UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

 

FORM 10-Q

 

[X] Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
   
  For the quarterly period ended February 28, 2015
   
[  ] Transition Report pursuant to 13 or 15(d) of the Securities Exchange Act of 1934
   
  For the transition period from __________ to __________
   
  Commission File Number:  333-179028

 

Avalanche International, Corp.

(Exact name of registrant as specified in its charter)

 

Nevada 38-3841757
(State or other jurisdiction of incorporation or organization) (IRS Employer Identification No.)

 

5940 S. Rainbow Blvd, Las Vegas, NV 89118
(Address of principal executive offices)

 

(888) 863-9490
(Registrant’s telephone number)
 
_______________________________________________________________
(Former name, former address and former fiscal year, if changed since last report)

 

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

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.

 

[ ] Large accelerated filer

[ ] Non-accelerated filer

[ ] Accelerated filer

[X] Smaller reporting company

 

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

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 229.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes [X] No [ ]

 

State the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: 5,508,500 common shares as of April 15, 2015.

 

 

TABLE OF CONTENTS

 

Page

 
PART I – FINANCIAL INFORMATION
 
Item 1: Consolidated Financial Statements 3
Item 2: Management’s Discussion and Analysis of Financial Condition and Results of Operations 14
Item 3: Quantitative and Qualitative Disclosures About Market Risk 20
Item 4: Controls and Procedures 20
 
PART II – OTHER INFORMATION
 
Item 1: Legal Proceedings 21
Item 1A: Risk Factors 21
Item 2: Unregistered Sales of Equity Securities and Use of Proceeds 21
Item 3: Defaults Upon Senior Securities 21
Item 4: Mine Safety Disclosures 21
Item 5: Other Information 21
Item 6: Exhibits 21
2

PART I - FINANCIAL INFORMATION

 

Item 1. Financial Statements

 

Our financial statements included in this Form 10-Q are as follows:

 

F-4 Consolidated Balance Sheets as of February 28, 2015 (unaudited) and November 30, 2014
F-5

Consolidated Statements of Operations for the Three Months ended February 28, 2015 and 2014 (unaudited)

F-6 Consolidated Statements of Cash Flows for the Three Months ended February 28, 2015 and 2014 (unaudited)
F-7 Notes to Consolidated Financial Statements (unaudited)

3

Avalanche International, Corp. and Subsidiary

Consolidated Balance Sheets

 

  February 28, 2015  November 30, 2014
   (unaudited)   
ASSETS          
Current Assets:          
  Cash  $1,271   $2,247 
  Accounts receivable   46    —   
  Prepaids   6,575    9,040 
  Prepaid stock for services   283,542    —   
  Inventory   20,758    25,900 
Total current assets   312,192    37,187 
  Other assets   705    526 
  Product license   42,750    29,250 
     Total assets  $355,647   $66,963 
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)          
Current Liabilities:          
Accounts payable and accrued expenses  $70,883   $76,917 
Accounts payable, related party   90,175    88,572 
Accrued interest   2,553    388 
Accrued compensation   32,073    9,912 
Due to related parties   32,935    6,927 
Convertible note payable   63,250    63,250 
Loans payable   20,000    18,300 
Total current liabilities   311,869    264,266 
     Total liabilities   311,869    264,266 
Stockholders' Equity (Deficit):          
 Common stock, $0.001 par value; 75,000,000 shares authorized; 5,358,500 and 5,144,400 shares issued and outstanding, respectively   5,359    5,144 
Class A Preferred stock, $0.001 par value; 50,000 shares authorized, 29,380 and 14,000 shares issued and outstanding, respectively   29    14 
Preferred stock, $0.001 par value; 9,950,000 shares authorized, no shares issued and outstanding   —      —   
  Additional paid-in capital   622,365    203,445 
  Accumulated deficit   (583,975)   (405,906)
Total stockholders’ equity (deficit)   43,778    (197,303)
      Total liabilities and stockholders’ equity  $355,647   $66,963 

 

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

F-4

  Avalanche International, Corp. and Subsidiary
Consolidated Statements of Operation

(unaudited) 

 

  For the Three Months Ended February 28,
   2015  2014
Revenue  $14,995   $—   
Cost of revenue   8,534    —   
Gross margin   6,461    —   
Operating Expenses:          
Advertising and marketing   8,364    —   
Salary expense   22,920    —   
Professional fees   5,450    3,818 
General and administrative   143,596    758 
  Total operating expense   180,330    4,576 
Net loss from operations   (173,869)   (4,576)
Other expense:          
      Interest expense   (4,200)   —   
Total other expense   (4,200)   —   
Loss before income tax   (178,069)   (4,576)
Provision for income taxes   —      —   
Net Loss  $(178,069)  $(4,576)
Loss per common share Basic and diluted  $(0.03)  $(0.00)
Weighted average common shares Basic and diluted   5,218,650    5,070,000 

 

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

F-5

Avalanche International, Corp. and Subsidiary
Consolidated Statements of Cash Flows

(unaudited) 

 

  For the Three Months Ended February 28,
   2015  2014
Cash flows from operating activities:          
Net loss for the period  $(178,069)  $(4,576)
Adjustments to reconcile net loss to net cash used by operating activities:          
    Stock for services   56,708    —   
    Financing fees   7,000    —   
Changes in operating assets and liabilities:          
   (Increase) in accounts receivable   (46)   —   
    Decrease in prepaid expenses   2,465    —   
   Decrease in inventory   5,142    —   
 (Increase) in other assets   (13,679)   —   
    Increase / (decrease) in accounts payable and accrued expense   (4,431)   1,826 
Increase in accrued interest   2,165    —   
  Increase in accrued compensation   22,161    —   
Net cash used in operating activities   (100,584)   (2,750)
Cash flows from investing activities:   —      —   
Cash flows from financing activities:          
Payments of note payable   (5,300)   —   
Advances from related parties   26,008    2,750 
Proceeds from issuance of common stock   2,000    —   
Proceeds from issuance of preferred stock   76,900    —   
Net cash provided by financing activities   99,608    2,750 
Decrease in cash   (976)   —   
Cash, beginning of period   2,247    —   
Cash, end of period  $1,271   $—   
Supplemental Disclosures:          
Cash paid for interest  $—     $—   
Cash paid for income tax  $—     $—   

 

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

F-6

Avalanche International, Corp. and subsidiary

Notes to the Consolidated Financial Statements

February 28, 2015

(Unaudited)

 

 

NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS

 

Organization and business operations

 

Avalanche International, Corp. (“the Company”) was incorporated under the laws of the State of Nevada, U.S. on April 14, 2011. The company had plans to distribute crystallized glass tile in the North American markets to wholesale customers. On May 14, 2014, the Company entered into an Agreement of Conveyance, Transfer and Assignment of Assets and Assumption of Obligations (the “Agreement”) with our sole officer and director, John Pulos. Pursuant to the Agreement, the Company transferred all assets to Mr. Pulos. In exchange for this assignment of assets, Mr. Pulos agreed to assume and cancel all liabilities due to him. In conjunction with the change in management, it was decided to abandon this line of business and become a holding company with operations at the subsidiary levels only. The Company formed its first wholly owned subsidiary, Smith and Ramsay Brands, LLC (“SRB”), on May 19, 2014. The Company acquired certain intellectual property, know how, product, name license and other capabilities from Smith and Ramsay, LLC, a Nevada company. Smith and Ramsay Brands, LLC is a manufacturer and distributor of flavored liquids for electronic vaporizers and eCigarettes and distributor of vape accessories. SRB manufactures its premium signature brand of eLiquid, Smith and Ramsay, a line that features all natural flavors produced in the United States. SRB rolled out its flagship product to targeted areas in the fall of 2014, following its pre-launch phase. The Smith and Ramsay line was manufactured, packaged and strategically distributed on a limited basis to generate revenue in test markets. The Company’s goal is to maintain a high standard of quality and to insure the production and warehouse environments, processes and procedures continue to meet or exceed guidelines of the FDA, and are in line with ISO and cGMP standards.

 

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 

 

Basis of Presentation

The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission ("SEC") for interim financial information and the SEC instructions to Form 10-Q. In the opinion of management, all adjustments necessary in order for the financial statements to not be misleading have been reflected herein. Operating results for the interim period ended February 28, 2015 are not necessarily indicative of the results that can be expected for the full year. The Company has adopted a November 30 year end.

 

Management further acknowledges that it is solely responsible for adopting sound accounting practices, establishing and maintaining a system of internal accounting control and preventing and detecting fraud. The Company's system of internal accounting control is designed to assure, among other items, that 1) recorded transactions are valid; 2) valid transactions are recorded; and 3) transactions are recorded in the proper period in a timely manner to produce financial  statements  which present  fairly  the  financial  condition,  results  of  operations  and  cash  flows  of  the Company for the respective periods being presented.

 

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. In management’s opinion, all adjustments necessary for a fair statement of the results for the interim period have been made, and all adjustments are of a normal recurring nature.

 

Principles of Consolidation

The consolidated financial statements include the accounts of Avalanche International, Corp. and its wholly-owned subsidiary Smith and Ramsay Brands, LLC. All significant intercompany accounts and transactions have been eliminated.

