- Quarterly Report (10-Q)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 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 July 31, 2009

OR

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

	For the transition period from _______________ to ____________

Commission File Number: 33-55254-10

Drinks Americas Holdings, Ltd.

(Exact name of registrant as specified in its charter)

Delaware		87-0438825
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

372 Danbury Road
Wilton, CT		06897
(Address of principal executive offices)		(Zip Code)

(203) 762-7000

(Registrant’s telephone number, including area code)

N/A

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

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

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

¨ Large accelerated filer	¨ Accelerated filer	¨ Non-accelerated filer	x Smaller reporting company
		(Do not check if smaller reporting company)

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

Yes ¨ No x

As of September 18,2009, the number of shares outstanding of the registrant’s common stock, $0.001 par value, was 100,890,412

DRINKS AMERICAS HOLDINGS, LTD

AND AFFILIATES

FORM 10-Q

FOR THE QUARTER ENDED JULY 31, 2009

TABLE OF CONTENTS

		Page
PART I	FINANCIAL INFORMATION

Item 1.	Financial Statements (Unaudited)

	Consolidated Balance Sheets	1
	Consolidated Statements of Operations	2
	Consolidated Statements of Cash Flows	3
	Notes to Consolidated Statements	4

Item 2.	Management Discussion and Analysis of Financial Condition And Results of Operations	17

Item 3.	Quantitative and Qualitative Disclosure About Market Risk	21

Item 4	Controls and Procedures	21

PART II	OTHER INFORMATION

Item 1.	Legal Proceedings	22
Item 1A.	Risk Factors	22
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	22
Item 3.	Defaults Upon Senior Securities	24
Item 4.	Submission of Matters to a Vote of Security Holders	24
Item 5.	Other Information	24
Item 6.	Exhibits	24

EXPLANATORY NOTE

Unless otherwise indicated or the context otherwise requires, all references in this Report on Form 10-Q to "we", "us", "our" and the “Company” are to Drinks Americas Holdings, Ltd., a Delaware corporation and formerly Gourmet Group, Inc., a Nevada corporation, and its majority owned subsidiaries Drinks Americas, Inc., Drinks Global Imports, LLC, D.T. Drinks, LLC, Olifant USA, Inc. (as of January 15, 2009), and Maxmillian Mixers, LLC, and Maxmillian Partners, LLC.

Cautionary Notice Regarding Forward Looking Statements

The disclosure and analysis in this Report contains some forward-looking statements. Certain of the matters discussed concerning our operations, cash flows, financial position, economic performance and financial condition, in particular, future sales, product demand, competition and the effect of economic conditions include forward-looking statements within the meaning of section 27A of the Securities Act of 1933, referred to herein as the Securities Act, and Section 21E of the Securities Exchange Act of 1934, referred to herein as the Exchange Act.

Statements that are predictive in nature, that depend upon or refer to future events or conditions or that include words such as "expects," "anticipates," "intends," "plans," "believes," "estimates" and similar expressions, are forward-looking statements. Although we believe that these statements are based upon reasonable assumptions, including projections of orders, sales, operating margins, earnings, cash flow, research and development costs, working capital, capital expenditures, distribution channels, profitability, new products, adequacy of funds from operations and other projections, and statements expressing general optimism about future operating results, and non-historical information, they are subject to several risks and uncertainties, and therefore, we can give no assurance that these statements will be achieved.

Readers are cautioned that our forward-looking statements are not guarantees of future performance and the actual results or developments may differ materially from the expectations expressed in the forward-looking statements.

As for the forward-looking statements that relate to future financial results and other projections, actual results will be different due to the inherent uncertainty of estimates, forecasts and projections and may be better or worse than projected. Given these uncertainties, you should not place any reliance on these forward-looking statements. These forward-looking statements also represent our estimates and assumptions only as of the date that they were made. We expressly disclaim a duty to provide updates to these forward-looking statements, and the estimates and assumptions associated with them, after the date of this filing to reflect events or changes in circumstances or changes in expectations or the occurrence of anticipated events.

We undertake no obligation to publicly update any forward-looking statement, whether as a result of new information, future events or otherwise. In addition, forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from our Company's historical experience and our present expectations or projections. These risks and uncertainties include, but are not limited to, those described in Part II, "Item 1A. Risk Factors" and elsewhere in this report and in our Annual Report on Form 10-K for the year ended April 30, 2009, and those described from time to time in our future reports filed with the Securities and Exchange Commission. This discussion is provided as permitted by the Private Securities Litigation Reform Act of 1995.

PART 1 FINANCIAL INFORMATION

DRINKS AMERICAS HOLDINGS, LTD., AND AFFILIATES

CONSOLIDATED BALANCE SHEETS

	July 31, 2009			April 30, 2009

	(Unaudited)
Assets
Current assets:
Cash and cash equivalents	$	14,591		$	30,169

Accounts receivable, net of allowances of $170,762 and $128,751, respectively		327,067			41,796
Due from factors		29,227			31,786
Inventories, net of allowances		1,040,544			1,204,266
Other current assets		476,232			374,671

Total current assets		1,887,661			1,682,688

Property and Equipment, at cost less accumulated depreciation		51,725			58,900
Investment in Equity Investees		73,916			73,916
Intangible assets, net of accumulated amortization of $283,006 and $245,678, respectively		1,855,732			1,892,650
Deferred loan costs, net of accumulated amortization of $475,327 and $335,452, respectively		535,403			-
Note Receivable, net		404,013			-
Other assets		356,388			467,912

Total Assets	$	5,164,838		$	4,176,066

Liabilities and Shareholders’ Deficiency
Current Liabilities:
Notes and loans payable	$	930,773		$	799,329
Loan Payable-related party		335,867			305,935
Accounts payable		2,944,237			2,746,181
Accrued expenses		3,374,919			2,900,425

Total current liabilities		7,585,796			6,751,870

Long-term debt, less current maturities		600,000			600,000

		8,185,796			7,351,870

Commitments and Contingencies (Note 16 )

Shareholders’ deficiency
Preferred Stock, $0.001 par value; 1,000,000 shares authorized; issued and outstanding 11,000 and 10,664 Series A shares, respectively(redemption value $11,000,000 and $10,664,000, respectively) (Series B - see Note 17)		11			11
Common Stock, $0.001 par value; 500,000,000 and 100,000,000, respectively, authorized; issued and outstanding 97,015,702 and 87,662,383 shares, respectively		97,016			87,662
Additional paid-in capital		36,285,182			34,206,433
Accumulated deficit		(39,477,180	)		(37,600,854	)
		(3,094,971	)		(3,306,748	)
Noncontrolling Interests		74,013			130,944
		(3,020,958	)		(3,175,804	)

	$	5,164,838		$	4,176,066

See accompanying notes to consolidated financial statements

DRINKS AMERICAS HOLDINGS, LTD., AND AFFILIATES

CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)

	Three Months Ended July 31,

	2009			2008

Net sales	$	433,972		$	1,068,577

Cost of sales		305,907			730,944

Gross profit		128,065			337,633

Selling, general and administrative expenses		1,623,617			1,617,121

Loss from Operations		(1,495,552	)		(1,279,488	)

Other expenses:
Interest expense, net of interest income		(437,705	)		(23,632	)

Net loss		(1,933,257	)		(1,303,120	)

Plus: Net loss attributed to the non controlling interest		56,931			-

Net loss attributable to controlling interest	$	(1,876,326	)	$	(1,303,120	)

Net loss per share (basic and diluted)	$	(0.02	)	$	(0.02	)

Weighted average number of common shares (basic and diluted)		90,232,045			81,245,602

See accompanying notes to the consolidated financial statements.

DRINKS AMERICAS HOLDINGS, LTD., AND AFFILIATES

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

	Three Months Ended July 31,
	2009			2008
Cash flows From Operating Activities:
Net loss	$	(1,876,326	)	$	(1,303,120	)
Adjustments to reconcile net loss to net cash used in operating activities
Depreciation and amortization		376,890			33,170
Allowance for doubtful accounts		41,981			-
Stock and warrants issued for services of vendors		61,545			42,719
Noncontrolling interest in net loss of consolidated subsidiary		(56,931	)		-
Changes in operating assets and liabilities:
Accounts receivable		(327,252	)		61,628
Due from factor		2,559			-
Inventories		163,722			201,462
Other current assets		208,439			111,989
Other assets		111,524			77,507
Accounts payable		198,056			415,650
Accrued expenses		644,494			277,849

Net cash used in operating activities		(451,299	)		(81,146	)

Cash Flows From Financing Activities:
Proceeds from issuance of debt		534,619			97,000
Repayment of debt		(147,535	)		(17,000	)
Increase (decrease) in working capital revolvers		48,637			(93,287	)
Payments for loan costs		-			(25,000	)

Net cash provided by (used in) financing activities		435,721			(38,287	)

Net decrease in cash and equivalents		(15,578	)		(119,433	)

Cash and equivalents - beginning		30,169			133,402
					-
Cash and equivalents - ending	$	14,591		$	13,969

Supplemental disclosure of non-cash investing and financing transactions:

Increase in other current assets equal to increase in notes payable	$	100,000		$	-

Increase in note receivable equal to increase in note payable to decrease in	$	2,625,000		$	-

Increase in deferred charges equal to decrease in note receivable, net	$	535,404		$	-

Increase in other current assets equal to the value of common stock issued	$	210,000		$	-

Payment of accrued expenses with shares of common stock	$	170,000			-

Accrued interest capitalized to debt principal	$	9,149		$	-

Satisfaction of note payable by issuance of common stock	$	450,000		$	-

Supplemental disclosure of cash flow information:
Interest paid	$	533		$	7,268

Income taxes paid	$	-		$	-

See notes to consolidated financial statements

DRINKS AMERICAS HOLDINGS, LTD., AND AFFILIATES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

1. Basis of Presentation and Nature of Business

Basis of Presentation

The accompanying unaudited condensed financial statements have been prepared by The Corporation (the "Company") pursuant to the rules and regulations of the Securities and Exchange Commission (the "SEC")for interim reporting. Certain information and disclosures normally included in notes to financial statements have been condensed or omitted pursuant to such rules and regulations, but resultant disclosures are in accordance with accounting principles generally accepted in the United States of America as they apply to interim reporting. The condensed financial statements should be read in conjunction with the financial statements and the notes thereto in the Company's Annual Report on Form 10-K for the fiscal year ended April 30, 2009.

