NOHO 10-Q 2014 Q1 Quarterly report

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549

Form 10-Q

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

For the quarterly period endedMarch 31, 2014

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

Commission file number000-54746

NOHO, INC.

(Exact name of registrant as specified in its charter)

Wyoming	27-2300669
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

8340 E. Raintree Dr. Unit D, Scottsdale, AZ	85260
(Address of principal executive offices)	(Zip Code)

(480) 306-7319

(Registrant’s telephone number, including area code)

Indicate by check mark whether the issuer(1) 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 ☑    No ☐

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

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

Large accelerated filer  ☐	Accelerated filer  ☐
Non-accelerated filer  ☐ (Do not check if a smaller reporting company)	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 ☑

The number of shares of Common Stock, $0.001 par value, outstanding on June 19, 2014 was 17,263,091 shares.

NOHO, INC.

QUARTERLY REPORT

PERIOD ENDED MARCH 31, 2014

TABLE OF CONTENTS

		Page No.
	PART I - FINANCIAL INFORMATION
Item 1.	Financial Statements	4
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	14
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	19
Item 4.	Controls and Procedures	19
	PART II - OTHER INFORMATION
Item 1.	Legal Proceedings	20
Item 1A.	Risk Factors	20
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	20
Item 3.	Defaults Upon Senior Securities	21
Item 4.	Mine Safety Disclosures	21
Item 5.	Other Information	21
Item 6.	Exhibits	21
	Signatures	22

Special Note Regarding Forward-Looking Statements

Information included in this Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (“Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (“Exchange Act”). This information may involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of NOHO Inc. (the “Company”), to be materially different from future results, performance or achievements expressed or implied by any forward-looking statements. Forward-looking statements, which involve assumptions and describe future plans, strategies and expectations of the Company, are generally identifiable by use of the words “may,” “will,” “should,” “expect,” “anticipate,” “estimate,” “believe,” “intend,” or “project” or the negative of these words or other variations on these words or comparable terminology. These forward-looking statements are based on assumptions that may be incorrect, and there can be no assurance that these projections included in these forward-looking statements will come to pass. Actual results of the Company could differ materially from those expressed or implied by the forward-looking statements as a result of various factors. Except as required by applicable laws, the Company has no obligation to update publicly any forward-looking statements for any reason, even if new information becomes available or other events occur in the future.

*Please note that throughout this Quarterly Report, and unless otherwise noted, the words "we," "our," "us," the "Company," or "DRNK" refers to NOHO Inc.

PART I - FINANCIAL INFORMATION

ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

INDEX	F-1
Condensed Consolidated Balance Sheets as of  March 31, 2014 and December 31, 2013 (Unaudited)	F-2
Condensed Consolidated Statements of Operations for the Three Months Ended March 31, 2014 and 2013 (Unaudited)	F-3
Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2014 and 2013 (Unaudited)	F-4
Notes to the Condensed Consolidated Financial Statements (Unaudited)	F-5

F-1

NOHO, INC.

Condensed Consolidated Balance Sheets

(Unaudited)

	March 31,			December 31,
	2014			2013
					(Restated)
ASSETS
Current assets:
Cash	$	—		$	18,804
Accounts receivable		87,422			50,392
Prepaid expense		—			61,583
Inventory		82,422			120,203
Total current assets		169,844			250,982
Fixed assets, net of accumulated depreciation of
$6,980 and $6,267, respectively		12,059			12,772
Intangible assets, net of accumulated amortization of
$47,845 and $43,911, respectively		128,564			132,498
Total assets	$	310,467		$	396,252
LIABILITIES AND STOCKHOLDERS' (DEFICIT)
Current liabilities:
Accounts payable and accrued expenses	$	393,645		$	272,253
Accrued compensation – related party		889,347			803,236
Accrued interest		75,458			46,312
Accrued interest – related party		13,073			10,014
Line of credit - related party		230,500			205,500
Notes payable, net of origination of $62,037 and $0, respectively		277,463			189,500
Convertible notes payable, net of discounts of
$435 and $1,232, respectively		259,065			254,268
Total current liabilities		2,138,551			1,781,083
Commitments and contingencies		—			—
Stockholders' (deficit):
Common stock; $0.001 par value; 760,000,000 shares authorized;
17,968,081 and 16,919,081 authorized and outstanding as of
March 31, 2014 and December 31, 2013, respectively		16,895			16,920
Common stock authorized and unissued, 1,073,500, and no shares
as of March 31, 2014 and December 31, 2013, respectively		1,074			—
Additional paid in capital		6,403,602			4,438,500
Accumulated (deficit)		(8,249,655	)		(5,840,251	)
Total stockholders' (deficit)		(1,828,084	)		(1,384,831	)
Total liabilities and stockholders' (deficit)	$	310,467		$	396,252

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

F-2

 NOHO, INC.

