conversion price of $0.00966 to $0.035, expected volatility of 172% to 424%, no expected dividends, an expected term of one year and a risk-free interest rate of 0.01% to 0.32%. The discount on the convertible loan is

accreted over the term of the convertible loan. During the six months ended January 31, 2016, the Company recorded amortization of debt discount of $263,941.

8. Debt

Short Term Debt - Minerco Line of Credit

On May 1, 2014, the Company entered into an Agreement (the “Line of Credit”) with Post Oak, LLC ("Post Oak”), where, among other things, the Company and Lender entered into a Line of Credit Financing Agreement in the principal amount of up to Two Million Dollars ($2,000,000), or such lesser amount as may be borrowed by the Company as advances under this line of credit (the “Line of Credit”). On April 1, 2015, the Company increased the line of credit to Three Million Dollars ($3,000,000). As of January 31, 2016 and July 31, 2015, the Company had 1,990,308 and 2,175,000 outstanding under the line of credit respectively.

During the six months ended January 31, 2016, Post Oak exchanged $450,000 outstanding under its line of credit with us with unrelated third parties and loaned the Company $480,000.

During the six months ended January 31, 2016, the Company converted $188,281 of principal and interest of the line of credit into 1,363,970 Series B Preferred shares and recorded a loss of $161,177 due to the difference between the fair market value of $349,458 and note and interested converted to settle the debt respectively. There is no accounting impact for the modification as there were not associated fees with the line of credit.

During the six months ended January 31, 2016, the Company converted $154,055 of principal and interest of the line of credit into 7,119,033 shares of common stock and recorded a loss of $203,932 due the difference between the fair market value of $357,987 and note and interest converted to settle the debt respectively. There is no accounting impact for the modification as there were not associated fees with the line of credit.

The summary of the Line of Credit is as:

This Line of Credit bears interest at the rate of ten percent (10.00%) per annum.

The entire outstanding principal amount of this Line of Credit is due and payable on April 30, 2016 (the “Maturity Date”).

Advances. Subject to the provisions of the line of credit, the Company has the right, at any time or from time to time prior to the Maturity Date to request loans and advances from the Lender (individually an “Advance” and collectively, the “Advances”). Each such Advance is to be considered a legal promissory note, is to be in the amount of $250,000, and is to be reflected on Schedule A to this Line of Credit and initialed as received by an officer or director of the Company. The Lender is not under any obligation to make advances under this Line of Credit.

Use of Proceeds. All proceeds received by the Company from each Advance made by the Lender under this Line of Credit are to be used by the Company for expenses incurred by the Company in connection with working capital and any other operating expenses determined to be necessary by the Company.

Interest Payments, Balloon Payment. The Company pays interest at the rate of ten percent (10.00%) per annum, calculated on a per day basis for each Advance made by Lender, and the Company is obligated to make one interest payment in twelve (12) months and one interest payment in eighteen (18) months. The Company is obligated to make a payment for the entire unpaid balance of all Advances, plus any accrued unpaid interest, as per a “balloon” payment, in two (2) years from the date of the Line of Credit.

Minerco Notes Payable

On September 11, 2015, the Company signed a line of credit with Capital Advance Partners, LLC for the amount of $58,360 with $18,360 recognized as a discount on the note payable for net proceeds of $40,000 payable over 4 months. $40,000 was repaid during the six months ended January 31, 2016 and as of January 31, 2016, $0 is outstanding, net of discount of $18,360.

Avanzar Notes Payable

Avanzar has received proceeds from various unrelated third parties and these notes have an interest rate of between 8% and 12% and matured between February 28, 2015 and December 31, 2015. The total principal due as of January 31, 2016 is $149,970. A schedule of the notes payable are below:



Principal at 7/31/2015		Principal at 1/31/2016		Interest Rate		Maturity
$	20,000	$	20,000	8	%	In default
$	10,000	$	10,000	8	%	In default
$	20,000	$	20,000	8	%	In default
$	49,970	$	49,970	12	%	In default
$	10,000	$	10,000	Non-interest bearing		In default
$	20,000	$	20,000	8	%	In default
$	20,000	$	20,000	8	%	In default
$	149,970	$	149,970

There were no repayments during the three months ended January 31, 2016.

Avanzar Line of Credit

On September 1, 2015, Avanzar signed a line of credit with BFS West Capital for a principal amount of $125,000. The factor rate is 1.42.

During the six months ended January 31, 2016, $47,953 was repaid from the line of credit and as of January 31, 2016, $89,707 is outstanding.

9. Common Stock

On August 5, 2014, the Company effectuated an increase in our authorized shares of common stock from 2,500,000,000 to 3,500,000,000. On October 2, 2015, the Company effected a 100 for 1 reverse stock split, decreasing authorized shares of common stock from 3,500,000,000 to 250,000,000 and as a result decreasing the issued and outstanding share of common stock from 3,496,233,557 to 34,962,336 and decreasing the issued and outstanding shares of Class A Preferred from 15,000,000 to 150,000. All shares amounts in these financial statements have been retroactively adjusted for all periods presented to reflect this stock split.

For the six months ended January 31, 2016, Minerco has issued following shares:

On September 15, 2015, the Company issued 100,000 common shares for consulting services. The shares vested immediately. The fair value of these shares was determined to be $11,000 and was expensed as stock compensation.

On October 1, 2015, the Company exchanged 595,000 shares of Series B Preferred for 2,975,000 shares of common stock.

On October 9, 2015, the Company exchanged 80,000 shares of Series B Preferred for 400,000 shares of common stock.

On November 21, 2015, the Company issued 1,116,000 shares of common stock for consulting services in three (3) separate transactions. The fair value of these shares was deteremined to be $25,668 and was expensed as consulting expense.

On November 30, 2015, the Company exchanged 500,000 shares of Series B Preferred for 2,500,000 shares of common stock.

On December 8, 2015, the Company exchanged 236,970 shares of Series B Preferred for 1,184,850 shares of common stock.

During the six months ended January 31, 2016, the Company issued, 12,310,164 common shares for the conversion of $163,421 convertible promissory notes and accrued interest. These notes converted at conversion rates between $0.00966 and $0.035.

10. Preferred Stock

The preferred stock may be divided into and issued in series. The Board of Directors of the Company is authorized to divide the authorized shares of preferred stock into one or more series, each of which shall be so designated as to distinguish the shares thereof from the shares of all other series and classes.

On January 11, 2011, the Company authorized 25,000,000 shares of unclassified preferred stock.

Class A Convertible Preferred Stock

On January 11, 2011, the Company designated 15,000,000 shares of its preferred stock as Class A Convertible Preferred Stock (“Class A Stock”). Each share of Class A Stock is convertible into 10 shares of common stock, has 100 votes, has no dividend rights except as may be declared by the Board of Directors, and has a liquidation preference of $1.00 per share.

Class B Convertible Preferred Stock

Dividends

The Series B Shares accrue dividends at the rate per annum equal to 8% of the Stated Value which initially is ten dollars per share payable in cash; provided that after an initial public offering of the Company’s common stock the dividends may be paid at the option of the Company in cash or additional shares of common stock.

Conversion

Each Series B Share (together with any accrued but unpaid dividends thereon) is convertible into shares of Common Stock at the option of the holder at any time at a conversion price per share equal to the sum of the Stated Value a divided by the Conversion Price, subject to adjustment as described below. The initial Conversion Price is equal to $0.02. The Series B Shares automatically convert to common stock immediately prior to the closing of a firmly underwritten public offering for gross offering proceeds of at least $10,000,000 or upon the consent of two-thirds of the holders of Series B Shares.

Redemption

The Company has the right to redeem the Series B Shares at any time at a price per share equal to the Stated Value multiplied by 125%.

Liquidation

In the event of a liquidation, dissolution or winding up of the Company and other Liquidation Events as defined in the Certificate of Designations, holders of Series B Shares are entitled to receive from proceeds remaining after distribution to the Company’s creditors and prior to the distribution to holders of Common Stock but junior to the Series A Preferred Stock the (x) Stated Value (as adjusted for any stock splits, stock dividends, reorganizations, recapitalizations and the like) held by such holder and (y) all accrued but unpaid dividends on such shares.

Anti-Dilution

The Series B Shares are entitled to weighted average anti-dilution protection under certain circumstances specified in the Certificate of Designations.

Voting

Except as otherwise required by law and except as set forth below, holders of Series B Shares will, on an as-converted basis, vote together with the Common Stock as a single class. Each holder of Series B Shares is entitled to cast the number of votes equal to five times the number of shares of Common Stock into which such shares of Series B Shares could be converted at the record date for determining stockholders entitled to vote at the meeting.

During the six months ended January 31, 2016, the Company converted $188,281 of principal and interest under the line of credit into 1,363,970 Series B Preferred shares and recorded a loss of $161,177 due the difference between the fair market value of $349,458 and note and interested converted to settle the debt respectively.

