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 ended ~~January~~April 3130, 2016

☐ 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

333-170393

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 ☒ 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 filer. See definition of “accelerated filer” and “large accelerated filer” in Rule 12b-2 of the Exchange Act (Check one):

Large Accelerated Filer ☐

Accelerated Filer ☐

Non-Accelerated Filer ☐

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 ☒ .

State the number of shares outstanding of each of the issuer’s classes of common equity as of the latest practicable date: 54 1,~~043~~564,~~323~~595,954 shares of Common Stock as of ~~March~~July 1811, 2016.

HIGH PERFORMANCE BEVERAGES COMPANY

FORM 10-Q

~~January~~April 3130, 2016

INDEX

		Page
PART I - FINANCIAL INFORMATION
Item 1.	Consolidated Financial Statements (Unaudited)	3
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	1718
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	2021
Item 4.	Controls and Procedures	2021
PART II - OTHER INFORMATION
Item 1.	Legal Proceedings	2122
Item 1A.	Risk Factors	2122
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	2122
Item 3.	Defaults Upon Senior Securities	22
Item 4.	Mine Safety Disclosures	22
Item 5.	Other Information	22
Item 6.	Exhibits and Reports on Form 8-K	22
SIGNATURES		23

PART I - FINANCIAL INFORMATION

Item 1. Financial statements

HIGH PERFORMANCE BEVERAGES COMPANY

CONSOLIDATED BALANCE SHEETS

AS OF ~~JANUARY~~APRIL 3130, 2016 AND JULY 31, 2015

(Unaudited)

	January 31, 2016			July 31, 2015
	April 30, 2016			July 31, 2015
ASSETS
Current Assets
Cash and cash equivalents	$	171,~~343~~645		$	144,093
Accounts receivable		268			-
Inventory		2019,~~671~~464			-
Total Current Assets		3821,~~282~~377			144,093
Total Assets	$	3821,~~282~~377		$	144,093
LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current Liabilities
Accounts payable and accrued expenses	$	~~881~~1,~~734~~016,556		$	759,190
Note payable		6,900			6,900
Convertible notes payable, net		3,~~387~~397,~~279~~532			3,356,418
Derivative liabilities		32,~~130~~384,~~115~~833			1,203,607
Total Liabilities		7,406,028			5,326,115
Total Current Liabilities		6,805,821			5,326,115
Stockholders’ Deficit
Preferred stock: $0.001 par value; 1,000,000 shares authorized; 100,000 shares issued and outstanding		100			100
Common stock: $0.001 par value; 5,000,000,000 shares authorized; 48,929,612 and 24,004,116 issued and outstanding at January 31, 2016 and July 31, 2015, respectively		48,931			24,004
Common stock: $0.001 par value; 5,000,000,000 shares authorized; 214,582,582 and 24,004,116 issued and outstanding at April 30, 2016 and July 31, 2015, respectively		214,585			24,004
Stock payable		~~256~~226,401			148,066
Additional paid-in capital		7,~~307~~425,~~041~~185			5,634,736
Accumulated deficit		(14,~~980~~650,~~219~~715	)		(10,988,928	)
Total Stockholders’ Deficit		(76,~~367~~784,~~746~~444	)		(5,182,022	)
Total Liabilities and Stockholders’ Deficit	$	3821,~~282~~377		$	144,093

See accompanying notes to these unaudited financial statements.

HIGH PERFORMANCE BEVERAGES COMPANY

CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE THREE AND ~~SIX~~NINE MONTHS ENDED ~~JANUARY~~APRIL 3130, 2016 AND 2015

(Unaudited)

	Three months ended January 31,						Six months ended January 31,
	Three months ended April 30,						Nine months ended April 30,
	2016			2015			2016			2015
REVENUES	$	105,~~743~~808		$	-		$	4045,~~111~~919		$	-
COST OF GOODS SOLD		106,~~000~~076			-			3945,~~163~~239			-
GROSS PROFIT		~~743~~(268	)		-			~~948~~680			-
OPERATING EXPENSES
General and administrative		~~101~~126,~~310~~337			~~405~~91,~~082~~872			~~273~~399,~~183~~519			~~552~~644,~~226~~097
Marketing		1427,~~310~~553			799,~~408~~407			2755,~~929~~482			~~135~~145,~~629~~036
Product development		~~21,000~~-			~~117~~51,500			61,809			~~117~~169,~~500~~000
Compensation		22131,~~000~~350			59130,~~560~~706			~~336~~467,~~115~~465			~~387~~517,~~080~~786
TOTAL OPERATING EXPENSES		~~158~~285,~~620~~240			~~661~~283,~~550~~485			~~699~~984,~~036~~275			1,~~192~~475,~~435~~919
OTHER (INCOME) EXPENSE
Interest income		-			-(170	)		(8-	)		-(170	)
Interest expense		~~479~~331,~~849~~345			76108,~~114~~963			~~940~~1,~~406~~053,648			~~251~~360,~~798~~761
Change in fair value of derivative liabilities		486,861			965,491			2,352,805			2,126,801
Gain on extinguishment of debt		(735,553	)		-			(968,225	)		-
TOTAL OTHER EXPENSE		966,710			1,041,605			3,293,203			2,378,599
Change in fair value of derivative liabilities		(210,800	)		(537,868	)		2,592,769			1,588,933
NET LOSS	$	(1,124,587	)	$	(1,703,155	)	$	(3,991,291	)	$	(3,571,034	)
TOTAL OTHER (INCOME) EXPENSE		(615,008	)		(429,075	)		2,678,192			1,949,524
NET LOSS PER COMMON SHARE: BASIC AND DILUTED	$	(0.02	)	$	(0.80	)	$	(0.10	)	$	(2.21	)
NET INCOME (LOSS)	$	329,500		$	145,590		$	(3,661,787	)	$	(3,425,443	)
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING: BASIC AND DILUTED		47,030,827			2,120,194			40,974,819			1,612,835
NET INCOME / (LOSS) PER COMMON SHARE: BASIC AND DILUTED	$	0.01		$	1.08		$	(0.07	)	$	(31.37	)
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING: BASIC AND DILUTED		78,446,527			134,582			53,040,779			109,290

See accompanying notes to these unaudited financial statements.