On March 9, 2005 the shareholders of Drinks Americas, Inc. ("Drinks") a company engaged in the business of importing and distributing unique, premium alcoholic and non-alcoholic beverages associated with icon entertainers, sports figures, celebrities and destinations, to beverage wholesalers throughout the United States, acquired control of Drinks Americas Holdings, Ltd. ("Holdings"). Holdings and Drinks were incorporated in the state of Delaware on February 14, 2005 and September 24, 2002, respectively. On March 9, 2005 Holdings merged with Gourmet Group, Inc. ("Gourmet"), a publicly traded Nevada corporation, which resulted in Gourmet shareholders acquiring 1 share of Holdings' common stock in exchange for 10 shares of Gourmet's common stock. Both Holdings and Gourmet were considered "shell" corporations, as Gourmet had no operating business on the date of the share exchange, or for the previous three years. Pursuant to the June 9, 2004 Agreement and Plan of Share Exchange among Gourmet, Drinks and the Drinks' shareholders, Holdings, with approximately 4,058,000 shares of outstanding common stock, issued approximately 45,164,000 of additional shares of its common stock on March 9, 2005 (the "Acquisition Date") to the common shareholders of Drinks and to the members of its affiliate, Maxmillian Mixers, LLC ("Mixers"), in exchange for all of the outstanding Drinks' common shares and Mixers' membership units, respectively. As a result Maxmillian Partners, LLC ("Partners") a holding company which owned 99% of Drinks' outstanding common stock and approximately 55% of Mixers' outstanding membership units, became Holdings' controlling shareholder with approximately 87% of Holdings' outstanding common stock. For financial accounting purposes this business combination has been treated as a reverse acquisition, or a recapitalization of Partners' subsidiaries (Drinks and Mixers).

Subsequent to the Acquisition Date, Partners, which was organized as a Delaware limited liability company on January 1, 2002 transferred all its shares of holdings to its members as part of a plan of liquidation.

On March 11, 2005 Holdings and an individual organized Drinks Global, LLC ("DGI"). Holdings owns 90% of the membership units and the individual, who is the president of DGI, owns 10%. DGI's business is to import wines from various parts of the world and sell them to distributors throughout the United States. In May 2006 Holdings organized D.T. Drinks, LLC ("DT Drinks") a New York limited liability company for the purpose of selling certain alcoholic beverages.

On January 15, 2009 Drinks acquired 90% of Olifant U.S.A Inc. (“Olifant”), a Connecticut corporation, which owns the trademark and brand names and holds the worldwide distribution rights ( excluding Europe) to Olifant Vodka and Gin.

In partnership with Kid Rock, the Company will distribute Kid Rock’s BadAss Beer on a worldwide basis for a term of five years with an option to renew for an additional five years.

The accompanying consolidated balance sheets as of July 31, 2009 and April 30, 2009 and the consolidated results of operations, consolidated changes in shareholders' deficiency and consolidated cash flows for the three months ended July 31, 2009 and 2008 reflect Holdings its majority-owned subsidiaries, Newco of which it is the managing and controlling member, and Partners (collectively, the "Company") with adjustments for income and loss allocated based on percentage of ownership. The accounts of the subsidiaries have been included as of the date of acquisition. All intercompany transactions and balances in these financial statements have been eliminated in consolidation. The amount of common and preferred shares authorized, issued and outstanding as of July 31, 2009 and April 30, 2009 are those of Holdings.

The accompanying consolidated financial statements have been prepared on a basis that assumes the Company will continue as a going concern. As of July 31, 2009 the Company has a shareholders’ deficiency of ($3,020,958) and has incurred significant operating losses and negative cash flows since inception. For the three months ended July 31, 2009, the Company sustained a net loss of $1,876,326 compared with a net loss of $1,303,120 for the three months ended July 31, 2008 and used $451,299 in operating activities compared with $81,146 for the three months ended July 31, 2008. We have increased our working capital via our June 2009 sale of our debenture. In addition we have improved our liquidity by extinguishing a significant amount of debt by exchanging it for our common stock in previous periods. We will need additional financing which may take the form of equity or debt. We anticipate that increased sales revenues will help to some extent. In the event we are not able to increase our working capital, we will not be able to implement or may be required to delay all or part of our business plan, and our ability to attain profitable operations, generate positive cash flows from operating and investing activities and materially expand the business will be materially adversely affected. The accompanying financial statements do not include any adjustments relating to the classification of recorded asset amounts or amounts and classification of liabilities that might be necessary should the company be unable to continue in existence.5

In the opinion of management, the accompanying consolidated financial statements reflect all adjustments, consisting of normal recurring accruals, necessary to present fairly the financial position of the Company as of July 31, 2009 and April 30, 2009, its results of operations for the three months ended July 31, 2009 and 2008 and its cash flows for the three months ended July 31, 2009 and 2008. Pursuant to the rules and regulations of the SEC for the interim financial statement, certain information and disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been omitted from these financial statements unless significant changes have taken place since the end of the most recent fiscal year. Accordingly, these financial statements should be read in conjunction with the audited consolidated financial statements and the other information in the Form 10-K.

Nature of Business

Through our majority-owned subsidiaries, Drinks, DGI, DT Drinks, and Olifant we import, distribute and market unique premium wine and spirits and alcoholic beverages associated with icon entertainers, celebrities and destinations, to beverage wholesalers throughout the United States.

2. Critical Accounting Policies and Estimates

Significant Accounting Policies

We believe the following significant accounting policies, among others, may be impacted significantly by judgment, assumptions and estimates used in the preparation of the consolidated financial statements:

Revenue Recognition

The Company recognizes revenues when title passes to the customer, which is generally when products are shipped.

The Company recognizes revenue dilution from items such as product returns, inventory credits, discounts and other allowances in the period that such items are first expected to occur. The Company does not offer its clients the opportunity to return products for any reason other than manufacturing defects. In addition, the Company does not offer incentives to its customers to either acquire more products or maintain higher inventory levels of products than they would in ordinary course of business. The Company assesses levels of inventory maintained by its customers through communications with them. Furthermore, it is the Company's policy to accrue for material post shipment obligations and customer incentives in the period the related revenue is recognized.

Accounts Receivable

Accounts receivable are recorded at original invoice amount less an allowance for uncollectible accounts that management believes will be adequate to absorb estimated losses on existing balances. Management estimates the allowance based on collectability of accounts receivable and prior bad debt experience. Accounts receivable balances are written off upon management's determination that such accounts are uncollectible. Recoveries of accounts receivable previously written off are recorded when received.

Impairment of Long-Lived Assets

In accordance with Statement of Financial Accounting Standards No. 144 (SFAS No. 144), Accounting for the Impairment or Disposal of Long-lived Assets, we review long-lived assets for impairment whenever events or changes in circumstances indicate the carrying amounts of such assets may not be recoverable. The Company's policy is to record an impairment loss at each balance sheet date when it is determined that the carrying amount may not be recoverable. Recoverability of these assets is based on undiscounted future cash flows of the related asset. The Company concluded that there was no impairment during the three months ended year ended July 31, 2009 and year ended April 30, 2009, respectively.

Deferred Charges and Intangible Assets

The costs of intangible assets with determinable useful lives are amortized over their respectful useful lives and reviewed for impairment when circumstances warrant. Intangible assets that have an indefinite useful life are not amortized until such useful life is determined to be no longer indefinite. Evaluation of the remaining useful life of an intangible asset that is not being amortized must be completed each reporting period to determine whether events and circumstances continue to support an indefinite useful life. Indefinite-lived intangible assets must be tested for impairment at least annually, or more frequently if warranted. Intangible assets with finite lives are generally amortized on a straight line bases over the estimated period benefited. The costs of trademarks and product distribution rights are amortized over their related useful lives of between 15 to 40 years. We review our intangible assets for events or changes in circumstances that may indicate that the carrying amount of the assets may not be recoverable, in which case an impairment charge is recognized currently.

Deferred financing costs are amortized ratably over the life of the related debt. If debt is retired early, the related unamortized deferred financing costs are written off in the period debt is retired.

Income Taxes

The Company applies Statement of Financial Accounting Standards ("SFAS") No. 109, "Accounting for Income Taxes." Under the asset and liability method of SFAS No. 109, deferred tax assets and liabilities are recognized for future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. The effect on deferred tax assets and liabilities of a change in tax laws is recognized in the results of operations in the period the new laws are enacted. A valuation allowance is recorded to reduce the carrying amounts of deferred tax assets unless it is more likely than not that such assets will be realized.

On July 1, 2007, the Company adopted FASB Interpretation No. 48, "Accounting for Uncertainty in Income Taxes-an interpretation of FASB Statement 109" ("FIN 48"). There was no material effect on the Company's financial statements associated with the adoption of FIN 48. The tax years 2004 – 2008 remain open to examination by the major taxing jurisdictions to which we are subject.

Stock Based Compensation

The Company accounts for stock-based compensation in accordance with Statement of Financial Accounting Standard 123 (revised 2004), Share-Based Payment (SFAS 123R) using the modified prospective approach. The Company recognizes in the statement of operations the grant-date fair value of stock options and other equity based compensation issued to employees and non employees.

Earnings Per Share

The Company computes earnings per share under the provisions of SFAS No. 128, Earnings per Share, whereby basic earnings per share is computed by dividing net income (loss) attributable to all classes of common shareholders by the weighted average number of shares of all classes of common stock outstanding during the applicable period. Diluted earnings per share is determined in the same manner as basic earnings per share except that the number of shares is increased to assume exercise of potentially dilutive and contingently issuable shares using the treasury stock method, unless the effect of such increase would be anti-dilutive. For the three months ended July 31, 2009 and 2008, the diluted earnings per share amounts equal basic earnings per share because the Company had net losses and the impact of the assumed exercise of contingently issuable shares would have been anti-dilutive.

Fair Value of Financial Instruments

SFAS No. 107, ‘Disclosure About Fair Value of Financial Instruments,’ defines the fair value of financial instruments as the amount at which the instrument could be exchanged in a current transaction between willing participants and requires disclosure of the fair value of certain financial instruments. The Company believes that there is no material difference between the fair value and the reported amounts of financial instruments in the balance sheet due to the short term maturity of these instruments, or with respect to the debt, as compared to the current borrowing rates available to the Company.

SFAS No. 157. “ Fair Value Measurements ” defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value measurements. The Company adopted the provisions of SFAS 157 for financial assets and liabilities on May 1, 2008; there was no material impact on the Company’s financial position or results of operations at adoption.

FASB Staff Position (FSP) 157-2, “Effective Date of FASB Statement No. 157,” permits a one-year deferral in applying the measurement provisions of Statement No. 157 to non-financial assets and non-financial liabilities (non-financial items) that are not recognized or disclosed at fair value in an entity’s financial statements on a recurring basis (at least annually). Therefore, if the change in fair value of a non-financial item is not required to be recognized or disclosed in the financial statements on an annual basis or more frequently, the effective date of application of Statement 157 to that item is deferred until fiscal years beginning after November 15, 2008 and interim periods within those fiscal years. The Company elected to defer adoption of the provisions of SFAS 157 that relate to such items until May 1, 2009. The Company believes that there is no material difference between fair values and reported amounts of its non-financial items.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts in the financial statements and accompanying notes. Actual results could differ from those estimates.