Condensed Consolidated Statements of Operations

(Unaudited)

	For the Three Months Ended
	March 31,
	2014			2013
Revenue, net	$	147,001		$	244,069
Cost of goods sold		74,769			142,351
Gross profit		72,232			101,718
Operating expenses:
Consulting fees		124,209			1,690
Compensation expense		2,077,045			136,718
General and administrative expenses		83,916			130,374
Professional fees		43,133			3,110
Promotional and marketing		17,800			26,127
Selling expense		82,190			152,681
Total operating expenses		2,428,293			450,700
Loss from continuing operations		(2,356,061	)		(348,982	)
Other income (expense):
Interest expense, net		(25,430	)		(8,387	)
Interest expense - related party		(27,913	)		(20,073	)
Total other income (expense)		(53,343	)		(28,460	)
Net loss	$	(2,409,404	)	$	(377,442	)
Net loss per share – basic and diluted	$	(0.13	)	$	(0.03	)
Weighted average number of shares outstanding - basic		17,922,775			12,748,745

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

F-3

 NOHO, INC.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

	For the Three Months Ended
	March 31,
	2014			2013
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(2,409,404	)	$	(377,442	)
Adjustments to reconcile net loss from operations to
Net cash used in operating activities:
Shares issued for services		1,877,659			—
Shares issued for financing		10,800			—
Amortization and depreciation		4,647			4,773
Amortization of debt discount		797			—
Amortization of warrants issued for financing		5,155			—
Changes in operating assets and liabilities:
(Increase) decrease in accounts receivable		(37,030	)		9,948
Decrease in prepaid expenses		61,583			—
Decrease in inventory		37,781			89,406
Increase in accounts payable		121,392			137,103
Increase in accrued payroll		86,111			8,107
Increase in accrued interest		3,059			2,136
Increase in accrued interest - related party		29,146			4,143
Net cash used by operating activities		(208,304	)		(121,826	)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of fixed assets		—			—
Net Cash used in investing activities		—			—
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds (payments) from line of credit - related party		25,000			(46,000	)
Proceeds from notes payable		150,000			—
Payments on notes payable		—			(18,750	)
Proceeds from convertible notes payable		4,000			125,000
Proceeds from the sale of common stock		10,500			—
Capital distributions, net – related party		—			(11,858	)
Net cash provided by financing activities		189,500			48,392
NET CHANGE IN CASH		(18,804	)		(73,434	)
CASH AT BEGINNING OF PERIOD		18,804			83,907
CASH AT END OF PERIOD	$	—		$	10,473
SUPPLEMENTAL INFORMATION:
Interest paid	$	2,569		$	6,624
Income taxes paid	$	—		$	—
Non-cash investing and financing activities:
Warrants issued for financing	$	67,192		$	—

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

F-4

NOHO, INC.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Organization

The Company was originally incorporated on September 30, 2011 under the laws of the State of Wyoming as RealEstate Pathways, Inc. On January 2, 2013, the Company amended its articles of incorporation to change its name to NOHO, Inc.

On April 1, 2013, we acquired 100% of the issued and outstanding common stock of Dolce Bevuto, Inc., a Nevada Corporation. Under the share exchange agreement, NOHO, Inc. issued 12,713,763 shares of its common stock to various individuals and entities in exchange for 100% of Dolce Bevuto, Inc. Additionally, under the share exchange agreement, the former officers and directors of NOHO, Inc. agreed to cancel 19,760,000 shares of common stock.  For accounting purposes, the acquisition of the Dolce Bevuto, Inc. by NOHO, Inc. has been accounted for as a recapitalization, similar to a reverse acquisition except no goodwill is recorded, whereby the private company, Dolce Bevuto, Inc., in substance acquired a non-operational public company (NOHO, Inc.) with nominal assets and liabilities for the purpose of becoming a public company.   Accordingly, Dolce Bevuto, Inc. is considered the acquirer for accounting purposes and thus, the historical financials are primarily that of Dolce Bevuto, Inc. As a result of this transaction, NOHO, Inc. changed its business direction and is now a beverage business. Dolce Bevuto, Inc. was incorporated on December 3, 2010 (Date of Inception) and accordingly, the accompanying financial statements are from the Date of Inception of Dolce Bevuto, Inc. through ending reporting periods reflected.

The financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America, and are expressed in U.S. dollars. The Company’s fiscal year end is December 31.

Nature of operations

Currently, the Company is focused on the production and sale of NOHO, a beverage for hangover defense. The Company purchases raw materials and outsources the manufacturing to a third party.

Use of estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ significantly from those estimates.

Fair value of financial instruments

Fair value estimates discussed herein are based upon certain market assumptions and pertinent information available to management as of March 31, 2014 and December 31, 2013. The respective carrying value of certain on-balance-sheet financial instruments approximated their fair values. These financial instruments include cash, prepaid expenses, accounts payable, accrued expense, and notes payable. Fair values were assumed to approximate carrying values for cash and payables because they are short term in nature and their carrying amounts approximate fair values or they are payable on demand.

Level 1:The preferred inputs to valuation efforts are “quoted prices in active markets for identical assets or liabilities,” with the caveat that the reporting entity must have access to that market. Information at this level is based on direct observations of transactions involving the same assets and liabilities, not assumptions, and thus offers superior reliability. However, relatively few items, especially physical assets, actually trade in active markets.

Level 2: FASB acknowledged that active markets for identical assets and liabilities are relatively uncommon and, even when they do exist, they may be too thin to provide reliable information. To deal with this shortage of direct data, the board provided a second level of inputs that can be applied in three situations.

Level 3: If inputs from levels 1 and 2 are not available, FASB acknowledges that fair value measures of many assets and liabilities are less precise. The board describes Level 3 inputs as “unobservable,” and limits their use by saying they “shall be used to measure fair value to the extent that observable inputs are not available.” This category allows “for situations in which there is little, if any, market activity for the asset or liability at the measurement date”. Earlier in the standard, FASB explains that “observable inputs” are gathered from sources other than the reporting company and that they are expected to reflect assumptions made by market participants.