HIGH PERFORMANCE BEVERAGES COMPANY

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE ~~SIX~~NINE MONTHS ENDED ~~JANUARY~~APRIL 3130, 2016 AND 2015

(Unaudited)

	2016			2015
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(3,~~991~~661,~~291~~787	)	$	(3,~~571~~425,~~034~~443	)
Adjustments to reconcile net loss to net cash used in operating activities
Share-based compensation		~~262~~261,~~935~~475			6075,~~985~~588
Amortization of debt discounts		~~323~~507,~~655~~113			5273,~~193~~426
Change in fair value of derivative liabilities		21,~~352~~624,~~805~~544			21,~~126~~584,~~801~~017
Penalty interest expense		~~370~~108,~~611~~701			~~2,922~~-
Changes in operating assets and liabilities
Accounts receivable		(268	)		-
Inventory		(2019,~~671~~464	)		-
Accounts payable and accrued expenses		138,437			118,334
Prepaid expense		-			27,000
Cash Flows Used in Operating Activities		(563,787	)		(1,209,799	)
Accounts payable and accrued expenses		274,907			192,560
Cash Flows Used in Operating Activities		(904,779	)		(1,472,852	)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from sale of common stock		~~100~~107,~~000~~500			-
Proceeds from issuances of convertible notes payable		~~337~~654,~~037~~831			1,~~596~~770,~~934~~377
Cash Flows Provided by Financing Activities		~~437~~762,~~037~~331			1,~~596~~770,~~934~~377
NET CHANGE IN CASH AND CASH EQUIVALENTS		(~~126~~142,~~750~~448	)		~~387~~297,~~135~~525
Cash and cash equivalents, beginning of period		144,093			10,485
Cash and cash equivalents, end of period	$	171,~~343~~645		$	~~397~~308,~~620~~010
SUPPLEMENTAL CASH FLOWS INFORMATION
Cash paid for interest	$	-		$	-
Cash paid for income taxes	$	-		$	-
NONCASH INVESTING AND FINANCING ACTIVITIES
Debt discounts from fair value of derivative liabilities	$	~~644~~443,~~389~~318		$	-
Debt discounts on convertible notes payable	$	~~163~~516,~~432~~674		$	-
Common stock issued for exercise of warrants	$	5,000		$	~~173~~113,~~574~~345
Conversion of convertible notes payable and interest payable to common stock	$	~~402~~729,~~290~~173		$	~~278~~557,~~049~~178

See accompanying notes to these unaudited financial statements.

HIGH PERFORMANCE BEVERAGES COMPANY

Notes to the Consolidated Financial Statements

(Unaudited)

NOTE 1 - ORGANIZATION

High Performance Beverages Company (formerly known as Dethrone Royalty Holdings, Inc. and Exclusive Building Services, Inc.) (the “Company”) was founded as an unincorporated DBA in February 1997 and was incorporated as a C corporation under the laws of the State of Nevada on October 11, 2010.

Effective February 29, 2016, the Company completed a 1 for 100 reverse stock split. All per share amounts have been adjusted to reflect the reverse stock split.

Currently, the Company is selling its beverage products online through Amazon.com.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Interim financial statements

The accompanying interim unaudited 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 interim unaudited 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, 2015 and notes thereto contained in the Company’s Annual Report on Form 10-K.

Basis of Accounting

The Company’s consolidated financial statements are prepared using the accrual method of accounting. These consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary Dethrone Beverage, Inc. All significant inter-company balances and transactions have been eliminated upon consolidation.

HIGH PERFORMANCE BEVERAGES COMPANY

Notes to the Consolidated Financial Statements

(Unaudited)

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont'd)

Use of Estimates and Assumptions

Preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates.

Inventory

Inventory is accounted for on a lower of cost or market basis. The inventory consists of completed bottled beverages.

Reclassifications

Certain comparative figures have been reclassified to conform to the current year presentation.

Loss per Common Share

Basic and diluted net income (loss) per common share has been calculated by dividing the net income (loss) for the period by the basic and diluted weighted average number of common shares. As of ~~January 31, 2016 and~~ July 31, 2015, independent third parties held 14,~~218,282 and 14,~~439,441 warrants outstanding, respectively, which have a potentially dilutive effect. On February 26, 2016, these warrants were cancelled.

Subsequent Events

The Company evaluates subsequent events from the date of the balance sheet through the date when the financial statements are issued for disclosure consideration.

Recently Issued 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.

HIGH PERFORMANCE BEVERAGES COMPANY

Notes to the Consolidated Financial Statements

(Unaudited)

NOTE 3 - GOING CONCERN

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As reflected in the accompanying consolidated financial statements, the Company had negative net working capital and a net stockholders’ deficit at ~~January~~April 3130, 2016 and had no reliable source of ongoing debt or equity financing.

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, High Performance Beverages Company. However, there are uncertainties as to whether the Company will obtain sufficient financing to continue to their products or if there will be sufficient market demand for the products. It is management’s plan to raise additional funding by the issuances of debt and equity instruments.

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

NOTE 4 - CONVERTIBLE NOTES PAYABLE

Convertible notes payable consists of the following:

	January 31,		July 31,
	April 30,		July 31,
Description	2016		2015
On November 15, 2012, the Company entered into a Senior Secured Promissory Note with an unaffiliated party under which the Company received a one-year loan with a principal balance of $100,000. This note 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 note, it becomes convertible into the Company’s common stock at a price of $0.001 per share (100 million shares).
On November 15, 2012, the Company entered into a Senior Secured Promissory Note with an unaffiliated party under which the Company received a one-year loan with a principal balance of $100,000. This note 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, the senior executives of the Company, pledged their 56,250 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 note, it becomes convertible into the Company’s common stock at a price of $0.001 per share (100 million shares).
On September 17, 2015, the Company and the lender entered into an exchange agreement and combined this note with two other notes held by the same lender and issued a new note to the lender.	$	-	$	100,000
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. The Company has not filed a Registration Statement since this note was issued.
During the six months ended January 31, 2016, the Company repaid $18,400 by issuing 1,840,000 shares of common stock. As of January 31, 2016, this note was in default.		17,320		35,720
During the nine months ended April 30, 2016, the Company repaid $18,400 by issuing 1,840,000 shares of common stock. As of April 30, 2016, this note was in default.		17,320		35,720

HIGH PERFORMANCE BEVERAGES COMPANY

Notes to the Consolidated Financial Statements

(Unaudited)

NOTE 4 - CONVERTIBLE NOTES PAYABLE (cont'd)

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.
On September 17, 2015, the Company and the lender entered into an exchange agreement and combined this note with two other notes held by the same lender and issued a new note to the lender.	-	37,554
On October 10, 2013, the Company entered into a securities purchase agreement (the “SPA”) with an 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 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.
Each note is convertible, at any time after the date nine 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 adjustments as further described in the Master Note.
As of January 31, 2016, this note was in default.	116,160	72,027
On February 25, 2016, these notes, together with accrued interest and default penalties of $47,323, were combined and assigned to another investor in exchange for a $25,000 cash payment by the new investor. The original terms were not altered.
As of April 30, 2016, this note was in default.	157,323	72,027