F-7

Cash and Cash Equivalents

The Company considers all highly liquid instruments with a maturity of three months or less at the time of issuance to be cash equivalents. There were no cash equivalents as of February 28, 2015 and November 30, 2014.

 

Inventories

Inventories are stated at the lower of cost or market. Cost is determined using the first-in, first-out method; market value is based upon estimated replacement costs. As of February 28, 2015 inventory consists of $20,758 of product and accessories.

 

Fair Value of Financial instruments

For certain of the Company’s non-derivative financial instruments, including cash and cash equivalents, receivables, prepaids, inventory, accounts payable, accrued liabilities, and notes payable, the carrying amount approximates fair value due to the short-term maturities of these instruments. The estimated fair value of long-term debt is based primarily on borrowing rates currently available to the Company for similar debt issues. The fair value approximates the carrying value of long-term debt.

 

FASB ASC Topic 820, “Fair Value Measurements and Disclosures,” requires disclosure of the fair value of financial instruments held by the Company. FASB ASC Topic 825, “Financial Instruments,” defines fair value, and establishes a three-level valuation hierarchy for disclosures of fair value measurement that enhances disclosure requirements for fair value measures.  The carrying amounts reported in the balance sheets for receivables and current liabilities each qualify as financial instruments and are a reasonable estimate of their fair values because of the short period of time between the origination of such instruments and their expected realization and their current market rate of interest. The three levels of valuation hierarchy are defined as follows:

 

·Level 1. Observable inputs such as quoted prices in active markets;
·Level 2. Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly;
·Level 3. Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.

 

As of February 28, 2015, the company had no assets or liabilities that would be considered level 1, 2 or 3.

 

Revenue Recognition

The Company follows paragraph 605-10-S99-1 of the FASB Accounting Standards Codification for revenue recognition. The Company will recognize revenue when it is realized or realizable and earned.  The Company considers revenue realized or realizable and earned when all of the following criteria are met: (i) persuasive evidence of an arrangement exists, (ii) the product has been shipped or the services have been rendered to the customer, (iii) the sales price is fixed or determinable, and (iv) collectability is reasonably assured.

 

During the three months ended February 28, 2015, the Company sold $10,236 in products to Vape Nation, generating 67.7% of its revenue.

F-8

Income Taxes

The Company follows Section 740-10-30 of the FASB Accounting Standards Codification, which requires recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred tax assets and liabilities are based on the differences between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the fiscal year in which the differences are expected to reverse. Deferred tax assets are reduced by a valuation allowance to the extent management concludes it is more likely than not that the assets will not be realized. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the fiscal years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the Statements of Income and Comprehensive Income in the period that includes the enactment date.

 

The Company adopted section 740-10-25 of the FASB Accounting Standards Codification (“Section 740-10-25”) with regards to uncertainty income taxes. Section 740-10-25 addresses the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements. Under Section 740-10-25, the Company may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position should be measured based on the largest benefit that has a greater than fifty percent (50%) likelihood of being realized upon ultimate settlement. Section 740-10-25 also provides guidance on de-recognition, classification, interest and penalties on income taxes, accounting in interim periods and requires increased disclosures. The Company had no material adjustments to its liabilities for unrecognized income tax benefits according to the provisions of Section 740-10-25.

 

Basic and diluted net loss per share

The Company computes net loss per share of common stock in accordance with FASB ASC 260, Earnings per Share (“FASB ASC 260”). Under the provisions of FASB ASC 260, basic net income (loss) per share is computed using the weighted average number of common shares outstanding during the period. Diluted net loss per share is computed using the weighted average number of common shares and, if dilutive, potential common shares outstanding during the period. Potential common shares consist of the incremental common shares issuable upon the exercise of stock options and warrants and the conversion of convertible promissory notes. Potentially dilutive shares were excluded from the computation as of February 28, 2015 and 2014 since they would have been anti-dilutive.

 

Recent Accounting Pronouncements

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

F-9

NOTE 3 – GOING CONCERN

 

The financial statements have been prepared on a going concern basis which assumes the Company will be able to realize its assets and discharge its liabilities in the normal course of business for the foreseeable future. The Company has an accumulated deficit of $583,975 as of February 28, 2015 and a net loss of $178,069 for the three months ended February 28, 2015, raising substantial doubt about the Company’s ability to continue as a going concern. The ability to continue as a going concern is dependent upon the Company generating profitable operations in the future and/or to obtain the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due. Management intends to finance operating costs over the next twelve months with loans and/or private placement of common stock.

 

NOTE 4 – PRODUCT LICENSE

 

Effective May 23, 2014, the Company licenses certain intellectual property, know how, product and capability from Smith and Ramsay, LLC, a Nevada company. Currently the Company is paying a minimum per bottle licensing fee of $4,500 per month for the perpetual licensing rights, recipes, industry advice, brand and company names, etc., against a royalty stream for twelve months with a 4% royalty fee of gross revenue thereafter in perpetuity. This license also provides in perpetuity the first right of refusal of any new products or flavors developed by Smith and Ramsay, LLC.

 

NOTE 5 - RELATED PARTY TRANSACTIONS

 

As of February 28, 2015, the Company owed its CEO $6,883 for expense reimbursement. The amount due for expense reimbursement is non-interest bearing, due upon demand and unsecured.

 

As of February 28, 2015, the Company owed a member of the Board of Directors $2,984 for expense reimbursement. The amount due for expense reimbursement is non-interest bearing, due upon demand and unsecured.

 

As of February 28, 2015, the Company owed MCKEA Holdings, LLC $23,068. Amount is due for both expense reimbursement and short term loans that were made to cover certain operating expenses. The amount due is non-interest bearing, due upon demand and unsecured.

 

During the three months ended February 28, 2015, the Company sold $10,236 in products to Vape Nation, generating 67.7% of its revenue. Vape Nation, is 50% owned by MCKEA Holdings, LLC. MCKEA Holdings, LLC is the majority member of Philou Ventures, LLC, which is our controlling shareholder. Kristine L. Ault is the Manager of MCKEA Holdings, LLC and the wife to the Chairman of Avalanche International, Corp.

 

Cross Click Media, Inc. performs sales, marketing, and investor relation services for the Company. As of February 28, 2015, we have paid approximately $157,000 for these services. As of February 28, 2015 and November 30, 2014, we had accounts payable due to CrossClick Media of $90,175 and $88,572, respectively. MCKEA Holdings, LLC is the controlling shareholder of Cross Click Media, Inc. MCKEA Holdings, LLC is also the majority member of Philou Ventures, LLC, which is our controlling shareholder.

 

NOTE 6 – LOAN PAYABLE

 

On November 26, 2014, the Company executed a promissory note with Argent Offset, LLC for $12,500. The note included a $500 loan fee, accrued interest at 10%, compounded monthly, and was due December 5, 2014. A late payment fee of $500 per day was to be incurred from December 6, 2014 through December 7, 2014 and then increases to $1,000 per day. On February 1, 2015, we entered into a Temporary Forbearance Agreement with Argent. Under the forbearance agreement, we agreed to pay a forbearance fee of $7,500. The full $20,000 now owing will bear interest at an annual rate of 10% until due on August 1, 2015. Further, we have agreed to pay 12.5% of any new funds invested in the company until the amount due is paid in full. Interest accrued on this note as of February 28, 2015 is $466.

 

NOTE 7 – CONVERTIBLE NOTE PAYABLE

 

On November 3, 2014, the Company executed a convertible promissory note for $63,250 with LG Capital Funding, LLC. The note bears interest at 8% per annum and is due on or before November 3, 2015. The note includes a 15% original issue discount and is convertible at a 40% discount any time during the period beginning 180 days following the date of the note. Accrued interest on the note as of February 28, 2014 is $1,622.

F-10

NOTE 8 - COMMON STOCK

 

The Company is authorized to issue 75,000,000 common shares with a par value of $0.001 per share.

 

On August 22, 2014, the Company approved a two for one stock split. All shares have been retroactively adjusted to reflect the split.

 

During the quarter ended February 28, 2015, the Company issued 1,600 shares of common stock at a price of $1.25 per share for total cash proceeds of $2,000.

 

During the quarter ended February 28, 2015, the Company issued 200,000 shares of common stock for consulting services. The stock was issued at the closing price on the date of grant of $1.60 for total non-cash expense of $320,000. The expense is being recognized over the six month term of the agreement. As of February 28, 2015, $53,333 has been expensed with the balance debited to prepaid stock for services.

 

During the quarter ended February 28, 2015, the Company issued 12,500 shares of common stock for consulting services. The stock was issued at the closing price on the date of grant of $1.62 for total non-cash expense of $20,250. The expense is being recognized over the six month term of the agreement. As of February 28, 2015, $3,375 has been expensed with the balance debited to prepaid stock for services.

 

NOTE 9 - PREFERRED STOCK

 

The Company is authorized to issue 10,000,000 preferred shares with a par value of $0.001 per share.