Recent accounting pronouncements

In May 2009, the FASB issued SFAS No. 165, Subsequent Events (“SFAS No. 165”). This Statement establishes general standards of accounting for and disclosure of events that occur after the balance sheet date but before financial statements are issued or available to be issued. It requires the disclosure of the date through which an entity has evaluated subsequent events and the basis for that date. This Statement is effective for interim and annual periods ending after June 15, 2009 and such, the Company adopt SFAS No. 165 concurrent with its report filed for the interim period ending July 31, 2009. The Company believes that the adoption of SFAS No. 165 has not had a material impact on its results of operations, cash flows or financial position.

In October 2008, the FASB issued FSP FAS No. 157-3, “Determining the Fair Value of a Financial Asset When the Market for That Asset is Not Active” (“FSP FAS No. 157-3”), to provide guidance on determining the fair value of financial instruments in inactive markets. FSP FAS No. 157-3 became effective for the Company upon issuance. This standard had no impact on the Company’s results of operations, cash flows or financial position.

In June 2008, the FASB issued FASB Staff Position (“FSP”) No. EITF 03-6-1, "Determining Whether Instruments Granted in Share-Based Payment Transactions Are Participating Securities," which classifies unvested share-based payment awards that contain non-forfeitable rights to dividends or dividend equivalents (whether paid or unpaid) as participating securities and requires them to be included in the computation of earnings per share pursuant to the two-class method described in SFAS No. 128, "Earnings per Share.” This Staff Position is effective for financial statements issued for fiscal years beginning after December 15, 2008, and interim periods within those years. All prior-period earnings per share data presented are to be adjusted retrospectively (including interim financial statements, summaries of earnings, and selected financial data) to conform to the provisions of this Staff Position, with early application not permitted. The adoption of this Staff Position, which will require us to allocate a portion of net income to these participating securities, did not have an effect on our historical reported earnings for prior periods previously presented.

On December 4, 2007, the FASB issued SFAS No. 141(R), “ Business Combinations ,” and SFAS No. 160, “ Accounting and Reporting of Noncontrolling Interests in Consolidated Financial Statements , an amendment of ARB No. 51 .” Statement No. 141(R) is required to be adopted concurrently with Statement No. 160 and is effective for business combination transactions for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008. Early adoption is prohibited. Application of Statement No. 141(R) and Statement No. 160 is required to be adopted prospectively, except for certain provisions of Statement No. 160, which are required to be adopted retrospectively. Business combination transactions accounted for before adoption of Statement No. 141(R) should be accounted for in accordance with Statement No. 141 and that accounting previously completed under Statement No. 141 should not be modified as of or after the date of adoption of Statement No. 141(R). The adoption of Statement No. 141(R) and Statement No. 160, did not have a material impact on the Company’s financial position or results of operations.

In February 2007, the FASB issued Statement of Financial Accounting Standards (SFAS) No. 159, “ The Fair Value Option for Financial Assets and Financial Liabilities ” (SFAS 159), which allows an entity the irrevocable option to elect fair value for the initial and subsequent measurement for certain financial assets and liabilities on a contract-by-contract basis. Subsequent changes in fair value of these financial assets and liabilities would be recognized in earnings when they occur. SFAS 159 further establishes certain additional disclosure requirements. SFAS 159 is effective for fiscal years beginning after November 15, 2007, with earlier adoption permitted. The adoption of this pronouncement did not have a material impact on the Company’s consolidated financial position or results of operations.

3. Due From Factors

As of July 31, 2009 and April 30, 2009, Due From Factors consist of the following:

	July 31,			April 30,
	2009			2009

Accounts receivable	$	81,828		$	153,444
Advances		(49,424	)		(118,191	)
Allowances		(3,177	)		3,467
	$	29,227		$	31,786

The Company has an agreement with a factor entered into April 2009, pursuant to which a substantial portion of the Company’s accounts receivable, , is sold to the factor with recourse to bad debts and other customer claims. The Company receives a cash advance equal to 80% of the invoice amount and is paid the balance of the invoice less fees incurred at the time the factor receives the final payment from the customer. The factor fee is 1.75% for the first 30 days the invoice remains unpaid and 0.07% for each day thereafter. The facility shall remain open until a 30 day notice by either party of termination of the agreement The facility is secured by all assets of the Company.

The Company also had an agreement with a second factor which was terminated in August 2009.

4. Inventories

As of July 31, 2009 and April 30, Inventories consist of the following:

	July 31, 2009		April 30, 2009

Finished goods	$	379,295	$	518,489
Raw materials		661,249		685,777
	$	1,040,544	$	1,204,266

All raw materials used in the production of the Company's inventories are purchased by the Company and delivered to independent production contractors.

5. Other Current Assets

As of July 31, 2009 and April 30, 2009 Other Current Assets consist of the following:

	July 31, 2009		April 30, 2009
Prepaid inventory purchases	$	315,952	$	315,592
Prepaid insurance		-		-
Other		160,280		59,079
	$	476,232	$	374,671

In April 2009 the Company entered into a sponsorship agreement with concert producer and promoter to promote Olifant Vodka in its concert tour which runs from July 10, thru August 8, 2009. In consideration for their services the Company has given the promoter the following: 1,500,000 shares of its common stock which was issued in May 2009; 3% of the net profits of Olifant for each fiscal year commencing with its 2013 fiscal year and ending the earlier of Olifant’s fiscal year ending in 2018 or when Olifant is sold, if that were to occur.. If Olifant is sold prior to expiration the promoter will receive 3% of the consideration received from the sale. The Company has agreed to grant an additional 2% profits interest or proceeds from the sale of Olifant (or if it were to be promoted in a concert tour, a future brand) for promotion in the 2010 concert tour; and warrants to purchase 200,000 shares of the Company’s common stock at an exercise price of $0.50 per share which were due at the end of the 2009 tour and remain unissued. The value of the 1,500,000 shares issued aggregated $210,000, based on the market price of the Company’s stock on the date of the agreement, and the warrants granted. In accordance with the agreement the amount of cash and stock based consideration issued by the Company which shall not be less than $400,000 will be amortized over the life of the tour of which is considered a series of direct marketing events, which at July 31, the unamortized balance was $110,345. The beneficial 3% interest granted in connection with the 2009 tour was not material to the financial statements of the Company.

6. Note receivable

On June 19, 2009 (the "Closing Date") we sold to one investor (the “Investor”) a $4,000,000 non interest bearing debenture with a 25% ($1,000,000) original issue discount, that matures in 48 months from the Closing Date (the Drink’s Debenture) for $3,000,000, consisting of $375,000 paid in cash at closing and eleven secured promissory notes, aggregating $2,625,000, bearing interest at the rate of 5% per annum, each maturing 50 months after the Closing Date (the “Investor Notes”). The Investor Notes, the first ten of which are in the principal amount of $250,000 and the last of which is in the principal amount of $125,000, are mandatorily pre-payable, in sequence, at the rate of one note per month commencing on January 19, 2010, subject to certain contingencies. If the prepayment occurs, the entire aggregate principal balance of the Investor Notes in the amount of $2,625,000 (less the $200,000 August prepayment) together with the interest outstanding thereon, will be paid in eleven monthly installments (ten in the amount of $230,000 and one the amount of $125,000)such that the entire amount would be paid to us by November 26, 2010. As a practical matter, the interest rate on the Investor Notes serves to lessen the interest cost inherent in the original issue discount element of the Drinks Debenture. For the mandatory prepayment to occur, no Event of Default or Triggering Event as defined under the Drinks Debenture shall have occurred and be continuing and the outstanding balance due under the Drinks Debenture must have been reduced to $3,500,000 on January 19, 2009 and be reduced at the rate of $333,334 per month thereafter. Due to the uncertainty of the mandatory prepayments by the Investor the note receivable has been classified as a long term asset as of July 31, 2009.

One of the Triggering Events includes the failure of the Company to maintain an average daily dollar volume of common stock traded per day for any consecutive 10-day period of at least $10,000 or if the average value of the shares are pledge to secure our obligation under the Drinks Debenture (as subsequently described ) falls below $1,600,000.

Under the Drinks Debenture, commencing six months after the Closing Date, the Investor may request the Company to repay all or a portion of the Drinks Debenture by issuing the Company’s common stock, $0.001 par value, in satisfaction of all or part of the Drinks Debenture, valued at the Market Price,(as defined in the Drinks Debenture), of Drink’s common stock at the time the request is made (collectively, the “Share Repayment Requests”). The Investor’s may not request repayment in common stock if, at the time of the request, the amount requested would be higher than the difference between the outstanding balance owed under the Drinks Debenture and 125% of the aggregate amount owed under the Investor Note.

The Company may prepay all or part of the Drinks Debenture upon 10-days prior written notice and are entitled to satisfy a portion of the amount outstanding under the debenture by offset of an amount equal to 125% of the amount owed under the Investor Notes, which amount will satisfy a corresponding portion of the Drinks Debenture.

Also as part of this financing, the Investor acquired warrants to purchase 2,500,000 shares of our common stock at an exercise price of $0.35 per share (the “Investor Warrants”). The Investor Warrants contain full ratchet anti-dilution provisions, as to the exercise price and are exercisable for a five year period. Management has determined that the aggregate value of the warrants was $142,500 based on the market price per share of the Company’s common stock on the date of the agreement.

Out of the gross proceeds of this Offering, we paid the placement agent $37,500 in commissions and we are obligated to pay the placement agent 10% of the principal balance of the Investor Notes when each note is paid. We will also issue to the Placement Agent, warrants to acquire 5% of the shares of our Common Stock which we deliver in response to Share Repayment Requests, at an exercise price equal to the Market Price related to the shares delivered in response to the Share Repayment Request (the "Placement Agent Warrants"), which warrants are exercisable for a five year period, will contain cashless exercise provisions as well as anti-dilution provisions in the case of stock splits and similar matters

Our CEO has guaranteed our obligations under the Drinks Debenture in an amount not to exceed the lesser of (i) $375,000 or (ii) the outstanding balance owed under the Drinks Debenture. In addition our CEO, COO, and two other members of our Board of Directors and another of our shareholders, have, either directly, or through entities they control pledged an aggregate of 9,000,000 shares of our common stock to secure our obligations under the Drinks Debenture (the “Pledged Shares”). The Company has pledged an additional 3,000,000 shares of its common stock. The Company has agreed in principle to issue to those individuals who pledged their shares, 0.5 shares of Company stock for each share pledged which aggregates to 4,500,000 shares (including 3,000,000 to its CEO, 453,000 to its COO and an aggregate of 1,047,000 to two members of its board of directors). The 4,500,000 shares had a value of $675,279 on the date of the agreement and is included in additional paid in capital in accompanying balance sheet as of July 31, 2009.