HIGH PERFORMANCE BEVERAGES COMPANY

Notes to the Consolidated Financial Statements

(Unaudited)

NOTE 4 - CONVERTIBLE NOTES PAYABLE (cont'd)

On January 8, 2014, the Company sold an Original Issue Discount Convertible Promissory Note in the principal amount of $75,000, for cash consideration of $50,000. This note matured on July 8, 2014 and all overdue principal entailed a late fee at the rate of 22% per annum. The Company had the option to prepay this note for $100,000 at any time prior to the maturity date.
This 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. This 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 noteholder upon with not less than 61 days’ prior notice to the Company.
This 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. This 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 noteholder upon not less than 61 days’ prior notice to the Company.
During the six months ended January 31, 2016, the Company repaid $11,965 by issuing 119,660 shares of common stock. In addition, $43,671 in principal was sold to another investor on September 10, 2015. As of January 31, 2016, this note was in default.	13,035	68,671
During the nine months ended April 30, 2016, the Company repaid $11,965 by issuing 119,660 shares of common stock. In addition, $43,671 in principal was sold to another investor on September 10, 2015. As of April 30, 2016, this note was in default.	13,035	68,671
On March 25, 2014, the Company sold a note with a principal balance of $75,000 for a purchase price of $50,000 and an original issuance discount of $25,000. This note matured on September 25, 2014.
This 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. This 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 noteholder upon with not less than 61 days’ prior notice to the Company.
As of January 31, 2016, this note was in default.	75,000	75,000
As of April 30, 2016, this note was in default.	31,329	75,000
On March 31, 2014, the Company sold a note with a principal balance of $42,000 for a purchase price of $30,000. This note matured on September 30, 2014. Interest accrued at the rate of 15% per annum, compounding daily. At any time from the date hereof until no payment and/or repayment of funds due to the holder of this note, all principal, accrued but unpaid interest and all other payments due under this note shall be convertible into shares of common stock of the Company, at a conversion price of $.0001 at the option of the holder, in whole at any time and from time to time.
On September 17, 2015, the Company and the lender entered into an exchange agreement and combined this note with two other notes held by the same lender and issued a new note to the lender.	-	6,496

HIGH PERFORMANCE BEVERAGES COMPANY

Notes to the Consolidated Financial Statements

(Unaudited)

NOTE 4 - CONVERTIBLE NOTES PAYABLE (cont'd)

On June 3, 2014, the Company sold a note with a principal purchase price of $10,000. This note matured on June 2, 2015. Interest accrued at the rate of 8% per annum, compounding daily. At any time from the date hereof until no payment and/or repayment of funds due to the holder of this note, all principal, accrued but unpaid interest and all other payments due under the note shall be convertible into shares of common stock of the Company, at a conversion price of $.0001 at the option of the noteholder, in whole at any time and from time to time.
During the quarter ended October 31, 2015, the Company repaid $39,534 in interest and penalties by issuing 926,204 shares of common stock.	-	1,500
On June 6, 2014, the Company sold a note with a principal purchase price of $60,000. This note matured on June 5, 2015. Interest accrues at the rate of 8% per annum, compounding daily. At any time from the date hereof until no payment and/or repayment of funds due to the noteholder, all principal, accrued but unpaid interest and all other payments due under this note shall be convertible into shares of common stock of the Company, at a conversion price of $.0001 at the option of the noteholder, in whole at any time and from time to time.
During the quarter ended October 31, 2015, the Company repaid $39,756 by issuing 587,508 shares of common stock.	-	39,756
On June 4, 2014, a new lender assumed a $60,000 portion of existing debt. Pursuant to the original agreement, if the Company does not repay the entire balance of the maturity date, June 15, 2014, the note shall accrue interest at 22% per annum.
The note is convertible 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 original note.
As of January 31, 2016, the Company was in default on this note.	472,568	472,568
As of April 30, 2016, the Company was in default on this note.	472,568	472,568
On June 6, 2014, the Company sold a note with a principal purchase price of $60,000. This note matured on June 5, 2015. Interest accrues at the rate of 8% per annum, compounding daily. This note is convertible 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 five (5) trading days immediately preceding the conversion, subject to certain adjustment as further described in the original note.
During the quarter ended October 31, 2015, the Company repaid $36,510 by issuing 543,404 shares of common stock.	-	36,510
On August 15, 2014, the Company sold a non interest bearing note with a principal purchase price of $66,000. This note was due on August 15, 2015. This note is convertible into shares of the Company’s common stock at an exercise price equal to (i) the outstanding balance divided by (ii) 50% of the lowest trade price in the twenty-five (25) trading days immediately preceding the conversion, subject to certain adjustment as further described in the original note.
As of January 31, 2016, the Company was in default on this note.	68,000	68,000
As of April 30, 2016, the Company was in default on this note.	68,000	68,000

HIGH PERFORMANCE BEVERAGES COMPANY

Notes to the Consolidated Financial Statements

(Unaudited)

NOTE 4 - CONVERTIBLE NOTES PAYABLE (cont'd)

On August 26, 2014, a new Investor purchased from an original noteholder, a convertible note with a face value of $48,000 dated October 8, 2013, with a present balance of $62,234, including accrued interest. The terms of the original note remain the same.
On August 26, 2014, a new investor purchased from an original noteholder, a convertible note with a face value of $48,000 dated October 8, 2013, with a present balance of $62,234, including accrued interest. The terms of the original note remain the same.
Pursuant to the Master Note, the Investor held 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 had a principal balance of $22,000 and had a purchase price of $20,000, and an original issue discount of $2,000.
Pursuant to the Master Note, if the Company repays the entire balance of each of the Notes 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 each Note shall have a one-time interest charge equal to 12%, applied to the outstanding balance of each note.
Each of the notes 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.
Each of the notes is convertible, at any time after the date nine 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.
As of January 31, 2016, this note was in default.	705,946	705,946
During the nine months ended April 30, 2016, the note holder converted $9,960 in principal into 7,996,762 shares of the Company’s common stock.
As of April 30, 2016, this note was in default.	695,986	705,946
On August 27, 2014, the Company sold a 12% Convertible Redeemable Note in the principal amount of $160,000 pursuant to a Securities Purchase Agreement. The Note matured on March 27, 2015.
The Note may be converted into common stock of the Company at any time beginning on the 1st day of the date of the Note at a price equal to the lesser of (i) $0.01 or (ii) 60% of the lowest intraday bid price of the common stock as reported on OTCQB, for the five prior trading days.
As of January 31, 2016, this note was in default.	233,707	233,707
As of April 30, 2016, this note was in default.	233,707	233,707
On October 2, 2014, the Company sold a 12% Convertible Redeemable Note in the principal amount of $58,000 pursuant to a Securities Purchase Agreement. The Note matured on May 2, 2015.
This note is convertible into shares of the Company’s common stock at an exercise price equal to (i) the outstanding balance divided by (ii) 40% of the lowest bid price for the thirty (30) trading days immediately preceding the conversion, subject to certain adjustment as further described in the note agreement.
During the six months ended January 31, 2016, the Company repaid $22,268 by issuing 6,433,892 shares of common stock. As of January 31, 2016, this note was in default.	3,462	25,730
During the nine months ended April 30, 2016, the Company repaid $22,268 by issuing 6,433,892 shares of common stock. As of April 30, 2016, this note was in default.	3,462	25,730