On September 9, 2015, the Company and JusThink, Inc. entered into an exchange agreement, whereby the Company issued 32,000 shares of Series B Preferred shares in settlement of $20,000 in accounts payable. The Company recognized a gain of $800 on the transaction due to the difference between the fair market value of $19,200 and accounts payable settled.

On September 28, 2015, the Company and MSF International, Inc. ("MSF"), effective August 1, 2015, entered into an exchange agreement whereby MSF exchanged 50 shares, or approximately five percent (5%), of Athena owned by MSF in exchange for 400,000 shares of the Company's Class B Preferred Stock. This transaction was recognized through equity section on the balance sheet in the amount of $93,956 and there was no gain or loss on the transaction.

On October 1, 2015, the Company and Eco Processing, LLC ("Eco"), entered into an exchange agreement whereby Eco exchanged 15 shares, or approximately one and half percent (1.5%), of Athena owned by Eco in exchange for 150,000 shares of the Company's Class B Preferred Stock. This transaction was recognized through equity section on the balance sheet in the amount of $28,187 and there was no gain or loss on the transaction.

During the six months ended January 31, 2016, the Company entered into exchange agreements with 12 shareholders to exchange 752,713 shares of common stock for 156,900 shares of Series B Preferred shares, as of January 31, 2016, only 524,258 shares of common stock have been exchanged for 106,500 shares of Series B.

On September 10, 2014, the Company issued 500,000 Class B convertible preferred shares to V. Scott Vanis ("Vanis"), its Chief Executive Officer valued at $0.62 or $1,550,000. The Company recognized this as compensation and will amortize this over the vesting period which is July 31, 2017. On January 7, 2015, the Company entered into an exchange agreement with Vanis, where, among other things, the Company and Vanis exchange Vanis’ five hundred thousand (500,000) shares of the Company’s Class ‘B’ Preferred stock and all accrued and unpaid dividends for two hundred fifty thousand (250,000) shares of the Company’s Class ‘C’ Preferred stock. The total expense for six months ended January 31, 2016 is $301,497.

On September 10, 2014, the Company issued 500,000 Class B convertible preferred shares to Sam J Messina III ("Messina"), its Chief Financial Officer valued at $0.62 or $1,550,000. The Company recognized this as compensation and will amortize this over the vesting period which is July 31, 2017. On January 7, 2015, the Company entered into an exchange agreement with Messina, where, among other things, the Company and Messina exchange Messina’s five hundred thousand (500,000) shares of the Company’s Class ‘B’ Preferred stock and all accrued and unpaid dividends for two hundred fifty thousand (250,000) shares of the Company’s Class ‘C’ Preferred stock. The total expense for the six months ended January 31, 2016 is $301,497.

Class C Convertible Preferred Stock

On January 7, 2015, the Company filed a Certificate of Designations for the creation of a class of Series C Preferred Stock with the Nevada Secretary of State. The number of shares constituting Series C Preferred is 1,000,000. The stated value is $20.00 per share. The holders of the Series C Preferred are also entitled to a liquidation preference equal to the stated value plus all accrued and unpaid dividends. Each share of Series C Preferred is convertible into 1,000 shares of common stock; however the conversion price is subject to adjustment. Holders of shares of Series C Preferred vote together with the common stock as a single class and each holder of Series C Preferred is entitled to 5 votes for each share of Common Stock into which such shares of Series C Preferred held by them could be converted. The Company has the right to redeem the shares of Series C Preferred at any time after the date of issuance at a per share price equal to 125% of the stated value.

During the six months ended January 31, 2016, the Company had accrued preferred dividends of $306,564.

11. Related Parties

As of January 31, 2016, the Company owes its current Chief Executive Officer $351,411 ($238,911– July 31, 2015) in accrued salary ($18,750 per month) and $93,266 ($181,044 – July 31, 2015) for advances made to the Company. The Company owes its current Chief Financial Officer $65,000 ($33,500 – July 31, 2015) in accrued salary ($12,500) per month. The advances are due on demand and non interest bearing.

As of January 31, 2016 and July 31, 2015, Avanzar owes one of its members $23,170 and $23,170, respectively, for advances made to the Company.

12. Commitments

Capital Leases

We have a capital leases for property and equipment through our subsidiary Avanzar. At January 31, 2016, total future minimum payments on our capital lease were as follow fiscal years:



2016	$	3,341
2017	1,670
Total	$	5,011

Operating Leases

We have an operating lease for San Diego office. At January 31, 2016, total future minimum payments on our operating lease were as follow fiscal years:



2016	$	12,978
2017	26,721
2018	2,308
Total	$	42,007

13. Noncontolling Interest

The Company owns 81.8% of its subsidiary Athena. The remaining 18.2% is owned by unrelated third parties. Athena owns 75% equity interest of Avanzar Sales and Distribution, LLC. The net loss attributable to noncontrolling interest for the three and six months ended January 31, 2016 was $42,579 and $138,108, respectively.

On September 2, 2015, the Company and MSF entered into a Mutual Release and Settlement Agreement for the Pledge and Security Agreement. In exchange for forgiving the promissory note in the amount $682,850 which was impaired to $117,196 as of July 31, 2015, MSF exchanged 50 shares, or approximately five percent (5%), of Athena owned by MSF. During the three months ended January 31, 2016, this transaction was recognized through equity section on the balance sheet in the amount of $117,196 and there was no gain or loss recognized.

14. Subsequent Events

On February 3, 2016, the Company entered into a Securities Purchase Agreement and Convertible Promissory Note for $110,000. The convertible note carries an 8% rate of interest and the Note is convertible into common stock at a variable conversion price of 50% of the market price which shall be calculated as the lower of the lowest day during the preceding 20 days before conversion.

On February 4, 2016, the Company issued 1,575,891 common shares in one (1) transaction upon the exchange of $43,890 in principal and accrued interest under a convertible promissory note dated October 16, 2015.

On February 16, 2016, the Company issued 821,340 common shares in one (1) transaction upon exchange of $10,061 pursuant to a debt exchange agreement under the line of credit with Post Oak, LLC.

On February 17, 2016, the Company issued 1,658,477 common shares in one (1) transaction upon exchange of $20,482 in principal and accrued interest under a convertible promissory note dated October 30, 2015.

On February 18, 2016, the Company entered into two Securities Purchase Agreement and Convertible Promissory Note for a total $25,000. The convertible notes carry an 8% rate of interest and the Note is convertible into common stock at the lower of a variable conversion price of 50% of the market price which shall be calculated as the lower of the lowest day during the preceding 25 days before conversion or $0.025.

On February 23, 2016, the Company issued 2,205,882 common shares in two (2) transactions in consideration of a payment of $37,500 pursuant to a stock purchase agreement with two (2) accredited investors.

On February 24, 2016, the Company issued 1,674,521 common shares in one (1) transaction upon exchange of $20,513 in principal and accrued interest under a convertible promissory note dated October 30, 2015.

On February 25, 2016, the Company issued 2,096,315 common shares in one (1) transaction upon exchange of $13,626 pursuant to a debt exchange agreement under the line of credit with Post Oak, LLC.

On March 2, 2016, the Company issued 3,223,727 common shares in one (1) transaction upon exchange of $50,000 pursuant to a debt exchange agreement under the line of credit with Post Oak, LLC.

On March 3, 2016, the Company issued 1,593,514 common shares in one (1) transaction upon the exchange of $19,521 in principal and accrued interest under a convertible promissory note dated October 30, 2015.

On March 9, 2016, the Company issued 2,519,296 common shares in one (1) transaction upon the exchange of $30,861 in principal and accrued interest under a convertible promissory note dated October 30, 2015.

On March 10, 2016, the Company issued 588,235 common shares in one (1) transaction in consideration of a payment of $10,000 pursuant to a stock purchase agreement with one (1) accredited investor.

On March 16, 2016, the Company issued 735,294 common shares in one (1) transaction in consideration of a payment of $12,500 pursuant to a stock purchase agreement with one (1) accredited investor.

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

Forward Looking Statements

This quarterly report on Form 10-Q for the quarter ended January 31, 2016 contains forward-looking statements that involve risks and uncertainties. These statements relate to future events or our future financial performance. In some cases within the meaning of Section 21E of the Securities Excahgne Act of 1934, as amended (the "Exchange Act"), you can identify forward-looking statements by terminology including “could”, “may”, “will”, “should”, “expect”, “plan”, “anticipate”, “believe”, “estimate”, “predict”, “potential” and the negative of these terms or other comparable terminology. These statements are only predictions. Actual events or results may differ materially.

While these forward-looking statements, and any assumptions upon which they are based, are made in good faith and reflect our current judgment regarding the direction of our business, actual results will almost always vary, sometimes materially, from any estimates, predictions, projections, assumptions or other future performance suggested in this report. In light of significant uncertainties in these forward-looking statements,, you should not regard these statements as a representation or warranty by us that we will achieve our objectives and plans in any specified time frame, or at all.

