High Performance Beverages (TBEV) 10-Q 2014 Q2 Quarterly report

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 January 31, 2014

o TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE EXCHANGE ACT

For the transition period from ___________ to _____________

HIGH PERFORMANCE BEVERAGES COMPANY

(Exact name of small business issuer as specified in its charter)

Nevada	000-54973	27-3566307
(State or other jurisdiction of incorporation or organization)	(Commission file number)	(IRS Employer Identification  Number)

5137 E. Armor St., Cave Creek, AZ 85331

(Address of principal executive office)

602.326.8290

(Issuer’s telephone number)

Check whether the issuer (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for such shorter period that the issuer 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 filer. See definition of “accelerated filer” and “large accelerated filer” in Rule 12b-2 of the Exchange Act (Check one):

Large Accelerated Filer o Accelerated Filer o Non-Accelerated Filer o Smaller Reporting Company x

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

State the number of shares outstanding of each of the issuer’s classes of common equity as of the latest practicable date: 134,582,603 shares of Common Stock as of April 15, 2014.

HIGH PERFORMANCE BEVERAGES COMPANY

FORM 10-Q

January 31, 2014

INDEX

	Page
PART I - FINANCIAL INFORMATION
Item 1.     Financial Statements (Unaudited)	3
Item 2.     Management's Discussion and Analysis of Financial Condition and Results of Operations	25
Item 3.     Quantitative and Qualitative Disclosures About Market Risk	28
Item 4.     Controls and Procedures	28
PART II - OTHER INFORMATION
Item 1.     Legal Proceedings	28
Item 1A.  Risk Factors	28
Item 2.     Unregistered Sales of Equity Securities and Use of Proceeds	29
Item 3.     Defaults Upon Senior Securities	29
Item 4.     Mine Safety Disclosures	29
Item 5.     Other Information	29
Item 6.     Exhibits and Reports on Form 8-K	29
SIGNATURES	30

2

PART I - FINANCIAL INFORMATION

Item 1.  Financial Statements

HIGH PERFORMANCE BEVERAGES COMPANY

(Formerly Dethrone Royalty Holdings, Inc.)

BALANCE SHEETS

(Unaudited)

	January 31, 2014			July 31, 2013 (restated)
ASSETS
Current Assets
Cash	$	12,403			3,920
Inventory		31,149			31,034
Deferred loan costs		-		$	174,857
Total Current Assets		43,552			209,811
TOTAL ASSETS	$	43,552		$	209,811
LIABILITIES AND STOCKHOLDERS’ (DEFICIT)
Current Liabilities
Accrued expenses	$	143,052		$	76,979
Convertible notes payable, net of discount of $88,852 and 0, respectively		366,948			270,000
Derivative liability		899,350			242,430
Total Current  Liabilities		1,409,350			589,409
Total Liabilities		1,409,350			589,409
Commitments and contingencies (Note 6)		-			-
Stockholders’ (Deficit)
Preferred stock: $0.001 par value; 1,000,000 shares authorized; no shares issued or outstanding		-			-
Common stock: $0.001 par value; 500,000,000 shares authorized; 134,582,603 and 103,970,000 shares issued and outstanding at January 31, 2014 and July 31, 2013, respectively		134,583			103,970
Stock subscriptions payable		260,239			220,839
Additional Paid-in Capital		2,695,611			1,662,132
Retained earnings from discontinued operations		6,944			6,944
Accumulated deficit		(4,463,175	)		(2,373,483	)
Total Stockholders’ (Deficit)		(1,365,798	)		(379,598	)
Total Liabilities and Stockholders’ Deficit	$	43,552		$	209,811

The accompanying notes are an integral part of these financial statements

3

HIGH PERFORMANCE BEVERAGES COMPANY

(Formerly Dethrone Royalty Holdings, Inc.)

STATEMENTS OF OPERATIONS

(Unaudited)

	Three months ended January 31,						Six months ended January 31,
	2014			2013 (restated)			2014			2013 (restated)
REVENUES	$	1,108		$	-		$	1,481		$	-
COST OF GOOD SOLD		2,971			-			4,363			-
GROSS (LOSS)		(1,863	)		-			(2,882	)		-
OPERATING EXPENSES
General and administrative		19,151			122,293			96,761			175,673
Marketing		7,314			139,998			14,392			183,129
Product development		-			15,275			-			37,019
Compensation		52,932			12,500			1,039,992			314,500
TOTAL OPERATING EXPENSES		79,397			290,066			1,151,145			710,321
OTHER (INCOME) EXPENSE
Interest expense		53,062			8,389			262,330			8,389
Change in fair value of derivative liability		(241,147	)		-			656,920			-
Total Other (Income ) Expenses		(188,085	)		8,389			919,250			8,389
NET LOSS	$	106,825		$	(298,455	)	$	(2,073,277	)	$	(718,710	)
NET LOSS PER SHARE: BASIC AND DILUTED	$	(0.00	)	$	(0.00	)	$	(0.02	)	$	(0.01	)
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING: BASIC AND DILUTED		116,726,284			96,466,703			108,352,514			95,292,077

 

The accompanying notes are an integral part of these financial statements

4

HIGH PERFORMANCE BEVERAGE COMPANY

(Formerly Dethrone Royalty Holdings, Inc.)

STATEMENTS OF CASH FLOWS

FOR THE SIX MONTHS ENDED JANUARY 31, 2014 AND 2013

(Unaudited)

	2014			2013 (restated)
CASH FLOWS FROM OPERATING ACTIVITIES
Net (loss)	$	(2,073,277	)	$	(718,710	)
Adjustments to reconcile net loss to net cash used in operating activities:
Share-based compensation		966,292			470,939
Amortization of deferred financing costs		174,857			107,779
Amortization of debt discount		11,148			-
Change in derivative liability		656,920			-
Changes in assets and liabilities:
Inventory		(115	)		(64,238	)
Accrued expenses		49,658			17,698
Cash Flows Provided by (Used in) Operating Activities		(214,517	)		(208,832	)
CASH FLOWS FROM  INVESTING ACTIVITIES		-			-
CASH FLOWS FROM  FINANCING ACTIVITIES
Proceeds from convertible notes payable		223,000			100,000
Sales of common stock		-			111,361
Cash Flows Provided by Financing Activities		223,000			211,361
NET INCREASE  IN CASH		8,483			2,529
Cash, beginning of period		3,920			-
Cash, end of period	$	12,403		$	2,529
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for interest	$	-		$	-
Cash paid for income taxes	$	-		$	-
Conversion of convertible notes payable	$	16,000		$	-
Shares issued for loan origination costs	$	325,000

The accompanying notes are an integral part of these financial statements
 

5

HIGH PERFORMACE BEVERAGE COMPANY

(Formerly Dethrone Royalty Ho4ldings, Inc.)

Notes to the Financial Statements

(Unaudited)

NOTE 1 - BASIS OF PRESENTATION AND ACCOUNTING POLICIES

Interim financial statements

The accompanying unaudited interim financial statements and related notes have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information, and with the rules and regulations of the United States Securities and Exchange Commission set forth in Article 8 of Regulation S-X.  Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements.  The unaudited interim financial statements furnished reflect all adjustments (consisting of normal recurring accruals) which are, in the opinion of management, necessary to a fair statement of the results for the interim periods presented.  Unaudited interim results are not necessarily indicative of the results for the full fiscal year.  These financial statements should be read in conjunction with the financial statements of the Company for the fiscal year ended July 31, 2013 and notes thereto contained in the Company’s Annual Report on Form 10-K.

Share-Based Compensation

The Company issues stock-based compensation awards to contractors, vendors and for marketing purposes. This compensation is generally in the form of restricted shares of common stock.