On July 14, 2009 the value of the Pledged Shares fell below the required amount and consequently the Investor delivered a notice of default to the Company. On receipt of the notice the Company requested, and the Investor orally agreed, that the penalties the Company would have incurred would not apply. The agreement was subsequently documented and the Investor also waived the application of this provision through October 31, 2009. In response to the default the Investor transferred 5,523,645 shares of the Pledged Shares into its own name in order to commence sale thereof to satisfy payment of the Drinks Debenture. Accordingly and upon the Company’s request, Investor agreed to waive its right under an Event of Default. The value of the 5,523,645 shares on the date transferred to the Investor aggregated $828,547 which when sold by the Investor will reduce the balance of the Drinks Debenture. The aggregate value of $828,547 of the shares transferred has been accounted for as a reduction of the Drinks Debenture for accounting purposes. Of the 5,523,645 shares transferred 3,000,0000 were Company shares having an aggregate value of $450,000 and the balance, 2,523,645 shares, were shares pledged by Company shareholders having an aggregate value $378,547. The aggregate value of the shares transferred is included in additional paid in capital on the accompanying balance sheet at July 31, 2009 The Original Issue Discount of $1,000,000, and the value of the Investor warrants which aggregated $142,500 together totaling $1,142,500 was accounted for as a discount on the Drinks Debenture. The unamortized balance of the discount of $935,363 has been presented as a reduction of the Drinks Debenture as of July 31, 2009. The 4,500,000 shares the Company agreed to issue to our shareholders who pledged shares for this financing aggregated $675,279 which is included in deferred loan costs net of accumulated amortization of $139,876 as of July 31, 2009.

At July 31, 2009 the balance of the Investor notes of $2,640,103 (including accrued interest of $15,103) has been reduced by the balance of the Drinks Debentures of $2,236,090 (net of discount of $935,363) for presentation purposes.

In order to secure waivers which the investors in our December 2007 placement of our Series A Preferred stock claimed were required for the Company to consummate this financing , we allowed, and the three December investors elected, to convert an aggregate of $335,800(335.8 shares) of our preferred stock into 3,358,000 shares of our common stock.. In addition, in August 2009 we allowed the two other holders of our Series A Preferred Stock to convert an aggregate of $134,625 (134.6 shares) of our Series A Preferred Stock into 1,200,000 shares of our common stock. The book value of the preferred stock converted exceeded the par value of the common stock received on the date of conversions.

On August 31, 2009, subsequent to the date of these financial statements we amended the Drink’s Debenture. Pursuant to the amendment, the outstanding balance of the debenture was increased by $400,000 and the debenture will carry an interest rate of 12% per annum. Also, a member of the Company’s board of directors pledged 1,263,235 shares of our common stock as security for our obligations under the debenture, which increased the total number of shares pledged for this purpose. In return, the investor has prepaid $200,000 of the notes it issued to the Company in partial payment for the debenture and agreed that the provisions of the debenture relating to a 10% premium and the imposition of default interest will not apply in the event a “Triggering Event”, as defined in the debenture, was to occur in the future. The July 31, 2009 financial statements do not give effect to the modifications made on August 31, 2009.

7. Other long term assets

In January 2009, in accordance with an employment agreement executed with an Olifant employee the Company issued 100,000 shares of its common stock (see Note 8). The value of the stock on the date of grant aggregated $26,000 which is being amortized over the five year life of the un-extended term of the agreement. At July 31,2009 and April 30, 2009 the unamortized balance of the stock was $23,195 and $24,505, respectively.

In August 2008 the Company entered into a three year agreement with an unrelated entity which is to provide marketing and promotional services for the Company. Under the terms of the agreement, as consideration for the services to be provided, the Company is to issue warrants to purchase an aggregate of 350,000 shares of Company stock at an exercise price of $.50. The Company determined, as of the grant date the warrants had an aggregate value of $6,730 which is being amortized over the three year benefit period. At July 31, 2009 and April 30, 2009 the unamortized balance of the warrants was $4,552 and 5,666, respectively. As of July 31, 2009 a warrant to purchase an aggregate of 275,000 shares of Company stock has been issued with 75,000 remaining to be issued.

In August 2006, in connection with an agreement with one of its sales consultants the Company issued warrants to purchase 100,000 shares of Holdings common stock at an exercise price of $0.60 per share. The agreement which was for three years, expiring in June 30, 2009, was automatically extended for a one year renewal term with an optional renewal term of one year remaining . The warrants may be exercised at any time up to five years from the date of the agreement. The Company determined, as of the grant date of the warrants, that the warrants had a value of $18,000 which was amortized over the one year benefit period of such warrants. In addition, under the terms of the agreement, the consultant received 175,000 shares of Holdings common stock which were valued at $107,000 based on the market price of the stock at the date of the agreement. The value of stock issued is being amortized over the five year life of the consulting agreement.. On August 28, 2008, the Company granted the consultant warrants to purchase an additional 200,000 shares of the Company’s common stock at an exercise price of $0.50 per share. This issuance satisfies the Company’s requirements for the contract years ending June 30, 2008 and 2009. Management has determined that the aggregate value of the warrants was $4,000 based on a market price of $0.28 per share of the Company stock on the date of grant. The warrants expire five years from the date of grant. The unamortized value of the aggregate stock and warrants issued to the consultant under the agreement at July 31, 2009 and April 30, 2009 was $41,691 and $53,478, respectively. On August 28, 2008 the consultant and the Company agreed to convert $153,000 of past due consulting fees into 306,000 shares of common stock at a value of $0.50 per share which was at a premium to the market price on date of grant. Also, in August 2009, the consultant converted $ 307,981 of past due and future consideration into 2,053,210 shares of Company stock.

In February 2007, the Company entered into a five year agreement with a consulting company to provide certain financial advisory services. The Company prepaid $300,000 for such services. This amount is carried as a long-term asset and is being amortized over the five year life of the agreement. At July 31, 2009 and April 30, 2009 the unamortized balance of the agreement was $150,247 and $165,370 respectively.

On June 14, 2007, in connection with an endorsement agreement, the Company issued warrants to purchase 801,000 shares of the Company’s common stock at a price of $1.284 per share. The warrants may be exercised at any time up to June 14, 2017. The Company determined that the warrants had a value of $416,500, as of the date the warrants were granted, which is being amortized over the three year term of the endorsement agreement. The warrants have cashless exercise provisions. At July 31, 2009 and April 30, 2009, the unamortized balance of these warrants was $120,884 and $155,856 respectively. In addition, the Company has agreed to issue, as partial consideration for monthly consulting services, to a principal of one of the entities involved in the endorsement agreement, warrants to purchase 3,000 shares of the Company’s common stock per month at the monthly average market price. As of July 31, 2009 warrants to purchase 99,000 shares of the Company’s stock have been earned under this agreement of which a warrant for 54,000 shares has been issued at exercise prices ranging from $0.19 to $2.12 per share of common stock.. Each warrant issuance has an exercise period of 5 years from date of issuance.

8 . Acquisition

On January 15, 2009 (the “Closing”), the Company acquired 90% of the capital stock of Olifant U.S.A, Inc. (“Olifant”) , pursuant to a Stock Purchase Agreement (the “Agreement”). Olifant has the worldwide distribution rights (other than Europe) to Olifant Vodka and Olifant Gin which are both produced in Holland. The transaction was accounted for as a business combination using the purchase method of accounting under the provisions of SFAS 141.

The Company agreed to pay the sellers $1,200,000 for its 90% interest: $300,000 in cash and Company common stock valued at $100,000 to be paid 90 days from the Closing date. At Closing the initial cash payment of $300,000 was reduced by $138,000 because Olifant’s liabilities exceeded the amount provided for in the Purchase Agreement. . In August 2009, upon final settlement of the consideration to be paid by the Company, the parties agreed to additional offsets aggregating $13,000 which resulted in the Company paying the sellers $149,000 and issuing $100,000 (555,556 shares) of Company stock which were released from escrow to the sellers. At Closing, the Company issued a promissory note for the $800,000 balance. The promissory note is payable in four annual installments, the first payment is due one year from Closing. Each $200,000 installment is payable $100,000 in cash and $100,000 in Company common stock, with the stock value based on the 30 trading days immediately prior to the installment date. The cash portion of the note accrues interest at a rate of 5% per annum. The Company will also pay contingent consideration to the sellers based on the financial performance of Olifant. The contingent consideration terminates at the later of (i) full payment of the promissory note or (ii) second year following Closing. The Agreement also provides for “piggyback” registration rights relating to the shares issuable.

The Company has tentatively assigned the excess of cost over investment to trademarks. We are in the process of completing our acquisition date fair value allocations which shall be completed no later than January 15, 2010.

The cost of the acquisition was allocated based on management’s estimates as follows:

Cash	$	17,150
Accounts receivable		87,850
Inventory		217,770
Other current assets		27,070
Trademarks and brand names		1,333,333

Total assets		1,683,173

Accounts payable		483,173

Net assets acquired	$	1,200,000

The operating results of Olifant are reflected in the accompanying consolidated financial statements from the date of acquisition.

In connection with the acquisition the Company entered into an employment agreement with one of the sellers. The agreement is for five years with two automatic one year extensions. The annual base compensation under the employment agreement is $132,000 with additional compensation due based on the financial performance of Olifant. In accordance with the employment agreement the Company issued to the seller 100,000 shares of its common stock in May 2009.

9. Notes and Loans Payable

As of July 31, 2009 and April 30, 2009 Notes and loans payable consisted of the following:

	July 31, 2009		April 30, 2009

Convertible note(a)	$	286,623	$	286,623
Purchase order facility(b)		49,860		1,223
Olifant note(c)		1,049,633		1,061,763
Other (d)		144,657		49,720
		1,530,773		1,399,329
Less current portion		930,773		799,329

Long-term portion	$	600,000	$	600,000

(a)

In October 2006, the Company borrowed $250,000 and issued a convertible promissory note in like amount. The due date of the loan was originally extended by the Company to October 2008 from October 2007 in accordance with the terms of the original note agreement. On March 1, 2009 the note was amended to extend the due date to October 18, 2009. As of March 1, 2009, the principal amount of the amended note is $286,623, which includes the original $250,000 of principal plus accrued and unpaid interest of 36,623 as of March 1, 2009. The amended note is convertible into shares of our common stock at $0.35 per share, a decrease from the $0.60 price under the original note but at a premium to the market price on the date of the amended agreement, with certain anti-dilution provisions. The note bears interest at 12% per annum which is payable quarterly. At the option of the lender, interest can be paid in shares of Company common stock. Under the terms of the amended note monthly principal payments of $20,000 were to commence June 1, 2009 with the balance paid at maturity. As of September 2009 the Company had not made any payments under the amended note and has reached an informal agreement with the note-holder, to issue 50,000 shares of the Company’s common stock for each week of nonpayment. As of July 31, 2009 the Company has issued the note-holder 200,000 and in August 2009 the Company issued an additional 200,000 shares of its stock to remain in compliance with the amended note. The 400,000 shares which had an aggregate value of $57,454 based on the date issued which is included in interest expense for the three months ended July 31, 2009 represented consideration for June and July non-payment under the amended note. In addition, as consideration for extending the note the Company issued the lender 286,623 shares of Company common stock which had a value of $42,992 on March 1, 2009. As of the July 31, 2009 and April 30, 2009 the unamortized balance of the 286,623 shares issued was $12,284 and $30,710, respectively, which is included in Other current assets on the accompanying balance sheets. During the year ended April 30, 2008 the Company issued the note holder an aggregate of 49,307 shares of Company common stock to satisfy an aggregate of $29,583 of unpaid interest accrued through October 10, 2007. In February 2008 the Company paid the note holder an additional $7,742 for interest accrued through January 10, 2008. At April 30, 2009 and 2008 accrued interest on this loan aggregated $5,760 and $9,283, respectively, which is included in accrued expenses on the accompanying balance sheets. In October 2006, connection with this borrowing, we issued warrants to purchase 250,000 shares of our common stock for $0.60 per share. These warrants are exercisable for a five-year period from the date of issuance. The Company had determined, as of the date the notes were issued, the warrants had a value of $48,000 which was expensed over the original term of the note

(b)

Balances on borrowings under purchase order financing facility with Hartsko Financial Services, LLC (“Hartsko”). Advances under the facility are subject to a 3% fee for the first 30 days they remain outstanding and 1% for each 10 days they remain unpaid. Hartsko has a first security interest in the assets of the Company to the extent of this advance.