Business Overview

Since 2012, our primary focus has been on our subsidiary Athena Brands, Inc. ("Athena"), formerly Level 5 Beverage Company, Inc., and its functional beverage business. In September, 2012, we formed Athena, a specialty beverage company which develops, produces, markets and distributes a diversified portfolio of forward-thinking, good-for-you consumer brands. Athena has developed or acquired exclusive rights to four separate and distinct brands: VitaminFIZZ®, Vitamin Creamer®, COFFEE BOOST and The Herbal Collection™. The Herbal Collection has been transferred and assigned from Athena to us. During the six months ended January 31, 2016 we generated revenue of $516,534 all of which was generated from sales from our distribution business.

We organically developed the COFFEE BOOST™ Brands, and we acquired the exclusive, worldwide rights to the VitaminFIZZ® Brand from VITAMINFIZZ, L.P. in November, 2013. In 2014, we acquired 100% of the right, title and intellectual property to the Vitamin Creamer® Brand. The current focus of our business is on the VitaminFIZZ® brand and in September 2014, we acquired 100% ownership of the brand. We are currently completing the research and development of the VitaminCreamer® brand to include a Boost and Relax, and we are completing the formulation and packaging for The Herbal Collection™ brand.

Athena also owns a majority interest in Avanzar, a sales and distribution company locate in Brea, California. Avanzar is a full service brokerage which includes account management, trade development and logistics services as well as in house DSD operations throughout Southern California. Avanzar distributes products to some of the most trusted retailers in the United States, including Kroger, Albertsons, HEB, Golub (Price Chopper), Whole Foods, Walgreens, 7-Eleven, Tesoro, Circle K, Chevron, Kmart, Gelson's and Winco. On October 24, 2014 (effective September 15, 2014), we entered into a Membership Interest Purchase Agreement with Avanzar to acquire the controlling interest in Avanzar. Athena acquired an initial thirty percent (30%) equity position and fifty-one percent (51%) voting interest in Avanzar for the purchase pice of $500,000 with an option to acquire a twenty-one percent (21%) interest in Avanzar and second option to acquire up to an aggregate of seventy-five percent (75%) interest in Avanzar. The Agreement was effective as of September 15, 2014. As of April 30, 2015, all 3 of the options were exercised.

As of September 20, 2013, we completely discontinued operations of our Renewable Energy line of business. On May 5, 2015, effective April 30, 2015, we entered into a Securities Purchase Agreement (the "Agreement") with MSF a Belize corporation for the sale to MSF of all our rights and title and interest in its (i) Chiligatoro Hydro-Electric Project and its earned interest therein; (ii) Iscan Hydro-Electric Project and its 10% royalty interest therein; and (iii) its Sayab Wind Project and its 6% royalty interest therein (the “Assets”). The purchase price consisted of MSF assuming Thirty Two Thousand Six Hundred Forty-two US Dollars ($32,642) of certain of our accounts payable and a note payable by MSF to us in the principal amount of Six Hundred Eighty Two Thousand Eight Hundred Fifty US Dollars ($682,850) Dollars, accruing interest at a rate of 5% per annum, with interest payable quarterly commencing September 1, 2015 and the principal balance thereof and accrued and unpaid interest due and payable twelve (12) months after the date of its closing.

On March 30, 2010, we effected a 6 for 1 forward stock split, increasing the issued and outstanding shares of common stock from 55,257,500 to 331,545,000 shares. On February 13, 2012, we effected a 150 for 1 reverse stock split, decreasing the issued and outstanding share of common stock from 1,054,297,534 to 7,028,670 shares. On May 13, 2013, we effectuated an increase in our authorized shares of common stock from 1,175,000,000 to 2,500,000,000. On August 5, 2014, we effectuated an increase in our authorized shares of common stock from 2,500,000,000 to 3,500,000,000. On October 2, 2015, we effected a 100 for 1 reverse

stock split, decreasing the issued and outstanding share of common stock from 3,496,235,155 to 34,962,352 and decreasing the issued and outstanding shares of Class A Preferred from 15,000,000 to 150,000. All shares amounts in these financial statements have been retroactively adjusted for all periods presented to reflect this stock split.

Results of Operations

Our results of operations are presented below:



	Three Months Ended January 31, 2016 (Successor)			Three Months Ended January 31, 2015 (Successor)
Sales:
Products	$	196,021		696,690
Services	—			44,295
Total Sales	196,021			740,985
Cost of Goods Sold	160,609			605,736
Gross Profit	35,412			135,249
Selling and Marketing	11,000			128,376
General and Administrative	792,328			1,010,364
Total Operating Expenses	803,328			1,138,740
Net Loss from Operations	(767,916		)	(1,003,491		)
Other Income (Expenses):
Interest Expense, net	(242,583		)	(179,042		)
Gain/(Loss) on Derivative Liability	(110,901		)	(476,187		)
Contract Term Fees	—			2,000
Gain/(Loss) on Debt for Equity Swap	(187,200		)	(462,202		)
Total Other Expenses	(540,684		)	(1,115,431		)
Net loss	(1,308,600		)	(2,118,922		)
Net loss attributable to Noncontrolling interest	(42,579		)	(162,123		)
Net loss attributable to Minerco	(1,266,021		)	(1,956,799		)
Preferred Stock Dividends	194,328			(28,107		)
Net loss attributable to common shareholders	$	(1,460,349	)	(1,928,692		)
Total Other Comprehensive Income (Loss)
Unrealized gain (loss) on AFS securities	—			(22,275		)
Total Other Comprehensive Income (Loss)	$	—		(22,275		)
Other Comprehensive Income (Loss) attributable to noncontrolling interest	—			(18,284		)
Other Comprehensive Income (Loss) attributable to Minerco	$	—		(3,991		)
Total Comprehensive Income (Loss)	$	(1,460,349	)	(1,932,683		)
Net Loss Per Common Share – Basic and Diluted	$	(0.03	)	$	(0.06	)
Weighted Average Common Shares Outstanding	49,538,915			30,245,081

Results of Operations for the Three months ended January 31, 2016

Revenues

During the three months ended January 31, 2016, total revenue decreased 72% to $196,021 compared to total revenue of $740,985 during the same period in fiscal 2015. The decrease was due a decrease in service related revenue and decrease in capital invested into the distribution business due to a reallocation of capital into our beverage business.

Gross Profit

During the three months ended January 31, 2016, gross profit decreased 74% to $35,412 compared to gross profit of $135,249 during the same period in fiscal 2015 The decrease was due to a decrease in sales. Gross margin were 18.3% during the three months ended January 31, 2015 compared to 18.1% during the three months ended January 31, 2016.

Operating Expenses

Our total operating expenses for the three months ended January 31, 2016 decreased 29% to $803,328, compared to operating expenses of $1,138,740 during the same period in fiscal 2015. The decrease was due a reduction in general and administrative expenses due to decreased sales.

Our general and administrative expenses consist of professional fees, transfer agent fees, investor relations expenses and general office expenses. Our professional fees include legal, accounting and auditing fees.

During the three months ended January 31, 2016 we incurred a net loss of $1,308,600 compared to a net loss of $2,118,922 during the same period in fiscal 2015. The decrease in our net loss during the three months ended January 31, 2016 The decrease was due a reduction in general and administrative expenses due to decreased sales.



	Six Months Ended January 31, 2016 (Successor)			Six Months Ended January 31, 2015 (Combined)
Sales:
Products	$	450,534		$	1,134,117
Services	66,000			110,295
Total Sales	516,534			1,244,412
Cost of Goods Sold	449,085			961,348
Gross Profit	67,449			283,064
Selling and Marketing	58,991			128,376
General and Administrative	1,670,403			1,311,374
Total Operating Expenses	1,729,394			1,439,750
Net Loss from Operations	(1,661,945		)	(1,156,686		)
Other Income (Expenses):
Interest Expense, net	(417,668		)	(197,494		)
Gain/(Loss) on Derivative Liability	(399,981		)	(476,187		)
Contract Term Fees	—
Gain/(Loss) on Debt for Equity Swap	(364,109		)	(462,202		)
Total Other Expenses	(1,181,758		)	(1,133,883		)
Net loss	(2,843,703		)	(2,290,569		)
Net loss attributable to Noncontrolling interest	(138,108		)	(176,410		)
Net loss attributable to Minerco	(2,705,595		)	(2,114,159		)
Preferred Stock Dividends	306,564			(12,985		)
Net loss attributable to common shareholders	$	(3,012,159	)	$	(2,101,174	)
Total Other Comprehensive Income (Loss)
Unrealized gain (loss) on AFS securities	—			(9,938		)
Total Other Comprehensive Income (Loss)	$	—		(9,938		)
Other Comprehensive Income (Loss) attributable to noncontrolling interest	—			(15,578		)
Other Comprehensive Income (Loss) attributable to Minerco	$	—		5,640
Total Comprehensive Income (Loss)	$	(3,012,159	)	$	(2,095,534	)
Net Loss Per Common Share – Basic and Diluted	$	(0.07	)	(0.07		)
Weighted Average Common Shares Outstanding	45,132,238			30,081,768

Results of Operations for the Six months ended January 31, 2016

The six months ended January 31, 2016 represent Successor results and the six months ended January 31, 2015 represent mostly Predecessor results so any comparisons between the six months ended January 31, 2016 and 2015 may not be meaningful.