The Company measures and recognizes compensation expense for all stock-based awards based on the awards' fair value which is generally the quoted market value of common shares on the date that the contract mandating the award issuance is executed. The Company recognizes the expense on a straight-line basis over the service period of the related contract. However, if shares of common stock are issued as of the inception of a contract period and the Company does not have the right to recover any of the shares for nonperformance, the entire expense is recognized at the inception date of the contract.

Basic and Diluted Loss Per Common Share

Net loss per common share is computed pursuant to section 260-10-45 of the FASB Accounting Standards Codification. Basic and diluted net income per common share has been calculated by dividing the net income for the period by the basic and diluted weighted average number of common shares outstanding assuming that the Company incorporated as of the beginning of the first period presented. There were no dilutive shares outstanding at January 31, 2014 or 2012.  Issuable common stock is not included in the calculation of basic or diluted weighted average number of common shares outstanding because including these shares would be antidilutive.

Discontinued Operations

In accordance with ASC 205-20, Presentation of Financial Statements-Discontinued Operations (“ASC 205-20”), the Company reported the results of its commercial cleaning services as a discontinued operation. The results of operations of business dispositions are   segregated from continuing operations and reflected as discontinued operations in current and prior periods. The application of the principle is discussed in Note 5, Discontinued Operations.

Recently Issued Accounting Standards

There were no new accounting pronouncements that had a significant impact on the Company’s operating results or financial position.
 

6

HIGH PERFORMACE BEVERAGE COMPANY

(Formerly Dethrone Royalty Holdings, Inc.)

Notes to the Financial Statements

(Unaudited)

NOTE 2 - GOING CONCERN

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As reflected in the accompanying financial statements, the Company had negative working capital and a net stockholders’ deficit at January 31, 2014 and had no committed source of debt or equity financing.

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

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

NOTE 3 - CONVERTIBLE NOTES PAYABLE

Convertible notes payable consists of the following:

	January 31,		July 31,
Description	2014		2013
On November 15, 2012, the Company entered into a Senior Secured Promissory Note (the “Note”) with an unaffiliated party (the “Third Party”) under which the Company received a one-year loan with a principal balance of $100,000. The loan bears interest at 20% per annum with interest payments due quarterly. In addition, the Company issued 2,500,000 shares of restricted common stock to the lender and Mr. Holley and McBride pledged their 56,250,000 shares of the Company’s common stock as collateral and transferred 1,000,000 shares of free trading shares to the lender. If the Company goes into default of the provisions of the loan, it becomes convertible into the Company’s common stock at a price of $0.001 per share (100 million shares). If an event of default occurs, the lender will have the ability of becoming the controlling shareholder of the Company. The Company recorded deferred financing costs of $560,000 in connection with these transfers.  The deferred financing costs is being amortized to interest expense over the term of the loan or twelve months. The company reflected amortization on the deferred financing costs in the amount of $148,111 for the three months ended January 31, 2014, which is reflected in the statement of operations.  On June 20, 2013, the Company and the Third party entered into an Amended and Restated Senior Secured Convertible Promissory Note (the “Amended Note”) which amended certain terms of the Note. Pursuant to the Amended Note, the Company’s repayment of the principal balance of the Amended Note is secured by all the assets of the Company. In addition, the provisions of the Note whereby Mssrs. Holley and McBride pledged 56,250,000 of their shares of common stock of the Company were removed.	$	100,000	$	100,000

7

HIGH PERFORMACE BEVERAGE COMPANY

(Formerly Dethrone Royalty Holdings, Inc.)

Notes to the Financial Statements

(Unaudited)

NOTE 3 - CONVERTIBLE NOTES PAYABLE (cont'd)

On February 27, 2013, the Company entered into a $335,000 convertible loan agreement. The agreement provides for a $35,000 original issue discount. The lender, at its discretion, may provide funds up to $300,000 to the Company. It provided $60,000 at the closing of the agreement on April 30, 2013. All loans under the agreement are payable in full one year after the funds are issued together with a prorated portion of the original issue discount. All amounts outstanding under the agreement become convertible, at the lender’s discretion, into shares of the Company’s common stock starting 180 days from the execution date of the agreement. The conversion rate per share is the lower of (i) $0.044 or (ii) 60% of the lowest trade price during the 25 trading days prior to a conversion notice. The lender has agreed that it will not execute any short trades and, at no time, will hold more than 4.9% of the Company’s outstanding common stock. If the Company repays all amounts outstanding under the agreement within 90 days of the execution date, there will be no interest amounts due. If it does not pay all amounts due within 90 days of the execution date, it cannot make any other prepayments of the amounts outstanding without the consent of the lender. In addition, there will be a one-time interest charge of 12% of the amounts outstanding. The Company must also register all shares that are issuable under the agreement in any Registration Statement that it files with the SEC for any purpose.	92,800	115,000
On April 30, 2013, the Company sold an 18% Senior Convertible Debenture in the principal amount of $60,000 (the “Debenture”). The Debenture matures on April 30, 2014 and has an interest rate of 18% per annum payable monthly and on each conversion date. The conversion price of the Debenture is 65% of the average of the lowest three closing bid prices of the Common Stock for the twenty trading days immediately prior to the conversion date. Upon an Event of Default (as defined in the Debenture), the outstanding principal amount of the Debenture plus accrued but unpaid interest, liquidated damages and other amounts owing on the Debenture through the date of the acceleration shall become at the Debenture holder’s election immediately due and payable in cash at the Mandatory Default Amount (as defined in the Debenture). Commencing five days after the occurrence of an Event of Default that results in the eventual acceleration of the Debenture, the interest rate on the Debenture shall accrue at an interest rate equal to the lesser of 22% per annum or the maximum rate permitted under applicable law. In connection with the sale of the Debenture, on April 30, 2013 (the “Initial Exercise Date”) the Company issued the purchaser of the Debenture a warrant to purchase 3,726,708 shares of the Company’s common stock at an exercise price of $.03 per share (subject to adjustment as provided in the debenture). The Warrant is exercisable on a cashless basis (as provided in the Warrant) and as a result there is no assurance that any part of the Warrant will be exercised for cash. The warrant terminates three years from the Initial Exercise Date and on such date the Warrant shall be automatically exercised via cashless exercise. The fair market value of the warrant was $50,777 on the date of issuance.	40,000	55,000

8

 HIGH PERFORMACE BEVERAGE COMPANY

(Formerly Dethrone Royalty Holdings, Inc.)

Notes to the Financial Statements

(Unaudited)

NOTE 3 - CONVERTIBLE NOTES PAYABLE (cont'd)