F-5

Cash and cash equivalents

For the purpose of the statements of cash flows, all highly liquid investments with an original maturity of three months or less are considered to be cash equivalents. The carrying value of these investments approximates fair value. As of March 31, 2014 and December 31, 2013, there are no cash equivalents.

Accounts receivable

The Company uses the allowance method to account for uncollectible accounts receivable. The allowance for doubtful accounts represents the Company’s best estimate of the amount of probable credit losses in the Company’s existing accounts receivable. The Company determines the allowance based on specific customer information, historical write-off experience and current industry and economic data. Account balances are charged off against the allowance when the Company believes it is probable the receivable will not be recovered. Management believes that there are no concentrations of credit risk for which an allowance has not been established. Although management believes that the allowance is adequate, it is possible that the estimated amount of cash collections with respect to accounts receivable could change. Accounts receivable are presented net of an allowance for doubtful accounts. At March 31, 2014 and December 31, 2013, respectively, no allowance was recognized.

Inventory

Inventories are stated at the lower of cost (first-in, first-out basis) or market (net realizable value).

Fixed assets

The Company records all property and equipment at cost less accumulated depreciation.  Improvements are capitalized while repairs and maintenance costs are expensed as incurred.  Depreciation is calculated using the straight-line method over the estimated useful life of the assets or the lease term, whichever is shorter.  Leasehold improvements include the cost of the Company’s internal development and construction department.  Depreciation periods are as follows:

Computer equipment 3 years

Furniture and fixtures 7 years

Intangible assets

ASC 350 requires that goodwill and intangible assets with indefinite useful lives no longer be amortized, but instead tested for impairment at least annually in accordance with the provisions of ASC 350. This standard also requires that intangible assets with definite useful lives be amortized over their respective estimated useful lives to their estimated residual values, and reviewed for impairment. As of March 31, 2014 and December 31, 2013, the Company has not record an impairment of its intangible assets.

The Company's intangible assets consist of the costs of filing and acquiring various patents and trademarks. The trademarks are recorded at cost. The Company determined that the trademarks have an estimated useful life of approximately 11 years and will be reviewed annually for impairment. Amortization will be recorded over the estimated useful life of the assets using the straight-line method for financial statement purposes.

Stock-based compensation

The Company records stock-based compensation in accordance with the guidance in ASC Topic 505 and 718 which requires the Company to recognize expenses related to the fair value of its employee stock option awards.  This eliminates accounting for share-based compensation transactions using the intrinsic value and requires instead that such transactions be accounted for using a fair-value-based method. The Company recognizes the cost of all share-based awards on a graded vesting basis over the vesting period of the award. 

The Company accounts for equity instruments issued in exchange for the receipt of goods or services from other than employees in accordance with FASB ASC 718-10 and the conclusions reached by the FASB ASC 505-50. Costs are measured at the estimated fair market value of the consideration received or the estimated fair value of the equity instruments issued, whichever is more reliably measurable. The value of equity instruments issued for consideration other than employee services is determined on the earliest of a performance commitment or completion of performance by the provider of goods or services as defined by FASB ASC 505-50.

Revenue recognition

The Company recognizes revenues from sale of products when the items have shipped and title has transferred to the purchaser.

Advertising costs

Advertising costs are anticipated to be expensed as incurred. Advertising costs included in general and administrative expenses totaled $18,035 and $8,527 for the three months ended March 31, 2014 and 2013, respectively.

F-6

Loss per common share

Net loss per share is provided in accordance with ASC Subtopic 260-10. We present basic loss per share (“EPS”) and diluted EPS on the face of the statements of operations.  Basic EPS is computed by dividing reported losses by the weighted average shares outstanding. Loss per common share has been computed using the weighted average number of common shares outstanding during the year.

Recent pronouncements

The Company has evaluated the recent accounting pronouncements and believes that none of them will have a material effect on the Company’s financial statements.

NOTE 2 – GOING CONCERN

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the recoverability of assets and the satisfaction of liabilities in the normal course of business. Since its inception, the Company has been engaged substantially in financing activities and developing its business plan and marketing. As a result, the Company incurred accumulated net losses from through the period ended March 31, 2014 of $8,249,655 . In addition, the Company’s development activities since inception have been financially sustained through capital contributions from a shareholder.

The ability of the Company to continue as a going concern is dependent upon its ability to raise additional capital from the sale of common stock or through debt financing and, ultimately, the achievement of significant operating revenues. These financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts, or amounts and classification of liabilities that might result from this uncertainty.

NOTE 3 – INVENTORY

Inventories consist of the following:

	March 31,		December 31,
	2014		2013
Raw materials	$	41,812	$	43,851
Finished goods		40,610		76,352
	$	82,422	$	120,203

NOTE 4 – FIXED ASSETS

Fixed assets consisted of the following:

	March 31,			December 31,
	2014			2013
Computer equipment	$	9,769		$	9,769
Furniture and fixtures		9,270			9,270
Fixed assets, total		19,039			19,039
Less: accumulated depreciation		(6,980	)		(6,267	)
Fixed assets, net	$	12,059		$	12,772

Depreciation expense for the three months ended March 31, 2014 and 2013 was $592 and $840, respectively.