Revenues

During the six months ended January 31, 2016, total revenue decreased 58% to $516,534 compared to total revenue of $1,244,412 during the same period in fiscal 2015. The decrease was due a decrease in service related revenue and decrease in capital invested into the distribution business due to a reallocation of capital into our beverage business.

Gross Profit

During the six months ended January 31, 2016, gross profit decreased 76% to $67,449 compared to gross profit of $283,064 during the same period in fiscal 2015 The decrease was due the Athena’s promotion sales during the first quarter to launch new retailers. Gross margin were 22.7% in the six months ended January 31, 2015 compared to 13.1% in the three months ended January 31, 2016.

Operating Expenses

Our total operating expenses for the six months ended January 31, 2016 were $1,729,394, compared to operating expenses of $1,439,750 during the same period in fiscal 2015. The 18% increase was due an increase in business activity of as we launched our products to retailers and due to an increase in infrastructure for our beverage business during the first quarter.

During the six months ended January 31, 2016 we incurred a net loss of $2,843,703 compared to a net loss of $2,290,569 during the same period in fiscal 2015. The increase in our net loss during the six months ended January 31, 2016 was primarily due to the launch of our products to several major key retailers and due to an increase in infrastructure for our beverage business during the first quarter.

Liquidity and Capital Resources

As of January 31, 2016, we had $345 in cash, $148,197 in accounts receivable, $4,896 in current prepaid assets, and $187,875 in inventory and $1,574,519 in total assets, $6,967,898 in total liabilities and a working capital deficit of $6,626,585. Our accumulated deficit from our inception on June 21, 2007 to January 31, 2016 is $31,140,648 and was funded primarily through equity and debt financing.

We are dependent on our net revenues and funds raised through our equity and debt financing.

During the six months ended January 31, 2016 our monthly cash requirements to fund our operating activities was approximately $918,959. Our cash on hand of $345, as of January 31, 2016, will not allow us to continue to operate until we receive Athena revenue proceeds and additional financings. We estimate our planned expenses for the next 24 months (beginning March, 2016) to be approximately $6,369,000, as summarized in the tables below assuming revenue from our beverage sales will exceed $3,000,000 over the next 12 months and $5,000,000 in fiscal 2017. If revenue is not as anticipated as, we will be forced to scale our expenses according to our business requirements which will negatively impact our ability to increase revenue.



Expense Overview
Description
	Fiscal Year 2016 ($)	Fiscal Year 2017 ($)	Total
Advertising	125,000	500,000	625,000
Warehouse & Delivery	75,000	75,000	150,000
Insurance	40,000	75,000	115,000
Inventory Purchases / Production (net Cash)	600,000	1,250,000	1,850,000
Consulting Services	100,000	125,000	225,000
Retail incentive	100,000	125,000	225,000
Sales incentive	100,000	200,000	300,000
Sales Representative Payroll	75,000	125,000	200,000
Payroll Taxes	15,000	25,000	40,000
Rent or Lease	120,000	150,000	270,000
Filling Equipment Lease	—	100,000	100,000
Sales Commission	75,000	15,000	90,000
Research & Development	75,000	150,000	225,000
POS material	150,000	30,000	180,000
Taxes & Licenses	30,000	30,000	60,000
Utilities & Telephone	25,000	30,000	55,000
Sampling	75,000	125,000	200,000
Accounting & Legal fees	125,000	125,000	250,000
General and Administrative Expenses	280,000	350,000	630,000

Contingencies (10%)	218,500	360,500	579,000
Total	2,403,500	3,965,500	6,369,000

Our general and administrative expenses for the year are expected to consist primarily of salaries, transfer agent fees, investor relations expenses and general office expenses. The professional fees are related to our regulatory filings throughout the year.

Athena has started generating revenues for us; however, there can be no assurances that enough sales or revenues will be received to support our capital needs.

Future Financings

Our financial statements for the three months ended January 31, 2016 have been prepared on a going concern basis and contain an additional explanatory paragraph in Note 2 which identifies issues that raise substantial doubt about our ability to continue as a going concern. Our financial statements do not include any minimal adjustments that might result from the outcome of this uncertainty.

As of January 31, 2016, we have generated $516,534 of revenues for the six months ended January 31, 2016, have achieved losses since inception, and rely upon the sale of our securities to fund our operations. As a new competitor in the beverage line of business, there can be no assurance we will generate any significant revenue from the sale of any such products and our future cash needs vary from those estimated. Accordingly, we are dependent upon obtaining outside financing to carry out our operations and pursue any acquisition and exploration activities. In addition, we require funds to meet our current operating needs and to repay certain demand note obligations and other convertible debt obligations that will mature shortly.

We had $345 in cash as of January 31, 2016. We intend to raise the balance of our cash requirements for the next 12 months from revenues received from Athena, private placements, shareholder loans or possibly a registered public offering (either self-underwritten or through a broker-dealer). If we are unsuccessful in raising enough money through such efforts, we may review other financing possibilities such as bank loans. At this time we have a three million dollar line of credit with Post Oak, LLC which has an outstanding balance of $1,990,308, as of January 31, 2016, but there is no guarantee that any additional financing will be available to us or if available, on terms that will be acceptable to us. We intend to negotiate with our management and

any consultants we may hire to pay parts of their salaries and fees with stock and stock options instead of cash. If we are unable to obtain the necessary additional financing, then we plan to reduce the amounts spent on our acquisition and development activities and our general and administrative expenses so as not to exceed the amount of capital resources that are available to us. Specifically, we anticipate deferring development, expansion and certain acquisitions pending the receipt of additional financing. Still, if we do not secure additional financing, our current cash reserves and working capital will be not be sufficient to enable us to sustain our operations for the next 12 months unless revenue increases dramatically, even if the Company does decide to scale back its operations.

Outstanding Indebtedness

Set forth below is a chart of our outstanding convertible debt obligations as of January 31, 2016:



	Original Amount	Balance on 1/31/2016	Date of Issuance	Maturity Date	Features
Convertible Promissory Note	$250,000	$250,000	6/4/2015	6/4/2016	8% interest rate converts at a variable conversion price of 50% of the market price calculated based on the lowest day during the preceding 20 days
Convertible Promissory Note	$250,000	$250,000	6/4/2015	2/6/2016	8% interest rate converts at a variable conversion price of 50% of the market price calculated based on the lowest day during the preceding 20 days
Convertible Promissory Note	$220,000	$220,000	12/31/2015	6/30/2016	8% interest rate converts at a variable conversion price of 50% of the market price calculated based on the lowest day during the preceding 20 days
Convertible Promissory Note	$105,830	$65,830	10/16/2015	10/17/2016	8% interest rate converts at a variable conversion price of 50% of the market price calculated based on the lowest day during the preceding 20 days
Convertible Promissory Note	$163,118	$138,618	10/30/2015	10/31/2016	8% interest rate converts at a variable conversion price of 50% of the market price calculated based on the lowest day during the preceding 20 days

Outstanding Notes

As of January 31, 2016, our obligations under outstanding notes totaled an aggregate principal amount of $924,448. Of such amount $250,000 was due February 6, 2016, $250,000 is due June 4, 2016, $220,000 is due June 30, 2016, $65,830 is due October 17, 2016 and $138,618 is due October 31, 2016. We currently do not have sufficient funds to pay all of the past due or future notes.

On June 4, 2015, June 4, 2015, December 31, 2015, we entered into three Securities Purchase Agreement and Convertible Promissory Note with Union Capital for $250,000, $250,000 and $220,000, respectively. On October 16, 2015 and October 30, 2015, we entered into two notes in the amount of $105,830 and $163,118 for a total of $268,948 that were exchanged for portion of the outstanding line of credit with Post Oak, LLC ("Post Oak"). The convertible notes carry 8% rate of interest and the Notes are convertible into common stock at a variable conversion price of 50% of the market which shall be calculated as the lowest day during the preceding 20 days before conversion. On November 4, 2015, we entered into one note in the amount of $111,416 that was exchanged for a portion of the outstanding line of credit with Post Oak. The convertible note carried a 10% rate of interest and the note were convertible into common stock at a variable conversion price of 60% of the market

which shall was calculated as the lowest day during the prece3eding 10 days before conversion. There was no balance remaining on this note as of January 31, 2016.