 

On July 31, 2014, the Board of Directors designated a series of preferred stock titled Class A Convertible Preferred Stock consisting of 50,000 shares. Each share of Class A Convertible Preferred Stock (“preferred stock”) has a stated value of $5.00 per share. The holders of preferred stock have no voting rights. The holders are entitled to receive cumulative dividends at a rate of 10% of the stated value per annum, payable twice a year, subject to the availability of funds and approval by the Board of Directors. In the discretion of the Board of Directors dividends may be paid with common stock. In the event of liquidation or dissolution of the Company each holder of preferred stock shall be entitled to be paid in cash $5 per share,

 

At any time after August 31, 2015, a holder of preferred stock may, at their option, convert all or a portion of their outstanding shares into common stock on a one for one basis. On February 1, 2016, all issued and outstanding preferred stock shall be automatically converted into shares of common stock.

 

On January 30, 2015, the Company issued 15,380 shares of preferred stock at a price of $5.00 per share for total cash proceeds of $76,900 to Finiks Capital, LLC.

F-11

NOTE 10 – CONSOLIDATION

 

The consolidated financial statements include the accounts of Avalanche International, Corp. and its wholly-owned subsidiary Smith and Ramsay Brands, LLC. A separate presentation of each Company as of February 28, 2015 and for the three months ended February 28, 2015 is as follows.

 

  Avalanche International, Corp.  Smith and Ramsay Brands, LLC  Elimination  Consolidated
Current Assets:                    
Cash  $506   $765   $—     $1,271 
Accounts receivable   —      46    —      46 
Prepaids   5,605    970    —      6,575 
Prepaid stock for services   283,542    —      —      283,542 
Inventory   —      20,758    —      20,758 
Intercompany   185,322    —      185,322    —   
Total current assets   474,975    22,539    185,322    312,192 
Other assets   —      705    —      705 
Product license   —      42,750    —      42,750 
     Total assets  $474,975   $65,994   $185,322   $355,647 
Current Liabilities                    
Accounts payable and accrued expenses  $57,462   $13,421   $—     $70,883
Accounts payable, related party   23,26   66,849   —     90,175 
Accrued interest   2,088    465    —      2,553 
Accrued compensation   9,900    22,173    —      32,073 
Due to related parties   6,177    26,758    —      32,935 
Convertible note payable   63,250    —      —      63,250 
Loans payable   —      20,000    —      20,000 
Intercompany   —      185,322    185,322    —   
Total current liabilities   162,203    334,988    185,322    311,869 
     Total liabilities   162,203    334,988    185,322    311,869 
Stockholders' Equity (Deficit)                    
     Preferred stock   29    —      —      29 
Common stock   5,359    —      —      5,359 
Additional paid-in capital   622,365    —      —      622,365 
Accumulated deficit   (314,981)   (268,994)   —      (583,975)
Total stockholders’ equity (deficit)   312,772    (268,994)   —      43,778 
      Total liabilities and stockholders’ equity  $474,975   $65,994   $185,322   $355,647 

F-12

NOTE 11 - SUBSEQUENT EVENTS

 

In accordance with FASB ASC 855-10, the Company has analyzed its operations subsequent to February 28, 2015 through the October 15, 2014 and has determined that it does not have any material subsequent events to disclose in these financial statements except for the following.

 

Subsequent to February 28, 2015, the Company issued 100,000 shares of common stock to Hallmark Investments, Inc., for consulting services to be provided to the Company.

 

On March 17, 2015, the Company executed a convertible promissory note for $10,750 with Strategic IR, Inc. The note bears interest at 10% per annum and is due on or before April 16, 2015. The note includes a one-time loan fee of $1,750 for a total due of $12,500. This note was not repaid by April 16, 2015 resulting in an increase of the interest rate to 21%.

 

On March 27, 2015, the Company executed a convertible promissory note for $100,000 with Dr. Gary Gelbfish. The note bears interest at 10% per annum and is due on or before September 23, 2015.  If not paid by the due date the note and any accrued interest is convertible at the lesser of $0.50 per share or a 50% discount of the average closing price for the twenty days preceding the conversion. In addition, the loan requires a one-time loan fee of $10,000 and the issuance of 50,000 shares of common stock.

F-13

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

Forward-Looking Statements

 

Certain statements, other than purely historical information, including estimates, projections, statements relating to our business plans, objectives, and expected operating results, and the assumptions upon which those statements are based, are “forward-looking statements.” These forward-looking statements generally are identified by the words “believes,” “project,” “expects,” “anticipates,” “estimates,” “intends,” “strategy,” “plan,” “may,” “will,” “would,” “will be,” “will continue,” “will likely result,” and similar expressions. Forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties which may cause actual results to differ materially from the forward-looking statements. Our ability to predict results or the actual effect of future plans or strategies is inherently uncertain. Factors which could have a material adverse effect on our operations and future prospects on a consolidated basis include, but are not limited to: changes in economic conditions, legislative/regulatory changes, availability of capital, interest rates, competition, and generally accepted accounting principles. These risks and uncertainties should also be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements.

 

Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

Company Overview and Description of Business

 

Avalanche International Corp., a Nevada corporation, is a holding company with one subsidiary, Smith and Ramsay Brands, LLC. We have acquired certain intellectual property, knowhow, product and capability from Smith and Ramsay, LLC, a Nevada company. Smith and Ramsay Brands, LLC (SRB) is a manufacturer and distributor of flavored liquids for electronic vaporizers and eCigarettes and accessories. SRB currently has a single brand of premium vape liquid, its signature brand Smith and Ramsay, which began a targeted rollout mid-Fall of 2014 following its pre-launch phase. The Smith and Ramsay line was manufactured, packaged and strategically distributed on a limited basis to generate revenue in test markets. Due to the feedback we received during our test marketing, from our observations of the changing consumer demand in the marketplace and our direct experience with our customers, the Company sought and received Board approval to establish Puff Systems. Puff Systems is a new business unit focused on the manufacturing and distribution of vape devices including pens and vape accessories. Puff Systems was launched as a department of Smith and Ramsay Brands so it could minimize costs while developing its business model and proving concept. The efforts and success of Puff Systems are being evaluated by the Company’s management to determine the unit’s future path. While the Company has chosen to focus primarily on its subsidiary’s business model, it reserves the right to explore other opportunities that either may leverage its current activities, expand organically into new revenue streams or enter new industries that will provide added value for its shareholders. This includes the pursuit of a merger or acquisition of existing businesses from other industries with proceeds from new capital raised.

 

“Vape” is the common term used to refer to the use of vaporizers by consumers which has grown out of the increasing popular use of electronic cigarettes as an alternative to traditional cigarette and other tobacco uses.  The use of electronic cigarettes and vaporizers has been accelerated by state and local legislation outlawing the smoking of tobacco products in public places. In 2012, Goldman Sachs declared electronic cigarettes one of the top 10 disruptive technologies to watch.

 

This highly competitive and innovative marketplace has made its mark and set a consumer standard by offering a wide and colorful array of varying flavors, nicotine levels and other attributes to produce a truly unique and customized experience. We believe that, as this market matures, there will be a natural rising demand for better quality products and wider range of varying flavors that is appetizing to an even more diverse consumer base. Through Smith and Ramsay Brands, we plan to provide a wide variety of high quality vapor liquids to anticipate and lead this demand in a commercial manner to assure product integrity and consistency.

 

It is the plan of SRB to move into the market place during 2015 and over the next twenty four (24) months following its launch of its Smith and Ramsay signature brand upon threshold funding being reached. Management’s goal is to expand aggressively with additional flavors in the signature brand, and expanding through additional new brands and the acquisition and distribution of signature and non-signature accessories. The signature line of premium vape liquid will focus on the Vape store and traditional smoke shop markets, while another brand product line and offerings will focus on the convenience store and gas station marketplace, and other lines will target ethnic-specific markets, etc. Additional products within these brand lines as well as external to these lines will focus on combination hardware/liquid market that includes disposable devices with preloaded liquid, and/or preloaded cartridges for use in specific types of devices.

 

The Company’s management consists of Phil Mansour, Chief Executive Officer and Director and Rachel Boulds, Chief Financial Officer.

 

The Company's principal offices are located at 5940 S. Rainbow Blvd., Las Vegas, Nevada 89118. The Company’s web domain is www.AvalancheInternationalCorp.com. The signature brand of SRB has a web site: www.SmithAndRamsay.com.

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The Marketplace and Competition

 

The Vape marketplace over the past eight years has grown to $2.5 billion, according to VapeNewsMagazine.com and to over $3.5 billion at the turn of 2015 according to Bonnie Herzog, managing director, Beverage, Tobacco & Convenience Store Research, for Wells Fargo Securities LLC in New York. Herzog was cited as stating, “We have increased conviction that consumption of e-Cigs could surpass consumption of conventional cigs within the next decade [by 2023],” according to an article published on VirginiaBusiness.com. In September of 2013, Forbes Magazine estimated that by 2015 the market for eCigarettes would hold a $3.0 Billion share. Forbes Magazine at the beginning of 2014 reported that market share is now closer to $3.5 Billion thus eclipsing its original projection. In fact, on a health issue perspective, we believe it is noteworthy that Forbes Magazine has issued several positive opinions supporting the Vaping industry and its potential ability to help those desiring to quit or reduce traditional smoking products.