On October 10, 2013, Dethrone Royalty Holdings, Inc. (the “Company”), entered into a securities purchase agreement (the “SPA”) with an investor (“Investor”), pursuant to which the Investor purchased a master promissory note (the “Master Note”) with a principal balance of $48,000 for a purchase price of $40,000 at an original issuance discount of $4,000.  The Company also agreed to pay $4,000 worth of legal, accounting and due diligence costs to the Investor. Pursuant to the Master Note, the Investor has the right, solely in the Investor’s discretion, to subsequently purchase up to eight (8) additional promissory notes (each, an “Additional Note”, the Master Note and each Additional Note collectively, the “Notes”), at any time from the date of issuance of the Master Note until October 10, 2014.  Each Additional Note shall have a principal balance of $22,000 and shall have a purchase price of $20,000, at an original issue discount of $2,000. Pursuant to the Master Note, if the Company repays the entire balance of each Note prior to the Prepayment Opportunity Date (as defined in the Master Note), the Company shall pay an interest rate equal to 0% per annum.  If the Company does not repay the entire balance of each Note prior to the Prepayment Opportunity Date (as defined in the Master Note) each Note shall have a one-time interest charge equal to 12% , applied to the outstanding balance of each note. Each Note is convertible, at any time after the date six months from the Purchase Price Date (as defined in the Master Note), into shares of the Company’s common stock at an exercise price equal to (i) the outstanding balance divided by (ii) 60% of the lowest intra-day trade price in the twenty-five (25) trading days immediately preceding the conversion, subject to certain adjustment as further described in the Master Note (the “Conversion Price”).  In connection with the SPA and the issuance of the Master Note, the Company issued to the Investor, warrants to purchase shares of the Company’s common stock (the “Warrant”) at an exercise price equal to the Conversion Price.  The Warrant has a term of five years.  The warrant provides for both cash and cashless exercise. The fair value of the warrant on the date of issuance was $295,273.	48,000	-
8% Convertible Note, dated August 26, 2013, in the principal amount of $42,500 (the “Note”) pursuant to a Securities Purchase Agreement. The Note matures on May 21, 2014 and has an interest rate of 8% per annum until the Note becomes due. Any amount of principal or interest on the Note which is not paid when due shall bear interest at the rate of 22% per annum from the due date thereof. The Note may be converted into common stock of the Company at any time beginning on the 180 th day of the date of the Note. However, the Note shall not be converted if the conversion would result in beneficial ownership by the holder of the Note and its affiliates to own more than 9.99% of the outstanding shares of the Company’s common stock. Such limitations on conversion may be waived by the Note holder upon with not less than 61 days’ prior notice to the Company. The conversion price is 58% of the average of the lowest three closing bid prices of the Company’s common stock for the ten trading days immediately prior to the conversion date. If the Company fails to pay the principal hereof or interest thereon when due at the maturity date, the Note shall become immediately due and payable and the Company shall pay to the holder of the Note an amount equal to the Default Sum (as defined in the Note). If the Company fails to issue common stock of the Company upon exercise of the Note, the Note shall become immediately due and payable and the Borrower shall pay to the Holder, in full satisfaction of its obligations hereunder, an amount equal to the Default Sum multiplied by two. Upon any other Event of Default (as defined in the Note), the Note shall become immediately due and payable and the Company shall pay to the holder of the Note an amount equal to the greater of (i) 150% times the Default Sum or (ii) the “parity value” (as defined in the Note) of the Default Sum to be prepaid.	42,500	-

9

HIGH PERFORMACE BEVERAGE COMPANY

(Formerly Dethrone Royalty Holdings, Inc.)

Notes to the Financial Statements

(Unaudited)

NOTE 3 - CONVERTIBLE NOTES PAYABLE (cont'd)

On October 1, 2013, the Company, sold an 8% Convertible Note in the principal amount of $32,500 (the “Note”) pursuant to a Securities Purchase Agreement. The Note matures on June 19, 2014 and has an interest rate of 8% per annum until the Note becomes due. Any amount of principal or interest on the Note which is not paid when due shall bear interest at the rate of 22% per annum from the due date thereof. The Note may be converted into common stock of the Company at any time beginning on the 180 th day of the date of the Note. However, the Note shall not be converted if the conversion would result in beneficial ownership by the holder of the Note and its affiliates to own more than 9.99% of the outstanding shares of the Company’s common stock. Such limitations on conversion may be waived by the Note holder upon with not less than 61 days’ prior notice to the Company. The conversion price is 58% of the average of the lowest three closing bid prices of the Company’s common stock for the ten trading days immediately prior to the conversion date. If the Company fails to pay the principal hereof or interest thereon when due at the maturity date, the Note shall become immediately due and payable and the Company shall pay to the holder of the Note an amount equal to the Default Sum (as defined in the Note). If the Company fails to issue common stock of the Company upon exercise of the Note, the Note shall become immediately due and payable and the Borrower shall pay to the Holder, in full satisfaction of its obligations hereunder, an amount equal to the Default Sum multiplied by two. Upon any other Event of Default (as defined in the Note), the Note shall become immediately due and payable and the Company shall pay to the holder of the Note an amount equal to the greater of (i) 150% times the Default Sum or (ii) the “parity value” (as defined in the Note) of the Default Sum to be prepaid.		32,500			-
On January 8, 2014, the Company sold a note with a principal balance of $75,000 for a purchase price of $50,000 at an original issuance discount of $25,000.  (the “January 2014 Note”).  The January 2014 Note matures on July 8, 2014.		75,000			-
Original issued discount		(25,000	)		-
Beneficial conversion feature		(75,000	)		-
Less: Amortization of discounts		11,148			-
Total convertible notes payable	$	366,948		$	270,000

10

 HIGH PERFORMACE BEVERAGE COMPANY

(Formerly Dethrone Royalty Holdings, Inc.)

Notes to the Financial Statements

(Unaudited)

NOTE 4 - DERIVATIVE LIABILITY

The convertible notes payable each contain a variable conversion feature (the Variable Conversion Feature) that gives rise to a derivative liability. We have measured this derivative at fair value and recognized the derivative value as a current liability and recorded the derivative value on our consolidated balance sheet. The derivative is valued primarily using models based on unobservable inputs that are supported by little to no market activity. These inputs represent management’s best estimate of what market participants would use in pricing the liability at the measurement date and thus are classified as Level 3. Changes in the fair values of the derivative are recognized in earnings in the current period. During the year ended July 31, 2013, the Company recorded a derivative liability of $235,165 related to the variable conversion feature of several convertible notes payable and recognized a change in the derivative liability of $7,265. At July 31, 2013, derivative liability was $242,430. Convertible notes payable issued during the six months ended January 31, 2014 and changes in volatility and interest rates resulted in an increase in the derivative liability of $656,920. The increase (decrease) in derivative liability during the three and six months ended January 31, 2014 was ($241,147) and $656,920, respectively, resulting in a balance of $899,350 as of January 31, 2014.

NOTE 5 - EQUITY

In August, 2013, the Company converted $10,200 in notes payable in exchange for 2,000,000 shares of its common stock in accordance with the note agreement.

In October 2013, the Company converted $5,000 in notes payable in exchange for 5,000,000 the Company’s common stock in accordance with the note agreement.

In October 2013, the Company issued 5,437,603 shares of its common stock in connection with the license agreement with Throwdown Industries Holdings, LLC. The fair market value of the shares on the date of issuance was $924,393, which was charged to expense as share based compensation during the six months ended January 31, 2014.

In November 2013, the Company issued 75,000 shares to a consultant for services performed. The common stock had a fair market value of $1,500 on the date of issuance.

In January 2014, the Company issued 2,100,000 shares to consultants for services performed.  The common stock had a fair market value of $26,000 on the dates of issuance.

In January 2014, two note holders converted $22,000 in principal into 16,000,000 shares of common stock.

In January 2014, the Company recognized $6,000 in expense related to celebrity endorsement contracts and increased the number of shares issuable in the Stock Subscriptions account by 300,000 shares.

NOTE 6 - COMMITMENTS AND CONTINGENCIES

In April 2012, the Company entered into an exclusive license agreement with Dethrone Royalty, Inc. giving the Company the right to use the Dethrone Trademark worldwide in connection with the manufacture and sale of sports performance or energy drinks along with any other non-alcoholic beverage under the Trade Name, Dethrone Beverages.

The License Agreement with Dethrone Royalty, Inc. is for five years and requires payments as follows:

Year	Royalty
1	12% of Gross Profit
2	$50,000 plus 8% of Gross Profit
3	$100,000 or 6% of Gross profit, whichever is higher
4	$150,000 or 6% of Gross profit, whichever is higher
5	$200,000 or 6% of Gross profit, whichever is higher

11

HIGH PERFORMACE BEVERAGE COMPANY

(Formerly Dethrone Royalty Holdings, Inc.)