On May 1, 2014, we entered into an agreement with Post Oak, which was amended on April 1, 2015, pursuant to which, among other things, we and Post Oak entered into a Line of Credit Financing Agreement in the principal sum of up to Three Million Dollars ($3,000,000), or such lesser amount as may be borrowed by us as Advances under this line of credit. The Line of Credit bears interest at the rate of ten percent per annum (10.00%) unless modified by certain provisions of the Line of Credit. The entire outstanding principal balance amount of this Line of Credit is due and payable on April 30, 2016. We are required to make one interest payment twelve months from the date of each advance and one interest payment eighteen months from the date of each advance. We are obligated to make a payment for the entire unpaid balance of all advances, plus any accrued interest, in a “balloon” payment, which is due in two years from the date of the Line of Credit Agreement. As of January 31, 2016, there was $1,990,308 outstanding under this line of credit.

On September 11, 2015, we signed a line of credit with Samson Partners, LLC for the principal amount of $58,360 payable over 4 months. As of January 31, 2016, $0 is outstanding.

Avanzar

Set forth below is a chart of Avanzar's notes payable as January 31, 2016:



Principal at 1/31/2016		Interest Rate		Maturity
$	20,000	8	%	In default
$	10,000	8	%	In default
$	20,000	8	%	In default
$	49,970	12	%	In default
$	10,000	Non-interest bearing		In default
$	20,000	8	%	In default
$	20,000	8	%	In default
$	149,970

On September 3, 2015, Avanzar signed a line of credit with BFS West Capital for a principal amount of $140,000 payable over 12 months. As of January 31, 2016, $89,707 is outstanding.

Product Research and Development

Our Research and Development (R&D) consisted of formulating the VitaminFIZZ®, Vitamin Creamer®, Coffee Boost™ and Athena® product lines. We spent $0 in the three and six months ending January 31, 2016 and 2015 respectively. The R&D for the product lines is the only R&D activities since the Company’s inception. we anticipate spending at least $100,000 in R&D activities over the next two fiscal years.

Acquisition of Plants and Equipment and Other Assets

We do not anticipate selling or acquiring any material properties, plants or equipment during the next 12 months.

Off-Balance Sheet Arrangements

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

Inflation

The amounts presented in the financial statements do not provide for the effect of inflation on our operations or financial position. The net operating losses shown would be greater than reported if the effects of inflation were reflected either by charging operations with amounts that represent replacement costs or by using other inflation adjustments.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable.

ITEM 4. CONTROLS AND PROCEDURES

Disclosure Controls

We maintain disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) under the Securities Exchange Act of 1934, as amended the "Exchange Act") designed to provide reasonable assurance that the information required to be reported in our Exchange Act filings is recorded, processed, summarized and reported within the time periods specified and pursuant to Securities and Exchange Commission rules and forms, including controls and procedures designed to ensure that this information is accumulated and communicated to our management, including our Principal Executive Officer, as appropriate, to allow timely decisions regarding required disclosure.

As of the end of the period covered by this report, our management, with the participation of our Principal Executive Officer and our Principal Financial Officer, carried out an evaluation of the effectiveness of our disclosure controls and procedures. Inasmuch as we only have two individuals serving as officers, directors and employees we have determined that the Company has, per se, inadequate controls and procedures over financial reporting due to the lack of segregation of duties despite the fact that the duties of the Chief Executive Officer and Chief Financial Officer are performed by two individuals. Management recognizes that its controls and procedures would be substantially improved if there was a greater segregation of the duties and as such is actively seeking to remediate this issue. Management believes that the material weakness in its controls and procedures referenced did not have an effect on our financial results. Based upon this evaluation, our Principal Executive Officer and Principal Financial Officer concluded that our disclosure controls and procedures were ineffective.

Changes in Internal Control

There were no changes in our internal control over financial reporting (as defined in Rule 13a-15(e) and Rule 15d-15(e) under the Exchange Act) during the three months ended January 31, 2016 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II – OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

On April 15, 2014, we filed a complaint and sued JMJ Financial (“JMJ”) relating to an alleged illegal conversion pursuant to a Promissory Note dated November 19, 2013 (the “Note”) in the Circuit Court of 11th Judicial Circuit in and for Miami-Dade County. The suit alleges that the Note violates Florida’s usury laws and is, therefore, unenforceable. Minerco sought (a) a declaratory judgment that the Note is null and voidab initio, and (b) preliminary and permanent injunctive relief prohibiting JMJ from converting any purported amounts owed pursuant to the Note into shares of our common stock. In May 2014, the injunctive relief bond was set at $2,500,000, cash, which we did not satisfy. Therefore, we did not receive injunctive relief from the court at that time. On June 24, 2014, JMJ filed its Answer and Affirmative Defenses, in which it denied that the Note is usurious, and set forth multiple affirmative defenses, including failure to state a claim upon which relief can be granted and estoppel. On December 12, 2014, we filed a Motion for Leave to File Amended Complaint (the “Motion”) against JMJ Financial relating to the same Note, seeking in its amended complaint the following relief: (a) a declaratory judgment that the Note violates Florida’s usury laws, and thus is null and void ab initio; (b) damages for JMJ’s conversions of the entire purported outstanding balance of the Note that have occurred subsequent to the commencement of the lawsuit; and (c) reasonable attorney’s fees and costs. The Motion was granted, and the Amended Complaint was deemed filed, on January 17, 2015. Discovery is ongoing. The outcome is uncertain.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES

Set forth below are the sales of unregistered securities during the three months ended January 31, 2016 and through the filing date.

On December 31, 2015 we issued one convertible promissory note and securities purchase agreement in the principal amount of $220,000 that bears interest at a rate of 8% per annum at a variable conversion price of 50% of the market price calculated based on the lowest day during the preceding 20 trading days before conversion. The issuance of the note was exempt from registration under Section 4(a)(2) of the Securities Act. No underwriter was involved in the offer of sale of the note. The issuance of the note did not involve a public offering. This issuance was done with no general solicitation or advertising by us. In addition, the investor had the necessary investment intent as required by Section 4(2) since it agreed to, and received, securities bearing a legend stating that such note are restricted. This restriction ensures that this note will not be immediately redistributed into the market and therefore not part of a public offering.

On January 4, 2016, we issued 2,485,441 common shares in one (1) transaction upon exchange of $24,854 in principal and accrued interest under a convertible promissory note dated October 30, 2015. The shares of common stock were issued in reliance on Section 3(a)(9) of the Act as they were issued upon conversion of securities with existing shareholders and no commission or other remuneration was paid or given in connection with the conversion.

On January 6, 2016, we issued 2,694,000 common shares in one (1) transaction upon the exchange of $40,000 in debt exchange agreement under the line of credit with Post Oak, LLC. The shares of common stock were issued in reliance on Section 3(a)(9) of the Act as they were issued upon conversion of securities with existing shareholders and no commission or other remuneration was paid or given in connection with the conversion.

On January 28, 2016, we issued 714,286 common shares in one (1) transaction upon the exchange of $10,000 in debt exchange agreement under the line of credit with Post Oak, LLC. The shares of common stock were issued in reliance on Section 3(a)(9) of the Act as they were issued upon conversion of securities with existing shareholders and no commission or other remuneration was paid or given in connection with the conversion.

On February 3, 2016 we issued one convertible promissory note and securities purchase agreement in the principal amount of $110,000 that bears interest at a rate of 8% per annum at a variable conversion price of 50% of the market price calculated based on the lowest day during the preceding 20 trading days before conversion. The issuance of the note was exempt from registration under Section 4(a)(2) of the Securities Act. No underwriter was involved in the offer of sale of the note. The issuance of the note did not involve a public offering. This issuance was done with no general solicitation or advertising by us. In addition, the investor had the necessary investment intent as required by Section 4IaO(2) since it agreed to, and received, securities bearing a legend stating that such note are restricted. This restriction ensures that this note will not be immediately redistributed into the market and therefore not part of a public offering.

On February 4, 2016, we issued 1,575,891 common shares in one (1) transaction upon exchange of $20,487 in principal and accrued interest under a convertible promissory note dated October 30, 2015. The shares of common stock were issued in reliance on Section 3(a)(9) of the Act as they were issued upon conversion of securities with existing shareholders and no commission or other remuneration was paid or given in connection with the conversion.

On February 16, 2016, we issued 821,340 common shares in one (1) transaction upon the exchange of $10,381 in debt exchange agreement under the line of credit with Post Oak, LLC. The shares of common stock were issued in reliance on Section 3(a)(9) of the Act as they were issued upon conversion of securities with existing shareholders and no commission or other remuneration was paid or given in connection with the conversion.

On February 17, 2016, we issued 1,658,477 common shares in one (1) transaction upon exchange of $20,482 in principal and accrued interest under a convertible promissory note dated October 30, 2015. The shares of common stock were issued in reliance on Section 3(a)(9) of the Act as they were issued upon conversion of securities with existing shareholders and no commission or other remuneration was paid or given in connection with the conversion.