 

A March 24, 2014 Wells Fargo Equity Research report bifurcated the market into eCigarettes and secondary and tertiary markets, referred to as Vapors/Tanks or eVapor. At that time, the report estimated the overall U.S. market was about $2.0 billion dollars with approximately a 65%/35% split between eCigarettes to eVapor. Over 2014, that split was narrowing closer with some recent 2014 year-end estimates at a 40/60 split, with eVapor likely to grow to surpass eCigarettes’ market share within the current decade.

 

A VapeNewsMagazine.com report supports this theory and suggests that the growth of the eVapor segment is increasing faster that the overall sales of the eCigarette market. It appears that the drivers behind this growth are: 1) natural progression from eCigarettes; 2) affordability, with eVapor costing 20% less than rechargeable eCigarettes, and 40% less than disposable eCigarettes; and 3) the ability to personalize devices, and receive better nicotine delivery and overall product performance. The report states, “Our view that vapor/tank growth is accelerating and taking share from eCigarettes, making vapor/tank an increasing threat was substantiated by our survey as respondents expect vapors/tanks to grow at 2x the rate of the eVapor category in 2014 with attractive margins that rival combustible cigs. Therefore, if the robust growth of the vapor/tank category continues and is not hindered by FDA regulation, we expect big tobacco has no choice but to enter this category either organically or via acquisition.” This prediction was realized with every major tobacco brand having an entry already launched in the eCigarette sector by the close of 2014.

 

This was further validated by Pamela Gorman, Director of Government Relations at NJOY (a prominent player in the eCigarettespace) when she recently announced at the Vape World Expo in June 2014, that NJOY would be making a strategic shift and enter the eVapor space. By the close of 2014, NJOY’s products were conveniently distributed in Plexiglas displays located at thousands of stores across the United States.

 

Our observations include a perspective that the eVapor market is a fragmented space that can be segmented into the following categories: Home Brew, Cottage, Regionals, Tier 2, and Tier 1.

 

Home Brew

 

This segment consists of tiny entrepreneurs, usually with one or two stores, making their own vape liquids and selling them primarily in their shop and online. Typically, these entrepreneurs only carry their own liquids and maybe one or two Tier 2 brands.

 

Cottage

 

This segment includes small businesses, usually with one to four stores that make their own vape liquids and distribute their liquids in their stores and in their local city or community. Their brand of liquid is limited to about two dozen or so flavors and have roughly no more than 2,000 bottles sold per month.

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Regionals

 

These companies typically have expanded beyond their city boundaries up to four states and have 25 to 250 stores carrying their brand. This category ranges in product quality and offerings. Most of these companies range from six months old to less than 30 months old while producing less than 15,000 units a month. There appears to be hundreds of these players in this category and it is growing every day. The major challenge for these businesses is to have the necessary resources, knowledge and experience or expertise available to expand their current customer reach. This category includes FuzionVapor.com, Hurricane Vapor, Nikki’s Vapor Bar, and Virgin Vapor to name a few.

 

Tier 2

 

The Tier 2 manufacturers have reached significant regional acceptance and/or national recognition within three of the four continental time zones in the United States. Typically, these groups are in more than 300 stores and have annual gross sales estimated at between five to fifteen million dollars. Companies included in this category are Five Pawns, Cosmic Fog, eLiquid Solutions, Space Jam Juice, ECBlend, Suicide Bunny and Vapor Corporation, which has been publicly traded on the OTC and upgraded to the NASDAQ (VPCO). Vapor Corporation is primarily a manufacturer of smokeless equipment and produces its own line of liquids.

 

Tier 1

 

Top players in this market have sales reaching $25+ million and are often but not always recognized nationally which includes NicQuid, and Johnsons Creek, two leaders in the eVapor space.

 

The Wells Fargo Report suggests that the large discrepancy between Nielsen data which captures only $750MM in annual eVapor sales and the $2.2 billion its survey suggests, is due to the fact that 60% of eVapor sales go untracked through channels of online and Vape Shop sales which are below the Tier 2 level.

 

Given the current wide-open nature of the market landscape with no clearly dominant market leaders despite the presence of the top five domestic tobacco manufacturers, we feel the barriers to entry and success for our organization to move in with quality products, marketing, distribution and strategic acquisition strategies are minimal compared to where they will be as the market matures over the next 18 months.

 

Plan of Operations

 

Our objective is to provide manufacturing options to support the organic growth begun during our test-marketing phase while continuing to support key wholesale and retail distributors and our strategic partners. These manufacturing options encompass the expanding variety of brands of flavoured eLiquids manufactured by Smith and Ramsay Brands and the innovative devices and accessories that the marketplace will find distinctive in design, quality and value that the Puff Systems brand will build its reputation on. The operations for each business line will need to continue to be progressively scalable and supply the needed amount of product in accordance with their sales and marketing plan as each unit has established.

 

Operational expansion and adjustment in personnel and capacity needs will be addressed through the increase of internal and/or, contract, sales, marketing, and manufacturing capabilities or through strategic acquisition of such capabilities. Decisions on the direction and strategy associated with business and product expansion goals will continue to be made while the business and market place continue to evolve during formative stages of the industry.

 

Marketing Strategies

 

Domestically, our plan was to outsource sales and marketing to a best of breed sales and marketing firm, to drive initial development of national branding, packaging, social media and full web presence. This initial 180-day plan included the development of a competitive landscape report and full launch and ongoing marketing plan and budget. During this initial startup campaign, the Company was developing its overall national marketing strategy with the anticipation of its national launch of its premium signature brand, Smith and Ramsay. The firm test marketed Smith and Ramsay in select localities, employing a variety of different regional and select small-scale national campaigns using a combination of direct sales, call center and business-to-business sales efforts. Data was gathered and analyzed to coordinate with the marketing strategy to insure a successful launch and solid development of an initial installed base. The market research is now driving our decisions and a scheduled calendar of Smith and Ramsay Brands events nationwide that should drive the expansion of its signature brand along with a mixed addition of proprietary brands through R&D, partnerships, and/or acquisitions, along with additions of non-liquid offerings.

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International

 

Internationally, Smith and Ramsay Brands continues its efforts internally to understand and map out the international eLiquid space in an effort to follow the same data driven decision making that has been utilized to develop and implemented its domestic marketing plan. Within months, an initial international strategy will be outlined with a timeline and budget for Board approval.

 

Research and Development

 

Research and development will be focused on expanding the number of brands offered by SRB and within each brand line expanding the lines themselves to include new flavors and different configurations.

 

Intellectual Property

 

We have purchased the following intellectual property from Smith and Ramsay, LLC:

 

Patent / Trademark/knowhow  Patent Title / Trademark
Recipe for Toasty Monkey  Trademark currently in filing process
Recipe for Tricky  Trademark currently in filing process
Recipe for Java Hopper  Trademark currently in filing process
Recipe for Peaches and Mango  Trademark currently in filing process
Recipe for Berries and Cream  Trademark currently in filing process
Smith and Ramsay  Trademark currently in filing process
Smith and Ramsay Brands  Trademark currently in filing process

 

Domain Names

 

www.AvalancheInternationalCorp.com

www.Smith AndRamsay.co

www.SmithAndRamsay.com

www.SmithAndRamsayBrands.co

www.SmithAndRamsayBrands.com

www.SmithAndRamsayBrands.info

www.SmithAndRamsayBrands.net

www.SmithAndRamsayBrands.org

www.SmithNRamsay.com

www.SmithAndRamsay.com

 

Employees

 

As of February 28, 2015, we employed two permanent management level personnel and work with outside labor and consultants to complete the tasks at hand. We may require additional employees in the future. There is intense competition for capable, experienced personnel and there is no assurance the Company will be able to obtain new qualified employees when required.

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Results of Operations for the three months ended February 28, 2015 compared to the three months ended February 28, 2014.

 

Revenue

For the three months ended February 28, 2015, revenue was $14,995 compared to $0 for the three months ended February 28, 2014. Revenue in the current period was from sales of our new vape liquid business including vape pens and accessories.

 

Operating Expenses

Advertising and marketing – while there were no costs incurred in the prior period for advertising and marketing, in the current period for the three months ended February 28, 2015, we incurred $8,364 of advertising and marketing costs in connection with the promotion of our new line of business and products.

 

Salary expense – for the three months ended February 28, 2015, salary expense for our CFO and CEO totaled $22,920. There was no salary expense incurred in the prior year.

 

Professional fees – Professional fees for the three months ended February 28, 2015 were $5,450 compared to $3,818 for the three months ended February 28, 2014. The increase is due to increased legal and audit fees associated with compliance and filing obligations.

 

General and administrative – General and administrative expense for the three months ended February 28, 2015 were $143,596 compared to $758 for the three months ended February 28, 2014. The increase is due to the increased activity associated with starting the new line of business, including $56,708 of non-cash expense for stock issued for services.

 

Net loss

The Company had a net loss of $178,069 for the three months ended February 28, 2015 compared to a net loss of $4,576 for the three months ended February 28, 2014. The increase in net loss was due to a net increase in operating expenses as described above.