Notes to the Financial Statements

(Unaudited)

NOTE 6 - COMMITMENTS AND CONTINGENCIES (cont’d)

The License Agreement with Dethrone Royalty, Inc. specifies minimum levels of sales which, if not attained by the Company, gives Dethrone Royalty, Inc. the right to terminate the License Agreement. These minimums are as follows:

Year	Minimum Sales
1	$	-0-
2	$	3,000,000
3	$	6,000,000
4	$	9,000,000
5	$	12,000,000

The License Agreement with Dethrone Royalty, Inc. also requires the Company to maintain various liability insurance coverage.

In October 2013, the License Agreement with Dethrone Royalty, Inc, was terminated.

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

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

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

* 2015 minimum Net Revenue shall be the greater of 120% of the actual 2014 Net Revenue or $1,600,000.00.

*** 2016 Minimum Net Revenue shall be the greater of 110% of the actual 2015 Net Revenue or $2,500,000.00. During any Extension Term and beyond 2016, the annual Minimum Net Revenue shall be at least 105% greater than the previous year.

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

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

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

12

 HIGH PERFORMACE BEVERAGE COMPANY

(Formerly Dethrone Royalty Holdings, Inc.)

Notes to the Financial Statements

(Unaudited)
 

NOTE 6 - COMMITMENTS AND CONTINGENCIES (cont’d)

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

On October 14, 2013, the licensor in this licensing agreement sent a notice of termination of this license agreement wherein it purposed to terminate this license agreement and demanded licensing fees of $475,000. The Company has asserted that the licensor has repudiated the license agreement and demanded damages of $850,000. This issue has not progressed passed this point and the Company is currently awaiting service of a complaint.

 Additionally, the Company is involved in a dispute with Overtime Marketing, SE, LLC and Overtime Marketing, LLC (“Potential Plaintiffs”) with which it had signed an agreement for marketing services. Potential plaintiffs have sent Company a demand letter seeking payment in the amount of $4,814,500 arising from an alleged breach of a term sheet that provided for the Company to compensate plaintiffs with up to 5,000,000 shares of its restricted common stock in exchange for certain marketing services. Settlement negotiations with potential plaintiffs are in process and Company legal counsel is unable at this time to estimate any potential liability of the Company resulting from this dispute. The Company is currently awaiting service of a complaint. No liability has been accrued as a result of this dispute.

NOTE 7 - SUBSEQUENT EVENTS

In November 2013, the Company issued 75,000 shares to a consultant for services performed.

On January 22, 2014, High Performance Beverages Company, a Nevada corporation (the “Company”), sold an Original Issue Discount Convertible Promissory Note in the principal amount of $75,000, dated January 8, 2014 (the “Note”) for cash consideration of $50,000. The Note matures on July 8, 2014 (“Maturity Date”) and all overdue principal will entail a late fee at the rate of 22% per annum. The Company may prepay the Note for $100,000 at any time prior to the Maturity Date.

The Note may be converted into common stock of the Company at any time after the Maturity Date at a fixed price of $0.0001 per share. However, if the stock price of the Company loses the bid at any time before the Maturity Date, the conversion price shall be $0.00001 per share. The Note shall not be converted to the extent that such conversion would result in beneficial ownership by the holder and its affiliates to own more than 4.99% of the issued and outstanding shares of the Company’s common stock. Such limitations on conversion may be waived by the Note holder upon with not less than 61 days’ prior notice to the Company.

On February 14, 2014, High Performance Beverages Company, a Nevada corporation (the “Company”), sold an Original Issue Discount Convertible Promissory Note in the principal amount of $75,000, dated February 11, 2014 (the “Note”) for cash consideration of $50,000. The Note matures on August 11, 2014 (“Maturity Date”) and all overdue principal will entail a late fee at the rate of 22% per annum. The Company may prepay the Note for $75,000 at any time prior to May 11, 2014.

The Note may be converted into common stock of the Company at any time after the Maturity Date at a fixed price of $0.0001 per share. However, if the stock price of the Company loses the bid, loses DTC eligibility, or gets “chilled for deposit” at any time before the Maturity Date, the conversion price shall be $0.00001 per share. The Note shall not be converted to the extent that such conversion would result in beneficial ownership by the holder and its affiliates to own more than 4.99% of the issued and outstanding shares of the Company’s common stock. Such limitations on conversion may be waived by the Note holder upon with not less than 61 days’ prior notice to the Company

On March 6, 2014, High Performance Beverages Company, a Nevada corporation (the “Company”), sold a 10% Convertible Redeemable Note in the principal amount of $22,000 (the “Note”) pursuant to a Securities Purchase Agreement.   The Note matures on February 28, 2015 and has an interest rate of 10% per annum.

The Note may be converted into common stock of the Company at any time beginning on the 180th day of the date of the Note at a price equal to 50% of the lowest closing bid price   of the common stock as reported on OTCQB, for the fifteen   prior   trading days. In the event the Company experiences a DTC “Chill” on its shares, the conversion price shall be decreased to 40% instead of 50% while that “Chill” is in effect.

13

 HIGH PERFORMACE BEVERAGE COMPANY

(Formerly Dethrone Royalty Holdings, Inc.)

Notes to the Financial Statements

(Unaudited)

NOTE 7 - SUBSEQUENT EVENTS (cont’d)

As previously reported by High Performance Beverages Company (the “Company”) on Form 8-K filed by the Company with the Securities and Exchange Commission, on  August 29, 2013, the Company on August 26, 2013, sold an 8% Convertible Note in the principal Amount of $42,500 (the “August 2013 Note”). As previously reported by the Company on Form 8-K filed by the Company with the Securities and Exchange Commission on October 4, 2013, the Company, on October 1, 2013, sold an 8% Convertible Note in the Principal amount of $32,500 (the “October Note” and together with the August 2013 Note, the “Notes”).  On March 24, 2014, the Company received correspondence stating that the Notes provide that the Company shall be in default if it fails to comply with the reporting requirements of the  Exchange Act of 1934, as amended and that based upon the foregoing the Company was now in default under the Notes.  As a result of the asserted default, demand was made for immediate payment as provided in the Notes in the amount of $113,625 (representing 150% of the remaining outstanding principal balances) together with default interest as provided in the Notes (the “Default Amount”). Additionally, the Holder of the Note, may exercise any other remedy it has under the Note, including that should the Default Amount not be paid within five business days of the March 24, 2014, the Holder of the Note shall in its sole discretion convert the Default Amount into equity as provided for in the Notes.

As previously reported with the Securities and Exchange Commission, on March 12, 2014, on March 6, 2014, the Company sold a 10% Convertible Redeemable Note in the principal amount of $22,000 (the “March 2014 Note”) pursuant to a Securities Purchase Agreement.   Pursuant to the March 2014 Note, an event of default occurs if the Company defaults under any other note or similar debt instrument. As a result of the of the event of default of the Notes,  interest shall accrue at a default interest rate of 16% per annum or, if such rate is usurious or not permitted by current law, then at the highest rate of interest permitted by law.

Management has evaluated subsequent events through April 25, 2014 the date which these restated financial statements were available to be issued.

NOTE 8 – RESTATEMENT

On March 21, 2014, in the process of preparing its quarterly report on Form 10-Q for the quarter ended January 31, 2014, the Company’s management became aware that the Company’s financial statements in the annual report for the year ended July 31, 2012 erroneously did not give effect to shareholder advances for the payment of accounting fees and improperly treated shares issued for services as a liability as opposed to equity.  In addition, the Company determined that during the fiscal year ended July 31, 2013, it had (1) erroneously excluded from the derivative liability valuation a contract entered into late in the fiscal year that allowed for the settlement of the Company’s financial obligations under the contract in the Company’s common stock, based upon the price of the Company’s stock at the time of settlement; and, (2) excluded the value of common stock to be issued for services performed from the financial statements resulting in an understatement of compensation expense.