On February 18, 2016, we issued two convertible promissory note and securities purchase agreement in the principal amount of $12,500 each that bears interest at a rate of 8% per annum at a variable conversion price of the lower of 50% of the market price calculated based on the lowest day during the preceding 25 trading days before conversion or $0.025. The issuance of the note was exempt from registration under Section 4(a)(2) of the Securities Act. No underwriter was involved in the offer of sale of the note. The issuance of the note did not involve a public offering. This issuance was done with no general solicitation or advertising by us. In addition, the investor had the necessary investment intent as required by Section 4(2) since it agreed to, and received, securities bearing a legend stating that such note are restricted. This restriction ensures that this note will not be immediately redistributed into the market and therefore not part of a public offering.

On February 23, 2016, we issued 2,205,882 common shares in two (2) transactions under securities purchase agreements in the principal amount of $37,500. The issuance of the securities purchase agreement was exempt from registration under Section 4(a)(2) of the Securities Act. No underwriter was involved in the offer of sale of the note. The issuance of the note did not involve a public offering. This issuance was done with no general solicitation or advertising by us. In addition, the investor had the necessary investment intent as required by Section 4(a)(2) since it agreed to, and received, securities bearing a legend stating that such note are restricted. This restriction ensures that this note will not be immediately redistributed into the market and therefore not part of a public offering.

On February 24, 2016, we issued 1,674,521 common shares in one (1) transaction upon exchange of $20,513 in principal and accrued interest under a convertible promissory note dated October 30, 2015. The shares of common stock were issued in reliance on Section 3(a)(9) of the Act as they were issued upon conversion of securities with existing shareholders and no commission or other remuneration was paid or given in connection with the conversion.

On February 25, 2016, we issued 2,096,315 common shares in one (1) transaction upon the exchange of $13,626 in debt exchange agreement under the line of credit with Post Oak, LLC. The shares of common stock were issued in reliance on Section 3(a)(9) of the Act as they were issued upon conversion of securities with existing shareholders and no commission or other remuneration was paid or given in connection with the conversion.

On March 2, 2016, we issued 3,223,727 common shares in one (1) transaction upon the exchange of $50,000 in debt exchange agreement under the line of credit with Post Oak, LLC. The shares of common stock were issued in reliance on Section 3(a)(9) of the Act as they were issued upon conversion of securities with existing shareholders and no commission or other remuneration was paid or given in connection with the conversion.

On March 3, 2016, we issued 1,593,514 common shares in one (1) transaction upon exchange of $19,521 in principal and accrued interest under a convertible promissory note dated October 30, 2015. The shares of common stock were issued in reliance on Section 3(a)(9) of the Act as they were issued upon conversion of securities with existing shareholders and no commission or other remuneration was paid or given in connection with the conversion.

On March 10, 2016, we issued 588,235 common shares in one (1) transactions under securities purchase agreements in the principal amount of $10,000. The issuance of the securities purchase agreement was exempt from registration under Section 4(a)(2) of the Securities Act. No underwriter was involved in the offer of sale of the note. The issuance of the note did not involve a public offering. This issuance was done with no general solicitation or advertising by us. In addition, the investor had the necessary investment intent as required by Section 4(2) since it agreed to, and received, securities bearing a legend stating that such note are restricted. This restriction ensures that this note will not be immediately redistributed into the market and therefore not part of a public offering.

On March 16, 2016, we issued 735,294 common shares in one (1) transactions under securities purchase agreements in the principal amount of $12,500. The issuance of the securities purchase agreement was exempt from registration under Section 4(a)(2) of the Securities Act. No underwriter was involved in the offer of sale of the note. The issuance of the note did not involve a public offering. This issuance was done with no general solicitation or advertising by us. In addition, the investor had the necessary investment intent as required by Section 4(2) since it agreed to, and received, securities bearing a legend stating that such note are restricted. This restriction ensures that this note will not be immediately redistributed into the market and therefore not part of a public offering.

Unless otherwise stated, the sales of the above securities were deemed to be exempt from registration under the Securities Act of 1933, in reliance upon section 4(a)(2) of the Securities Act of 1933 as transactions by an issuer not involving any public offering. The recipients of the securities in each of these transactions represented their intentions to accrue the securities for investment only and not with a view to or for sale in connection with any distribution thereof, and appropriate legends were placed upon the stock certificates issued in these transactions.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURE

N/A

ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS

EXHIBIT INDEX



		Incorporated by reference
Exhibit	Document Description	Form	Date	Number	Filed herewith
3.1	Articles of Incorporation.	S-1	12/10/2008	3.1
3.2	Bylaws.	S-1	12/10/2008	3.2
3.3	Amendment to Articles of Incorporation	8-K	1/13/2011	3.1
4.1	Instrument Defining the Rights of Shareholders – Form of Share Certificate	S-1	12/10/2008	4
10.1	Mutual Release and Settlement Agreement	8-K	9/3/2015	10.1
10.2	Amendment to Employment Agreement with V. Scott Vanis dated September 2, 2015	8-K	9/3/2015	10.2
10.3	Amendment to Employment Agreement with Sam J Messina III dated September 2, 2015	8-K	9/3/2015	10.3
10.4	Exchange Agreement dated September 28, 2015	8-K	10/2/2015	10.1
10.5	Certificate of Amendment	8-K	10/2/2015	10.2
10.6	Asset Purchase Agreement dated September 28, 2015	8-K	10/5/2015	10.1
10.7	Securities Purchase Agreement dated December 31, 2015 with Union Capital, LLC				X
10.8	Securities Purchase Agreement Back End Note dated December 31, 2015 with Union Capital, LLC				X
10.9	Securities Purchase Agreement dated February 3, 2016 with Union Capital, LLC				X
10.10	Securities Purchase Agreement Back End Note dated February 3, 2016 with Union Capital, LLC				X
10.11	Securities Purchase Agreement dated February 18, 2016 with Micaddan Marketing Consultants, LLC				X
10.12	Securities Purchase Agreement dated February 18, 2016 with James Erickson				X
10.13	Stock Purchase Agreement dated February 23, 2016 with Beau Saad				X
10.14	Stock Purchase Agreement dated February 23, 2016 with Ray Ciarello				X
10.15	Stock Purchase Agreement dated March 8, 2016 with Beau Saad				X
10.16	Stock Purchase Agreement dated March 16, 2016 with Micaddan Marketing Consultants, LLC				X
10.17	Second Amendment to Employment Agreement for V. Scott Vanis				X
10.18	Second Amendment to Employment Agreement for Sam J Messina III				X
31.1	Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.				X
31.2	Certification of Principal Accounting Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.				X
32.1	Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.				X



32.2	Certification of Prinicipal Accounting Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.	X
EX-101.INS	XBRL INSTANCE DOCUMENT	X
EX-101.SCH	XBRL TAXONOMY EXTENSION SCHEMA	X
EX-101.CAL	XBRL TAXONOMY EXTENSION CALCULATION LINKBASE	X
EX-101.LAB	XBRL TAXONOMY EXTENSION LABEL LINKBASE	X
EX-101.PRE	XBRL TAXONOMY EXTENSION PRESENTATION LINKBASE	X
EX-101.DEF	XBRL TAXONOMY EXTENSION DEFNITION LINKBASE	X

EXHIBIT INDEX



		Incorporated by reference
Exhibit	Document Description	Form	Date	Number	Filed herewith
3.1	Articles of Incorporation.	S-1	12/10/2008	3.1
3.2	Bylaws.	S-1	12/10/2008	3.2
3.3	Amendment to Articles of Incorporation	8-K	1/13/2011	3.1
4.1	Instrument Defining the Rights of Shareholders – Form of Share Certificate	S-1	12/10/2008	4
10.1	Mutual Release and Settlement Agreement	8-K	9/3/2015	10.1
10.2	Amendment to Employment Agreement with V. Scott Vanis dated September 2, 2015	8-K	9/3/2015	10.2
10.3	Amendment to Employment Agreement with Sam J Messina III dated September 2, 2015	8-K	9/3/2015	10.3
10.4	Exchange Agreement dated September 28, 2015	8-K	10/2/2015	10.1
10.5	Certificate of Amendment	8-K	10/2/2015	10.2
10.6	Asset Purchase Agreement dated September 28, 2015	8-K	10/5/2015	10.1
10.7	Securities Purchase Agreement dated December 31, 2015 with Union Capital, LLC				X
10.8	Securities Purchase Agreement Back End Note dated December 31, 2015 with Union Capital, LLC				X
10.9	Securities Purchase Agreement dated February 3, 2016 with Union Capital, LLC				X
10.10	Securities Purchase Agreement Back End Note dated February 3, 2016 with Union Capital, LLC				X
10.11	Securities Purchase Agreement dated February 18, 2016 with Micaddan Marketing Consultants, LLC				X
10.12	Securities Purchase Agreement dated February 18, 2016 with James Erickson				X
10.13	Stock Purchase Agreement dated February 23, 2016 with Beau Saad				X
10.14	Stock Purchase Agreement dated February 23, 2016 with Ray Ciarello				X
10.15	Stock Purchase Agreement dated March 8, 2016 with Beau Saad				X



10.16	Stock Purchase Agreement dated March 16, 2016 with Micaddan Marketing Consultants, LLC	X
10.17	Second Amendment to Employment Agreement for V. Scott Vanis	X
10.18	Second Amendment to Employment Agreement for Sam J Messina III	X
31.1	Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.	X
31.2	Certification of Principal Accounting Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.	X
32.1	Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.	X
32.2	Certification of Prinicipal Accounting Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.	X
EX-101.INS	XBRL INSTANCE DOCUMENT	X
EX-101.SCH	XBRL TAXONOMY EXTENSION SCHEMA	X
EX-101.CAL	XBRL TAXONOMY EXTENSION CALCULATION LINKBASE	X
EX-101.LAB	XBRL TAXONOMY EXTENSION LABEL LINKBASE	X
EX-101.PRE	XBRL TAXONOMY EXTENSION PRESENTATION LINKBASE	X
EX-101.DEF	XBRL TAXONOMY EXTENSION DEFNITION LINKBASE	X

SIGNATURES

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



	MINERCO, INC.