(c)

On January 15, 2009 (the “Closing”), the Company acquired 90% of the capital stock of Olifant U.S.A, Inc. (“Olifant”), pursuant to a Stock Purchase Agreement (the “Agreement. The Company has agreed to pay the sellers $1,200,000 for its 90% interest: $300,000 in cash and common stock valued at $100,000 to be paid 90 days from the Closing date The initial cash payment of $300,000 which was due 90 days from Closing, was reduced to$149,633, which was paid to the sellers in August 2009 together with Company common stock having an aggregate value of $100,000 based on the date of the Agreement. The Company issued a promissory note for the $800,000 balance. The promissory note is payable in four annual installments, the first payment is due one year from Closing. Each $200,000 installment is payable $100,000 in cash and Company stock valued at $100,000 with the stock value based on the 30 trading days immediately prior to the installment date. The cash portion of the note accrues interest at a rate of 5% per annum.

(d)

As of July 31, 2009 and April 30, 2009, $40,000 is owed to a shareholder of the Company and at April 30, 2009 an additional $9,720 is owed to a member of the Company’s board of directors under an informal agreement s with the Company for amounts advanced to the Company for working capital purposes. Amounts owed to the shareholder accrues interest at a rate of 18% per annum. In June 2009, the director was repaid $11,220 which includes interest of $1,500. In addition, at July 31, 2009 $100,000 is due under a promissory note for consideration of the balance of the $400,000 owed by the Company for the promotion of the Olifant concert series (see Note 5). This note is secured by 500,000 shares of Company stock.

10. Accrued expenses

Accrued expenses consist of the following at July 31, 2009 and April 30, 2009:

	July 31, 2009		April 30, 009
Payroll, board compensation, and consulting fees owed to officers, directors and shareholders	$	1,711,463	$	1,565,964
All other payroll and consulting fees		541,688		470,061
Interest		64,607		17,465
Others		1,057,161		846,935
	$	3,374,919	$	2,900,425

11. Shareholders' Equity (Deficiency)

In addition to those referred to in Note 3, 6, 7, 8, and 9, additional transactions affecting the Company's equity for the three months ended July 31, 2009 are as follows:

In May 9, 2009 we issued a sales consultant 85,000 shares of our common stock with an aggregate value of $11,900 for past due fees owed to him. The value of the shares are included in Selling, general and administrative expenses for the three months ended July 31, 2009.

On July 1, 2009 we issued an aggregate of 333,333 shares of our common stock having an aggregate value of $50,000 to a member of our board of directors for an advance he made to a third, unrelated, entity for services they provided the Company. The amount the Company was invoiced for these services by the third party was equal to the value of the stock issued to the director.

On July 1, 2009 we issued 28,000 shares of our common stock having an aggregate value of $3,600 to a company which provides freight services to the company. The value of the shares are included in Selling, general and administrative expenses for the three months ended July 31, 2009.

On July 1, 2009 we issued 100,000 shares of our common stock having an aggregate value of $13,000 to a sales consultant for the Company for services he has provided to us. The value of the shares are included in Selling, general and administrative expenses for the three months ended July 31, 2009.

On July 29, 2009 we issued 71,500 shares of our common stock having an aggregate value of $10,000 to a consultant for the Company for services he has performed. The value of the shares are included in Selling, general and administrative expenses for the three months ended July 31, 2009.

In March , 2009, the Company granted 1,175,000 shares of its common stock under its 2008 Stock Incentive Plan (the” Plan”) to several of its employees as consideration for past services they have performed for the Company. The value of the stock on the date of grant aggregated $188,000 which was included in accrued expenses at April 30, 2009 as none of these shares were issued as of that date. In July 2009 the Company issued 750,000 of these shares (including 250,000 each to the Company’s Chief Operating Officer and Chief Financial Officer).

As of July 31, 2009, warrants to purchase 8,944,423 shares of Holdings common stock were outstanding, including warrants previously disclosed in Note 9. The warrants have exercises prices per share of Company common stock ranging from $0.35 to $3.00.

12. Stock Incentive Plan

In January 2009, the Company’s shareholders approved the 2008 Stock Incentive Plan (the” Plan”) which provides for awards of incentives of non-qualified stock options, stock, restricted stock and stock appreciation rights for its officers, employees, consultants and directors in order to attract and retain such individuals and to enable them to participate in the long-term success and growth of the Company. There are 10,000,000 common shares reserved for distribution under the Plan, of which 3,050,000 remain available. Stock options granted under the Plan are granted with an exercise price at or above the fair market value of the underlying common stock at the date of grant, generally vest over a four year period and expire 5 years after the grant date.

On March 12, 2009 the Company granted an aggregate of 5,775,000 options under its 2008 Stock Incentive Plan to various employees, the directors of the Company, and to two consultants to the Company. The exercise price of the options granted to employees and directors and one of the consultants was at the market value (other than those issued to our CEO which was at a 10% premium to the market value) of the underlying common stock at the date of grant. The exercise price of the options granted to the other consultant, $0.35, was above the fair market value of the underlying common stock at the date of grant. The value of the options on the date of grant was calculated using the Black-Scholes formula with the following assumptions: risk free frate-2%, expected life of options –5 years, expected stock volatility -67%, expected dividend yield -0%. The Company issued an aggregate of 4,175,000 options to purchase shares of its common stock to its employees including 2,500,000 to its CEO, 500,000 to its COO and 300,000 to its CFO.

The options granted to employees of the Company vest over a four year period and expire five years after the grant date. The cost of the options, $375,750, is expected to be recognized over the four year vesting period of the non-vested options. The options awarded to the directors (1,000,000) of the Company and the consultants (600,000) vested immediately upon grant.

The fair value of each option award is estimated on the date of grant using the Black-Scholes option pricing model and is affected by assumptions regarding a number of highly complex and subjective variables including expected volatility, risk-free interest rate, expected dividends and expected term. Expected volatility is based on the historic volatility of the Company’s stock over the expected life of the option. The expected term and vesting of the option represents the estimated period of time until the exercise and is based on management’s estimates, giving consideration to the contractual term, vesting schedules and expectations of future employee behavior. The risk-free interest rate is based on the U.S . Treasury yield curve in effect at the time of grant for the expected term of the option. The Company has not paid dividends in the past and does not plan to pay any dividends in the near future. SFAS 123R, “Share Based Payment,” also requires the Company to estimate forfeitures at the time of grant and revise these estimates, if necessary, in subsequent period if actual forfeitures differ from those estimates. The Company estimates forfeitures of future experience while considering its historical experience.

13. Income Taxes

No provision for taxes on income is included in the accompanying statements of operations because of the net operating losses for both the three months ended July 31, 2009 and 2008. Holdings and Drinks previously filed income tax returns on a June 30 and December 31 tax year, respectively; however, both companies applied for and received a change in tax year to April 30 and file a federal income tax return on a consolidated basis. Olifant files income tax returns on a February 28 tax year. The consolidated net operating loss carry forward as of July 31, 2009 is approximately $30,000,000, available to offset future years' taxable income expiring in various years through 2029.

A valuation allowance has been provided against the entire deferred tax asset due to the uncertainty of future profitability of the Company. Management's position with respect to the likelihood of recoverability of these deferred tax assets will be evaluated each reporting period.

14. Related Party Transactions

Related party transactions, in addition to those referred to in Notes 9, 10, 11 and 12 are as follows:

Consulting and Marketing Fees

For each of the three months ended July 31, 2009 and 2008, the Company incurred fees for services rendered related to sales and marketing

payable to a limited liability company which was controlled by a member of the Company’s board of directors, and previous chairman of the

board aggregating $24,000. As of July 31, 2009 and April 30, 2009 unpaid fees owed to the chairman's firm, aggregated $198,550 and $174,550, respectively.

In fiscal 2003 we entered into a consulting agreement with a company wholly owned by a member of the Company's board of directors. Under the agreement the consulting company is being compensated at a rate of $100,000 per annum. For each of the three months ended July 31, 2009 and 2008 the Company incurred fees aggregating $25,000 under this agreement. As of July 31, 2009 and April 30, 2009 we were indebted to the consulting company in the amount of $281,248 and $256,248, respectively.

In December 2002 the Company entered into a consulting agreement with one of its shareholders which provided for $600,000 in fees payable in five fixed increments over a period of 78 months. The agreement expired on June 9, 2009. For the three months ended July 31, 2009 and 2008 the Company incurred fees aggregating $13,151 and $30,000 , respectively, under this agreement. The Company has an informal agreement with the shareholder pursuant to which he has the option of converting all or a portion of the consulting fees owed him into shares of Holding's common stock at a conversion price to be agreed upon. In March 2009 the consultant elected to convert $120,000 due him for consulting fees into shares of Company stock at a price of $0.35 per share resulting in the Company issuing 342,857 shares to him. In February, 2008 the consultant elected to convert $190,000 due him for consulting fees into shares of Company common stock at a price of $0.50 per share resulting in the Company issuing 380,000 shares to him. Each of the conversions were was at a premium to the market price of the Company’s common on the date of the elections to convert. As of July 31, 2009 and April 30, 2009 amounts owed to this shareholder aggregated $43,151 and $30,000, respectively.

Royalty Fees

In connection with the Company's distribution and licensing agreements with its equity investee the Company incurred royalty expenses for the three months ended July 31, 2009 and 2008 of approximately $2,500 and $9,000, respectively. The operations and the net assets are immaterial.

Loan Payable

The Company is obligated to issue shares of its common stock to several of its shareholders in connection with its June 2009 debt financing (see Note 5).