HIGH PERFORMANCE BEVERAGES COMPANY

Notes to the Consolidated Financial Statements

(Unaudited)

NOTE 4 - CONVERTIBLE NOTES PAYABLE (cont'd)

On October 17, 2014, the Company sold a 1% Convertible Redeemable Note in the principal amount of $500,000 pursuant to a Securities Purchase Agreement.
This note matured on April 17, 2015. This note may be converted into common stock of the Company at any time beginning on the 1st day of the date of this note at a price equal to 56% of the lowest intraday bid price of the common stock as reported on OTCQB, for the five prior trading days.
As of January 31, 2016, this note was in default.	500,000	500,000
On April 26, 2016 and May 11, 2016, $50,000 and $25,000 in principal, respectively, were assigned to another investor.
As of April 30, 2016, this note was in default.	425,000	500,000
On November 28, 2014, the Company executed a convertible note payable in the amount of $800,000, which matured on May 28, 2015, bearing interest at 1% per annum. This note is convertible into the Company’s common stock at a variable conversion price equal to 56% of the market value at the time of conversion.
As of January 31, 2016, this note was in default.	800,000	800,000
On April 26, 2016, the noteholder assigned $50,000 in principal and $7,562 in principal, totaling $57,562 to another investor.
As of April 30, 2016, this note was in default.	750,000	800,000
On March 11, 2015, the Company executed a convertible note payable in the amount of $100,000 payable on September 5, 2015 bearing interest at 1% per annum. This note is convertible into the Company’s common stock at a variable conversion price equal to 56% of the market value at the time of conversion.
As of January 31, 2016, this note was in default.	100,000	100,000
As of April 30, 2016, this note was in default.	100,000	100,000
On September 17, 2015, the Company entered into a Settlement Agreement with a lender. In accordance with the Settlement Agreement, the Company agreed to issue to the lender a convertible promissory note in the principal amount of $240,500, in exchange for the return and cancellation of certain outstanding debt held by the lender. The debt was comprised of an aggregate of $240,500 of principal and interest on i) a convertible debenture in the original principal amount of $60,000 issued to the lender on April 30, 2013, ii) a senior secured convertible promissory note with an original principal balance of $100,000, which the lender had assumed from an individual on June 17, 2013, and iii) a convertible note with an original principal amount of $42,000 issued to the lender on March 31, 2014.
The note is convertible into shares of the Company’s common stock at a price per share equal to fifty percent (50%) of the lowest closing bid price or closing sale price for a share of common stock during the ten (10) consecutive trading days immediately preceding the date of conversion. No effect shall be given to conversions that would result in the lender holding an aggregate of more than 4.99% of the Company’s outstanding Common Stock. If at any time after September 17, 2015 the Company issues or sells any shares of Common Stock for consideration per share lower than the conversion price the conversion price in effect shall be reduced to the new issuance price.
During the three months ended January 31, 2016, the Company repaid $70,000 by issuing 2,000,000 shares of common stock. This note matured on December 3, 2015. As of January 31, 2016, this note was in default.	170,500	-
On November 20, 2015, the Company entered into a settlement agreement with the lender whereby the note, which had a balance of $170,500, was sold an investor for a purchase price of $227,500 and the original note was discharged.	-	-

HIGH PERFORMANCE BEVERAGES COMPANY

Notes to the Consolidated Financial Statements

(Unaudited)

NOTE 4 - CONVERTIBLE NOTES PAYABLE (cont'd)

On October 27, 2015, the Company executed a convertible note payable in the amount of $25,000 payable on April 26, 2016 bearing interest at 1% per annum. This note is convertible into the Company’s common stock at a variable conversion price equal to 56% of the market value at the time of conversion.		25,000			-
On October 27, 2015, the Company executed a convertible note payable in the amount of $25,000 payable on April 26, 2016 bearing interest at 1% per annum. This note is convertible into the Company’s common stock at a variable conversion price equal to 56% of the market value at the time of conversion. As of April 30, 2016, this note was in default.		25,000			-
On September 10, 2015, an investor acquired a note with a principal balance of $43,671 from the original investor. In accordance with the terms of the original note, this 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. This 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 noteholder upon with not less than 61 days’ prior notice to the Company.
On September 10, 2015, an investor acquired a note with a principal balance of $43,671 from the original investor. In accordance with the terms of the original note, this 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. This 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 noteholder upon not less than 61 days’ prior notice to the Company.
During the six months ended January 31, 2016, the Company repaid the note by issuing 87,456,860 shares of common stock.		-			-
During the nine months ended April 30, 2016, the Company repaid the note by issuing 87,456,860 shares of common stock.		-			-
On December 4, 2015, the Company executed a convertible note payable in the amount of $74,250 payable on June 4, 2016 bearing interest at 12% per annum. This note is convertible into the Company’s common stock at a variable conversion price equal to 56% of the market value at the time of conversion. The note was issued with an original issue discount of $6,750. This note is convertible into the Company’s common stock at a variable conversion price equal to 60% of the market value at the time of conversion, but no less than $0.00005 per share.		74,250			-
On December 7, 2015, an investor purchased a portion of a note and the related accrued interest, totaling $89,915. In accordance with the original terms of the note, the 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 note. During the three months ended January 31, 2016, the Company repaid $41,623 in principal by issuing 3,519,581 shares of the Company’s common stock.		48,292			-
Each note is convertible, at any time after the date nine 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 note. During the nine months ended April 30, 2016, the Company repaid $89,915 in principal by issuing 52,028,292 shares of the Company’s common stock.		-			-
On December 31, 2015, the Company executed a convertible note payable in the amount of $82,500, payable on September 31, 2016, bearing interest at 12% per annum. The note was issued with an original issue discount of $7,500. This note is convertible into the Company’s common stock at a variable conversion price equal to 60% of the market value at the time of conversion, but no less than $0.00005 per share.		82,500			-
Total		3,505,740			3,379,185
On November 20, 2015, the Company entered into an Assignment and Settlement Agreement (the November 2015 Settlement Agreement) with the noteholder and an investor whereby the investor sold a note and related accrued interest $190,722 for $227,500. The Company issued a new note to the investor with a face value of $250,500, which includes an original issue discount of $22,750, dated November 20, 2015, bearing interest at 12% per annum, payable on August 26, 2016. The note is convertible into the Company’s common stock at a variable conversion price equal to 60% of the market value at the time of conversion, but no less than $0.00005 per share.		250,250			-
Less: debt discounts		(442,116	)		(1,652,229	)
On March 1, 2016, the Company executed a convertible note payable in the amount of $77,000, payable on December 1, 2016, bearing interest at 12% per annum. The note was issued with an original issue discount of $7,000. This note is convertible into the Company’s common stock at a variable conversion price equal to 60% of the market value at the time of conversion, but no less than $0.00005 per share.		77,000			-
Plus: amortization of discounts		323,655			1,629,462
Total convertible notes payable	$	3,387,279		$	3,356,418

