UNITED STATES ~~SECURITIES AND EXCHANGE COMMISSION~~

~~Washington,~~SECURITIES AND ~~D.C.~~EXCHANGE ~~20549~~COMMISSION

Washington, DC 20549

FORM 10-Q

(Mark One)

x	Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

	For the quarterly period ended May 31, 2016

o	Transition Report pursuant to 13 or 15(d) of the Securities Exchange Act of 1934

	For the transition period from __________ to __________

	Commission File Number: 333-179028

☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended February 29, 2016.

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to

Commission File Number 333-179028

Avalanche International, Corp.

(Exact name of registrant as specified in its charter)

Nevada	38-3841757	~~38-3841757~~
(State or other jurisdiction of incorporation or organization)	(IRS Employer Identification No.)	~~(I.R.S. Employer Identification No.)~~
5940 S. Rainbow Blvd., Las Vegas, NV		89118
(Address of principal executive offices)		(Zip Code)

5940 S. Rainbow Blvd, Las Vegas, NV 89118 (~~888)~~Address ~~863-9490~~of principal executive offices)

(888) 863-9490 (Registrant’s telephone number) (Former name, ~~including~~former ~~area~~address ~~code~~and former fiscal year, if changed since last report)

~~Indicate~~Indicated by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 ~~year~~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. o Yes ☐ x No ☑

Indicate by check mark whether the registrant is ~~has~~a ~~submitted~~large ~~electronically~~accelerated ~~and~~filer, ~~posted~~an onaccelerated ~~its~~filer, ~~corporate~~a ~~Web~~non-accelerated ~~site~~filer, ifsmaller ~~any~~reporting company, ~~every~~or ~~Interactive~~an ~~Data~~emerging ~~File~~growth ~~required~~company. See tothe bedefinitions ~~submitted and posted pursuant to Rule 405~~ of ~~Regulation~~“large ~~S-T~~accelerated ~~(§232.405~~filer,” of“accelerated ~~this~~filer,” ~~chapter)~~“smaller ~~during~~reporting ~~the~~company,” and ~~preceding~~“emerging ~~year~~growth ~~(or~~company” ~~for~~in ~~such~~Rule 12b-2 ~~shorter~~of ~~period that~~ the ~~registrant~~Exchange ~~was required to submit and post such files). Yes ☐ No ☑~~Act:

~~Indicate~~Large ~~by check mark whether the registrant is a large~~ accelerated filer, ano ~~accelerated~~Accelerated filer, ao ~~non~~Non-accelerated filer, orx aSmaller ~~smaller~~ reporting company. ~~See~~x ~~the~~Emerging ~~definitions~~growth ~~of “large accelerated filer,” “accelerated filer” and “smaller reporting~~ company” ~~in Rule 12b-2 of the Exchange Act.~~x

~~Large~~If ~~accelerated~~an ~~filer~~emerging ☐growth ~~Accelerated~~company, ~~filer~~indicate by ☐check ~~Non-accelerated~~mark ~~filer~~if ☐the ~~(Do~~registrant has elected not ~~check~~to ifuse athe ~~smaller~~extended ~~reporting~~transition ~~company)~~period ~~Smaller~~for ~~reporting~~complying ~~company~~with ☑any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

~~Emerging~~Indicate ~~growth~~by check mark whether the registrant is a shell company ☑(as defined in Rule 12b-2 of the Exchange Act). o Yes x No

IfIndicate ~~an emerging growth company, indicate~~ by check mark ifwhether the registrant has ~~elected~~submitted electronically ~~not~~and toposted ~~use~~on ~~the~~its ~~extended~~corporate ~~transition~~Web ~~period~~site, ~~for~~if ~~complying~~any, ~~with~~every ~~any~~Interactive ~~new~~Data orFile ~~revised~~required ~~financial~~to ~~accounting~~be ~~standards~~submitted ~~provided~~and ~~pursuant~~posted pursuant to ~~Section~~Rule 13405 of Regulation S-T (a)§ 229.405 of this chapter) during the ~~Exchange~~preceding ~~Act~~12 months (or for such shorter period that the registrant was required to submit and post such files). ☐Yes x No o

~~Indicate~~State bythe ~~check~~number ~~mark~~of ~~whether~~shares ~~the~~outstanding ~~registrant~~of iseach aof ~~shell~~the ~~company~~issuer’s classes ~~(as~~of ~~defined~~common instock, ~~Rule 12b-2~~as of the ~~Exchange~~latest ~~Act)~~practicable date: 5,529,200 common shares as of December 5, 2018. ~~Yes ☐ No ☑~~

There were 5,309,200 shares of common stock outstanding as of August 3, 2017.