NOTE 5 – ASSET PURCHASE AGREEMENT

In March 2011, the Company purchased assets from Dajomi Brands, LLC. The assets acquired included vehicles, inventory and intangible assets. The Company made a deposit of $29,800 on the asset purchase agreement in 2010. During the year ended December 31, 2011, the Company issued a total of 10,939,698 shares of common stock valued at $109,397 and cash totaling $37,211 to settle the purchase of the asset.

Amortization expense for the three months ended March 31, 2014 and 2013 was $3,934 and $3,934, respectively.As of March 31, 2014, and no impairment was recognized by the Company.

F-7

NOTE 6 – LINE OF CREDIT – RELATED PARTY

On November 15, 2011, the Company executed a revolving credit line with a related party for up to $150,000. The related party was an entity that is owned and controlled by an officer of the Company. On November 15, 2012, the lender agreed to increase the credit line up to $200,000, extend the maturity date to March 31, 2013 and to decrease the interest rate from 30% to 15% per annum. On April 1, 2013, the lender agreed to a further increase up to $300,000 and to extend the maturity date to December 31, 2013 which was subsequently extended to March 31, 2015. As of March 31, 2014, the Company has drawn down a total of $484,000 and repaid $253,500 leaving a principal balance owed of $230,500. As of March 31, 2014 and 2013, the Company recorded interest expense of $8,092 and $7,345, respectively.

NOTE 7 – NOTES PAYABLE – RELATED PARTY

Notes payable consisted of the following as of

	March 31, 2014			December 31, 2013
Debenture to an entity, unsecured, 0% interest, default interest at 18%, matured December 2013	$	—		$	100,000
Debenture to an individual, unsecured, 12% interest, default interest at 24%, matured April 2013		125,000			125,000
Debenture to an individual, unsecured, 12% interest, default interest at 24% matured July 2013		75,000			75,000
Debenture to an individual, unsecured, 24% interest, default interest at 24% matured October 2013		110,000			110,000
Debenture to an individual, unsecured, 12% interest, default interest at 24% matured September 2013		100,000			100,000
Debenture to an individual, unsecured, 12% imputed interest, due on demand		4,500			4,500
Note payable to an entity, unsecured, 8% interest, maturing on March 5, 2015		150,000			—
Convertible debenture to an entity, unsecured, 12% imputed interest, convertible at $2 per share, maturing May 2014		21,500			17,500
Convertible debenture to an individual, unsecured, interest due in 5,000 shares of common stock fair valued at $14,000, matured October 2013		13,000			—
Debt discount		(62,472	)		(1,232	)
Total notes payable, net of discounts	$	536,528		$	443,768

F-8

NOTE 8 – STOCKHOLDERS’ (DEFICIT)

The Company is authorized to issue up to 760,000,000 shares of $0.001 par value, common stock as a result of the Company’s 15.2 to 1 forward split effective as of January 16, 2013. All equity has been retroactively restated for the effects of the forward split.

During the three months ended March 31, 2014, the Company authorized the issuance of a total of 1,031,000 shares of common stock for executive and employee services and recorded compensation expense in the amount of $1,877,659 representing the fair value of the shares on the date of grant. As of March 31, 2014, 986,000 are unissued.

On March 3, 2014 the Company issued 10,500 shares of its common stock for cash proceeds of $10,500 or $1.00 per share.

On March 31, 2014, the Company authorized the issuance of 7,500 shares of its common stock valued at $10,800 of which 5,000 were in connection with a loan extension fee valued at $7,050 and recorded interest expense and the remaining 2,500 in connection with settlement fees valued at $3,750. As of March 31, 2014, the shares were unissued.

NOTE 9 – RELATED PARTY TRANSACTIONS

Employment agreement with Chief Executive Officer

Effective January 1, 2014, the Company executed a five year employment agreement with its Chief Executive Officer, superseding all previous agreements. Pursuant to the agreement, the Company has agreed to pay the following cash and equity compensation over the five-year term of the agreement:

Years Ended December 31,		Annual Base Salary		Equity Compensation
	2014	$	240,000	450,000 shares
	2015		300,000	500,000 shares
	2016		375,000	575,000 shares
	2017		450,000	700,000 shares
	2018		550,000	850,000 shares
	Total	$	1,915,000	3,075,000 shares

In addition, the Company has agreed to grant has an automobile allowance of $18,000 per year. In the event, the Company does not make timely payments of salary; the interest is accrued on any unpaid portion at a rate of 10% per annum.

During the three months ended March 31, 2014, the Company recorded executive compensation totaling $60,000 and interest expense totaling $14,348.

F-9

Employment agreement with Chief Operating Officer

Effective January 1, 2014, the Company executed a five year employment agreement with its Chief Operating Officer, superseding all previous agreements. Pursuant to the agreement, the Company has agreed to pay the following cash and equity compensation over the five-year term of the agreement:

Years Ended December 31,		Annual Base Salary		Equity Compensation
	2014	$	135,000	250,000 shares
	2015		150,000	275,000 shares
	2016		185,000	325,000 shares
	2017		225,000	450,000 shares
	2018		270,000	550,000 shares
	Total	$	965,000	1,850,000 shares

In addition to the above compensation, the Company has agreed to a one-time grant of 250,000 shares as a signing bonus. Further, in the event, the Company does not make timely payments of salary; the interest is accrued on any unpaid portion at a rate of 10% per annum.