March 21, 2016	By:	/s/ V. Scott Vanis,
		V. Scott Vanis,
		President, Secretary and Principal Executive Officer



	MINERCO, INC.

March 21, 2016	By:	/s/ Sam J Messina III,
		Sam J Messina III
		Principal Financial Officer and Treasurer

EXHIBIT 10.7

THE SECURITIES OFFERED HEREBY HAVE NOT BEEN AND WILL NOT BE REGISTERED WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE PURSUANT TO AN EXEMPTION FROM REGISTRATION PROVIDED BY SECTION 3(b) OF THE SECURITIES ACT OF 1933, AS AMENDED, AND THE RULES AND REGULATIONS PROMULGATED THEREUNDER (THE "1933 ACT)

US $220,000.00

MINERCO RESOURCES, INC.

8% CONVERTIBLE REDEEMABLE NOTE

DUE DECEMBER 31, 2017

FOR VALUE RECEIVED, Minerco Resources, Inc. (the “Company”) promises to pay to the order of UNION CAPITAL, LLC and its authorized successors and permitted assigns ("Holder"), the aggregate principal face amount of Two Hundred Twenty Thousand dollars exactly (U.S. $220,000) on December 31, 2017 ("Maturity Date") and to pay interest on the principal amount outstanding hereunder at the rate of 8% per annum commencing on December 31, 2015. The Company acknowledges this Note was issued with a 10% original issue discount (OID) and as such the issuance price was $200,000. The interest will be paid to the Holder in whose name this Note is registered on the records of the Company regarding registration and transfers of this Note. The principal of, and interest on, this Note are payable at 525 Norton Parkway, New Haven, CT 06511, initially, and if changed, last appearing on the records of the Company as designated in writing by the Holder hereof from time to time. The Company will pay each interest payment and the outstanding principal due upon this Note before or on the Maturity Date, less any amounts required by law to be deducted or withheld, to the Holder of this Note by check or wire transfer addressed to such Holder at the last address appearing on the records of the Company. The forwarding of such check or wire transfer shall constitute a payment of outstanding principal hereunder and shall satisfy and discharge the liability for principal on this Note to the extent of the sum represented by such check or wire transfer. Interest shall be payable in Common Stock (as defined below) pursuant to paragraph 4(b) herein.

This Note is subject to the following additional provisions:

1. This Note is exchangeable for an equal aggregate principal amount of Notes of different authorized denominations, as requested by the Holder surrendering the same. No service charge will be made for such registration or transfer or exchange, except that Holder shall pay any tax or other governmental charges payable in connection therewith.

2. The Company shall be entitled to withhold from all payments any amounts required to be withheld under applicable laws.

3. This Note may be transferred or exchanged only in compliance with the Securities Act of 1933, as amended ("Act") and applicable state securities laws. Any attempted transfer to a non-qualifying party shall be treated by the Company as void. Prior to due presentment for transfer of this Note, the Company and any agent of the Company may treat the person in whose name this Note is duly registered on the Company's records as the owner hereof for all other purposes, whether or not this Note be overdue, and neither the Company nor any such agent shall be affected or bound by notice to the contrary. Any Holder of this Note electing to exercise the right of conversion set forth in Section 4(a) hereof, in addition to the requirements set forth in Section 4(a), and any prospective transferee of this Note, also is required to give the Company written confirmation that this Note is being converted ("Notice of Conversion") in the form annexed hereto as Exhibit A. The date of receipt (including receipt by telecopy) of such Notice of Conversion shall be the Conversion Date.

4. (a) The Holder of this Note is entitled, at its option, at any time after and after full cash payment for the shares convertible hereunder, to convert all or any amount of the principal face amount of this Note then outstanding into shares of the Company's common stock (the "Common Stock") without restrictive legend of any nature, at a price ("Conversion Price") for each share of Common Stock equal to 50% of the lowest closing bid price of the Common Stock as reported on the National Quotations Bureau OTCQB exchange which the Company’s shares are traded or any exchange upon which the Common Stock may be traded in the future ("Exchange"), for the twenty prior trading days including the day upon which a Notice of Conversion is received by the Company (provided such Notice of Conversion is delivered by fax or other electronic method of communication to the Company after 4 P.M. Eastern Standard or Daylight Savings Time if the Holder wishes to include the same day closing price). If the shares have not been delivered within 3 business days, the Notice of Conversion may be rescinded. Such conversion shall be effectuated by the Company delivering the shares of Common Stock to the Holder within 3 business days of receipt by the Company of the Notice of Conversion. Once the Holder has received such shares of Common Stock, the Holder shall surrender this Note to the Company, executed by the Holder evidencing such Holder's intention to convert this Note or a specified portion hereof, and accompanied by proper assignment hereof in blank. Accrued but unpaid interest shall be subject to conversion. No fractional shares or scrip representing fractions of shares will be issued on conversion, but the number of shares issuable shall be rounded to the nearest whole share. 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. In the event the Company is not “Current” in its SEC filings at the time this note is cash funded, the discount shall be decreased to 40%. To the extent the Conversion Price of the Company’s Common Stock closes below the par value per share, the Company will take all steps necessary to solicit the consent of the stockholders to reduce the par value to the lowest value possible under law. The Company agrees to honor all conversions submitted pending this increase. In no event shall the Holder be allowed to effect a conversion if such conversion, along with all other shares of Company Common Stock beneficially owned by the Holder and its affiliates would exceed 9.9% of the outstanding shares of the Common Stock of the Company.

(b) Interest on any unpaid principal balance of this Note shall be paid at the rate of 8% per annum. Interest shall be paid by the Company in Common Stock ("Interest Shares"). The Holder may, at any time, send in a Notice of Conversion to the Company for Interest Shares based on the formula provided in Section 4(a) above. The dollar amount converted into Interest Shares shall be all or a portion of the accrued interest calculated on the unpaid principal balance of this Note to the date of such notice.

of the face amount plus any accrued interest This Note may not be prepaid after the 180^th day. The redemption must be closed and paid for within 3 business days of the Company sending the redemption demand or the redemption will be invalid and the Company may not redeem this Note.

(d) Upon (i) a transfer of all or substantially all of the assets of the Company to any person in a single transaction or series of related transactions, (ii) a reclassification, capital reorganization or other change or exchange of outstanding shares of the Common Stock, or (iii) any consolidation or merger of the Company with or into another person or entity in which the Company is not the surviving entity (other than a merger which is effected solely to change the jurisdiction of incorporation of the Company and results in a reclassification, conversion or exchange of outstanding shares of Common Stock solely into shares of Common Stock) (each of items (i), (ii) and (iii) being referred to as a "Sale Event"), then, in each case, the Company shall, upon request of the Holder, redeem this Note in cash for 150% of the principal amount, plus accrued but unpaid interest through the date of redemption, or at the election of the Holder, such Holder may convert the unpaid principal amount of this Note (together with the amount of accrued but unpaid interest) into shares of Common Stock immediately prior to such Sale Event at the Conversion Price.

(e) In case of any Sale Event in connection with which this Note is not redeemed or converted, the Company shall cause effective provision to be made so that the Holder of this Note shall have the right thereafter, by converting this Note, to purchase or convert this Note into the kind and number of shares of stock or other securities or property (including cash) receivable upon such reclassification, capital reorganization or other change, consolidation or merger by a holder of the number of shares of Common Stock that could have been purchased upon exercise of the Note and at the same Conversion Price, as defined in this Note, immediately prior to such Sale Event. The foregoing provisions shall similarly apply to successive Sale Events. If the consideration received by the holders of Common Stock is other than cash, the value shall be as determined by the Board of Directors of the Company or successor person or entity acting in good faith.