From July 2007 through July 2009 the Company borrowed an aggregate of $813,035 from our CEO for working capital purposes. The borrowings bear interest at 12% per annum.. For the three months ended July 31, 2009 and 2008 interest incurred on this loan aggregated $9,149 and $8,479, respectively. As of July 31, 2009 and April 30, 2009 amounts owed to our CEO on these loans including accrued and unpaid interest aggregated $335,867 and $305,935, respectively.

15. Customer Concentration

For the three months ended July 31, 2009 four customers accounted for approximately 12% , 19%, 16% and 14%, respectively, of our net sales. For the three months ended July 31, 2008 two different customers accounted for 11% and 12%, respectively, of net sales.

16. Commitments

Lease

The Company leases office space under an operating sublease, with minimum annual rentals of $50,000 through September , 2009 which was renewed for a two year period through September 2011 with minimum annual rentals of $36,000. The Company leased additional office under an operating lease, which expired in March 2009 that required minimal annual rental payments of $51,600.

Rent expense for these leases aggregated approximately $12,000 and $26,000 for the three months ended July 31, 2009 and 2008, respectively.

Future minimum payments for all leases are approximately as follows:

Year Ending
April 30,	Amount
2010		$	29,333
2011			36,000
2012			15,000

License Agreement

In November 2005 the Company entered into an eight-year license agreement for sales of Trump Super Premium Vodka. Under the agreement the Company is required to pay royalties on sales of the licensed product. The agreement requires minimal royalty payments through November 2012 which if not paid could result in termination of the license. The Company is currently in default under the terms of its license agreement with Trump Marks LLC. The licensor has the right to terminate the license, but at present has not formally asserted that right. The Company under a non documented arrangement with the licensor is continuing to sell the product. The Company and licensor are currently in discussion to amend the agreement under mutually beneficial terms.

In 2008 the Company entered into a licensing agreement with Vetrerie Bruni S.p.A. (“Bruni”), which has the patent to the Trump Vodka bottle design. The agreement is retroactive to January 1, 2008 and calls for annual minimum royalties of $150,000. Royalties are due on a per bottle basis on bottles produced by another bottle supplier of approximately 18% of the cost of such bottles. The agreement terminates upon the expiration of the patent or the expiration of the Company’s license agreement with Trump Marks LLC. At July 31, 2009 the Company has accrued $237,500 in fees due Bruni. Due to nonpayment of the outstanding balance the Company was sued by Bruni (see below).

In February 2008 we entered into a joint venture with Grammy Award-winning producer and artist, Dr. Dre. The Company and Dr. Dre have formed the joint venture to identify, develop, and market premium alcoholic beverages, The deal is under the umbrella of the agreement between the Company and Interscope Geffen A&M Records. Our Leyrat Cognac is the joint ventures’ first beverage. In January 2009 the Company launched its Leyrat Estate Bottled Cognac which it imports from a 200 year old distillery in Cognac France. The Company granted 10% of its 50% interest in the brand to the producer of the product , leaving us with a 45% interest, in return for the rights to distribute the product in the United States. The Company has 5% of the rights for the brand in Europe..

Our license with respect to the Kid Rock related trademarks requires payment to the licensor of a per case royalty (or equivalent liquid volume), with certain minimum royalties for years 2 through 5 of the agreement payable on the first day of the applicable year.

OTHER AGREEMENTS

The Company has an agreement with a foreign distributor, through December 2023, to distribute our products in their country. The agreement requires the distributor to purchase a set monthly amount of our products, predominately our Trump Super Premium Vodka for the term of the agreement. The distributor is to pay the Company a monthly fee over the term of the agreement for the rights to be the exclusive distributor in their country. As of July 31, 2009 the distributor has not received its distribution license. Once the distributor receives its license and begins purchasing our products the Company will accrue the monthly “exclusivity” fee to revenue based on the intent of the agreement and such fee.

Litigation

In June 2009, Richard Shiekman, a former employee of the Company, filed a claim against the Company and our chief Executive Officer in Superior Court of Connecticut, Fairfield County (CV 09 4028895 S). The plaintiff seeks $127,250 of unpaid wages and commissions and, $1,500 for reimbursement of expenses. The maximum exposure to the Company and our CEO is $387,000 for treble damages plus attorneys’ fees and costs. The Company believes that the claims made by the plaintiff are false and plans to vigorously defend this suit,. In addition, the Company plans to commence a countersuit for damage and theft of services. We pledged 2,325,000 shares of Company common stock in lieu of a prejudgment remedy.

In February 2009, Vetrerie Bruni S.p.A (“Bruni”) the company which has the patent to the Trump Vodka bottle design filed a complaint against us in the U.S. District Court, Southern District of New York for alleged breach of contract and seeking $225,000 for alleged past due invoices and royalties. The Company filed a counterclaim. The case is presently being defended and discovery is ongoing. The case is scheduled for mediation in October. . The Company has reached a preliminary settlement agreement with Bruni.

In June 2009, Liquor Group Wholesale, Inc. (“Liquor Group”) a company which provided distribution services for us in several states filed a claim for damages against us in Duval County Florida for alleged damages including breach of contract and is seeking approximately $2 million in damages. It is the Company’s opinion that the claim arose out of our termination of the agreements we had with them for their nonperformance, failure of the plaintiff to accurately report sales to the Company and their withholding of information required by the agreements. The Company filed a counterclaim of $500,000 for damages against Liquor Group and has denied their claimed breach of contract claim previously made against it. The Company contends that it is owed money by Liquor Group under the agreements. Liquor Group has not filed a response to the counterclaim for damages. Liquor Group has until the end of September to submit the fee for its claim to proceed to arbitration.

Other than the above we believe that the Company is currently not subject to litigation, which, in the opinion of our management, is likely to have a material adverse effect on us.

17. Subsequent Events

In addition to those referred to in Note 6, 7, 8, and 9, subsequent events which have been reviewed through September 21, 2009 include the following:

As of August 17, 2009, we entered into a Preferred Stock Purchase Agreement (the “Purchase Agreement”) with Optimus Capital Partners, LLC, d/b/a Optimus Special Situations Capital Partners, LLC an unaffiliated investment fund (the “Fund”), which provides that, upon the terms and subject to the conditions set forth therein, the Fund is committed to purchase up to $5,000,000 of our Series B Preferred Stock. Under the terms of the Purchase Agreement, from time to time until August 16, 2011 and at our sole discretion, we may present the Fund with a notice to purchase such Series B Preferred Stock (the “Notice”). The Fund is obligated to purchase such Series B Preferred Stock on the tenth trading day after the Notice date, subject to satisfaction of certain closing conditions. The Fund will not be obligated to purchase the Series B Preferred Stock (i) in the event the closing price of our common stock during the nine trading days following delivery of a Notice falls below 75% of the closing price on the trading day prior to the date such Notice is delivered to the Fund, or (ii) to the extent such purchase would result in the Fund and its affiliates beneficially owning more than 9.99% of our common stock. Our ability to send a notice is also subject to certain conditions. Therefore, the actual amount of the Fund’s investment is not certain.

In connection with the Purchaser Agreement, we also issued to the Fund five-year warrants to purchase 6,750,000 shares of our common stock at an exercise price equal to the closing price of our common stock on the trading day prior to the execution of the Purchase Agreement. The number of shares exercisable under the warrant will be equal in value to 135% of the purchase price of the Series B Preferred Stock to be issued in respect of the related Notice and the exercise price of a corresponding number of shares is subject to adjustment to equal the closing bid price of our common stock on the trading day preceding the Notice. Each warrant will be exercisable on the earlier of (i) the date on which a registration statement registering for resale the shares of common stock issuable upon exercise of such warrant becomes effective and (ii) the date that is six months after the issuance date of such warrant.

The Series B Preferred Stock is redeemable at Registrant’s option on or after the fifth anniversary of the date of its issuance. The Series B Preferred Stock also has a liquidation preference per share equal to the original price per share thereof plus all accrued dividends thereon, and is subject to repurchase by us at the Fund’s election under certain circumstances, or following the consummation of certain fundamental transactions by us, at the option of a majority of the holders of the Series B Preferred Stock.

Holders of Series B Preferred Stock will be entitled to receive dividends, which will accrue in shares of Series B Preferred Stock on an annual basis at a rate equal to 10% per annum from the issuance date. Accrued dividends will be payable upon redemption of the Series B Preferred Stock. The Series B Preferred Stock ranks, with respect to dividend rights and rights upon liquidation senior to our common stock and our Series A Convertible Preferred Stock.

In a concurrent transaction the Fund will borrow up to 10,000,000 shares of our common stock from certain of our non-affiliated stockholders.

The Series B Preferred Stock and warrants, and the shares common stock issuable upon exercise of the warrants have not been registered under the Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements.

Out of the gross proceeds of this Offering, we are obligated to pay Source Capital Group (the "Placement Agent") 10% of the amount we realize on the sale of the Series B Preferred Stock. We will also issue to the Placement Agent, warrants to acquire 5% of the shares of our Common Stock which we deliver on exercise of the Warrants with an exercise price equal to the exercise price of the Warrants that were exercised. (the "Placement Agent Warrants"), which warrants are exercisable for a five year period, will contain cashless exercise provisions as well as anti-dilution provisions in the case of stock splits and similar matters.

In order to secure amendments to our Certificate of Designation with respect our Series A Convertible Preferred Stock (“Series A Shares”)which were required in order for us to enter into the Purchase Agreement, we agreed that that upon any issuance by the Company of any Common Stock with an effective price per share of Common Stock of less than $0.35 per share (“Triggering Issuances”)(subject to adjustment for reverse and forward stock splits and the like), the holders of the Series A Shares(the “Series A Holders”) may, in their sole discretion, at any time thereafter, pursuant to the conversion terms set forth in the Certificate of Designation of the Series A Preferred Stock, convert at the per share price which applied to the Triggering Issuance, such number of shares of Preferred Stock as will result, in the aggregate, in the issuance by the Company of the same number of shares of Common Stock to the Series A Holders as were issued in the Triggering Issuances, which rights will be exercisable by the Series A Holders pro rata to the number of shares of Preferred Shares held by each of them on the date the Triggering Issuances occur.

On August 5, 2009 we issued 350,000 shares of our common stock having an aggregate value of $49,000 to an attorney for the Company for services he has performed.

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

Introduction

The following discussion and analysis summarizes the significant factors affecting (1) our consolidated results of operations for the three months ended July 31, 2009, compared to the three months ended July 31, 2008, and (2) our liquidity and capital resources. This discussion and analysis should be read in conjunction with the consolidated financial statements and notes included in Item 1 of this Report, and the audited consolidated financial statements and notes included in Form 10-K, which Report was filed on August 13, 2009.

RESULTS OF OPERATIONS

Three months ended July 31, 2009 compared to three months ended July 31, 2008.