During the three months ended March 31, 2014, the Company recorded executive compensation totaling $33,750 and interest expense totaling $213.

Consulting agreement with Chief Financial Officer

Effective January 1, 2014 the Company extended its consulting agreement for services of the chief financial officer for an additional three month term. In accordance with the agreement, the Company granted 30,000 shares of its common stock as full consideration for these services and has recorded compensation expense totaling $55,500 based on the fair market value on the date of grant. As of March 31, 2014, the shares are unissued. On April 1, 2014, the parties agreed to a subsequent term of three months and an additional issuance of 30,000 shares of common stock.

NOTE 10– COMMITMENTS AND CONTINGENCIES

On May 2, 2012, the Company executed a lease agreement for a period of 39 months with a monthly base rent of $750 plus estimated common area maintenance and HVAC charges of $1,230. The Company was required to pay a security deposit of $2,186.

The future minimum lease payments are as follows:

Years Ended December 31,
2014		23,760
2015		13,860
Total	$	37,620

F-10

NOTE 11 – SUBSEQUENT EVENTS

On January 15, 2014, the Company signed a Joint Venture Agreement with Elite Growth Holdings Limited, a British Virgin Islands corporation, to form NOHO Asia, Ltd., a Hong Kong corporation. (the “Joint Venture”). This Joint Venture will allow NOHO, Inc. to now distribute its premium and functional lifestyle beverages throughout Asia, including Hong Kong, Macau, Singapore, Taiwan and Peoples Republic of China (the “Territories”), through the newly formed NOHO Asia, Ltd. Elite Growth Holdings and NOHO, Inc. shall each have an equal ownership in NOHO Asia, Ltd. and equally share in net profits, after tax, derived from the operations of NOHO Asia, Ltd. and the sale of the NOHO products in the Territories. Revenue generated pursuant to this joint venture occurred subsequent to the quarter ended March 31, 2014 and will be applied to the quarter ended June 30, 2014.

On April 23, 2014, NOHO Asia Ltd. entered into a Distribution Agreement with Telford International Company Limited (“Telford”) wherein Telford will act as the exclusive seller and distributor of NOHO products in the Honk Kong and Macau Special Administration Regions for a term of three years unless terminated pursuant to the Distribution Agreement.

On May 22, 2014, the Company issued 50,000 shares of restricted common stock at a cost basis of $0.90 per share pursuant to a Private Placement Subscription Agreement dated April 27, 2014.

On May 29, 2014, the Company issued 20,000 shares of restricted common stock pursuant to an Independent Contractor Agreement dated February 24, 2014.

On June 18, 2014, the Company issued 16,000 shares of restricted common stock for services rendered pursuant to a Promotion and Consulting Agreement dated June 18, 2013.

On June 18, 2014, the Company issued 100,000 shares of restricted common stock pursuant to the Third Addendum to Subscription and Purchase Agreement dated February 28, 2014.

On June 18, 2014, the Company issued 100,000 shares of restricted common stock pursuant to a Marketing and Sale Agreement dated April 10, 2014. 

END OF NOTES TO FINANCIAL STATEMENTS

F-11

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION OR PLAN OF OPERATION

FORWARD-LOOKING STATEMENTS

This Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) contains forward-looking statements that involve known and unknown risks, significant uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed, or implied, by those forward-looking statements. You can identify forward-looking statements by the use of the words may, will, should, could, expects, plans, anticipates, believes, estimates, predicts, intends, potential, proposed, or continue or the negative of those terms. These statements are only predictions. In evaluating these statements, you should consider various factors which may cause our actual results to differ materially from any forward-looking statements. Although we believe that the exceptions reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Therefore, actual results may differ materially and adversely from those expressed in any forward-looking statements. We undertake no obligation to revise or update publicly any forward-looking statements for any reason.

Overview of Operations

Our flagship product “NOHO®” – The Hangover Defense® (“NOHO”) is a dietary supplement, taken before or during the consumption of alcohol that may help to prevent the symptoms associated with a hangover. NOHO was formulated by a Doctor of Pharmacy and comes in a 2 ounce “shot” that can be consumed on a stand-alone basis or as a mixer available in an 8.4 ounce that can be consumed by itself or mixed with an alcoholic drink. It is recommended that the 2 ounce shot be taken as the first and last shot of the night, while the mixer can be consumed alone or mixed with subsequent drinks. NOHO has a refreshing flavor, containing no caffeine or stimulants. Although the method by which NOHO works has not been confirmed through clinical testing, field tests conducted throughout the country have demonstrated NOHO’s effectiveness. NOHO is intended to pre-plenish common electrolytes and trace elements lost by alcohol consumption.

RESULTS OF OPERATIONS

Revenues

Comparison of the three month period ended March 31, 2014 and 2013.

Total net revenue during the three months ended March 31, 2014 was $147,001 as compared to $244,069 for the three months ended March 31, 2013. Gross profit for the three months ended March 31, 2014 and 2013 was $72,769 and $101,718, respectively, for a decrease in gross profits of $(29,486). Additionally, during the three months ended March 31, 2014, the cost of goods sold was $74,769 as compared to $142,351 for the three months ended March 31, 2013. The decrease in total net revenue for the three months ended March 31, 2014, as compared to three months ended March 31, 2013, was due to continuous focus on consumer education, as well as international expansion. This new focus took time away from domestic sales, but will allow us to grow our brand internationally.