HIGH PERFORMANCE BEVERAGES COMPANY

Notes to the Consolidated Financial Statements

(Unaudited)

NOTE 4 - CONVERTIBLE NOTES PAYABLE (cont'd)

On March 15, 2016, the Company executed a convertible note payable in the amount of $55,000, payable on December 15, 2016, bearing interest at 12% per annum. The note was issued with an original issue discount of $5,000. This note is convertible into the Company’s common stock at a variable conversion price equal to 60% of the market value at the time of conversion, but no less than $0.00005 per share.		55,000			-

On April 11, 2016, the Company executed a convertible note payable in the amount of $29,700, payable on April 11, 2017, bearing interest at 10% per annum. The note was issued with an original issue discount of $2,700. This note is convertible into the Company’s common stock at a variable conversion price equal to 56% of the lowest trading volume weighted average price during the 5 days prior to the date of conversion.		29,700			-

On April 11, 2016, an investor purchased a portion of a note, totaling $25,000. The original date of the note was October 17, 2014 and it bears interest at 1% per annum.

This note matured on April 17, 2015. This note may be converted into common stock of the Company at any time beginning on the 1st day of the date of this note at a price equal to 56% of the lowest intraday bid price of the common stock as reported on OTCQB, for the five prior trading days. During the nine months ended April 30, 2016, the Company repaid $17,735 in principal by issuing 34,780,030 shares of the Company’s common stock.		7,265			-

On April 26, 2016, an investor purchased a portion of a note, including principal of $50,000 and accrued interest of $7,562 totaling $57,562. The original date of the note was October 17, 2014 and it bears interest at 1% per annum. This note is convertible into the Company’s common stock at a variable conversion price equal to 56% of the market value at the time of conversion. During the nine months ended April 30, 2016, the Company repaid $1,438 in principal by issuing 19,565,217 shares of the Company’s common stock.		56,123			-

Total		3,624,818			3,379,185
Less: debt discounts		(734,399	)		(1,652,229	)
Plus: amortization of discounts		507,113			1,629,462
Total convertible notes payable - current	$	3,397,532		$	3,356,418

HIGH PERFORMANCE BEVERAGES COMPANY

Notes to the Consolidated Financial Statements

(Unaudited)

NOTE 5 - DERIVATIVE LIABILITY

The convertible notes payable issued by the Company contain a variable conversion feature (the Variable Conversion Feature) that gives rise to a derivative liability. The Company has measured its derivative liability at fair value and recognized the derivative value as a current liability and recorded the derivative value on its 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 as earnings or losses in the current period.

The fair values of derivative liabilities related to the Variable Conversion ~~Feature~~Features as of July 31, 2015, for derivative instruments issued during the ~~six~~nine months ended ~~January~~April 3130, 2016 and as of ~~January~~April 3130, 2016 were estimated on the transaction dates and balance sheet dates under the following assumptions:

	July 31, 2015			Issuances / changes			~~January~~April 3130, 2016
Shares of common stock issuable upon exercise of debt		110,297,625			~~207~~5,~~641~~241,~~753~~027,916			~~317~~5,~~939~~351,~~378~~326,541
Estimated market value of common stock on measurement date	$	0.03		$	0.01		$	0.~~034~~0005
Exercise price	$	0.07		$	0.023		$	0.01001
Risk free interest rate		0.33	%		0.01% to 0.1112	%		0.4019	%
Expected dividend yield		0.00	%		0.00	%		0.00	%
Expected volatility		384.93	%		118.60% to 693.3	%		~~341~~366.1228	%
Expected exercise term in years		0.8333			0.00			0.00948

The changes in fair values of the derivative liabilities related to the convertible notes payable for the ~~six~~nine months ended ~~January~~April 3130, 2016 are summarized as follows:

Fair value of derivative liabilities at July 31, 2015	$	1,203,607
Conversion of derivative liabilities		(~~426~~565,~~297~~131	)
Change in fair value of derivative liabilities		21,~~352~~746,~~805~~358
Fair value of derivative liabilities at January 31, 2016	$	3,130,115
Fair value of derivative liabilities at April 30, 2016	$	2,384,833

NOTE 6 - EQUITY

The Company is authorized to issue 5,000,000,000 shares of common stock and 1,000,000 shares of preferred stock.

On September 1, 2015, the Company issued 100,000 shares of common stock to a consultant for services rendered. The fair market value of these common stock is $25,000.

On September 1, 2015, the Company issued 10,000 shares of common stock to a consultant for services rendered. The fair market value of these common stock is $2,500.

On September 15, 2015, the Company settled a lawsuit by issuing 1,000,000 shares of common stock. These shares have a fair value of $220,000 on the date of issuance.

On September 22, 2015, the Company issued 50,000 shares of common stock to an athlete in exchange for an endorsement of its products. 10,000 shares had been recorded as a common stock to be issued as of July 31, 2015. The balance, 40,000 shares of common stock, was a bonus. The fair value of the additional 40,000 shares was $5,600 on the date of issuance.

During the ~~three~~nine-month period ended ~~October~~April 3130, ~~2015~~2016, the Company issued 5,000,000 shares of common stock upon the exercise of 221,159 warrants.

During the ~~three~~nine-month period ended ~~October~~April 3130, ~~2015,~~2016 the Company issued 12143,~~836~~718,~~122~~186 shares of common stock related to conversions of $~~286~~498,~~569~~225 in convertible debt, related accrued interest and fees during the period.