Net Sales: Net sales were $434,000 for the three months ended July 31, 2009 compared to net sales of $1,069,000 for the three months ended July 31, 2008. The decrease is predominantly due to inventory shortfalls as a result of insufficient working capital and the resulting delay of certain shipments. Trump Super Premium Vodka sales aggregated $85,000 which accounted for 20% of total dollar sales for the three months ended July 31, 2009. For the three months ended July 31, 2008, Trump Super Premium Vodka sales aggregated $521,000 which accounted for 49% of total dollar sales. We believe that the recent economic downturn has hurt the sales of this premium product. In addition sales of Trump for the three months ended July 31, 2009 were effected by issues relating to our California and, Chicago distributors and with Liquor Group, who represented us in several “controlled states” which have been corrected with new distributors being appointed. Sales of all alcoholic products aggregated $434,000 for the three months ended July 31, 2009 compared to $795,000 for the three months ended July 31, 2008. Net sales of Old Whiskey River Bourbon totaled $38,000 on 293 cases sold for the three months ended July 31, 2009 compared to net sales of $96,000 on 763 cases sold for the three months ended July 31, 2008. There were no sales of our Aguila Tequila for the three months ended July 31, 2009 compared to net sales of $32,000 on 374 cases for the three months ended July 31, 2008. Net sales of our Damiana Liqueur aggregated $29,400 on 214 cases sold for the three months ended July 31, 2009 compared to net sales of $74,000 on 558 cases sold for the three months ended July 31, 2008 Net sales of our premium imported wines totaled $17,000 on 796 cases sold for the three months ended July 31, 2009 compared to net sales of $72,000 on 796 cases sold for the three months ended July 31, 2008. For the three months ended July 31, 2009 there were no sales of our non alcoholic product, Newman’s Own sparkling fruit beverages and sparkling waters due to the Company’s decision to exit this business, compared to sales of $273,000 on 29,482 cases sold for the three months ended July 31, 2008. We have made the strategic decision to discontinue selling the Newman’s Own products in light of the fact our contract ends in October 2009. The Newman’s Own organization and the Company have agreed that the Newman’s Own organization will assume the selling of the product. The Company’s decision was based on enhancing profitability and our inability to have equity in the brand. Net sales of our Olifant Vodka which was acquired by the Company in January 2009 aggregated $234,000 on 5,514 cases sold for the three months ended July 31, 2009 The Company’s management believes, and customer demand indicates, that with national distribution already in place sales of these products will be very successful in this economic environment. Net sales of our Leyrat Cognac , which commenced in January 2009, aggregated $4,500 on 30 cases for the three months ended July 31, 2009. In partnership with Kid rock the Company the Company has the license rights to distribute Kid Rock’s BadAss Beer on a worldwide basis for a term of five years with an option to renew for an additional five years. In July 2009 the company commenced sales of BadAss Beer on a very limited basis in the state of Michigan recognizing $21,970 in net sales on the equivalent of 2,325 cases sold.

Gross margin: Gross profit was $128,000 (29% of net sales) for the three months ended July 31, 2009 compared to gross profit of $338,000 (32% of net sales) for the three months ended July 31, 2008. Gross margin for our wine, spirits and beer business was 34% percent for the three months ended July 31, 2009 compared to 35% for the prior year. Gross margin for our non alcoholic business was 23% for the three months ended July 31, 2008. For the three months ended July 31, 2009 we wrote-off Newman’s Own related inventory resulting in a charge of $29,000 to cost of goods sold. The inherent low margins for the Newmans’ Own products, the increased costs in production together with the inability to sustain its growth has lead to our decision to discontinue to sell the products.

Selling, general and administrative: Selling, general and administrative expenses totaled $1,624,000,000 for the three months ended July 31, 2009, compared to $1,617,000 for the three months ended July 31, 2008, , an increase of 0.4%. Total selling and marketing costs aggregated $638,000 for the three months ended July 31, 2009 compared to $761,000 for the three months ended July 31, 2008. For the three months ended July 31, 2009 marketing expenses included $290,000 of fees relating to the Olifant Summer Concert Series. Local marketing expenses decreased from the prior year because many customers were out of inventory of our brands. General and administrative expenses aggregated $986,000 for the three months ended July 31, 2009 compared to $856,000 for the three months ended July 31, 2008. Legal and finance fees have increased from the prior year due to our June 2009 financing and increase in litigation.

Other Income (expense): Interest expense totaled $438,000 for the three months ended July 31, 2009 compared to expense of $24,000 for the three months ended July 31, 2008. During the three months ended July 31, 2009 we incurred non-cash charges of $66,000 relating to stock issued to one investor in connection with extending his note. In addition during the three months ended July 31, 2009 we incurred approximately $347,000 in non-cash interest charges relating to our June sales of our debentures.

Income Taxes: We have incurred substantial net losses from our inception and as a result, have not incurred any income tax liabilities. Our federal net operating loss carry forward is approximately $28,000,000, which we can use to reduce taxable earnings in the future. No income tax benefits were recognized for the three months ended July 31, 2009 and 2008 as we have provided valuation reserves against the full amount of the future carry forward tax loss benefit. We will evaluate the reserve every reporting period and recognize the benefits when realization is reasonably assured.

IMPACT OF INFLATION

Although management expects that our operations will be influenced by general economic conditions we do not believe that inflation has had a material effect on our results of operations.

SEASONALITY

As a general rule, the second and third quarters of our fiscal year (August-January) are the periods that we realize our greatest sales as a result of sales of alcoholic beverages during the holiday season. During the fourth quarter of our fiscal year (February-April) we generally realize our lowest sales volume as a result of our distributors working off inventory which remained on hand after the holiday season. As we increase our beer sales, as a result of the launch of Kid Rock’s beer, we would expect sales in first quarter of our fiscal year (May-July), to increase since the spring and summer tends to be the strongest periods for sales of this beverage.

FINANCIAL LIQUIDITY AND CAPITAL RESOURCES

Although we expect that our working capital position will benefit from our June 2009 sales of our debentures and our August 2009 agreement relating to our Series B Preferred Stock, our business continues to be effected by insufficient working capital. We will need to continue to carefully manage our working capital and our business decisions will continue to be influenced by our working capital requirements. Lack of liquidity continues to negatively affect our business and curtail the execution of our business plan.

We have experienced net losses and negative cash flows from operations and investing activities since our inception in 2003. Net losses for the three months ended July 31, 2009 and 2008 were $1,876,000 and $1,303,000 , respectively. Cash used in operating activities for the three months ended July 31, 2009 and 2008 and 2008 was $451,000 and $81,000, respectively. We have to date funded our operations predominantly through bank borrowings, loans from shareholders and investors, and proceeds from the sale of our common stock, preferred stock, and warrants.

In June, 2009 (the "Closing Date") we sold to one investor (the “Investor”) a $4,000,000 non interest bearing debenture with a 25% ($1,000,000) original issue discount, that matures in 48 months from the Closing Date (the Drink’s Debenture) for $3,000,000, consisting of $375,000 paid in cash at closing and eleven secured promissory notes, aggregating $2,625,000, bearing interest at the rate of 5% per annum, each maturing 50 months after the Closing Date(the “Investor Notes”). The Investor Notes, the first ten of which are in the principal amount of $250,000 and the last of which is in the principal amount of $125,000, are mandatorily pre-payable, in sequence, at the rate of one note per month commencing on the seven month anniversary of the Closing Date. If the prepayment occurs, the entire aggregate principal balance of the Investor Notes (less the $200,000 August prepayment) in the amount of $2,425,000, together with the interest outstanding thereon, will be paid in eleven monthly installments (ten in the amount of $230,000 and one the amount of $125,000) such that the entire amount would be paid to us by November 26, 2010. These monthly payments if made will help fund operations over their eleven month period.

The Company has an agreement with a factor entered into April 2009, pursuant to which a substantial portion of the Company’s accounts receivable, is sold to the factor with recourse to bad debts and other customer claims. The Company receives a cash advance equal to 80% of the invoice amount and is paid the balance of the invoice less fees incurred at the time the factor receives the final payment from the customer. The factor fee is 1.75% for the first 30 days the invoice remains unpaid and 0.07% for each day thereafter. The facility shall remain open until a 30 day notice by either party of termination of the agreement The facility is secured by all assets of the Company.

On December 18, 2007 (the "Closing Date") the Company sold to three related investors (the "December Investors") an aggregate of 3,000 shares of our Series A Preferred Stock, $.001 par value (the "Preferred Stock"), at a cash purchase price of $1,000 per share, generating gross proceeds of $3,000,000 (the “December Financing”). The Preferred Stock has no voting or dividend rights. Out of the gross proceeds of the December Financing, we paid Midtown Partners & Co., LLC (the "Placement Agent") $180,000 in commissions and $30,000 for non-accountable expenses. We also issued, to the Placement Agent, warrants to acquire 600,000 shares of our Common Stock for a purchase price of $.50 per share (the "Placement Agent Warrants"), which warrants are exercisable for a five year period and contain anti-dilution provisions in the events of stock splits and similar matters. Both the commissions and expenses were accounted for as a reduction of Additional Paid in Capital.

The financing that we consummated in January 2007 (the “January Financing”) provided participating investors (the “January Investors”) rights to exchange the common stock they acquired for securities issued in subsequent financings which were consummated at a common stock equivalent of $2.00 per share or less. Under this provision, the January Investors have exchanged 4,444,445 shares of common stock for 8,000 shares of Preferred Stock. The 4,444,445 shares returned were accounted for as a reduction of Additional Paid in Capital and a reduction of Common Stock since the shares have been cancelled. Also in the January Financing, the January Investors acquired warrants to purchase 3,777,778 shares of our common stock at an exercise price of $3.00 per share (the “January Warrants”). These warrants were exercised at $.20 per share of common stock.

Each of our December Investors participated in the January Financing but not all of our January Investors participated in the December Financing.

The December Investors may allege that certain penalties are owed to them by the Company based on certain time requirements in the documentation relating to the December Financing. If such claim is successfully made, we may lack the liquidity to satisfy such claim.

On January 15, 2009 (the “Closing”), the Company acquired 90% of the capital stock of Olifant U.S.A, Inc. (“Olifant”) , pursuant to a Stock Purchase Agreement (the “Agreement. As security for the balance due to the sellers the Company issued a promissory note for the $800,000 balance. The promissory note is payable in four annual installments, the first payment is due one year from Closing. Each $200,000 installment is payable $100,000 in cash and Company stock valued at $100,000 with the stock value based on the 30 trading days immediately prior to the installment date. The cash portion of the note accrues interest at a rate of 5% per annum.

ROYALTIES/LICENSING AGREEMENTS

In November 2005, the Company entered into an eight-year license agreement for sales of Trump Super Premium Vodka. Under the agreement the Company is required to pay royalties on sales of the licensed product. The agreement provides for certain minimum royalty payments through November 2012 which if not satisfied could result in termination of the license.

Under our license agreement for Old Whiskey River, we are obligated to pay royalties of between $10 and $33 per case, depending on the size of the bottle.

Under our license agreement for Damaina Liqueur we pay $3 per case.