 

Liquidity and Capital Resources

 

Management currently believes that the Company may not have sufficient working capital needed to meet its current fiscal obligations. In order to continue to meet its fiscal obligations beyond the next twelve months, management has plans to pursue various financing alternatives including, but not limited to, raising capital through the equity markets and debt financing.

 

Should the Company not be successful at raising capital through the issuance of capital stock, the Company may consider raising capital by the issuance of debt. However, unless the appropriate features, such as convertible options, are attached to the debt instruments, this form of financing is less desirable until such time as the Company may be in a position to reasonably foresee the generation of cash flow to service and repay debt. The Company does not currently have plans to issue debt.

 

As of February 28, 2015, we had an accumulated deficit of $583,975 and a net loss for the three months ended February 28, 2015 of $178,069. For the three months ended February 28, 2015, net cash used in operating activities was $100,584 and we received $99,608 from financing activities.

 

On November 3, 2014, the Company executed a convertible promissory note for $63,250 with LG Capital Funding, LLC. The note bears interest at 8% per annum and is due on or before November 3, 2015. The note includes a 15% original issue discount and is convertible at a 40% discount any time during the period beginning 180 days following the date of the note. Accrued interest on the note as of November 30, 2014 is $1,622.

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On November 26, 2014, the Company executed a promissory note with Argent Offset, LLC for $12,500. The note included a $500 loan fee, accrued interest at 10%, compounded monthly, and was due December 5, 2014. A late payment fee of $500 per day was to be incurred from December 6, 2014 through December 7, 2014 and then increases to $1,000 per day. On February 1, 2015, we entered into a Temporary Forbearance Agreement with Argent. Under the forbearance agreement, we agreed to pay a forbearance fee of $7,500. The full $20,000 now owing will bear interest at an annual rate of 10% until due on August 1, 2015. Further, we have agreed to pay 12.5% of any new funds invested in the company until the amount due is paid in full. Interest accrued on this note as of February 28, 2015 is $466.

 

On March 17, 2015, the Company executed a convertible promissory note for $10,750 with Strategic IR, Inc. The note bears interest at 10% per annum and is due on or before April 16, 2015. The note includes a one-time loan fee of $1,750 for a total due of $12,500.

 

On March 27, 2015, the Company executed a convertible promissory note for $100,000 with Dr. Gary Gelbfish. The note bears interest at 10% per annum and is due on or before September 23, 2015.  If not paid by the due date the note and any accrued interest is convertible at the lesser of $0.50 per share or a 50% discount of the average closing price for the twenty days preceding the conversion. In addition, the loan requires a one-time loan fee of $10,000 and the issuance of 50,000 shares of common stock.

 

Going Concern

 

These interim unaudited financial statements have been prepared on the going concern basis which assumes that adequate sources of financing will be obtained as required and that the Company’s assets will be realized and liabilities settled in the ordinary course of business.  Accordingly, the interim unaudited financial statements do not include any adjustments related to the recoverability of assets and classification of assets and liabilities that might be necessary should the Company not be unable to continue as a going concern.

 

Off Balance Sheet Arrangements

 

As of February 28, 2015, there were no off balance sheet arrangements.

 

Critical Accounting Policies

 

In December 2001, the SEC requested that all registrants list their most “critical accounting polices” in the Management Discussion and Analysis. The SEC indicated that a “critical accounting policy” is one which is both important to the portrayal of a company’s financial condition and results, and requires management’s most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain. Currently, we do not believe that any accounting policies fit this definition.

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Recently Issued Accounting Pronouncements

 

We do not expect the adoption of recently issued accounting pronouncements to have a significant impact on our results of operations, financial position or cash flow.

 

Item 3. Quantitative and Qualitative Disclosures About Market Risk

 

A smaller reporting company is not required to provide the information required by this Item.

 

Item 4. Controls and Procedures

 

Management has evaluated the effectiveness of our internal control over financial reporting as of February 28, 2015 based on the control criteria established in a report entitled Internal Control – Integrated Framework published by the Committee of Sponsoring Organizations of the Treadway Commission, known as COSO. Based on our assessment and those criteria, our management has concluded that the Company has inadequate controls and procedures over financial reporting due to the lack of segregation of duties and lack of a formal review process that includes multiple levels of review. Management believes that the material weakness in its controls and procedures did not have an effect on our financial results.

 

Internal control over financial reporting cannot provide absolute assurance of achieving financial reporting objectives because of its inherent limitations. It is a process that involves human diligence and compliance and is subject to lapses in judgment and breakdowns resulting from human failures. It also can be circumvented by collusion or improper management override.

 

Because of such limitations, there is a risk that material misstatements may not be prevented or detected on a timely basis by internal control over financial reporting. However, these inherent limitations are known features of the financial reporting process. Therefore, it is possible to design into the process certain safeguards to reduce, though not eliminate, this risk. Management is responsible for establishing and maintaining adequate internal control over our financial reporting.

 

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

 

There have not been any changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the first quarter of FY 2015 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 

Changes in Internal Control over Financial Reporting

 

We have not had any changes or disagreements with our accountants required to be disclosed pursuant to Item 304 of Regulation S-K.

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PART II – OTHER INFORMATION

 

Item 1. Legal Proceedings

  

We are not a party to any pending legal proceeding. We are not aware of any pending legal proceeding to which any of our officers, directors, or any beneficial holders of 5% or more of our voting securities are adverse to us or have a material interest adverse to us.

 

Item 1A. Risk Factors

 

A smaller reporting company is not required to provide the information required by this Item.

 

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

 

The following sets forth certain information concerning securities, which were sold or issued by us without the registration of the securities under the Securities Act of 1933 in reliance on exemptions from such registration requirements. All proceeds are being used to fund operating activities.

 

On December 15, 2015, the Company issued 1,600 shares of common stock at a price of $1.25 per share for total cash proceeds of $2,000. Proceeds were used to fund general operating expenses.

 

On January 30, 2015, the Company issued 15,380 shares of preferred stock at a price of $5.00 per share for total cash proceeds of $76,900 to Finiks Capital, LLC. Proceeds were used to pay loans and accounts payable.

 

Item 3. Defaults upon Senior Securities

 

None

 

Item 4. Mine Safety Disclosures

 

Not applicable.

 

Item 5. Other Information

 

None

 

Item 6. Exhibits

 

Exhibit Number Description of Exhibit
3.1 Amended and Restated Articles of Incorporation(2)
3.2 Bylaws(1)
3.3 Certificate of Designation of Class A Convertible Preferred Stock(2)
10.1 Convertible Promissory Note issued to Strategic IR, Inc.
10.2 Convertible Promissory Note issued to Dr. Gary Gelbfish
31.1 Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2 Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1 Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101 The following materials from the Company’s Quarterly Report on Form 10-Q for the quarter ended February 28, 2015 formatted in Extensible Business Reporting Language (XBRL).

 

(1) Incorporated by reference to Registration Statement on Form S-1 filed on January 17, 2012.

(2) Incorporated by reference to Quarterly Report on Form 10-Q filed October 15, 2014

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SIGNATURES

 

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

 

  Avalanche International, Corp.
   
Date: April 20, 2015
   
By:

/s/ Philip Mansour

Philip Mansour

Title: Chief Executive Officer and Director

 

   
Date: April 20, 2015
   
By:

/s/ Rachel Boulds

Rachel Boulds

Title: Chief Financial Officer
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NEITHER THIS NOTE NOR THE SECURITIES INTO WHICH THIS NOTE IS CONVERTIBLE HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 193 3 , AS AMENDED (THE "ACT" ) OR ANY STATE SECURITIES LAWS AND NEITHER THIS NOTE NOR ANY INTEREST THEREIN NOR THE SECURITIES INTO WHICH THIS NOTE IS CONVERTIBLE MAY BE OFFERED, SOLD, TRANSFER RED, PLEDGED OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT AND SUCH LAWS OR AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT AND SUCH LAWS.

 

AVALANCHE INTERNATIONAL, CORP.

 

AND

 

STRATEGIC IR, INC.

 

PROMISSORY NOTE

INTEREST RATE OF TEN (10%) PERCENT

THIRTY (30) DAY TERM

 

Principal Amount: $10,750.00

 

Issue Date: March 17, 2015 Maturity Date: April 16 , 2015

 

 

For good and valuable consideration, Avalanche International, Corp, a Nevada Corporation ('Maker"), hereby makes and delivers this Promissory Note (this "Note") in favor of Strategic IR, Inc. or their assignees (''Holder"), and hereby agrees as follows:

 

ARTICLE I.

PRINCIPAL AND INTEREST; SECURITY AGREEMENT

 

Section 1.1 For value received, Maker promises to pay to Holder at such place as Holder or its assignees may designate in writing, in currently available funds of the United States, the principal sum of Ten Thousand Seven Hundred Fifty Dollars USD ($10,750.00) and No Cents. Maker's obligation under this Note shall bear an interest rate of Ten (10.00%) percent per annum plus a one-time loan fee of $1,750.00 for total due of $12,500.00 plus earned interest. If the Note shall not be repaid in full, the interest rate per annum increases to 21 % thereafter until the principal is paid in full.

 

a. All principal then outstanding shall be due and payable by the Maker to the Holder on or before April 16, 2015 (the 'Maturity Date"). All interest is paid first prior to principal

 

b. Maker shall have the right to prepay all or any part of the principal under this Note with no penalty for early payment.