	TABLE OF CONTENTS	Page

PART I - FINANCIAL INFORMATION
Item 1:	Consolidated Financial Statements	F-1
Item 2:	Management’s Discussion and Analysis of Financial Condition and Results of Operations	1
Item 3:	Quantitative and Qualitative Disclosures About Market Risk	7
Item 4:	Controls and Procedures	7
PART II - OTHER INFORMATION
Item 1:	Legal Proceedings	8
Item 1A:	Risk Factors	8
Item 2:	Unregistered Sales of Equity Securities and Use of Proceeds	8
Item 3:	Defaults Upon Senior Securities	9
Item 4:	Mine Safety Disclosures	9
Item 5:	Other Information	9
Item 6:	Exhibits	10

~~FORM~~PART 10I -Q FINANCIAL INFORMATION

~~FOR~~Item ~~THE~~1. ~~QUARTER~~Financial ~~ENDED FEBRUARY 29, 2016~~Statements

~~TABLE~~Our OFconsolidated ~~CONTENTS~~financial statements included in this Form 10-Q are as follows:

			Page
Condensed Consolidated Balance Sheets as of May 31, 2016 (unaudited) and November 30, 2015	F-1
PART I – FINANCIAL INFORMATION
Condensed Consolidated Statements of Operations for the Three and Six Months ended May 31, 2016 (unaudited) and 2015 (unaudited)	F-2
	Item 1.	Financial Statements
Condensed Consolidated Statements of Cash Flows for the Three and Six Months ended May 31, 2016 (unaudited) and 2015 (unaudited)	F-3 – F-4
		Condensed Consolidated Balance Sheets as of February 29, 2016 (Unaudited) and November 30, 2015	1
Notes to Consolidated Financial Statements (unaudited)	F-5 – F-23
		Condensed Consolidated Statements of Operations for the three months ended February 29, 2016 and February 28, 2015 (Unaudited)	2
		Condensed Consolidated Statements of Cash Flows for the three months ended February 29, 2016 and February 28, 2015 (Unaudited)	3
		Notes to Condensed Consolidated Financial Statements (Unaudited)	4 - 23
	Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	24
	Item 3.	Quantitative and Qualitative Disclosures about Market Risk	31
	Item 4.	Controls and Procedures	31
PART II – OTHER INFORMATION
	Item 1.	Legal Proceedings	32
	Item 1A.	Risk Factors	33
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	33
	Item 3.	Defaults Upon Senior Securities	33
	Item 4.	Reserved	33
	Item 5.	Other Information	33
	Item 6.	Exhibits	34

Table of Contents

~~PART~~Avalanche IInternational, –Corp. ~~FINANCIAL~~and ~~INFORMATION~~Subsidiaries