Under our license agreement with Aguila Tequila we are obligated to pay $3 per case.

Under our joint venture agreements with Dr. Dre and Interscope Records, which includes our Leyrat Cognac, we are obligated to pay a percentage of gross profits, less certain direct selling expenses.

The license agreement with respect tot the Kid Rock related tradememarks requires the payment of a per case royalty (or equivalent liquid volume), with certain minimum royalties for years 2 through 5 of the agreement payable on the first day of the applicable year.

OTHER AGREEMENTS

The Company has an agreement with a foreign distributor, through December 2023, to distribute our products in their country. The agreement requires the distributor to purchase a set monthly amount of our products, predominately our Trump Super Premium Vodka for the term of the agreement. The distributor is to pay the Company a monthly fee over the term of the agreement for the rights to be the exclusive distributor in Israel. As of July 31, 2009 the distributor has not received its distribution license. As of july 31, 2009 the distributor has not received its distribution license. Once the distributor receives its license performance under the contract will commence.

In April 2009 the Company entered into a sponsorship agreement with concert producer and promoter to promote Olifant Vodka in its concert tour which runs from July 10, thru August 8, 2009. In consideration for their services the Company has given the promoter the following: 1,500,000 shares of its common stock which were issued in May 2009; 3% of the net profits of Olifant for each fiscal year beginning following the third anniversary of the agreement (years beginning May 2012) and ending the earlier of Olifant’s fiscal year ending in 2018 or when Olifant is sold, if that were to occur. If Olifant is sold prior to expiration the promoter will receive 3% of the consideration received from the sale. The Company has agreed to grant an additional 2% (of Olifant or a future brand) for promotion in the 2010 concert tour; and warrants to purchase 200,000 shares of Company stock at an exercise price of $.50 per share which shall be issued at the end of the 2009 tour. The value of the 1,500,000 shares issued aggregating $225,000, based on the market price of the Company’s stock on the date of the agreement, and the warrants granted , $8,000 , will be amortized over the life of the tour. In accordance with the agreement the amount of cash and stock based consideration issued by the Company shall not be less than $400,000. In accordance with the agreement, in May 2009, the Company issued a promissory note to the promoter for a loan in the same amount to cover expenses relating to the tour. The note, which bears no interest, was to be paid in four equal installments beginning in June 2009 is secured by 500,000 shares of Company stock. The promoter has deferred the requirement of payment under the note pending the completion of a future financing for the Company at which time they will elect payment in cash or take the 500,000 shares of stock.

In fiscal 2003 we entered into a consulting agreement with a company, Marvin Traub & Associates (“MTA”), owned 100% by Marvin Traub, a member of the Board of Directors. Under the agreement, MTA is being compensated at the rate of $100,000 per annum. As of July 31, 2009, we were indebted to MTA in the amount of $281,248.

In December 2002 the Company entered into a consulting agreement with one of its shareholders which provides for $600,000 in fees payable in five fixed increments over a period of 78 months. The agreement expired on June 9, 2009. The Company has an informal agreement with the shareholder pursuant to which he has the option of converting all or a portion of the consulting fees owed him into shares of Holding's common stock at a conversion price to be agreed upon. In March 2009 the consultant elected to convert $120,000 due him for consulting fees into shares of Company stock at a price of $0.35 per share resulting in the Company issuing 342,857 shares to him. In February, 2008 the consultant elected to convert $190,000 due him for consulting fees into shares of Company common stock at a price of $0.50 per share resulting in the Company issuing 380,000 shares to him. Each of the conversions were was at a premium to the market price of the Company’s common on the date of the elections to convert. As of July 31, 2009 to this shareholder aggregated $43,000.

Since we were founded in 2002, the implementation of our business plan has been negatively affected by insufficient working capital. Business judgments have been substantially affected by the availability of working capital. We expect that our working capital position and our cash balance will benefit from our June 2009 sale of our debentures and potentially, the issuance of our Series B Preferred Stock our business continues to be effected by insufficient working capital. We will need to continue to carefully manage our working capital and our business decisions will continue to be influenced by our working capital requirements. Therefore, our short term business strategy will rely heavily on our cost efficient icon brand strategy and the resources available to us from our media and entertainment partners We will continue to focus on those of our products which we believe will provide the greatest return per dollar of investment with the expectation that as a result of increases in sales and the resulting improvement in our working capital position, we will be able to focus on those products for which market acceptance might require greater investments of time and resources. To that end, our short-term focus, for beer and spirits, will be on Trump Super Premium Vodka, Old Whiskey River Bourbon, Damiana, Aquila Tequila, and in association with our recent joint venture with music icon Dr. Dre, our Leyrat Cognac and our recent joint venture with music icon Kid Rock, BadAss Beer. In order for us to continue and grow our business, we will need additional financing which may take the form of equity or debt. There can be no assurance we will be able to secure the financing we require, and if we are unable to secure the financing we need, we may be unable to continue our operations. We anticipate that increased sales revenues will help to some extent, but we will need to obtain funds from equity or debt offerings, and/or from a new or expanded credit facility. In the event we are not able to increase our working capital, we will not be able to implement or may be required to delay all or part of our business plan, and our ability to attain profitable operations, generate positive cash flows from operating and investing activities and materially expand the business will be materially adversely affected.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

We do participate in certain transactions which are settled in foreign currencies. Such transactions are short term in nature and any corresponding fluctuation in foreign exchange rates have not been material. We do not hold instruments that are sensitive to changes in interest rates or commodity prices. Therefore, we believe that we are not materially exposed to market risks resulting from fluctuations from such rates or prices.

Item 4. Controls and Procedures

Disclosure Controls and Procedures

We have adopted and maintain disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the "Exchange Act")) that are designed to provide reasonable assurance that information required to be disclosed in our reports under the Exchange Act, is recorded, processed, summarized and reported within the time periods required under the SEC's rules and forms and that the information is gathered and communicated to our management, including our Chief Executive Officer (Principal Executive Officer) and Chief Financial Officer (Principal Financial Officer), as appropriate, to allow for timely decisions regarding required disclosure.

Our Chief Executive Officer and our Chief Financial Officer evaluated the effectiveness of our disclosure controls and procedures as of July 31, 2009 as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act. Our management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based on the evaluation of our disclosure controls and procedures as of October 31, 2008, our Chief Executive Officer, who also is our principal executive officer, and our Chief Financial Officer, who is our principal financial officer, concluded that, as of such date, our disclosure controls and procedures were effective to provide reasonable assurance that information required to be declared by us in reports that we file with or submit to the SEC is (1) recorded, processed, summarized, and reported within the periods specified in the SEC’s rules and forms and (2) accumulated and communicated to our management, including our Chief Executive Officer and our Chief Financial Officer, to allow timely decisions regarding required disclosure.

There was no change in our internal control over financial reporting that occurred during the fiscal quarter ended July 31, 2009 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II OTHER INFORMATION

Item 1. Legal Proceedings

In February 2009, Vetrerie Bruni S.p.A (“Bruni”) the company which has the patent to the Trump Vodka bottle design filed a complaint against us in the U.S. District Court, Southern District of New York for alleged breach of contract and seeking $225,000 for alleged past due invoices and royalties. The Company filed a counterclaim. The case is presently being defended and discovery is ongoing. The case is scheduled for mediation in October 2009. The Company has reached a preliminary settlement agreement with Bruni.

In June 2009, Liquor Group Wholesale, Inc. (“Liquor Group”) a company which provided distribution services for us in several states filed a claim for damages against us in Duval County Florida for alleged damages including breach of contract and is seeking approximately $2 million in damages. It is the Company’s strong opinion that the claim arose out of our termination of the agreements we had with them for their nonperformance, failure of the plaintiff to accurately report sales to the Company and their withholding of information required by the agreements. The Company filed a counterclaim of $500,000 for damages against Liquor Group and has denied their claimed breach of contract claim previously made against it. The Company contends that it is owed money by Liquor Group under the agreements. Liquor Group has not filed a response to the counterclaim for damages. Liquor Group has until the end of September to submit the fee for its claim to proceed to arbitration..

Other than the above we believe that the Company is currently not subject to litigation, which, in the opinion of our management, is likely to have a material adverse effect on us.

Item 1A. Risk Factors

There have been no material changes from the risk factors as previously disclosed in our Annual Report on Form 10-K for the year ended April 30, 2009.

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

In August 2009, a consultant to the Company converted $ 307,981 of past due and future consideration into 2,053,210 shares of Company stock.

In connection with our June 2009 sale of our debenture, we allowed, three of the investors in our Series A Preferred Stock, to convert an aggregate of $335,800 (335.8 shares) of our preferred stock into 3,358,000 shares of our common stock. In addition, in August 2009 we allowed the two other holders of our Series A Preferred Stock to convert an aggregate of $134,625 (134.6 shares) of our Series A Preferred Stock into 1,200,000 shares of our common stock.

In a concurrent transaction the Fund will borrow up to 10,000,000 shares of our common stock from certain of our non-affiliated stockholders.

As part of our June 2009 sale of our debentures we issued warrants to purchase 2,500,000 shares of our common stock at an exercise price of $0.35 per share (the “Investor Warrants”). The Investor Warrants contain full ratchet anti-dilution provisions, as to the exercise price and are exercisable for a five year period.

In May 9, 2009 we issued a sales consultant 85,000 shares of our common stock with an aggregate value of $11,900 for past due fees owed to him.

On July 1, 2009 we issued 28,000 shares of our common stock having an aggregate value of $3,600 to a company which provides freight services to the company.

On July 1, 2009 we issued 100,000 shares of our common stock having an aggregate value of $13,000 to a sales consultant for the Company for services he has provided to us.

On July 29, 2009 we issued 71,500 shares of our common stock having an aggregate value of $10,000 to a consultant for the Company for services he has performed.

In March , 2009, the Company granted 1,175,000 shares of its common stock under its 2008 Stock Incentive Plan (the” Plan”) to several of its employees as consideration for past services they have performed for the Company. 750,000 of these shares (including 250,000 each to the Company’s Chief Operating Officer and Chief Financial Officer) were issued in July 2009..

Item 3. Defaults Upon Senior Securities

None

Item 4. Submission of Matters to a Vote of Security Holders

None

Item 5. Other Information

None

Item 6. Exhibits

31.1		Certification of J. Patrick Kenny, President and Chief Executive Officer

31.2		Certification of Jeffrey Daub, Chief Financial Officer

32.1		Certification of J. Patrick Kenny, President and Chief Executive Officer, pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.2		Certification of Jeffrey Daub, Chief Financial Officer, pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of The Sarbanes-Oxley Act of 2002.

SIGNATURE

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 hereunto duly authorized.

September 21 , 2009

	DRINKS AMERICAS HOLDINGS, LTD.

	By:	/s/ J. Patrick Kenny
		J. Patrick Kenny President and Chief Executive Officer

	By:	/s/ Jeffrey Daub
		Jeffrey Daub Chief Financial Officer