 

c. This Note is free from all taxes, liens, claims and encumbrances with respect to the issue thereof and shall not be subject to preemptive rights or other similar rights of shareholders of the Maker and will not impose personal liability upon the holder thereof.

 
 

ARTICLE II.

REPRESENTATIONS AND WARRANTIES

 

a.                   Organization and Qualification. The Maker and each of its Subsidiaries (as defined below), if any, is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction in which it is incorporated, with full power and authority (corporate and other) to own, l ease, use and operate its properties and to carry on its business as and where now owned, leased, used, operated and conducted. The Maker and each of its Subsidiaries is duly qualified as a corporation to do business and is in good standing in every jurisdiction in which its ownership or use of property or the nature of the business conducted by it makes such qualification necessary except where the failure to be so qualified or in good standing would not have a Material Ad verse Effect. 'Material Adverse Effect" means any material adverse effect on the business , operations, assets, financial condition or prospects of the Maker or its Subsidiaries, if any, taken as a whole, or on the transactions contemplated hereby or by the agreements or instruments to be entered into in connection herewith . "Subsidiaries" means any corporation or other organization, whether incorporated or unincorporated, in which the Maker owns, directly or indirectly, any equity or other ownership interest.

 

b.                   Authorization; Enforcement. (i) The Maker has all requisite corporate power and authority to enter into and perform this Note, in accordance with the terms hereof, (ii) the execution and delivery of this Note by the Maker and the consummation by it of the transactions contemplated hereby and thereby have been duly authorized by the Maker's Board of Directors and no further consent or authorization of the Maker, its Board of Directors, or its shareholders is required, (iii) this Note has been duly executed and delivered by the Maker by its authorized representative, and such authorized representative is the true and official representative with authority to sign this Note and the other documents executed in connection herewith and bind the Maker accordingly, and (iv) this Note constitutes, a legal, valid and binding obligation of the Maker enforceable against the Maker in accordance with its terms.

 

c.                    No Conflicts. The execution, delivery and performance the Note by the Maker and the consummation by the Maker of the transactions contemplated hereby will not (i) conflict with or result in a violation of any provision of the Articles of Incorporation or By-laws of the Maker, or (ii) violate or conflict with, or result in a breach of any provision of, or constitute a default (or an event which with notice or lapse of time or both could become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, any agreement, indenture, patent, patent license or, instrument to which the Maker or any of its Subsidiaries is a party, or (iii) result in a violation of any law, rule, regulation, order, judgment or decree (including federal and state securities laws and regulations and regulations of any self-regulatory organizations to which the Maker or its securities are subject) applicable to the Maker or any of its Subsidiaries or by which any property or asset of the Maker or any of its Subsidiaries is bound or affected (except for such conflicts, defaults, terminations, amendments, accelerations, cancellations and violations as would not, individually or in the aggregate. have a Material Adverse Effect).

2
 

d.                   No Integrated Offering. either the Maker, nor any of its affiliates, nor any person acting on its or their behalf, has directly or indirectly made any offers or sales in any security or solicited any offers to buy any security under circumstances that would require registration under the 1933 Act of the issuance of this note or the Conversion Stock to the Holder. The issuance of the Conversion Stock to the Holder will not be integrated with any other issuance of the Maker's securities (past, current or future) for purposes of any shareholder approval provisions applicable to the Maker or its securities.

 

e.                    No Investment Company. The Company is not, and upon the issuance and sale of the Conversion Stock as contemplated by this Note will not be an "investment company" required to be registered under the Investment Company Act of 1940 (an "Investment Company"). The Maker is not controlled by an Investment Company.

 

ARTICLE III.

EVENTS OF DEFAULT

 

Section 3.1. Default. The following events shall be defaults under this Note: ("Events of Default"):

 

a.                   Default in the due and punctual payment of all or any part of any payment of interest or the Principal Amount as and when such amount or such part thereof shall become due and payable hereunder; or

 

b.                   Failure on the part of the Maker duly to observe or perform in all material respects any of the covenants or agreements on the part of the Maker contained herein (other than those covered by clause (a) above) for a period of 10 business days after the date on which written notice specifying such failure, stating that such notice is a 'Notice of Default" hereunder and demanding that the Maker remedy the same, shall have been given by the Holder by registered or certified mail, return receipt requested, to the Maker; or

 

c.                    Any representation, warranty or statement of fact made by the Maker herein when made or deemed to have been made, false or misleading in any material respect; provided however, that such failure shall not result in an Event of Default to the extent it is corrected by the Maker with in a period of 5 business days after the date on which written notice specifying such failure, stating that such notice is a "Notice of Default" hereunder and demanding that the Maker remedy same, shall have been given by the Holder by registered or certified mail, return receipt requested; or

3
 

d.                   Any of the following actions by the Maker pursuant to or within the meaning title 11, U.S. Code or any similar federal or state law for the relief of debtors (collectively, the ''Bankruptcy Law"): (I) commencement of a voluntary case or proceeding , (2) consent to the entry of an order for relief against it in an involuntary case or proceeding, (3) consents to the appointment of a receiver, trustee, assignee, liquidator or similar official under any Bankruptcy Law (each, a "Custodian"), of it or for all or substantially all of its property, (4) a general assignment for the benefit of its creditors, or (5) admission in writing its inability to pay its debts as the same become due; or

 

e.                    Entry by a court of competent jurisdiction of an order or decree under any Bankruptcy Law that: (1) is for relief against the Maker in an involuntary case, (2) appoints a Custodian of the Maker or for all or substantially all of the property of the Maker, or (3) orders the liquidation of the Maker, and such order or decree remains unstayed and in effect for 60 days.

 

Section 3.2. Remedies Upon Default. Upon the occurrence of an event of default by Maker under this Note, then, in addition to all other rights and remedies at law or in equity, Holder may exercise any one or more of the following rights and remedies:

 

a.                   Accelerate the time for payment of all amounts payable under this Note by written notice thereof to Maker, whereupon all such amounts shall be immediately due and payable.

 

b.                   Pursue and enforce all of the rights and remedies provided under the Uniform Commercial Code.

 

c.                    Make such appearance, disburse such sums, and take such action, as Holder deems necessary, in its sole discretion, to protect Holder's interest, including but not limited to disbursement of attorneys' fees. Any amounts disbursed by Holder pursuant to this Section, with interest thereon, shall become additional indebtedness of the Maker secured by this Note and shall be immediately due and payable and shall bear interest from the date of disbursement at the default rate stated in this Note. Nothing contained in this Section shall require Holder to incur any expense or take any action.

 

d.                   Pursue any other rights or remedies available to Holder at law or in equity.

 

Section 3.3. Payment of Costs. The Maker shall reimburse the Holder, on demand, for any and all reasonable costs and expenses, including reasonable attorneys' fees and disbursement and court costs, incurred by the Holder in collecting or otherwise enforcing this Note or in attempting to collect or enforce this Note.

 

Section 3 .4. Powers and Remedies Cumulative; Delay or Omission Not Waiver of Default. No right or remedy herein conferred upon or reserved to the Holder is intended to be exclusive of any other right or remedy available to Holder under applicable law, and every such right and remedy shall, to the extent permitted by law, be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The asse1iion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other appropriate right or remedy. No delay or omission of the Holder to exercise any right or power accruing upon any Default occurring and continuing as aforesaid shall impair any such right or power or shall be construed to be a waiver of any such Default or an acquiescence therein; and every power and remedy given by this Note or by law may be exercised from time to time, and as often as shall be deemed expedient, by the Holder.

 

Section 3.5. Waiver of Past Defaults. The Holder may waive any past default or Event of Default hereunder and its con sequences but no such waiver shall extend to any subsequent or other default or Event of Default or impair any right consequent thereon.

 

Section 3.6. Waiver of Presentment etc. The Maker hereby waives presentment, demand, notice, protest and all other demands and notices in connection with the delivery, acceptance, performance and enforcement of this Note, except as specifically provided herein.

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ARTICLE IV.

MISCELLANEOUS

 

Section 4.1. Notices. Any notice herein required or permitted to be given shall be in writing and may be personally served or delivered by courier or sent by United States mail and shall be deemed to have been given upon receipt if personally served (which shall include telephone line facsimile transmission) or sent by courier or three (3) days after being deposited in the United States mail, certified, with postage pre-paid and properly addressed, if sent by mail. For the purposes hereof, the address of the Holder shall be 8686 Merced Circle, Unit 1007D, Huntington Beach, CA 92646: and the address of the Maker shall be 5940 S. Rainbow Blvd., Las Vegas, NV 89118. Both the Holder or its assigns and the Maker may change the address for service by delivery of written notice to the other as herein provided.

 

Section 4.2. Amendment. This Note and any provision hereof may be amended only by an instrument in writing signed by the Maker and the Holder.

 

Section 4.3. Assignability. This Note shall be binding upon the Maker and its successors and assigns and shall inure to be the benefit of the Holder and its successors and assigns; provided, however, that so long as no Event of Default has occurred, this Note shall only be transferable in whole subject to the restrictions contained in the restrictive legend on the first page of this Note.