~~Item~~Condensed ~~1. Financial~~Consolidated ~~Statements.~~Balance Sheets

AVALANCHE INTERNATIONAL CORP. AND SUBSIDIARY
	May 31, 2016			November 30, 2015
Condensed Consolidated Balance Sheets
	February 29,			November 30,
	2016			2015
	(Unaudited)
ASSETS
Assets:
CURRENT ASSETS
Current assets:
Cash	$	582,562		$	405
Accounts receivable, related party		17,222			17,222
Notes receivable, net of discount of $9,358 and nil, respectively		123,975			—
Notes receivable		103,659			-
Other current assets		158,~~615~~078			705
TOTAL ASSETS	$	156,870		$	18,332
Total current assets		131,521			18,332
LIABILITIES AND STOCKHOLDERS' DEFICIT
Notes receivable, net of discount of $53,159		271,841			-
CURRENT LIABILITIES
Total assets	$	403,362		$	18,332
Accounts payable and accrued expenses	$	260,207		$	177,004
Liabilities and Stockholders' Deficit:
Accounts payable and accrued expenses, related party		197,159			63,699
Current liabilities:
Derivative liability		1,084,408			1,313,012
Accounts payable and accrued expenses	$	145,519		$	105,137
Convertible notes payable, net of discount of $108,618 and $202,325, respectively		498,352			416,975
Accounts payable and accrued expenses, related party		198,209			63,699
Notes payable, net of discount of $29,315 and $19,294, respectively		246,260			135,031
Accrued interest on convertible and promissory notes payable		213,165			71,867
TOTAL CURRENT LIABILITIES		2,286,386			2,105,721
Derivative warrant liabilities		24,900			-
LONG TERM LIABILITIES
Convertible notes payable, net of discount of $33,650
Convertible notes payable, net of discount of $10,156 and nil, respectively		844			—
and $202,325, respectively		1,928,334			1,729,987
TOTAL LIABILITIES		2,287,230			2,105,721
Notes payable, net of discount of $68,369 and
COMMITMENTS AND CONTINGENCIES		—			—
and $19,294, respectively		510,706			135,031
STOCKHOLDERS' DEFICIT
Notes payable, related party, net of discount of $2,800		38,137			-
Preferred stock, $0.001 par value: 10,000,000 shares authorized;
Total current liabilities		3,058,970			2,105,721
Class A Preferred Stock, $5 stated value per share: 50,000 shares designated;
Convertible notes payable, net of discount of $165,683		206,053			-
nil shares issued and outstanding at February 29, 2016 and November 30, 2015		—			—
Derivative warrant liabilities		8,054			-
Total liabilities		3,273,077			2,105,721
Stockholders' Deficit:
Preferred stock, $0.001 par value: 10,000,000 shares authorized;		-			-
Class A Convertible Preferred Stock, $20 stated value
per share: 50,000 shares designated; nil shares issued
and outstanding at May 31, 2016 and November 30, 2015		-			-
Class B Convertible Preferred Stock, $50 stated value
per share: 100,000 shares designated; nil shares issued
and outstanding at May 31, 2016 and November 30, 2015		-			-
Common stock, $0.001 par value: 75,000,000 shares authorized;
6,842,254 and 6,309,635 shares issued and outstanding, respectively		6,842			6,310
6,842,254 and 6,309,635 shares issued and outstanding
Additional paid-in capital		1,383,871			1,119,118
at May 31, 2016 and November 30, 2015, respectively		6,843			6,310
Accumulated deficit		(3,521,073	)		(3,212,817	)
Additional paid-in capital		1,326,633			1,119,118
TOTAL STOCKHOLDERS' DEFICIT		(2,130,360	)		(2,087,389	)
Accumulated deficit		(4,203,191	)		(3,212,817	)
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT	$	156,870		$	18,332
Total stockholders' deficit		(2,869,715	)		(2,087,389	)
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
Total liabilities and stockholders' deficit	$	403,362		$	18,332

1The accompanying notes are an integral part of these condensed consolidated financial statements.

~~Table of Contents~~F-1

AVALANCHE INTERNATIONAL CORP. AND SUBSIDIARY
Condensed Consolidated Statements of Operations
	For the Three Months Ended
	February 29, 2016			February 28, 2015
	(Unaudited)			(Unaudited and Restated)
Revenue - related party	$	—		$	10,236
Revenue		—			4,759
Total Revenue		—			14,995
Cost of revenue		—			8,534
Gross profit		—			6,461
Operating expenses
General and administrative		175,770			193,830
Total operating expense		175,770			193,830
Loss from operations		(175,770	)		(187,369	)
Other income (expense)
Interest income		6,441			—
Interest expense, including penalties		(83,320	)		(4,200	)
Interest expense - debt discount		(140,517	)		—
Loss on issuance of convertible debt		(157,233	)		—
Change in fair value of derivative liability		242,143			—
Total other income (expense)		(132,486	)		(4,200	)
Net loss	$	(308,256	)	$	(191,569	)
Basic and diluted net loss per common share	$	(0.05	)	$	(0.04	)
Basic and diluted weighted average common shares outstanding		6,517,372			5,218,650
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