1516

HIGH PERFORMANCE BEVERAGES COMPANY

Notes to the Consolidated Financial Statements

(Unaudited)

NOTE 6 – EQUITY (~~CONT’D~~cont'd)

On ~~December~~February 329, ~~2015~~2016, the Company ~~issued~~completed ~~2,000,000~~a ~~shares~~1 tofor an100 ~~investor~~reverse ~~upon~~stock ~~the~~split. ~~conversion~~All ofper ~~$70,000~~share amounts in ~~principal~~the financial statements have been restated to reflect the reverse stock split.

On ~~December~~March 157, ~~2015~~2016, the Company issued ~~1,250,000~~265 shares to anthe ~~investor~~Depository ~~upon~~Trust Company in order to effect the ~~conversion~~rounding provisions of ~~$15,000~~the reverse insplit ~~principal~~that became effective on February 29, 2016.

~~On December~~In ~~22,~~March ~~2015~~2016, the Company issued ~~409~~40,~~793~~700,000 shares to anathletes in ~~investor~~accordance ~~upon~~with ~~the~~their ~~conversion~~endorsement contracts. The fair market value of ~~$4,098~~the inshares ~~principal~~on ~~and~~the ~~accrued~~date ~~interest~~of issuance was $98,100.

On December 31, 2015, the Company issued 1,250,000 shares to an investor upon the conversion of $15,000 in principal.

On January 11, 2016, the Company issued 1,019,581 shares to an investor upon the conversion of $11,623 in principal.

NOTE 7 - RELATED PARTY TRANSACTIONS

The Company neither owns nor leases any real or personal property. The Company's office is provided to it by an officer who incurs no incremental costs as a result of the Company using the space. Therefore, he does not charge for its use. There is no written lease agreement, and no obligation for him to continue this arrangement.

NOTE 8 - COMMITMENTS AND CONTINGENCIES

Pending and Threatened Litigation

On or about January 29, 2015, Alpha Capital Anstalt (“Alpha”) filed a complaint against the Company for damages in connection with a note that they alleged was in default by the Company, which was answered on or about April 3, 2015. See Case 1:15-cv-00639-CM filed in the United States District Court, Southern District. On ItJune is26, ~~still pending~~2016, ~~discovery~~the isparties ~~complete~~reached a settlement whereby the Company will issue 410,000,000 ~~and~~shares of its common stock to Alpha. The settlement has ~~filed and~~been ~~served~~submitted ato ~~motion~~the court for ~~summary judgment~~approval. The ~~Company~~fair ~~plans~~market tovalue ~~file~~of anthe ~~opposition~~settlement was $82,000 ~~and~~on the ~~case~~settlement date ~~will~~and ~~likely~~has bebeen ~~settled~~recorded inas ~~the meantime~~interest expense as of April 30, 2016.

NOTE 9 - SUBSEQUENT EVENTS

On ~~February~~May 2917, 2016, the Company ~~completed~~issued a5,000,000 1shares ~~for~~to ~~100~~a ~~reverse~~consultant ~~stock~~for ~~split~~services rendered. ~~All~~The ~~per~~fair ~~share~~market ~~amounts~~value inof the ~~financial~~shares ~~statements have~~was ~~been~~$1,500 ~~restated~~on ~~to reflect~~ the ~~reverse~~date ~~stock~~of ~~split~~issuances.

OnBetween May ~~March~~ 1, 2016 and the date of this report, the Company issued 2354,~~423~~980,~~330~~320 shares tofor ~~an investor upon~~ the ~~conversion~~repayment of $473,~~798~~760 in principal and accrued interest.

OnThrough ~~March~~the ~~10,~~date ~~2016~~of this filing, the Company ~~issued~~has ~~2,690,381~~determined ~~shares~~that no toadditional anevents ~~investor~~are ~~upon~~required ~~the~~to ~~conversion~~be ofreported, $5other than the above,~~049~~ inincluding ~~principal~~Note 8.

1617

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-Q involve 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 “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.

MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

In October 2013, the Dethrone License Agreement was terminated and the Company entered into a license agreement with Throwdown Industries Holdings, LLC, a Delaware limited liability company (“Throwdown 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 (“Throwdown Trademarks”) solely in connection with the development, manufacture, distribution, marketing and sale of sports performance drinks within the United States and Canada (the “Throwdown License”) as well as a one-time right of first refusal to license other types of beverages.

Effective November 14, 2013, the Company changed its name to High Performance Beverages Company in order to better reflect the direction and business of the Company.

On July 23, 2014, the Company filed a Certificate of Amendment with the Secretary of State of the State of Nevada to increase the number of authorized shares of common stock from 500,000,000 to 2,500,000,000 shares, effective immediately.

On August 27, 2015, the Company filed a Certificate of Amendment with the Secretary of State of the State of Nevada to increase the number of authorized shares of common stock from 2,500,000,000 to 5,000,000,000 shares, effective immediately.

17On February 29, 2016, the Company completed a 1 for 100 reverse stock split.

Current Status

We began distribution of our product in September 2015 through Amazon.com. Currently we have one flavor of our beverage, High Performance Punch, for sale on Amazon. It is sold in a pack of 12, 16oz bottles. We sold 819 packs from August 1, 2015 through October 31, 2015 and 372 packs from November 1, 2015 through January 31, 2016. Our initial production run was approximately 5,000 cases. These units are stored in a warehouse and shipped to Amazon on a periodic basis in order to keep sufficient product on hand in Amazaon’s warehouses to meet customer demand.

We promote our product through social media and with athlete endorsements. We have entered into contracts with several professional sports personalities (Jonathan Quick, Aldon Smith, Haloti Nagata, Taj Gibson, Matt Moulson, Brian Braham, Kenneth Draun, and Andrew Depaula) to represent us by endorsing our products. All contracts cover three years and require us to issue an aggregate of 205,634,091 restricted shares of common stock over the lives of the contracts. During the three and six months ended January 31, 2016, we have recorded an aggregate marketing expense of $7,500 and $21,119, respectively, relating to the shares that are issuable.

Three months ended January 31, 2016 compared with three months ended January 31, 2015

We had sales of $10,743 during the quarter ended January 31, 2016, which represents an increase of $10,743 over the quarter ended January 31, 2105. Our products are sold and fulfilled by Amazon.

We incurred cost of goods sold related to the sale of our product during the quarter ending January 31, 2016 of $10,000. This represents an increase of $10,000 from the prior year, when there were no sales or related cost of goods sold. Cost of goods sold represents 93% of revenue due to the costs associated with establishing an inventory position with Amazon.com, the associated fees, and the relatively high cost of manufacturing our product in small lots.

General and administrative expenses decreased by $303,772, from $405,082 during the three months ended January 31, 2015 to $101,310 during the three months ended January 31, 2016. The decrease was due to lower professional fees for legal and accounting services.