5. No provision of this Note shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of, and interest on, this Note at the time, place, and rate, and in the form, herein prescribed.

6. The Company hereby expressly waives demand and presentment for payment, notice of non-payment, protest, notice of protest, notice of dishonor, notice of acceleration or intent to accelerate, and diligence in taking any action to collect amounts called for hereunder and shall be directly and primarily liable for the payment of all sums owing and to be owing hereto.

7. The Company agrees to pay all costs and expenses, including reasonable attorneys' fees and expenses, which may be incurred by the Holder in collecting any amount due under this Note.

8. If one or more of the following described "Events of Default" shall occur:

(a) The Company shall default in the payment of principal or interest on this Note or any other note issued to the Holder by the Company; or

(b) Any of the representations or warranties made by the Company herein or in any certificate or financial or other written statements heretofore or hereafter furnished by or on behalf of the Company in connection with the execution and delivery of this Note shall be false or misleading in any respect; or

(c) The Company shall fail to perform or observe, in any respect, any covenant, term, provision, condition, agreement or obligation of the Company under this Note or any other note issued to the Holder; or

(d) The Company shall (1) become insolvent; (2) admit in writing its inability to pay its debts generally as they mature; (3) make an assignment for the benefit of creditors or commence proceedings for its dissolution; (4) apply for or consent to the appointment of a trustee, liquidator or receiver for its or for a substantial part of its property or business; (5) file a petition for bankruptcy relief, consent to the filing of such petition or have filed against it an involuntary petition for bankruptcy relief, all under federal or state laws as applicable; or

(e) A trustee, liquidator or receiver shall be appointed for the Company or for a substantial part of its property or business without its consent and shall not be discharged within thirty (30) days after such appointment; or

(f) Any governmental agency or any court of competent jurisdiction at the instance of any governmental agency shall assume custody or control of the whole or any substantial portion of the properties or assets of the Company; or

(g) One or more money judgments, writs or warrants of attachment, or similar process, in excess of fifty thousand dollars ($50,000) in the aggregate, shall be entered or filed against the Company or any of its properties or other assets and shall remain unpaid, unvacated, unbonded or unstayed for a period of fifteen (15) days or in any event later than five (5) days prior to the date of any proposed sale thereunder; or

(h) defaulted on or breached any term of any other note of similar debt instrument into which the Company has entered and failed to cure such default within the appropriate grace period; or

(i) The Company shall have its Common Stock delisted from an exchange (including the OTCBB exchange) or, if the Common Stock trades on an exchange, then trading in the Common Stock shall be suspended for more than 10 consecutive days or ceases to file its 1934 act reports with the SEC;

(j) If a majority of the members of the Board of Directors of the Company on the date hereof are no longer serving as members of the Board;

(k) The Company shall not deliver to the Holder the Common Stock pursuant to paragraph 4 herein without restrictive legend within 3 business days of its receipt of a Notice of Conversion; or

(l) The Company shall not replenish the reserve set forth in Section 12, within 3 business days of the request of the Holder.

(m) The Company shall not be “current” in its filings with the Securities and Exchange Commission; or

(n) The Company shall lose the “bid” price for its stock in a market (including the OTCQB marketplace or other exchange).

Then, or at any time thereafter, unless cured within 5 days, and in each and every such case, unless such Event of Default shall have been waived in writing by the Holder (which waiver shall not be deemed to be a waiver of any subsequent default) at the option of the Holder and in the Holder's sole discretion, the Holder may consider this Note immediately due and payable, without presentment, demand, protest or (further) notice of any kind (other than notice of acceleration), all of which are hereby expressly waived, anything herein or in any note or other instruments contained to the contrary notwithstanding, and the Holder may immediately, and without expiration of any period of grace, enforce any and all of the Holder's rights and remedies provided herein or any other rights or remedies afforded by law. Upon an Event of Default, interest shall accrue at a default interest rate of 24% per annum or, if such rate is usurious or not permitted by current law, then at the highest rate of interest permitted by law. In the event of a breach of Section 8(k) the penalty shall be $250 per day the shares are not issued beginning on the 4^th day after the conversion notice was delivered to the Company. This penalty shall increase to $500 per day beginning on the 10^th day. The penalty for a breach of Section 8(n) shall be an increase of the outstanding principal amounts by 20%. In case of a breach of Section 8(i), the outstanding principal due under this Note shall increase by 50%. If this Note is not paid at maturity, the outstanding principal due under this Note shall increase by 10%. Further, if a breach of Section 8(m) occurs or is continuing after the 6 month anniversary of the Note, then the Holder shall be entitled to use the lowest closing bid price during the delinquency period as a base price for the conversion. For example, if the lowest closing bid price during the delinquency period is $0.01 per share and the conversion discount is 50% the Holder may elect to convert future conversions at $0.005 per share. If this Note is not paid at maturity, the outstanding principal due under this Note shall increase by 10%.

If the Holder shall commence an action or proceeding to enforce any provisions of this Note, including, without limitation, engaging an attorney, then if the Holder prevails in such action, the Holder shall be reimbursed by the Company for its attorneys’ fees and other costs and expenses incurred in the investigation, preparation and prosecution of such action or proceeding.

Make-Whole for Failure to Deliver Loss. At the Holder’s election, if the Company fails for any reason to deliver to the Holder the conversion shares by the by the 3rd business day following the delivery of a Notice of Conversion to the Company and if the Holder incurs a Failure to Deliver Loss, then at any time the Holder may provide the Company written notice indicating the amounts payable to the Holder in respect of the Failure to Deliver Loss and the Company must make the Holder whole as follows:

Failure to Deliver Loss = [(High trade price at any time on or after the day of exercise) x (Number of conversion shares)]

The Company must pay the Failure to Deliver Loss by cash payment, and any such cash payment must be made by the third business day from the time of the Holder’s written notice to the Company.

9. In case any provision of this Note is held by a court of competent jurisdiction to be excessive in scope or otherwise invalid or unenforceable, such provision shall be adjusted rather than voided, if possible, so that it is enforceable to the maximum extent possible, and the validity and enforceability of the remaining provisions of this Note will not in any way be affected or impaired thereby.

10. Neither this Note nor any term hereof may be amended, waived, discharged or terminated other than by a written instrument signed by the Company and the Holder.

11. The Company represents that it is not a “shell” issuer and has not been a “shell” issuer

for the 12 months following the Company’ having reported Form 10 type information indicating it is no longer a “shell issuer.

12. The Company shall issue irrevocable transfer agent instructions reserving 4x shares of its Common Stock for conversions under this Note (the “Share Reserve”). Upon full conversion of this Note, any shares remaining in the Share Reserve shall be cancelled. The Company shall pay all costs associated with issuing and delivering the shares. If such amounts are to be paid by the Holder, it may deduct such amounts from the Conversion Price. Conversion Notices may be sent to the Company or its transfer agent via electric mail. The company should at all times reserve a minimum of three times the amount of shares required if the note would be fully converted. The Holder may reasonably request increases from time to time to reserve such amounts. The Company will instruct its transfer agent to provide the outstanding share information to the Holder in connection with its conversions.

13. The Company will give the Holder direct notice of any corporate actions, including but not limited to name changes, stock splits, recapitalizations etc. This notice shall be given to the Holder as soon as possible under law.

14. This Note shall be governed by and construed in accordance with the laws of New York applicable to contracts made and wholly to be performed within the State of New York and shall be binding upon the successors and assigns of each party hereto. The Holder and the Company hereby mutually waive trial by jury and consent to exclusive jurisdiction and venue in the courts of the State of New York. This Agreement may be executed in counterparts, and the facsimile transmission of an executed counterpart to this Agreement shall be effective as an original.

IN WITNESS WHEREOF, the Company has caused this Note to be duly executed by an officer thereunto duly authorized.

Dated: 12-31-2015

MINERCO RESOURCES, INC.

By: _____/s/ V. Scott Vanis_________________

Title: _CEO_____________________________

EXHIBIT 10.8

US $220,000.00

MINERCO RESOURCES, INC.

8% CONVERTIBLE REDEEMABLE NOTE

DUE DECEMBER 31, 2017

BACK END NOTE

This Note is subject to the following additional provisions:

2. The Company shall be entitled to withhold from all payments any amounts required

to be withheld under applicable laws.

(c) During the first 180 days after the Note has been issued, it may be prepaid at 150% of the face amount plus any accrued interest This Note may not be prepaid after the 180^th day. The redemption must be closed and paid for within 3 business days of the Company sending the redemption demand or the redemption will be invalid and the Company may not redeem this Note.

7. The Company agrees to pay all costs and expenses, including reasonable attorneys' fees and expenses, which may be incurred by the Holder in collecting any amount due under this Note.

8. If one or more of the following described "Events of Default" shall occur:

(a) The Company shall default in the payment of principal or interest on this Note or any other note issued to the Holder by the Company; or

respect; or