14

 HIGH PERFORMACE BEVERAGE COMPANY

(Formerly Dethrone Royalty Holdings, Inc.)

Notes to the Financial Statements

(Unaudited)

NOTE 8 – RESTATEMENT (cont’d)

The following tables summarize the effect of corrections on the consolidated financial statements as of the three months ended October 31, 2013:

	Previously Reported		Adjustments		Current Restatement
Assets
Current assets
Cash	$	23,960	$	-	$	23,960
Accounts receivable, net		-		-		-
Inventory		33,766		-		33,766
Deferred loan costs		26,747		-		26,747
Total current assets		84,473		-		84,473
Total assets	$	84,473	$	-	$	84,473

Liabilities
Accrued expenses	$	111,467		$	16,417		$	127,884
Senior secured convertible note payable		402,800			-			402,800
Derivative Liability		452,912			687,585			1,140,497
Total current liabilities		967,179			704,200			1,671,181
Total liabilities		967,179			704,200			1,671,181
Stockholders' deficit:
Common stock		121,408			(5,000	)		116,408
Stock subscription payable		315,600			(61,361	)		254,239
Additional paid in capital		2,488,564			100,722			2,589,286
Retained earnings from discontinued operations		6,944			-			6,944
Accumulated deficit		(3,815,222	)		(738,363	)		(4,553,585	)
Total stockholders' deficit		(882,706	)		(704,002	)		(1,586,708	)
Total liabilities and stockholders' deficit	$	84,473		$	-		$	84,473

15

HIGH PERFORMACE BEVERAGE COMPANY

(Formerly Dethrone Royalty Holdings, Inc.)

Notes to the Financial Statements

(Unaudited)

NOTE 8 – RESTATEMENT (cont’d)

Statement of Operations

	Previously Reported			Adjustments			Current Restatement
Revenue	$	373		$	-		$	373
Cost of goods sold		1,392			-			1,392
Gross profit		(1,019	)		-			(1,019	)
Operating expenses
General, administrative and other		77,606			4			77,610
Marketing		10,847			(1	)		10,846
Compensation		983,292			-			983,292
Total Operating Expenses		1,071,745			3			1,071,748
Loss from continuing operations		(1,072,764	)		(3	)		(1,072,767	)
Other income (expense)
Change in derivative liability		210,482			687,585			898,067
Interest expense		209,268		-				209,268
Total Other (Income) Expense		419,750			687,585			1,107,335
Net loss	$	(1,492,514	)	$	(687,588	)	$	(2,180,102	)
Net loss per common share	$	(0.00	)	$	(0.02	)	$	(0.02	)

16

HIGH PERFORMACE BEVERAGE COMPANY

(Formerly Dethrone Royalty Holdings, Inc.)

Notes to the Financial Statements

(Unaudited)

NOTE 8 – RESTATEMENT (cont’d)

The following tables summarize the effect of corrections on the consolidated financial statements as of the year ended July 31, 2013:

	Previously Reported			Adjustments			Current Restatement
Assets
Current assets
Cash	$	3,920		$	-		$	2,529
Accounts receivable, net		-			-			-
Inventory		31,034			-			31,034
Deferred loan costs		174,857			-			174,857
Total current assets		209,811			-			209,811
Total assets	$	209,811		$	-		$	209,811
Liabilities and Stockholders’ Deficit
Liabilities:
Accrued expenses	$	60,564		$	16,415		$	76,979
Convertible notes payable, net		270,000			-			270,000
Derivative liability		242,430			-			242,430
Total current liabilities		572,994			16,415			589,409
Total liabilities		572,994			16,415			589,409
Stockholders' deficit:
Common stock		108,970			(5,000	)		103,970
Stock subscription payable		282,220			(61,381	)		220,839
Additional paid in capital		1,561,409			100,723			1,662,132
Retained earnings from discontinued operations		6,944			-			6,944
Accumulated deficit		(2,322,706	)		(50,777	)		(2,373,483	)
Total stockholders' deficit		(363,183	)		(16,415	)		(379,598	)
Total liabilities and stockholders' deficit	$	209,811		$	-		$	209,811

17

HIGH PERFORMACE BEVERAGE COMPANY

(Formerly Dethrone Royalty Holdings, Inc.)

Notes to the Financial Statements

(Unaudited)

NOTE 8 – RESTATEMENT (cont’d)

Statement of Operations

	Previously Reported			Adjustments			Current Restatement
Revenues	$	55,143		$	-		$	55,143
Cost of goods sold		36,411			-			36,411
Gross profit		18,732			-			18,732
Operating expenses
General, administrative and other		502,162			(220	)		501,942
Marketing		982,637			-			982,637
Product development		37,077			-			37,077
Compensation		313,007			50,997			364,004
Total Operating Expenses		1,834,886			50,777			1,885,660
Other expense
Interest expense		120,329			-			120,329
Change in derivative liability		242,430			-			242,430
Loss from continuing operations		(2,178,910	)		(50,777	)		(2,229,687	)
Discontinued operations, net		-			-			-
Net loss	$	(2,178,910	)	$	(50,777	)	$	(2,229,687	)
Net loss per common share	$	(0.02	)	$	(0.00	)	$	(0.02	)

18

HIGH PERFORMACE BEVERAGE COMPANY

(Formerly Dethrone Royalty Holdings, Inc.)

Notes to the Financial Statements

(Unaudited)

NOTE 8 – RESTATEMENT (cont’d)

The following tables summarize the effect of corrections on the consolidated financial statements as of the nine months ended April 30, 2013:

	Previously Reported			Adjustments			Current Restatement
Assets
Current assets
Cash	$	39,015		$	-		$	39,015
Prepaid expenses		37,042			-			37,042
Inventory		26,587			-			26,587
Deferred loan costs		316,977			-			316,977
Total current assets		419,621			-			419,621
Total assets	$	419,621		$	-		$	419,621
Liabilities:
Accrued expenses	$	44,463		$	16,415		$	60,878
Senior secured convertible note payable		240,000			-			240,000
Total current liabilities		288,463			16,415			300,878
Derivative liability		118,133			-			118,133
Total liabilities		402,596			16,415			419,011
Stockholders' deficit:
Common stock		103,970			-			103,970
Stock subscription payable		282,220			(61,361	)		220,859
Additional paid in capital		1,568,130			95,723			1,663,853
Retained earnings from discontinued operations		6,944			-			6,944
Accumulated deficit		(1,944,239	)		(50,777	)		(1,995,016	)
Total stockholders' deficit		17,025			(16,415	)		610
Total liabilities and stockholders' deficit	$	419,621		$	-		$	419,621

19

HIGH PERFORMACE BEVERAGE COMPANY

(Formerly Dethrone Royalty Holdings, Inc.)

Notes to the Financial Statements

(Unaudited)

NOTE 8 – RESTATEMENT (cont’d)

Statement of Operations

	Previously Reported			Adjustments			Current Restatement
Revenues	$	53,283		$	-		$	53,283
Cost of goods sold		35,499			-			35,499
Gross Profit		17,784			-			17,784
Operating expenses
General, administrative and other		368,094			-			368,094
Marketing		970,379			-			970,379
Product development		37,019			-			37,019
Compensation		300,001			50,777			351,778
Total Operating Expenses		1,676,493			50,777			1,727,270
Other income (expense)
Interest expense and finance costs		(23,601	)		-			(23,601	)
Change in derivative liability		(118,133	)		-			(118,133	)
Loss from continuing operations		(1,785,231	)		(50,777	)		1,851,220	)
Discontinued operations, net		-			-			-
Net loss	$	(1,785,231	)	$	(50,777	)	$	(1,851,220	)
Net loss per common share	$	(0.00	)	$	(0.02	)	$	(0.02	)

20

HIGH PERFORMACE BEVERAGE COMPANY

(Formerly Dethrone Royalty Holdings, Inc.)