Marketing expense decreased by $65,098, from $79,408 during the three months ended January 31, 2015 to $14,310 during the three months ended January 31, 2016. The decrease was due to decreased marketing activities during the three months ended January 31, 2016 after establishing the product in the market.

Product development expense decreased by $96,500, from $117,500 during the three months ended January 31, 2015 to $21,000 during the three months ended January 31, 2016. The decrease was due to the cost of developing the current products that was conducted during the quarter ending January 31, 2015.

Compensation decreased by $37,560, from $59,560 during the three months ended January 31, 2015 to $22,000 during the three months ended January 31, 2016. The decrease was primarily due to a reduction in share based compensation expense.

Other expense decreased $74,895 from $1,041,605 during the three months ended January 31, 2015 compared to $966,710 during the three months ended January 31, 2016. The decrease is due to an increase in interest expense of $403,735, and a decrease in the change in the fair value of derivative liabilities of $478,630.

Net loss for the three months ended January 31, 2016 decreased by $578,568, from $1,703,155 during the three months ended January 31, 2015 to $1,124,587 during the three months ended January 31, 2016, primarily due to lower operating expenses and the change in fair value of derivative liabilities.

~~Six months ended January 31, 2016~~Current ~~compared with six months ended January 31, 2015~~Status

We began ~~had~~distribution ~~sales~~of our product in September 2015 through Amazon.com. Currently we have one flavor of our beverage, High Performance ~~$40~~Punch,~~111~~ ~~during~~for ~~the~~sale ~~six~~on ~~months~~Amazon. ~~ended~~It ~~January~~is ~~31,~~sold ~~2016~~in a pack of 12, ~~compared~~16oz tobottles. $0We have sold 112 and 931 packs during the ~~six~~three and nine months ended ~~January~~April 3130, ~~2015~~2016, ~~which~~respectively. ~~represents an~~Our ~~increase~~initial ofproduction ~~$40,111~~run ~~over~~was ~~the~~approximately ~~six~~5,000 ~~months~~cases. ~~ended~~These ~~January~~units ~~31,~~are ~~2105.~~stored ~~The~~in a ~~increase~~warehouse isand ~~due~~shipped to ~~the~~Amazon ~~initiation~~on ofa ~~product~~periodic ~~sales~~basis in ~~September 2015.~~order ~~Our~~to ~~products~~keep ~~are~~sufficient ~~sold~~product ~~and~~on ~~fulfilled~~hand byin Amazon’s warehouses to meet customer demand.

We ~~incurred cost~~ ofpromote ~~goods~~our ~~sold~~product ~~related~~through tosocial ~~the~~media ~~sale~~and ofwith ~~our~~athlete ~~product~~endorsements. ~~during~~We ~~the~~have ~~six~~entered ~~months~~into ~~ending~~contracts ~~January~~with ~~31,~~several ~~2016~~professional sports ofpersonalities ~~$39~~(Jonathan Quick,~~163.~~ ~~This~~Aldon ~~represents~~Smith, anHaloti ~~increase of~~Nagata, ~~$39~~Taj Gibson,~~163~~ ~~from~~Matt ~~the~~Moulson, ~~prior~~Brian ~~year~~Braham, ~~when~~Kenneth weDraun, ~~had~~and noAndrew Depaula) ~~sales~~to orrepresent ~~cost~~us ofby ~~goods~~endorsing ~~sold~~our products. ~~Cost~~All ofcontracts ~~goods~~cover ~~sold~~three ~~represents~~years ~~98%~~and ofrequire ~~revenue~~us ~~due~~ to issue an aggregate of 199,634,091 ~~the~~restricted ~~costs~~shares ~~associated~~of ~~with~~common ~~establishing~~stock anover ~~inventory~~the ~~position~~lives ~~with~~of ~~Amazon~~the contracts.~~com,~~ During the ~~associated~~three ~~fees,~~ and ~~the~~nine ~~relatively~~months ~~high~~ended ~~cost~~April 30, 2016, we have recorded an aggregate marketing expense of ~~manufacturing~~$0 ~~our~~and ~~product~~$21,119, inrespectively, ~~small~~relating ~~lots~~to the shares that are issuable.

~~General and administrative~~Three ~~expenses decreased by $279,043, from $552,226 during the six~~ months ended ~~January~~April 3130, ~~2015~~2016 tocompared ~~$273,183~~with ~~during~~three ~~the six~~ months ended ~~January~~ ~~31,~~April ~~2016. The decrease was due to a decrease in professional fees for legal and accounting services of $292~~30,~~136.~~ 2015

~~Marketing expense~~We ~~decreased~~had bysales ~~$107,700,~~of ~~from~~ $~~135~~5,~~629~~808 during the ~~six~~quarter ~~months~~ ended ~~January~~April 3130, ~~2015~~2016, towhich represents an increase of $275,~~929~~808 ~~during~~over the ~~six~~quarter ~~months~~ ended ~~January~~April 3130, ~~2016.~~2105, ~~The~~when ~~decrease~~we ~~was~~had ~~due~~no tosales. ~~decreased~~Our ~~web~~products ~~design~~are sold and ~~sponsorships~~fulfilled ~~during~~by ~~the six months ended January 31, 2016~~Amazon.

~~Product development~~We ~~expense~~incurred ~~decreased~~cost byof ~~$55,691,~~goods ~~from~~sold ~~$117,500~~related to the sale of our product during the ~~six~~quarter ~~months~~ending ~~ended~~April ~~January~~30, 312016 of $6,076. ~~2015~~This torepresents an increase of $616,~~809~~076 ~~during~~from the ~~six~~prior ~~months~~year, ~~ended January~~when ~~31,~~there ~~2016~~were no sales or related cost of goods sold. ~~The~~Cost ~~decrease~~of ~~was~~goods sold represents 105% of revenue due to the ~~cost~~costs ofassociated ~~developing~~with ~~the~~establishing ~~current~~an ~~products~~inventory ~~that~~position ~~was~~with ~~conducted~~Amazon.com, ~~during~~ the ~~six~~associated ~~months~~fees, and ~~ending~~the ~~January~~relatively ~~31,~~high ~~2015~~cost of manufacturing our product in small lots.

~~Compensation decreased~~General and administrative expenses increased by $5034,~~965~~465, from $~~387~~91,~~080~~872 during the ~~six~~three months ended ~~January~~April 3130, 2015 to $~~336~~126,~~115~~337 during the ~~six~~three months ended ~~January~~April 3130, 2016. The ~~decrease~~increase was ~~primarily~~ due to ahigher ~~reduction~~professional infees ~~share~~for ~~based~~legal ~~compensation~~and ~~expense~~accounting services.