Table of Contents

2Avalanche International, Corp. and Subsidiaries

~~Table~~Condensed ofConsolidated ~~Contents~~Statements of Operations

AVALANCHE INTERNATIONAL CORP. AND SUBSIDIARY
Consolidated Statements of Cash Flows
	For the Three Months Ended
	February 29, 2016			February 28, 2015
	(Unaudited)			(Unaudited and Restated)
Cash flows from operating activities:
Net loss	$	(308,256	)	$	(191,569	)
Adjustments to reconcile net loss to net cash used in operating activities:
Interest income – original issue discount		(3,975	)		—
Interest expense on warrant issuance		26,250
Interest expense – debt discount		140,517			2,465
Loss on issuance of convertible debt		157,233			—
Change in fair value on derivative liability		(242,143	)		—
Stock-based compensation		7,556			56,708
Changes in operating assets and liabilities:
Accounts receivable		—			(46	)
Other receivables		(2,466	)		—
Inventories		—			5,142
Other assets		—			(179	)
Accounts payable and accrued expenses		104,227			70,119
Accounts payable, related parties		108,460			33,676
Net cash used in operating activities		(12,597	)		(23,684	)
Cash flows from investing activities:
Loan issuance		(95,000	)		—
Net cash used in investing activities		(95,000	)		—
Cash flows from financing activities:
Proceeds from issuance of common stock		5,000			2,000
Payments to related parties		—			26,008
Proceeds from convertible notes payable		11,000			—
Proceeds from notes payable		100,000			—
Payments on notes payable		(3,750	)		(5,300	)
Payments on convertible notes payable		(5,000	)		—
Net cash provided by financing activities		107,250			22,708
Net decrease in cash		(347	)		(976	)
Cash at beginning of period		405			2,247
Cash at end of period	$	58		$	1,271
Supplemental disclosures of cash flow information:
Issuance of common stock for services of which $12,444 is included in other current assets to be amortized over two months	$	20,000		$	—
Increase in accounts payable in connection with loan issuance	$	25,000		$	—
Derivative liability recorded in connection with convertible debt	$	13,539		$	—
Common stock issued for conversion of debt and accrued interest	$	183,048		$	—
Original issue discount in connection with note payable	$	25,000		$	—
Issuance of preferred stock to shareholder for payment of accrued expenses, related party	$	—		$	76,900

(Unaudited)

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

	For the Three						For the Six
	Months Ended May 31,						Months Ended May 31,
	2016			2015			2016			2015
Revenue:
Revenue - related party	$	-		$	23,547		$	-		$	33,848
Revenue		-			120			-			4,814
Total Revenue		-			23,667			-			38,662
Cost of revenue		-			(20,758	)		-			(29,292	)
Gross profit		-			2,909			-			9,370

Operating expenses:
General and administrative expenses		196,225			313,005			371,995			499,835
Total operating expenses		196,225			313,005			371,995			499,835
Loss from operations		(196,225	)		(310,096	)		(371,995	)		(490,465	)

Other income (expense):
Interest income		42,268			-			48,708			-
Interest expense, including penalties		(109,351	)		(68,669	)		(192,671	)		(79,869	)
Interest expense - debt discount		(118,351	)		(84,178	)		(258,867	)		(84,178	)
Loss on issuance of convertible debt		(68,522	)		(301,309	)		(71,061	)		(301,309	)
Loss on conversion of convertible debt		-			-			(154,694	)		-
Change in fair value of bifurcated
embedded conversion options and
derivative warrant liabilities		(231,937	)		182,776			10,206			182,776
Total other expense, net		(485,893	)		(271,380	)		(618,379	)		(282,580	)

Net loss		(682,118	)		(581,476	)		(990,374	)		(773,045	)

Preferred dividends		-			-			-			-

Net loss available to common shareholders	$	(682,118	)	$	(581,476	)	$	(990,374	)	$	(773,045	)

Basic and diluted net loss per share	$	(0.10	)	$	(0.11	)	$	(0.15	)	$	(0.14	)

Weighted average shares outstanding,
basic and diluted		6,842,254			5,451,384			6,680,701			5,336,296

3The accompanying notes are an integral part of these condensed consolidated financial statements.