 

Section 4.4. Governing Law. This Note shall be governed by the internal laws of the State of Nevada, without regard to conflicts of laws principles.

 

Section 4.5. Replacement of Note. The Maker covenants that upon receipt by the Maker of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Note, and in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it (which shall not include the posting of any bond), and upon surrender and cancellation of such Note, if mutilated, the Maker will make and deliver a new Note of like tenor.

 

Section 4.6. This Note shall not entitle the Holder to any of the rights of a stockholder of the Maker, including without limitation, the right to vote, to receive dividends and other distributions, or to receive any notice of, or to attend, meetings of stockholder or any other proceedings of the Maker, unless and to the extent converted into shares of Common Stock in accordance with the terms thereof.

 

Section 4.7. Severability. 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.

 

Section 4.8. Headings. The headings of the sections of this Note are inserted for convenience only and do not affect the meaning of such section.

 

Section 4.9. Counterparts. This Note may be executed in multiple counterparts, each of which shall be an original but all of which shall be deemed to constitute on instrument.

5
 

WITNESS WHEREOF, with the intent to be legally bound hereby, the Maker as executed this Note as of the date first written above.

 

MAKER: Avalanche International, Corp.

 

/s/ Philip E. Mansour

By Philip E. Mansour

It's: President & CEO

 

Acknowledged:

 

HOLDER: Strategic IR, Inc.

 

/s/ Anna Mosk

By: Anna Mosk

Its: President

6
 



THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED OR REGISTERED OR QUALIFIED UNDER ANY STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE SOLD, TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS SUCH SALE, TRANSFER, PLEDGE OR HYPOTHECATION IS IN ACCORDANCE WITH SUCH ACT AND APPLICABLE STATE SECURITIES LAWS.

 

AVALANCHE INTERNATIONAL, CORP.

10% 180 DAY CONVERTIBLE PROMISSORY NOTE

 

US $100,000.00 Las Vegas, Nevada
  March 27, 2015

 

For good and valuable consideration, Avalanche International, Corp., a Nevada corporation, ("Maker"), hereby makes and delivers this 10% 180 Day Unsecured Convertible Promissory Note (this ''Note") in favor of Dr. Gary Gelbfish, or his/her assigns ("Holder"), and hereby agrees as follows:

 

1.                   Principal Obligation and Interest. For value received, Maker promises to pay to Holder at 2502 Avenue One, Brooklyn, NY 11210, or at such other place as Holder may designate in writing, in currently available funds of the United States, the principal amount of $100,000.00, United States Dollars. Maker's obligation under this Note shall accrue simple interest at the rate of Ten Percent (10.0%) per year from the date hereof until paid in full. Interest shall be computed based on a 365-day year or 366-day year, as applicable and actual days lapsed. A loan fee of $10,000.00 and 50,000 shares restricted for six months of the Company's common stock is payable in addition to the interest. Holder shall pay principal of loan to Maker per Schedule A.

 

2.                   Payment Terms.

 

a.                           All principal, loan fees and accrued interest then outstanding shall be due and payable by the Maker on or before six months from the date hereof (the "Maturity Date"):

 

b.                           Accrued interest hereunder shall be due monthly and payable from Maker to Holder on a quarterly basis, with the first such payment being due on June 27, 2015, and future payment being due three (3) months thereafter until the Maturity Date or until earlier redemption of this Note under the terms hereof.

 
 

c.                           All payments of interest hereunder may, at the sole option of the Maker, be paid in validly issued shares of common stock in the Maker, par value $0.001, issued to Holder. Common stock issued to Holder as payment hereunder shall be valued at a price per share equal to the average of the closing market prices for the Maker's common stock during the twenty (20) trading days immediately preceding the due date for such payment.

 

d.                           All payments shall be applied first to interest, then to principal and shall be credited to the Maker's account on the date that such payment is physically received by the Holder.

 

e.                           Within 30 days of the date hereof, 50,000 validly issued shares of common stock in the Maker, par value $0.001, restricted for six months, issued to the Holder, as prescribed in written instructions by the Holder.

 

f.                            At any time after the date hereof and before the Maturity Date, this Note may be paid or redeemed in whole, or inpart on one or more occasions, at the sole option of the Maker. In the event that this Note and any outstanding accrued interest is paid prior to the Maturity Date, Maker shall also be obligated to remit the above-referenced $10,000.00 loan fee to Holder.

 

3.                   Optional Conversion; Adjustments to Conversion Price.

 

g.                    At any time prior to the Maturity date of this Note, the Maker shall the right to pay in full any principal, accrued interest or loan fees due. If such payment to the Holder is not made prior to the Maturity Date, the Holder shall have the right, at its option, to convert all or any portion of the outstanding principal, accrued interest and loan fees due and owing hereunder into shares of fully paid and non-assessable Common Stock of the Maker at the price of $0.50 per share or 50% of the average of the closing market prices for the Maker's common stock during the twenty (20) trading days immediately preceding the due date for such payment, (the "Conversion Price"), subject to adjustment as explained herein. In the event that Holder exercises its right to conversion, the conversion price, referenced in this paragraph, to be applied to said conversion shall be determined by Holder. Interest will be due and payable per the terms of this Note to the Holder and all other terms of this Note shall apply on any outstanding balance.

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h.                   If the Maker shall (i) declare a dividend or other distribution payable in securities, (ii) split its outstanding shares of Common Stock into a larger number, (iii) combine its outstanding shares of Common Stock into a smaller number, or (iv) increase or decrease the number of shares of its capital stock in a reclassification of the Common Stock including any such reclassification in connection with a merger, consolidation or other business combination in which the Maker is the continuing entity (any such corporate event, an "Event"), then in each instance the Conversion Price shall be adjusted such that the number of shares issued upon conversion of the sum due and owing hereunder will equal the number of shares of Common Stock that would otherwise be issued but for such event.

 

i.                     Notices.

 

                                                                     i.                        Immediately upon any adjustment of the Conversion Price, the Maker shall give written notice thereof to Holder, setting forth in reasonable detail and certifying the calculation of such adjustment and the facts upon which such adjustment is based.

 

                                                                    ii.                        The Maker shall give written notice to the Holder at least five (5) days prior to the date on which the Maker closes its books or takes a record (a) with respect to any dividend or distribution upon Common Stock, or (b) with respect to any dissolution or liquidation or any merger, consolidation, reorganization, recapitalization or similar event.

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4.                   Registration Rights.

 

a.                   The Maker agrees that if, at any time, and from time to time, the Board of Directors of the Maker shall authorize the filing of a registration statement under the Securities Act of 1933 on Form S-1, S-3, or S-4 in connection with the proposed offer of any of its securities by it or any of its stockholders, the Maker shall: (A) promptly notify each Holder that such registration statement will be filed and that the Common Stock issuable to Holder upon conversion of this Note at the Conversion Price then in effect (the "Registerable Securities") will be included in such registration statement at such Holder's request; (B) cause such registration statement to cover all of such Registerable Securities for which such Holder requests inclusion; (C) use best efforts to cause such registration statement to become effective as soon as practicable; (D) use best efforts to cause such registration statement to remain effective until the earliest to occur of (i) such date as the sellers of Registerable Securities have completed the distribution described in the registration statement and (ii) such time that all of such Registerable Securities are no longer, by reason of Rule 144 under the Securities Act, required to be registered for the sale thereof by such Holders; and (E) take all other reasonable action necessary under any federal or state law or regulation of any governmental authority to permit all such Registerable Securities to be sold or otherwise disposed of, and will maintain such compliance with each such federal and state law and regulation of any governmental authority for the period necessary for such Holder to promptly effect the proposed sale or other disposition.

 

b.                   The right of any Holder to request inclusion in any registration pursuant to this Agreement shall terminate if all Registerable Securities may immediately be sold under Rule 144.

 

c.                    Notwithstanding any other provision of this Section 5, the Maker may at any time, abandon or delay any registration commenced by the Maker. In the event of such an abandonment by the Maker, the Maker shall not be required to continue registration of shares requested by the Holder for inclusion.

 

d.                   In connection with any offering involving an underwriting of shares of the Maker's capital stock, the Maker shall not be required to include any of the Registerable Securities in such underwriting unless they accept the terms of the underwriting as agreed upon between the Maker and the underwriters selected by it, and then only in such quantity as the underwriters determine in their sole discretion will not jeopardize the success of the offering by the Maker. If the total amount of securities, including Registerable Securities, requested by stockholders to be included in such offering exceeds the amount of securities sold other than by the Maker that the underwriters determine in their sole discretion is compatible with the success of the offering, then the Maker shall be required to include in the offering only that number of such securities, including Registerable Securities, which the underwriters determine in their sole discretion will not jeopardize the success of the offering (the securities so included to be apportioned pro rata among the selling stockholders according to the total amount of securities entitled to be included therein owned by each selling stockholder or in such other proportions as shall mutually be agreed to by such selling stockholders).