Notes to the Financial Statements

(Unaudited)

NOTE 8 – RESTATEMENT (cont’d)

The following tables summarize the effect of corrections on the consolidated financial statements as of the six months ended January 31, 2013:

	Previously Reported			Adjustments			Current Restatement
Assets
Current assets
Cash	$	2,529		$	-		$	2,529
Prepaid expenses		10,861			-			10,861
Inventory		53,377			-			53,377
Deferred loan costs		452,221			-			452,221
Total current assets		518,988			-			518,988
Total assets	$	518,988		$	-		$	518,988
Liabilities:
Accrued expenses	$	21,748		$	32,830		$	54,578
Senior secured convertible note payable		100,000			-			100,000
Total current liabilities		121,748			32,830			154,578
Total liabilities		121,748			32,830			154,578
Stockholders' deficit:
Common stock		97,560			-			94,150
Stock subscription payable		510,000			(61,361	)		448,639
Additional paid in capital		645,242			44,946			690,188
Retained earnings from discontinued operations		6,944			-			6,944
Accumulated deficit		(862,506	)		(16,415	)		(878,921	)
Total stockholders' deficit		397,420			(32,830	)		364,410
Total liabilities and stockholders' deficit	$	518,988		$	-		$	518,988

Statement of Operations

	Previously Reported			Adjustments			Current Restatement
Revenue	$	-		$	-		$	-
Operating expenses
General, administrative and other		175,673			-			175,673
Marketing		183,129			-			183,129
Product development		37,019			-			37,019
Compensation		314,500			-			314,500
Total Operating Expenses		710,321			-			710,321
Other income (expense)
Interest expense and finance costs		(8,389	)					(8,389	)
Loss from continuing operations		(718,710	)		-			(718,710	)
Discontinued operations, net		-			-			-
Net loss	$	(718,710	)	$	-		$	(718,710	)
Net loss per common share	$	(0.00	)	$	(0.00	)	$	(0.00	)

21

HIGH PERFORMACE BEVERAGE COMPANY

(Formerly Dethrone Royalty Holdings, Inc.)

Notes to the Financial Statements

(Unaudited)

NOTE 8 – RESTATEMENT (cont’d)

The following tables summarize the effect of corrections on the consolidated financial statements as of the three months ended October 31, 2012:

	Previously Reported			Adjustments			Current Restatement
Assets
Current assets:
Cash	$	2,234		$	2,234		$	2,234
Total current assets		2,234			2,234			2,234
Total assets	$	2,234		$	2,234		$	2,234
Liabilities:
Accrued expenses	$	9,539		$	16,415		$	25,954
Total current liabilities		9,539			16,415			25,954
Liability for Issuable Common Stock		203,361			(203,361	)		-
Total liabilities		212,900			(186,946	)		25,954
Stockholders' deficit: Common stock		94,150			-			94,150
Additional paid in capital		(22,709	)		44,946			22,237
Stock subscription payable		-			142,000			142,000
Retained earnings from discontinued operations		6,944			-			6,944
Accumulated deficit		(289,051	)		-			(289,051	)
Total stockholders' deficit		(210,666	)		186,946			(23,720	)
Total liabilities and stockholders' deficit	$	2,234		$	-		$	2,234

22

 HIGH PERFORMACE BEVERAGE COMPANY

(Formerly Dethrone Royalty Holdings, Inc.)

Notes to the Financial Statements

(Unaudited)

NOTE 8 – RESTATEMENT (cont’d)

Statement of Operations

	Previously Reported			Adjustments			Current Restatement
Revenue	$	-		$	-		$	-
Operating expenses
General, administrative and other		53,380			-			53,380
Marketing		43,131			-			43,131
Product development		21,744			-			21,744
Compensation		27,000			-			27,000
Total Operating Expenses		145,255			-			145,255
Loss from continuing operations		(145,255	)		-			(145,255	)
Discontinued operations, net		-			-			-
Net loss	$	(145,255	)	$	-		$	(145,255
Net loss per common share	$	(0.00	)	$	(0.00	)	$	(0.00	)

23

HIGH PERFORMACE BEVERAGE COMPANY

(Formerly Dethrone Royalty Holdings, Inc.)

Notes to the Financial Statements

(Unaudited)

NOTE 8 – RESTATEMENT (cont’d)

The following tables summarize the effect of corrections on the consolidated financial statements as of the year ended July 31, 2012:

	Previously Reported			Adjustments			Current Restatement
Assets
Assets	$	-		$	-		$	-
Total assets	$	-		$	-		$	-
Liabilities:
Accrued expenses	$	4,050		$	32,830		$	36,880
Total current liabilities		4,050			32,830			36,880
Liability for Issuable Common Stock		61,361			(61,361	)		-
Total liabilities		65,411			(28,531	)		36,880
Stockholders' deficit:
Common stock		94,150			-			94,150
Additional paid in capital		(22,709	)		44,946			22,237
Retained earnings from discontinued operations		6,944						6,944
Accumulated deficit		(143,796	)		(16,415	)		(160,211	)
Total stockholders' deficit		(65,411	)		(28,531	)		(36,880	)
Total liabilities and stockholders' deficit	$	-		$	-		$	-

Statement of Operations

	Previously Reported			Adjustments			Current Restatement
Revenue	$	-		$	-		$	-
Operating expenses
General, administrative and other		49,820			16,415			66,235
Marketing		5,863			-			5,863
Product development		45,413			-			45,413
Compensation		20,000			-			20,000
Total Operating Expenses		121,096			16,415			137,511
Loss from continuing operations		(121,096	)		16,415			(137,511	)
Discontinued operations, net		(25	)		-			(25	)
Net loss	$	(121,121	)	$	16,415		$	(137,536	)
Net loss per common share	$	(0.00	)	$	(0.00	)	$	(0.00	)

24

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

NOTE REGARDING FORWARD-LOOKING STATEMENTS

Certain matters discussed herein are forward-looking statements.  Such forward-looking statements contained in this Form 10-Qinvolve risks and uncertainties, including statements as to:

● our future operating results;

● our business prospects;

● any contractual arrangements and relationships with third parties;

● the dependence of our future success on the general economy;

● any possible financings; and

● the adequacy of our cash resources and working capital.

These forward-looking statements can generally be identified as such because the context of the statement will include words such as we “believe," “anticipate,” “expect,” “estimate” or words of similar meaning.   Similarly, statements that describe our future plans, objectives or goals are also forward-looking statements.   Such forward-looking statements are subject to certain risks and uncertainties which are described in close proximity to such statements and which could cause actual results to differ materially from those anticipated as of the date of filing of this Form 10-Q.   Shareholders, potential investors and other readers are urged to consider these factors in evaluating the forward-looking statements and are cautioned not to place undue reliance on such forward-looking statements.   The forward-looking statements included herein are only made as of the date of filing of this Form 10-Q, and we undertake no obligation to publicly update such forward-looking statements to reflect subsequent events or circumstances.

Recent Developments

Our independent registered auditors included an explanatory paragraph in their opinion on our financial statements as of and for the fiscal year ended July 31, 2013 that states that our lack of resources cause substantial doubt about our ability to continue as a going concern.

Operations

We were founded as an unincorporated DBA in February 1997 and were incorporated as a C corporation under the laws of the State of Nevada on October 11, 2010. The incorporation effort included the Company issuing 10,000,000 shares of common stock to Patricia G. Skarpa, who founded and managed the business which had been operating continuously as a DBA since February 1997, and 300,000 shares to Hallie Beth Skarpa, our other director, for services rendered. These services involving the incorporation planning were valued at $10,300. Hallie Beth Skarpa is the daughter of Patricia G. Skarpa. The day-to-day operations of the Company did not change as a result of the change in legal structure.