~~Table of Contents~~F-2

~~Avalanche~~Table ~~International,~~of ~~Corp. and Subsidiary~~Contents

~~Notes~~Avalanche toInternational, ~~the~~Corp. ~~Consolidated~~and ~~Financial Statements (Unaudited)~~Subsidiaries

1.Condensed ~~ORGANIZATION~~Consolidated ~~AND~~Statements ~~DESCRIPTION~~of Cash ~~OF BUSINESS~~Flows

~~Avalanche International, Corp.~~ (~~the “Company” or “Avalanche”~~Unaudited) was incorporated under the laws of the State of Nevada on April 14, 2011. The Company had plans to distribute crystallized glass tile in the North American markets to wholesale customers. On May 14, 2014, the Company entered into an Agreement of Conveyance, Transfer and Assignment of Assets and Assumption of Obligations (the “Agreement”) with John Pulos, its prior sole officer and director. Pursuant to the Agreement, the Company transferred all assets related to its crystallized glass tile business to Mr. Pulos and in exchange Mr. Pulos assumed and cancelled all liabilities due to him. In conjunction with the Agreement, there was a change in management and the Company began to operate as a holding company with operations at the subsidiary levels only. The Company has formed two wholly-owned subsidiaries, Smith and Ramsay Brands, LLC (“SRB”) and Restaurant Capital Group, LLC (“RCG”). SRB was formed on May 19, 2014, and RCG was formed on October 22, 2015. SRB was originally formed as a manufacturer and distributor of flavored liquids for electronic vaporizers and eCigarettes and accessories; this business was discontinued in June 2015. RCG was formed to hold the Company’s investments in the restaurant industry.

2. LIQUIDITY AND GOING CONCERN

	For the Six Months Ended May 31,
	2016			2015
Cash Flows from Operating Activities:
Net loss	$	(990,374	)	$	(773,045	)
Adjustments to reconcile net loss to net cash used in operating activities:
Amortization expense-loan fees		-			48,095
Interest income-amortization of original issue discount		(35,174	)		-
Interest expense on warrant issuance		26,250			-
Interest expense-debt discount		258,867			84,178
Loss on issuance of convertible debt		71,061			301,309
Loss on conversion of convertible debt		154,694			-
Change in fair value of bifurcated embedded conversion options and
derivative warrant liabilities		(10,206	)		(182,776	)
Stock-based compensation		20,000			251,833
Stock issued for loan fees		-			50,314
Changes in operating assets and liabilities:
Accounts receivable		-			(16,919	)
Other current assets		(7,373	)		-
Inventories		-			25,900
Other assets		-			(179	)
Accounts payable and accrued expenses		40,382			81,339
Accounts payable and accrued expenses, related parties		109,510			(47,024	)
Accrued interest on convertible and promissory notes payable		162,322			6,610
Net cash used in operating activities		(200,041	)		(170,365	)

Cash Flows from Investing Activities:
Purchase of note receivable		(345,000	)		(150,000	)
Principal payments received on note receivable		19,674			-
Net cash used in investing activities		(325,326	)		(150,000	)

Cash Flows from Financing Activities:
Proceeds from issuance of common stock		5,000			2,000
Payments to related parties		-			(7,335	)
Proceeds from issuance of convertible notes		157,000			330,000
Payments of convertible notes payable		(5,000	)		-
Proceeds from issuance of notes payable		355,000			-
Proceeds from issuance of notes payable, related party		51,625			-
Payments of notes payable		(20,250	)		(5,000	)
Payments of notes payable, related party		(15,851	)		-
Net cash provided by financing activities		527,524			319,665

Net change in cash		2,157			(700	)

Cash - beginning of the period		405			2,247
Cash - ending of the period	$	2,562		$	1,547

Supplemental disclosures of cash flow information:
Cash paid during the period for interest	$	2,200		$	-

The accompanying ~~unaudited~~notes ~~condensed~~are consolidated financial statements have been prepared on the basis that the Company will continue as a going concern. The Company has incurred recurring losses and reported loss available to common shareholders for the three months ended February 29, 2016 and February 28, 2015, totaling $308,256 and $191,569, respectively, as well as an ~~accumulated~~integral part ~~deficit as~~ of ~~February~~these 29, 2016 and November 30, 2015, amounting to $3,521,073 and $3,212,817, respectively. As a result of the Company’s continued losses, at February 29, 2016, the Company’s current liabilities significantly exceed current assets, resulting in negative working capital of $2,129,516. Further, the Company does not have adequate cash to cover projected operating costs for the next 12 months. These factors raise substantial doubt about the ability of the Company to continue as a going concern. In order to ensure the continued viability of the Company, either future equity or debt financings must be obtained or profitable operations must be achieved in order to repay the existing short-term debt and to provide a sufficient source of operating capital. To address its liquidity issues, the Company continues to explore opportunities for additional financing and/or restructuring of its existing debt. No assurances can be made that the Company will be successful obtaining additional equity or debt financing and/or in restructuring existing debt, or that the Company will achieve profitable operations and positive cash flow. The unaudited condensed consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classifications of liabilities that may result should the Company be unable to continue as a going concern. ~~Further, subsequent to year end the Company has primarily funded its operations through the issuance of additional debt financings (See Note 11).~~