4
 

5.                   Representations and Warranties of Maker. Maker hereby represents and warrants the following to Holder:

 

a.                   Maker and those executing this Note on its behalf have the full right, power, and authority to execute, deliver and perform the Obligations under this Note, which are not prohibited or restricted under the articles of incorporation or bylaws of Maker. This Note has been duly executed and delivered by an authorized officer of Maker and constitutes a valid and legally binding obligation of Maker enforceable in accordance with its terms.

 

b.                   The execution of this Note and Maker's compliance with the terms, conditions and provisions hereof does not conflict with or violate any provision of any agreement, contract, lease, deed of trust, indenture, or instrument to which Maker is a party or by which Maker is bound, or constitute a default thereunder.

 

6.                   Representations and Covenants of the Holder. The Maker has issued this Note in reliance upon the following representations and covenants of the Holder:

 

a.                   Investment Purpose. This Note and any common stock which may be issued as payment hereunder or upon conversion hereof are acquired for investment and not with a view to the sale or distribution of any part thereof, and the Holder has no present intention of selling or engaging in any public distribution of the same except pursuant to a registration or exemption.

 

b.                   Private Issue. The Holder understands (i) that this Note and any common stock which may be issued as payment hereunder are not registered under the Securities Act of 1933 (the "1933 Act") or qualified under applicable state securities laws, and (ii) that the Maker is relying on an exemption from registration predicated on the representations set forth in this Section 5.

 

c.                    Financial Risk. The Holder has such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of its investment, and has the ability to bear the economic risks of its investment.

5
 

d.                   Risk of No Registration. The Holder understands that if the Maker does not register with the Securities and Exchange Commission pursuant to Section 12 of the Securities Exchange Act of 1934 (the "1934 Act"), or file reports pursuant to Section 15(d) of the 1934 Act, or if a registration statement covering the securities under the 1933 Act is not in effect when it desires to sell any of the common stock issued as payment hereunder, it may be required to hold such securities for an indefinite period. The Holder also understands that any sale of this Note or any sale of common stock in the Maker which might be made by Holder in reliance upon Rule 144 under the 1933 Act may be made only in accordance with the terms and conditions of that Rule.

 

7.                   Defaults. The following events shall be defaults under this Note:

 

a.                   Maker' s failure to remit any payment under this Note on before the date due, if such failure is not cured in full within ten (10) days of written notice of default;

 

b.                   Maker's failure to perform or breach of any non-monetary obligation or covenant set forth in this Note or in the Agreement if such failure is not cured in full within fifteen (15) days following delivery of written notice thereof from Holder to Maker;

 

c.                   If Maker is dissolved, whether pursuant to any applicable articles of incorporation or bylaws, and/or any applicable laws, or otherwise;

 

d.                   The entry of a decree or order by a court having jurisdiction in the premises adjudging the Maker bankrupt or insolvent, or approving as properly filed a petition seeking reorganization, arrangement, adjustment or composition of or in respect of the Maker under the federal Bankruptcy code or any other applicable federal or state law, or appointing a receiver, liquidator, assignee or trustee of the Maker, or any substantial part if its property, or ordering the winding up or liquidation of its affairs, and the continuance of any such decree or order un-stayed and in effect for a period of twenty (20) days; or

 

e.                   Maker's institution of proceedings to be adjudicated a bankrupt or insolvent, or the consent by it to the institution of bankruptcy or insolvency proceedings against it, or its filing of a petition or answer or consent seeking reorganization or relief under the federal Bankruptcy Code or any other applicable federal or state law, or its consent to the filing of any such petition or to the appointment of a receiver, liquidator, assignee or trustee of the company, or of any substantial part of its property, or its making of an assignment for the benefit of creditors or the admission by it in writing of its inability to pay its debts generally as they become due, or the taking of corporate action by the Maker in furtherance of any such action

6
 

8.                   Rights and Remedies of Bolder. Upon the occurrence of an event of default by Maker under this Note, then, in addition to all other rights and remedies at law or in equity, Holder may exercise any one or more of the following rights and remedies:

 

a.                   Pursue any other rights or remedies available to Holder at law or in equity.

 

9.                   Choice of Laws; Actions. This Note shall be constructed and construed in accordance with the internal substantive laws of the State of Nevada, without regard to the choice of law principles of said State. Maker acknowledges that this Note has been negotiated in Clark County, Nevada. Accordingly, the exclusive venue of any action, suit, counterclaim or cross claim arising under, out of, or in connection with this Note shall be the state or federal courts in Clark County, Nevada. Maker hereby consents to the personal jurisdiction of any court of competent subject matter jurisdiction sitting in Clark County, Nevada.

 

10.                Usury Savings Clause. Maker expressly agrees and acknowledges that Maker and Holder intend and agree that this Note shall not be subject to the usury laws of any state other than the State of Nevada. Notwithstanding anything contained in this Note to the contrary, if collection from Maker of interest at the rate set forth herein would be contrary to applicable laws, then the applicable interest rate upon default shall be the highest interest rate that may be collected from Maker under applicable laws at such time.

 

11.                Costs of Collection. Should the indebtedness represented by this Note, or any part hereof, be collected at law, in equity, or in any bankruptcy, receivership or other court proceeding, or this Note be placed in the hands of any attorney for collection after default, Maker agrees to pay, in addition to the principal and interest due hereon, all reasonable attorneys' fees, plus all other costs and expenses of collection and enforcement.

7
 

12.                Miscellaneous.

 

a.                   This Note shall be binding upon Maker and shall inure to the benefit of Holder and its successors, assigns, heirs, and legal representatives.

 

b.                   Any failure or delay by Holder to insist upon the strict performance of any term, condition, covenant or agreement of this Note, or to exercise any right, power or remedy hereunder shall not constitute a waiver of any such term, condition, covenant, agreement, right, power or remedy.

 

c.                   Any provision of this Note that is unenforceable shall be severed from this Note to the extent reasonably possible without invalidating or affecting the intent, validity or enforceability of any other provision of this Note.

 

d.                   This Note may not be modified or amended in any respect except in a writing executed by the party to be charged.

 

e.                   Time is of the essence.

8
 

13.                Notices. All notices required to be given under this Note shall be given to each of the parties at the, following addresses and fax numbers:

 

Avalanche International Corp

5940S.Rainbow Blvd

Las Vegas, NN 89118

Fax: 714-966-2649

 

Dr. Gary Gelbfish

2502 Avenue One

Brooklyn, NY 11210

 

Notices may be transmitted by facsimile, certified mail, private delivery, or any other commercially reasonable means, and shall be deemed given upon receipt by the Party to whom they are addressed.

 

14.                Waiver of Certain Formalities. All parties to this Note hereby waive presentment, dishonor, notice of dishonor and protest. All parties hereto consent to, and Holder is hereby expressly authorized to make, without notice, any and all renewals, extensions, modifications or waivers of the time for or the terms of payment of any sum or sums due hereunder, or under any documents or instruments relating to or securing this Note, or of the performance of any covenants, conditions or agreements hereof or thereof or the taking or release of collateral securing this Note. Any such action taken by Holder shall not discharge the liability of any party to this Note.

 

IN WITNESS WHEREOF, this Note has been executed effective the date and place first written above.

 

Avalanche International, Corp. "Maker": Dr. Gary GelbfISh "Holder":
   
/s/ Philip E. Mansour /s/ Gary Gelbfish
Philip E. Mansour Dr. Gary Gelbfish
President/CEO Individual Investor/Self
9
 



CERTIFICATIONS

 

I, Philip Mansour, certify that;

 

1.   I have reviewed this quarterly report on Form 10-Q for the quarter ended February 28, 2015 of Avalanche International Corp (the “registrant”);

 

2.   Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3.   Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

4.   The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

a.   Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

b.   Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

c.   Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

d.   Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

5.   The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

 

a.   All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

 

b.   Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

Date: April 20, 2015

 

/s/ Philip Mansour

By: Philip Mansour

Title: Chief Executive Officer



CERTIFICATIONS

 

I, Rachel Boulds, certify that;

 

1.   I have reviewed this quarterly report on Form 10-Q for the quarter ended February 28, 2015 of Avalanche International Corp (the “registrant”);

 

2.   Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3.   Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

4.   The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

a.   Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

b.   Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

c.   Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

d.   Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

5.   The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

 

a.   All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

 

b.   Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

Date: April 20, 2015

 

/s/ Rachel Boulds

By: Rachel Boulds

Title: Chief Financial Officer



CERTIFICATION OF CHIEF EXECUTIVE OFFICER AND

CHIEF FINANCIAL OFFICER

PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

 

In connection with the quarterly Report of Avalanche International Corp (the “Company”) on Form 10-Q for the quarter ended Febraury 28, 2015 filed with the Securities and Exchange Commission (the “Report”), I, Phil Mansour, Chief Executive Officer of the Company, and I, Rachel Boulds, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

 

1.The Report fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934; and

 

2.The information contained in the Report fairly presents, in all material respects, the consolidated financial condition of the Company as of the dates presented and the consolidated result of operations of the Company for the periods presented.

 

By: /s/ Philip Mansour
Name: Philip Mansour
Title: Principal Executive Officer, Principal Financial Officer and Director
Date: April 20, 2015

 

By: /s/ Rachel Boulds
Name: Rachel Boulds
Title: Principal Financial Officer
Date: April 20, 2015

 

 

This certification has been furnished solely pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

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