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

 In April 2012, DB entered into an exclusive license agreement with Dethrone Royalty, Inc. giving DB the right to use the Dethrone trademark worldwide in connection with the manufacture and sale of sports performance or energy drinks along with any other non-alcoholic beverage under the trade name, Dethrone Beverages.

The License Agreement with Dethrone Royalty, Inc. is for five years and requires payments as follows:

Year	Royalty
1	12% of Gross Profit
2	$50,000 plus 8% of Gross Profit
3	$100,000 or 6% of Gross profit, whichever is higher
4	$150,000 or 6% of Gross profit, whichever is higher
5	$200,000 or 6% of Gross profit, whichever is higher

25

The License Agreement with Dethrone Royalty, Inc. specifies minimum levels of sales which, if not attained by DB, gives Dethrone Royalty, Inc. the right to terminate the License Agreement. These minimums are as follows:

Year	Minimum Sales
1	$	-0-
2	$	3,000,000
3	$	6,000,000
4	$	9,000,000
5	$	12,000,000

The License Agreement with Dethrone Royalty, Inc. also requires the Company to maintain various liability insurance coverage.

The Company’s officers have formulas that will be used for the initial products that are planned. They have undertaken efforts to raise the financing necessary to manufacture the initial products using outside contractors and implement marketing programs. The initial expenditures are being used for:

● Production of bottles, labels and caps,

● Purchase of inventory needed for beverage content,

● Marketing materials,

● Travel and business expenses, and

● Shipping costs of our first orders.

We began distributing our product in the first calendar quarter of 2013. Initially, we shipped two flavors of one product and will distribute in California to convenience stores, gas stations, grocery stores and gyms. We ship product to distributors with net 30 day terms.

Three months ended January 31, 2014 and 2013

The Company began shipping products to distributors in February 2013. Shipments were insignificant during the quarter ending January 31, 2014 and generated sales of $1,108. There were no sales in the quarter ending January 31, 2013.

Cost of goods sold during the three months ended January 31, 2014 were $2,971, which exceeded of sales by $1,863, resulting in a gross loss of $(1,863). This was due to the high cost of the initial product runs due to start up tooling costs and a lack of economies of scale in the manufacturing process.

General and administrative expenses decreased by $103,142, from $122,293 during the three months ended January 31, 2013 to $19,151 during the three months ended January 31, 2014. The decrease was due to lower professional fees for legal and accounting services and consulting services.

Marketing expense decreased by $132,684, from $139,998 during the three months ended January 31, 2013 to $7,314 during the three months ended January 31, 2014. The decrease was due to lower promotional costs.

Compensation increased by $40,432, from $12,500 during the three months ended January 31, 2013 to $52,932 during the three months ended January 31, 2014. The increase was due to an increase of $10,700 in cash compensation and an increase in share based compensation issued in connection with professional athlete endorsement contracts of $33,730.

Other income (expense) increased $405,280 from $(298,455) during the three months ended January 31, 2013 to 106,825 during the three months ended January 31, 2014, as a result of the change in derivative liability of $(241,147) and an increase of $44,673 in interest expense due to increased levels of debt.

Net income for the three months ended January 31, 2014, was $106,825 compared to a net loss of $298,455 during the three months ended January 31, 2014, an decrease of $405,280.  The change is primarily due to the change in derivative liability and lower spending during the quarter ended January 31, 2014.

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Six months ended January 31, 2014 and 2013

The Company began shipping products to distributors in February 2013. Shipments were insignificant during the six months ending January 31, 2014 and generated sales of $1,481. There were no sales in the six months ending January 31, 2013.

Cost of goods sold during the six months ended January 31, 2014 were $4,363, which exceeded of sales by $2,882, resulting in a gross profit $(2,882). This was due to the high cost of the initial product runs due to start up tooling costs and a lack of economies of scale in the manufacturing process.

General and administrative expenses decreased by $78,912, from $175,673 during the six months ended January 31, 2013 to $96,761 during the six months ended January 31, 2014. The decrease was due to lower professional fees for legal and accounting services and consulting services.

Marketing expense decreased by $168,737, from $183,129 during the six months ended January 31, 2013 to $14,392 during the six months ended January 31, 2014. The decrease was due to lower promotional costs.

Compensation increased by $725,492, from $314,500 during the six months ended January 31, 2013 to $1,039,992 during the six months ended January 31, 2014. The increase was due to an increase of $10,700 in cash compensation and an increase in share based compensation issued in connection with professional athlete endorsement contracts of $1,029,292.

Other income (expense) increased $910,861 from $8,389 during the six months ended January 31, 2013 to $919,250 during the six months ended January 31, 2014, as a result of the change in derivative liability of $656,920 and an increase of $253,941 in interest expense due to increased levels of debt, discount amortization and deferred financing cost amortization.

Net income for the six months ended January 31, 2014, was $(2,073,277) compared to a net loss of $(718,710) during the six months ended January 31, 2014, a decrease of $1,354,567.  The change is primarily due to the change in derivative liability, increased stock based compensation, and increased interest expense and related amortization during the quarter ended January 31, 2014.

Liquidity

The Company has financed its operations through the private placement of debt and its common stock.

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

We are a public company and, as such, have incurred and will continue to incur additional significant expenses for legal, accounting and related services. Once we become a public entity, subject to the reporting requirements of the Exchange Act of '34, we will incur ongoing expenses associated with professional fees for accounting, legal and a host of other expenses including annual reports and proxy statements, if required.

Recent Accounting Pronouncements

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

Critical Accounting Policies

The preparation of financial statements and related notes requires us to make judgments, estimates, and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses, and related disclosure of contingent assets and liabilities.

An accounting policy is considered to be critical if it requires an accounting estimate to be made based on assumptions about matters that are highly uncertain at the time the estimate is made, and if different estimates that reasonably could have been used, or changes in the accounting estimates that are reasonably likely to occur periodically, could materially impact the financial statements.

Financial Reporting Release No. 60 requires all companies to include a discussion of critical accounting policies or methods used in the preparation of financial statements.  There are no critical policies or decisions that rely on judgments that are based on assumptions about matters that are highly uncertain at the time the estimate is made.  The financial statements include a summary of the significant accounting policies and methods used in the preparation of our financial statements. 

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Seasonality

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

Off-Balance Sheet Arrangements

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

Item 3.    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Pursuant to Item 305(e) of Regulation S-K (§ 229.305(e)), the Company is not required to provide the information required by this Item as it is a “smaller reporting company,” as defined by Rule 229.10(f)(1).

Item 4.    CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

Our management is responsible for establishing and maintaining adequate internal control of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as of the end of period covered by this Quarterly Report on Form 10-Q. Disclosure controls and procedures means that the material information required to be included in our Securities and Exchange Commission reports is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms relating to our company. The Company's internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

Our disclosure controls and procedures includes those policies and procedures that:

· Pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company;

· Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and

· that our receipts and expenditures are being made only in accordance with authorizations of the Company's management and directors; and

· Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements.

As of January 31, 2014, our management conducted an assessment of the effectiveness of the Company's internal control over financial reporting.  In making this assessment, management followed an approach based on the framework set forth in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (known as “COSO”).  Based on this assessment, management determined that the Company's internal control over financial reporting was not effective to ensure that material information relating to the Company is recorded, processed, summarized, and reported in a timely manner. In forming this conclusion this officer considered the fact that we were unable to timely file our Form 10K for the year ended July 31, 2013 as well as our From 10Q for the quarter ended January 31, 2014. As such we had inherent weakness in our ability to timely file our financial reports with the SEC.

