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.
PART
I - FINANCIAL INFORMATION
Item
1. Financial Statements
Our
financial statements included in this Form 10-Q are as follows:
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.
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.
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.
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.
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.
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.
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.
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.
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 | |
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.
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.
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.
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.
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.
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.
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.
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.
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
(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
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 |
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).
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
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.
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.
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
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.
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.
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).
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.
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
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.
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.
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 |
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.
Avalanche (CE) (USOTC:AVLP)
Historical Stock Chart
From Oct 2024 to Nov 2024
Avalanche (CE) (USOTC:AVLP)
Historical Stock Chart
From Nov 2023 to Nov 2024