~~Other~~ Marketing expense increased by $~~914~~18,~~604~~146, from $29,~~378,599~~407 during the ~~six~~three months ended ~~January~~April 3130, 2015 ~~compared~~ to $327,~~293,203~~533 during the ~~six~~three months ended ~~January~~ 31April 30, 2016. The increase iswas due to anincreased ~~increase~~marketing inactivities ~~interest~~during ~~expense~~the ofthree ~~$688,608,~~months ~~and~~ended anApril ~~increase~~30, 2016 in order to establish the ~~change~~product in the ~~fair value of derivative liabilities of $226,004~~market.

~~Net loss for the~~Product ~~six~~development ~~months~~expense ~~ended~~decreased ~~January 31, 2016 increased~~ by $~~420~~51,~~257~~500, from $351,~~571,034~~500 during the ~~six~~three months ended ~~January~~April 3130, 2015 to $~~3,991,291~~ 0 during the ~~six~~three months ended ~~January~~April 3130, 2016,. ~~primarily~~The decrease was due to ~~lower~~the ~~operating~~cost ~~expenses~~of ~~and~~developing the ~~change~~current inproducts ~~fair~~that ~~value~~was ofconducted ~~derivative~~during the quarter ~~liabilities~~ending April 30, 2015.

Compensation expense was substantially the same, as it increased by $644, from $130,706 during the three months ended April 30, 2015 to $131,350 during the three months ended April 30, 2016.

Other (income) / expense increased $185,933 from $(429,075) during the three months ended April 30, 2015 compared to $(615,008) during the three months ended April 30, 2016. The increase is due to a decrease in interest income of $170, an increase in interest expense of $222,382, and a decrease in the change in the fair value of derivative liabilities of $327,068 and an increase in the gain on debt extinguishment of $735,553.

Net income / (loss) for the three months ended April 30, 2016 increased by $183,910, from net income of $145,590 during the three months ended April 30, 2015 to a net income of $411,500 during the three months ended April 30, 2016, primarily due to the change in other income.

Nine months ended April 30, 2016 compared with nine months ended April 30, 2015

We had sales of $45,919 during the nine months ended April 30, 2016, compared to $0 during the nine months ended April 30, 2015, which represents an increase of $45,919 over the nine months ended April 30, 2105. The increase is due to the initiation of product sales in September 2015. Our products are sold and fulfilled by Amazon.

We incurred cost of goods sold related to the sale of our product during the nine months ending April 30, 2016 of $45,239. This represents an increase of $45,239 from the prior year, when we had no sales or cost of goods sold. Cost of goods sold represents 99% of revenue due to the costs associated with establishing an inventory position with Amazon.com, the associated Amazon fees, and the relatively high cost of manufacturing our product in small lots.

General and administrative expenses decreased by $244,578, from $644,097 during the nine months ended April 30, 2015 to $399,519 during the nine months ended April 30, 2016. The decrease was due to a decrease in professional fees for legal and accounting services of $292,136.

Marketing expense decreased by $89,554, from $145,036 during the nine months ended April 30, 2015 to $55,482 during the nine months ended April 30, 2016. The decrease was due to decreased web design and sponsorships during the nine months ended April 30, 2016.

Product development expense decreased by $107,191, from $169,000 during the nine months ended April 30, 2015 to $61,809 during the nine months ended April 30, 2016. The decrease was due to the cost of developing the current products that was conducted during the nine months ending April 30, 2015.

Compensation decreased by $50,321, from $517,786 during the nine months ended April 30, 2015 to $467,465 during the nine months ended April 30, 2016. The decrease was primarily due to a reduction in share based compensation expense.

Other expense increased $728,668 from $1,949,524 during the nine months ended April 30, 2015 compared to $2,678,192 during the nine months ended April 30, 2016. The increase is due to an increase in interest expense of $692,887, and an increase in the change in the fair value of derivative liabilities of $1,003,836 and an increase in the gain on debt extinguishment of $968,225.

Net loss for the nine months ended April 30, 2016 increased by $236,344, from $3,425,443 during the nine months ended April 30, 2015 to $3,661,787 during the nine months ended April 30, 2016, primarily due to lower operating expenses and the change in fair value of derivative liabilities.

Liquidity

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

During the ~~six~~nine months ended ~~January~~April 3130, 2016, we obtained $~~100~~654,~~000~~831 from ~~the sale of stock for cash proceeds, and $337,037 from~~ borrowing on notes payable.

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

1920

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.

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 the fiscal year covered by this report. 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 include 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

●

Ensure 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~~April 3130, 2016, 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.

We have made significant attempts to correct this issue including entering into an agreement to outsource our accounting and financial reporting functions to Clear Financial Solutions, Inc. of Houston, Texas. 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.

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PART II - OTHER INFORMATION

Item 1. Legal Proceedings

Pending and Threatened Litigation

Item 1A. Risk Factors

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

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

~~On December~~In 3,March ~~2015~~2016, the Company issued 240,~~000~~700,000 shares to anathletes in ~~investor~~accordance ~~upon~~with their endorsement contracts. The fair market value of the ~~conversion~~shares on the date of ~~$70,000~~issuance inwas ~~principal~~$98,100. 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 December~~During 15the three-month period ended April 30, ~~2015~~2016, the Company issued 1124,~~250~~952,~~000~~690 shares toof ancommon ~~investor~~stock ~~upon~~related ~~the~~to ~~conversion~~conversions of $1595,~~000~~935 in ~~principal~~convertible debt and related accrued interest. ~~The~~ 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 December 22, 2015, the Company issued 409,793 shares to an investor upon the conversion of $4,098 in principal and accrued interest. 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 December 31, 2015, the Company issued 1,250,000 shares to an investor upon the conversion of $15,000 in principal. 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 11, 2016, the Company issued 1,019,581 shares to an investor upon the conversion of $11,623 in principal. 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

None

Item 4. Mine Safety Disclosures

Not applicable

Item 5. Other Information

None

Item 6. Exhibits and Reports of Form 8-K

(a) Exhibits

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
101.INS		XBRL Instance Document
101.SCH		XBRL Taxonomy Extension Schema Document.
101.CAL		XBRL Taxonomy Extension Calculation Link base Document.
101.DEF		XBRL Taxonomy Extension Definition Link base Document.
101.LAB		XBRL Taxonomy Extension Label Link base Document.
101.PRE		XBRL Taxonomy Extension Presentation Link base Document.

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 BEVERAGES COMPANY
	(Registrant)

	/s/ Toby McBride
	Toby McBride
	Title: President and Chief Financial Officer

~~March~~July 2113, 2016

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