F-3~~. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES~~

~~Basis~~Table of ~~Presentation~~Contents

~~The~~Avalanche accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and Regulation S-X and do not include all the information and disclosures required by generally accepted accounting principles in the United States of America (“GAAP”). The Company has made estimates and judgments affecting the amounts reported in our consolidated financial statements and the accompanying notes. The actual results experienced by the Company may differ materially from our estimates. The consolidated financial information is unaudited but reflects all normal adjustments that areInternational, ~~in the opinion of management, necessary to provide a fair statement of results for the interim periods presented~~Corp. These unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements in the Company’s Annual Report on Form 10-K for the year ended November 30, 2015, filed with the Securities and Exchange Commission on April 28, 2017. The unaudited condensed consolidated balance sheet as of February 29, 2016 was derived from the Company’s audited 2015 financial statements contained in the above referenced Form 10-K. Results of the three months ended February 29, 2016, are not necessarily indicative of the results to be expected for the full year ending November 30, 2016.Subsidiaries

4Condensed Consolidated Statements of Cash Flows (continued)

~~Table of Contents~~(Unaudited)

Avalanche International, Corp. and Subsidiary

	For the Six Months Ended May 31,
	2016			2015
Supplemental schedule of non-cash investing and financing activities:
Decrease in accounts payable and accrued expenses-related party
in connection with the purchase of a third-party note receivable	$	25,000		$	-
Decrease in notes payable in connection with reduction in note receivable	$	(10,000	)	$	-
Common stock issued for conversion of debt and accrued interest	$	183,048		$	-
Decrease in notes payable in connection with common stock issued	$	(7,330	)	$	-
Decrease in accrued interest in connection with common stock issued	$	(21,024	)	$	-
Issuance of preferred stock to shareholder for payment of accrued expenses, related party	$	-		$	76,900
Warrants issued in connection with notes payable	$	30,987		$	-

~~Notes~~The toaccompanying ~~the~~notes ~~Consolidated~~are ~~Financial~~an ~~Statements~~integral part ~~(Unaudited)~~of ~~(Continued)~~these condensed consolidated financial statements.

~~Principles of Consolidation~~F-4

~~The~~Table ~~unaudited condensed consolidated financial statements include accounts~~ of Avalanche and its wholly-owned subsidiaries, SRB and RCG, (collectively referred to as the “Company"). No operations existed in RCG during the year ended November 30, 2015. All significant intercompany accounts and transactions have been eliminated in consolidation.Contents

~~Accounting~~Avalanche ~~Estimates~~International, Corp. and Subsidiaries

~~The~~Notes ~~preparation of financial statements, in conformity with accounting principles generally accepted in the United States of America, requires management~~ to ~~make~~Condensed ~~estimates~~Consolidated and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The Company’s critical accounting policies that involve significant judgment and estimates include share based compensation, valuation of derivative liabilities and valuation of deferred income taxes. Actual results could differ from those estimates.Financial Statements

~~Fair Value of Financial Instruments~~(Unaudited)

~~The Company’s financial instruments are accounts receivable, inventory, accounts payable, notes payable, and derivative liabilities~~1. ~~The~~ORGANIZATION ~~recorded~~AND ~~values~~DESCRIPTION ofOF accounts receivable, inventory, and accounts payable approximate their fair values based on their short-term nature. Notes payable and convertible notes payable are recorded at their issue value or if warrants are attached at their issue value less the proportionate value of the warrant, which approximates their fair value. Convertible notes payable and warrants issued with ratcheting provisions are classified as derivative liabilities and are revalued using the Black-Scholes model each quarter based on changes in the market value of our common stock and unobservable level 3 inputs.BUSINESS