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Operating Expenses

Comparison of the three month period ended March 31, 2014 and 2013.

Operating expenses during the three months ended March 31, 2014 were $2,428,293, of which $124,209 was for consulting fees, $2,077,045 was for compensation expense, $83,916 was for general and administrative costs, $43,133 was for professional fees, $17,800 was for promotional and marketing, and the remaining $82,190 was related to selling expense. In comparison, operating expenses for the three months ended March 31, 2013 were $450,700, of which $1,690 was for consulting fees, $136,718 was for compensation expense, $130,374 was for general and administrative costs, $3,110 was for professional fees, $26,127 was for promotional and marketing, and the remaining $152,681 was related to selling expense. The increase in professional fees was due to increased legal and accounting work. Additionally, the increase in compensation expense and consulting fees was a result of issuance of equity compensation to company executives and other partners, this compensation is not cash compensation and was based on the stock price at time of issuance.

Net Loss

As a result of the foregoing, we reported a net loss attributable to common shareholders for the three months ended March 31, 2014 and 2013 of $(2,409,404) and $(348,982), respectively.  

Our net loss for the year ended December 31, 2013 was $2,786,671 as compared to $1,907,201 for the year ended December 31, 2012, an increase in net loss of $879,470 of which approximately 36% is attributable to our decline in gross profit, 37% to increases in operational expenses and 11% to the non-recurring settlement cost. As we achieve an increase to our existing market share, with an expected result of greater net revenues over the next twelve months, we expectantly would also anticipate a relative decrease in net loss as a direct result.

Plan of Operations

We intend to use our cash reserves to fund further marketing, manufacture, distribution and product development activities. We expect to receive a certain amount of additional funds, either through the sale of equity, obtaining debt financing or through sales of our products, but this is not assured and, otherwise, we do not currently have any alternative source of revenues.  

In the event that additional financing is delayed or the Company does not generate enough revenues to meet its needs, the Company will scale down its operations. However, in that case, the marketing, development, manufacture and distribution of its products would be diminished, delayed, or even halted. In the event of an ongoing lack of financing, we may be obliged to discontinue operations, which will adversely affect the value of our common stock.

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Liquidity and Capital Resources

The following table summarizes total current assets and total current liabilities at March 31, 2014 compared to December 31, 2013 (restated).

	Period Ended March 31, 2014		Year Ended December 31, 2013 (restated)		Difference $
Total Current Assets	$	169,844	$	250,982	$	(81,138	)
Total Liabilities	$	2,138,551	$	1,781,083	$	357,468

For the period ended March 31, 2014, the Company had total current assets of $169,844 which consists of cash of $NIL, accounts receivable of $87,422, non-cash prepaid expenses of $NIL, and inventory of $82,422. For the period ending March 31, 2014, the Company had total current liabilities of $2,138,551 which consists of accounts payable of $393,645, accrued compensation for related party of $889,347, accrued interest of $75,458, accrued interest payable to related parties of $13,073, line of credit for related party of $230,500, notes payable of $277,463, and convertible notes payable of $259,065.  This represents a working capital deficit. Nevertheless, as of the date of filing this Report, the Company’s cash reserves are only adequate to fund operations for a limited period of time. 

For the year ended December 31, 2013, the Company had total current assets of $250,982 which consists of cash of $18,804, accounts receivable of $50,392, prepaid expenses of $61,583 and inventory of $120,203.As of December 31, 2013, the Company had total current liabilities of $1,781,083 which consists of accounts payable of $272,253 accrued payroll of $803,236, notes payable of $189,500, line of credit to related party of $205,500, convertible notes payable net of discounts of $254,268, accrued interest payable of $46,312 and accrued interest payable to related parties of $10,014.  This represents a working capital deficit of $1,530,101. Nevertheless, as of the date of filing this Report, the Company’s cash reserves are only adequate to fund operations for a limited period of time. 

Growth of our operations will be based on our ability to internally finance from cash flow, raise equity and/or debt to increase sales and production. Our primary sources of liquidity are: (i) cash from sales of our products; and (ii) financing activities.

 Cash Flows

	Three Months Ended March 31, 2014			Three Months Ended March 31, 2014
Cash Flows from (used in) Operating Activities	$	(208,304	)	$	(121,826	)
Cash Flows from (used in) Investing Activities	$	—		$	—
Cash Flows from (used in) Financing Activities	$	189,500		$	48,392

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Operating Activities

Net cash used by operating activities was $(208,304) for the three months ended March 31, 2014, as compared to $(121,826) used in operating activities for the three months ended March 31, 2013. The increase in net cash used in operating activities was primarily due to an increase in contract labor and increases in professional fees, as a result of increased legal work and accounting work.

Investing activities

Net cash used in investing activities was $NIL for the three months ended March 31, 2014 as compared to $NIL used in investing activities for the three months ended March 31, 2013.

Financing activities and future financings

Net cash provided by financing activities for the three months ended March 31, 2014 was $189,500, as compared to $48,392 for the three months ended March 31, 2013. The increase of net cash provided by financing activities was mainly attributable to capital provided through private placements of the Company’s common stock and proceeds from notes payable of related party loans.

We will continue to rely on revenues generated from sales of products and equity sales of our common shares in order to continue to fund our expanding business operations. Issuances of additional shares will result in dilution to existing stockholders. There is no assurance that we will achieve any additional sales of the equity securities or arrange for debt or other financing to fund our operations and other activities.