We have made significant attempts to correct this issue including entering into an agreement to outsource our accounting and financial reporting functions . Management believes this arrangement will ensure the timely filing of future financial reports.

This quarterly report does not include an attestation report of the Company's registered public accounting firm regarding internal control over financial reporting. Management's report was not subject to attestation by the Company's registered public accounting firm pursuant to rules of the Securities and Exchange Commission that permit the Company to provide only management's report in this quarterly report.

Changes in Internal Control over Financial Reporting

There have been no changes in our internal controls over financial reporting (as such term is defined in Rule 13a-15(f) and 15d-15(f) under the Exchange Act) during the quarter ended January 31, 2014  that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II - OTHER INFORMATION

Item 1.    Legal Proceedings

 A civil action that was filed against the Company in United States District Court for the Northern District of California on December 20, 2013 by Dethrone Royalty, Inc. (the “Plaintiff”) entitled: Dethrone Royalty, Inc. v. Dethrone Royalty Holdings, Inc., Dethrone Beverages, Inc., TO Sports Innovations, Inc., High Performance Beverage Company, Toby McBride and Does 1-10, 13 CV 5912 (N.D. Cal. 2013).  The Plaintiff, in its Complaint, alleged that the Company breached its licensing agreement with Plaintiff and infringed on Plaintiff’s trademarks.  In this vein, Plaintiff has made claims for Breach of Contract, Breach of the Implied Covenant of Good Faith and Fair Dealing, Trademark Infringement under 15 U.S.C. § 1125(a), and Unfair Competition at common law and under the California Business & Professions Code § 17200.  Plaintiff claims $475,000, treble damages, interest, costs, attorneys’ fees, as well as various forms of injunctive relief arising from these claims.  The Company is currently negotiating a definitive settlement agreement with the Plaintiff, however there cannot be any assurance that a settlement agreement will be entered into.

Item 1A.  Risk Factors

The Company, as a smaller reporting company, is not required to provide the information required by this item.

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

In November, 2013, the Company issued 75,000 shares of its common stock to a consultant for services performed.  The Company claims an exemption from the registration requirements of the Act for the private placement of the securities referenced herein pursuant to Section 4(2) of the Securities Act of 1933 since, among other things, the transaction did not involve a public offering.

In January, 2014, the Company issued 2,100,000 shares of its common stock to consultants for services performed.  The Company claims an exemption from the registration requirements of the Act for the private placement of the securities referenced herein pursuant to Section 4(2) of the Securities Act of 1933 since, among other things, the transaction did not involve a public offering.

On January 22, 2014, the Company sold Original Issue Discount Convertible Promissory Note in the principal amount of $75,000, dated January 8, 2014 (the “Note”) for cash consideration of $50,000. The Note matures on July 8, 2014 (“Maturity Date”) and all overdue principal will entail a late fee at the rate of 22% per annum. The Company may prepay the Note for $100,000 at any time prior to the Maturity Date.  The Company claims an exemption from the registration requirements of the Act for the private placement of the securities referenced herein pursuant to Section 4(2) of the Securities Act of 1933 since, among other things, the transaction did not involve a public offering.

In January 2014, the Company converted $22,000 in notes payable in exchange for 16,000,000 the Company’s common stock in accordance with the note agreement. The Company claims an exemption from the registration requirements of the Act for the private placement of the securities referenced herein pursuant to Section 4(2) of the Securities Act of 1933 since, among other things, the transaction did not involve a public offering.

On February 14, 2014, High Performance Beverages Company, a Nevada corporation (the “Company”), sold an Original Issue Discount Convertible Promissory Note in the principal amount of $75,000, dated February 11, 2014 (the “Note”) for cash consideration of $50,000. The Note matures on August 11, 2014 (“Maturity Date”) and all overdue principal will entail a late fee at the rate of 22% per annum. The Company may prepay the Note for $75,000 at any time prior to May 11, 2014. The Note may be converted into common stock of the Company at any time after the Maturity Date at a fixed price of $0.0001 per share. The Company claims an exemption from the registration requirements of the Act for the private placement of the securities referenced herein pursuant to Section 4(2) of the Securities Act of 1933 since, among other things, the transaction did not involve a public offering.

On March 6, 2014, High Performance Beverages Company, a Nevada corporation (the “Company”), sold a 10% Convertible Redeemable Note in the principal amount of $22,000 (the “Note”) pursuant to a Securities Purchase Agreement.   The Note matures on February 28, 2015 and has an interest rate of 10% per annum.  The Note may be converted into common stock of the Company at any time beginning on the 180th day of the date of the Note at a price equal to 50% of the lowest closing bid price   of the common stock as reported on OTCQB, for the fifteen   prior   trading days. In the event the Company experiences a DTC “Chill” on its shares, the conversion price shall be decreased to 40% instead of 50% while that “Chill” is in effect.The Company claims an exemption from the registration requirements of the Act for the private placement of the securities referenced herein pursuant to Section 4(2) of the Securities Act of 1933 since, among other things, the transaction did not involve a public offering.

Item 3.    Defaults Upon Senior Securities

As previously reported by High Performance Beverages Company (the “Company”) on Form 8-K filed by the Company with the Securities and Exchange Commission, on  August 29, 2013, the Company on August 26, 2013, sold an 8% Convertible Note in the principal Amount of $42,500 (the “August 2013 Note”). As previously reported by the Company on Form 8-K filed by the Company with the Securities and Exchange Commission on October 4, 2013, the Company, on October 1, 2013, sold an 8% Convertible Note in the Principal amount of $32,500 (the “October Note” and together with the August 2013 Note, the “Notes”).  As reported by the Company in a Current Report on Form 8-K which was filed with the Securities and Exchange Commission on March 28, 2014, on March 24, 2014, the Company received correspondence stating that the Notes provide that the Company shall be in default if it fails to comply with the reporting requirements of the  Exchange Act of 1934, as amended and that based upon the foregoing the Company was now in default under the Notes.  As a result of the asserted default, demand was made for immediate payment as provided in the Notes in the amount of $113,625 (representing 150% of the remaining outstanding principal balances) together with default interest as provided in the Notes (the “Default Amount”). Additionally, the Holder of the Note, may exercise any other remedy it has under the Note, including that should the Default Amount not be paid within five business days of the March 24, 2014, the Holder of the Note shall in its sole discretion convert the Default Amount into equity as provided for in the Notes.

As previously reported with the Securities and Exchange Commission, on March 12, 2014, on March 6, 2014, the Company sold a 10% Convertible Redeemable Note in the principal amount of $22,000 (the “March 2014 Note”) pursuant to a Securities Purchase Agreement.   As reported by the Company in a Current Report on Form 8-K which was filed with the Securities and Exchange Commission on March 28, 2014, pursuant to the March 2014 Note, an event of default occurs if the Company defaults under any other note or similar debt instrument. As a result of the of the event of default of the Notes,  interest shall accrue at a default interest rate of 16% per annum or, if such rate is usurious or not permitted by current law, then at the highest rate of interest permitted by law.

Item 4.    Mine Safety Disclosures

 None

Item 5.    Other Information

 None

Item 6.    Exhibits and Reports of Form 8-K

(a)Exhibits

4.1 Original Issue Discount Convertible Note, dated January 8, 2014 (incorporated by reference to the Current Report on Form 8-K Field with the Securities and Exchange Commission on January 27, 2014)

31.1 Certifications pursuant to Section 302 of Sarbanes Oxley Act of 2002

32.1 Certifications pursuant to Section 906 of Sarbanes Oxley Act of 2002

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SIGNATURES

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

HIGH PERFORMANCE BEVERAGE COMPANY

(Registrant)

/s/ Toby McBride

Toby McBride

Title: President and Chief Financial Officer

April 30, 2014

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