~~The~~Avalanche International, Corp. (the “Company” ~~defines~~or ~~fair~~“Avalanche”) ~~value~~was asincorporated under the ~~exchange~~laws ~~price~~of ~~that~~the State ~~would~~of beNevada ~~received~~on ~~for~~April an14, ~~asset~~2011. orThe ~~paid~~Company tois ~~transfer~~ a ~~liability~~holding ~~(an~~company ~~exit~~with ~~price)~~operations inat the ~~principal~~subsidiary orlevel ~~most~~only. ~~advantageous~~The ~~market~~Company ~~for~~has formed ~~the~~two ~~asset~~wholly-owned orsubsidiaries, ~~liability~~Smith inand anRamsay ~~orderly~~Brands, ~~transaction~~LLC ~~between~~(“SRB”) ~~market~~and ~~participants~~Restaurant onCapital ~~the~~Group, LLC ~~measurement date~~(“RCG”). ~~Valuation~~SRB ~~techniques~~was ~~used~~formed toon ~~measure~~May ~~fair~~19, ~~value~~2014, ~~must~~and ~~maximize~~RCG ~~the~~was ~~use~~formed ofon ~~observable~~October ~~inputs~~22, ~~and~~2015. ~~minimize~~SRB ~~the~~was ~~use~~originally formed ofas ~~unobservable~~a ~~inputs.~~manufacturer ~~The~~and ~~fair~~distributor ~~value~~of ~~hierarchy~~flavored isliquids ~~based~~for onelectronic ~~three~~vaporizers ~~levels~~and ofeCigarettes ~~inputs~~and ~~that~~accessories; ~~may~~this bebusiness ceased ~~used~~in toJune ~~measure~~2015. ~~fair~~RCG ~~value,~~was offormed ~~which~~to hold the ~~first~~Company’s ~~two~~investments ~~are~~in ~~considered observable and~~ the ~~last~~restaurant ~~is considered unobservable:~~industry.

~~Level~~2. 1:LIQUIDITY ~~Quoted~~AND ~~prices~~GOING ~~in active markets for identical assets or liabilities.~~CONCERN

~~Level~~The 2:accompanying ~~Inputs~~unaudited condensed ~~other~~consolidated ~~than~~financial ~~Level~~statements 1have been prepared on the basis that ~~are~~the ~~observable~~Company will continue as a going concern. The Company has incurred recurring losses and reported losses available to common stockholders for the six months ended May 31, 2016 ~~either~~and ~~directly~~2015, ortotaling ~~indirectly~~$990,374 ~~such~~and $773,045, respectively, as ~~quoted~~well ~~prices~~as ~~for~~an ~~similar~~accumulated ~~assets~~deficit oras of May 31, 2016 amounting to $4,203,191. As a result of the Company’s continued losses, at May 31, 2016, the Company’s current liabilities; ~~quoted~~significantly exceed ~~prices~~current assets, resulting in ~~markets~~negative ~~that~~working ~~are~~capital of $2,927,449. Further, the Company does not ~~active;~~have oradequate ~~other~~cash ~~inputs~~to cover projected operating costs for twelve months from the issuance date of these financial statements and to repay convertible notes payable and notes payable in the aggregate principal amount of $716,575 that are ~~observable~~in default at May 31, 2016. These factors raise substantial doubt about the ability of the Company to continue as a going concern. In order to ensure the continued viability of the Company, either future equity or ~~can~~debt financings must be ~~corroborated~~obtained byor ~~observable~~profitable ~~market~~operations ~~data~~must ~~for~~be ~~substantially~~achieved in order to repay the ~~full~~existing short-term debt and to provide a sufficient source of operating capital. To address its liquidity issues, the Company continues to explore opportunities for additional financing and/or restructuring of its existing debt. No assurances can be made that the Company will be successful obtaining additional equity or debt financing and/or in restructuring existing debt, or that the Company will achieve profitable operations and positive cash flow. The unaudited condensed consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classifications of liabilities that may result should the Company be unable to continue as a going concern. Further, subsequent to year end the Company has primarily funded its operations through the issuance of additional debt financings (see Note 12).