Cash Requirements

Our cash on hand as of March 31, 2014 was $NIL. The Company has incurred a net loss of $(2,409,404) for the three months period ended March 31, 2014 as compared to $(377,442) at March 31, 2013. While the Company has recognized revenues from operations, the revenues generated are not sufficient to sustain operations. The Company does have sufficient funds to acquire new business assets and maintain its existing operations at this time.

Future Financings

We will continue to rely on equity sales of our common shares in order to continue to fund our business operations. Issuances of additional shares will result in dilution to existing stockholders. There is no assurance that we will achieve any additional sales of the equity securities or arrange for debt or other financing to fund planned acquisitions and exploration activities.

Inflation

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

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Off-Balance Sheet Arrangements

We did not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.

Contractual Obligations

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.

Critical Accounting Policies

Our financial statements and accompanying notes have been prepared in accordance with United States generally accepted accounting principles applied on a consistent basis. The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods.

We regularly evaluate the accounting policies and estimates that we use to prepare our financial statements. A complete summary of these policies is included in note 1 of the notes to our financial statements contained herein. In general, management's estimates are based on historical experience, information from third party professionals, and various other assumptions that are believed to be reasonable under the facts and circumstances. Actual results could differ from those estimates made by management.

Recently Issued Accounting Pronouncements

The Company has evaluated all new accounting pronouncements that are in effect and believes that none will have a material impact on 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.

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.

ITEM 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Disclosure controls and procedures are controls and procedures that are designed to ensure that information required to be disclosed in our reports filed under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by our company in the reports that it files or submits under the Exchange Act is accumulated and communicated to our management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. Our management carried out an evaluation under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 ("Exchange Act").

Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures were not effective as of March 31, 2014, due to the material weaknesses resulting from the Board of Directors not currently having any independent members and no director qualifies as an audit committee financial expert as defined in Item 407(d)(5)(ii) of Regulation S-K, and controls were not designed and in place to ensure that all disclosures required were originally addressed in our financial statements.

Changes in Internal Control Over Financial Reporting

Our management has also evaluated our internal control over financial reporting, and there have been no significant changes in our internal controls or in other factors that could significantly affect those controls subsequent to the date of our last evaluation.

The Company is not required by current SEC rules to include, and does not include, an auditor's attestation report. The Company's registered public accounting firm has not attested to Management's reports on the Company's internal control over financial reporting.

Limitations on Effectiveness of Controls and Procedures

In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply its judgment in evaluating the benefits of possible controls and procedures relative to their costs.

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PART II — OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

On April 17, 2013, the United States District Court for the Eastern District of North Carolina entered an Order Entering Default Judgment against Dolce Bevuto, LLC, a wholly owned subsidiary of the Company (“DB”), in favor of The Pantry, Inc. (the “Plaintiff”) in the matter of The Pantry, Inc. v. Dolce Bevuto, LLC, Civil Action No, 5:12-CV-00764. Plaintiff alleged that DB owed Plaintiff a total of $92,325 for accounts to be paid under a funding agreement entered into by and between DB and the Plaintiff. The Company intends to pursue all available remedies, at law and in equity, to appropriately respond to the Court’s order.

On May 29, 2013, the Company filed a Complaint against the Perigon Companies, LLC, et al. in the Superior Court of California in San Diego County with regard to certain agreements entered into by and between the parties. The Company sought monetary damages and injunctive relief. On August 1, 2013, the Parties reached a settlement and the Company has dismissed this lawsuit without prejudice.

On June 11, 2013, Envision Growth Partners LLC (“Envision”) filed a Complaint against NOHO, Inc., et al. in the Arizona Superior Court of Maricopa County, Arizona with regard to certain agreements entered into by and between the parties. Envision sought monetary damages and injunctive relief. On August 1, 2013, the Parties reached a settlement and Envision has dismissed this lawsuit without prejudice.

Other than stated herein, we know of no material, existing or pending legal proceedings against our company, nor are we involved as a plaintiff in any material proceeding or pending litigation. There are no proceedings in which our director, officer or any affiliates, or any registered or beneficial shareholder, is an adverse party or has a material interest adverse to our interest.

ITEM 1A. RISK FACTORS

We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information required under this item.

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

Quarterly Issuances:

On December 17, 2013, the Company authorized the issuance of 260,000 shares of restricted common stock to be issued to two investors at an average cost basis of $1.63 per share pursuant to Subscription and Purchase Agreements. The shares were not issued until January 7, 2014.

During the quarter ended March 31, 2014, the Company issue 37,167 shares of restricted common stock to three investors, at an average cost basis of $1.58 per share, pursuant to Subscription and Purchase Agreements.

During the quarter ended March 31, 2014, the Company issued 45,000 restricted shares of common stock pursuant to two Independent Contractors Agreement’s, as consideration for services rendered to the Company.

Subsequent Issuances:

On April 7, 2014, the Company issued 30,000 shares of restricted common stock to the Company’s CFO as compensation pursuant to the First Addendum, dated January 1, 2014, to the Employment Agreement originally dated September 24, 2013, for services rendered between January 1, 2014 and March 31, 2014. The Company issued an additional 30,000 shares of restricted common stock on April 7, 2014 to the Company’s CFO pursuant to the Second Addendum, dated April 1, 2014, for services rendered between April 1, 2014 and June 30, 2014.

On April 7, 2014, the Company issued 5,000 shares of restricted common stock as consideration of the extension of a promissory note.

On April 7, 2014, the Company issued 9,000 shares of restricted common stock for services rendered pursuant to that a Promotion and Consulting Agreement dated June 18, 2013.

On April 7, 2014, the Company issued 2,500 shares of restricted common stock pursuant to a Settlement and General Mutual Release dated February 6, 2014.

On April 7, 2014, the Company issued 6,000 shares of restricted common stock pursuant to an Independent Contractor Agreement dated January 13, 2014.

On May 22, 2014, the Company issued 50,000 shares of restricted common stock at a cost basis of $0.90 per share pursuant to a Private Placement Subscription Agreement dated April 27, 2014.

On May 29, 2014, the Company issued 20,000 shares of restricted common stock pursuant to an Independent Contractor Agreement dated February 24, 2014.

On June 18, 2014, the Company issued 16,000 shares of restricted common stock for services rendered pursuant to that a Promotion and Consulting Agreement dated June 18, 2013.

On June 18, 2014, the Company issued 100,000 shares of restricted common stock pursuant to the Third Addendum to Subscription and Purchase Agreement dated February 28, 2014.

On June 18, 2014, the Company issued 100,000 shares of restricted common stock pursuant to a Marketing and Sale Agreement dated April 10, 2014.

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ITEM 3. Defaults Upon Senior Securities

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

On January 1, 2014, the Company executed a three month consulting agreement with the Chief Financial Officer (“CFO”) of the Company wherein the CFO’s term was extended from January 1, 2014 through March 31, 2014 in exchange for 30,000 shares of restricted common stock as compensation. The Company entered into the Second Addendum, subsequent to the quarter end on April 1, 2014, wherein the Company’s CFO received 30,000 restricted shares of common stock for services rendered between April 1, 2014 and June 30, 2014

On January 1, 2014, the Company executed a five year employment agreement with its Chief Executive Officer, John Grdina, and a five year employment agreement with its President, Sean Stephenson, and effective January 1, 2014 through December 31, 2018. The terms of these agreements are available in the Company’s Form 10-K/A as filed with the Commission on June 17, 2014, and the terms are incorporated by reference herein.

On January 15, 2014, the Company signed a Joint Venture Agreement with Elite Growth Holdings Limited, a British Virgin Islands corporation, to form NOHO Asia, Ltd., a Hong Kong corporation. (the “Joint Venture”). This Joint Venture will allow NOHO, Inc. to now distribute its premium and functional lifestyle beverages throughout Asia, including Hong Kong, Macau, Singapore, Taiwan and Peoples Republic of China (the “Territories”), through the newly formed NOHO Asia, Ltd. Elite Growth Holdings and NOHO, Inc. shall each have an equal ownership in NOHO Asia, Ltd. and equally share in net profits, after tax, derived from the operations of NOHO Asia, Ltd. and the sale of the NOHO products in the Territories. Revenue generated pursuant to this joint venture occurred subsequent to the quarter ended March 31, 2014 and will be applied to the quarter ended June 30, 2014.

On April 23, 2014, NOHO Asia Ltd. entered into a Distribution Agreement with Telford International Company Limited (“Telford”) wherein Telford will act as the exclusive seller and distributor of NOHO products in the Honk Kong and Macau Special Administration Regions for a term of three years unless terminated pursuant to the Distribution Agreement.

ITEM 6. EXHIBITS

Exhibit Number	Description	Filed
3.1	Articles of Incorporation filed with the Wyoming Secretary of State on September 30,  2011.	Incorporated by reference as an Exhibit to the Form S-1 filed on December 15, 2011
3.1(a)	Amendment to Articles of Incorporation filed with the Wyoming Secretary of State on January 9, 2013.	Incorporated by reference as an Exhibit to the Form 8-K filed on March 28, 2013.
3.1 (b)	Amendment to Articles of Incorporation filed with the Wyoming Secretary of State on January 9, 2013.	Incorporated by reference as an Exhibit to the Form 8-K filed on January 17, 2013.
3.1(c)	Amendment to Articles of Incorporation filed with the Wyoming Secretary of State on December 31, 2012	Incorporated by reference as an Exhibit to the Form 8-K filed on January 8, 2013.
3.2	Bylaws.	Incorporated by reference as an Exhibit to the Form S-1 filed on December 15, 2011
31.1	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.	Filed herewith.
31.2	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.	Filed herewith.
32.1	Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.	Filed herewith.
32.2	Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.	Filed herewith.
95.1	Mine Safety Disclosures.	Filed herewith.
101.INS*	XBRL Instance Document.	Filed herewith.
101.SCH*	XBRL Taxonomy Extension Schema Document.	Filed herewith.
101.CAL*	XBRL Taxonomy Extension Calculation Linkbase Document.	Filed herewith.
101.DEF*	XBRL Taxonomy Extension Definition Linkbase Document.	Filed herewith.
101.LAB*	XBRL Taxonomy Extension Label Linkbase Document.	Filed herewith.
101.PRE*	XBRL Taxonomy Extension Presentation Linkbase Document.	Filed herewith.

*XBRL (Extensible Business Reporting Language) information is furnished and not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.

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SIGNATURE

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	NOHO, INC.
Date: June 19, 2014	By:	/S/ John Grdina
		John Grdina
		Its: President
		(Principal Executive Officer and duly authorized signatory)

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