~~Level~~ 3. ~~assumptions:~~SUMMARY ~~Unobservable~~OF ~~inputs~~SIGNIFICANT ~~that~~ACCOUNTING are supported by little or no market activity and that are significant to the fair value of the assets or liabilities including liabilities resulting from imbedded derivatives associated with certain warrants to purchase common stock.POLICIES

~~Derivative~~Basis ~~Financial~~of ~~Instruments~~Presentation

~~Derivative~~The ~~liabilities~~accompanying ~~are~~unaudited ~~recognized~~condensed ~~in the~~ consolidated financial ~~balance~~statements ~~sheets~~have atbeen ~~fair~~prepared ~~value~~in ~~based~~accordance onwith the ~~criteria~~instructions ~~specified~~to inSecurities ~~Financial~~and ~~Accounting~~Exchange ~~Standards~~Commission ~~Board~~ (~~“FASB”)~~the ~~Accounting Standards Codification (~~“~~ASC~~SEC”) Form ~~Topic 815~~10-15Q ~~– Derivatives~~ and ~~Hedging~~Article –8 ~~Embedded~~of ~~Derivatives~~SEC ~~(“ASC~~Regulation ~~815~~S-~~15”).~~X ~~Pursuant~~and todo ~~ASC~~not ~~Topic~~include ~~815-15~~all ~~an evaluation of~~ the ~~embedded~~information ~~conversion~~and ~~feature~~disclosures ofrequired ~~convertible~~by ~~debt~~generally isaccepted accounting ~~evaluated~~principles toin ~~determine if~~ the ~~bifurcated~~United ~~debt~~States ~~conversion~~of ~~feature~~America ~~is required to be classified as a derivative liability~~(“GAAP”). ~~Since~~The ~~the~~Company ~~terms~~has ofmade ~~the~~estimates ~~embedded~~and ~~conversion~~judgments affecting ~~features of~~ the ~~Company’s~~amounts ~~convertible~~reported ~~debt~~in ~~provides~~our ~~for~~condensed ~~the~~consolidated ~~issuance~~financial ofstatements ~~shares of common stock at the election of the holders~~ and the ~~number~~accompanying ofnotes. The ~~shares~~actual results isexperienced ~~subject~~by ~~to adjustment for a decline in~~ the ~~price of the~~ Company’s ~~common~~may ~~stock,~~differ ~~the~~materially ~~Company~~from ~~determined~~our ~~that the embedded conversion option met the criteria of a derivative liability~~estimates. The ~~estimated~~consolidated ~~fair~~financial ~~value~~information ofis ~~the~~unaudited but ~~embedded~~reflects ~~conversion~~all ~~feature~~normal ofadjustments ~~debt~~that ~~classified as derivative liabilities~~ are, ~~determined~~in ~~using~~ the ~~Black-Scholes~~opinion ~~option~~of ~~pricing~~management, ~~model.~~necessary ~~The model utilizes Level 3 unobservable inputs~~ to ~~calculate~~provide ~~the~~a fair ~~value~~statement of results for the ~~derivative~~interim ~~liabilities~~periods ~~at each reporting period~~presented. ~~The~~These ~~Company~~unaudited ~~determined~~condensed ~~that~~consolidated ~~using~~financial anstatements ~~alternative~~should ~~valuation~~be ~~model~~read ~~such as a Binomial-Lattice model would result~~ in ~~minimal~~conjunction ~~differences. The fair value of~~ with the ~~embedded~~consolidated ~~conversion~~financial ~~feature~~statements ofand ~~debt~~notes ~~classified~~thereto asincluded ~~derivative liabilities are adjusted for changes~~ in ~~fair~~the ~~value~~Company’s atAnnual ~~each~~Report ~~reporting~~on ~~period,~~Form ~~and the corresponding non~~10-~~cash~~K ~~gain~~for ~~or loss is recorded as other income or expense in~~ the ~~consolidated~~year ended ~~statement of operations. As of February 29, 2016 and~~ November 30, 2015, ~~the~~filed ~~embedded~~with ~~conversion~~the ~~feature~~SEC ofon ~~$1,084,408~~April ~~and $1~~28,~~313,012,~~ ~~respectively, of convertible notes payable was classified as a derivative liability~~2017. Results ~~Each~~for ~~reporting period~~ the ~~embedded~~three ~~conversion~~and ~~feature~~six ismonths ~~re-valued~~ended ~~and~~May ~~adjusted~~31, ~~through~~2016, are ~~the~~not ~~caption~~necessarily ~~“change~~indicative inof ~~fair~~the ~~value~~results ofto ~~derivative~~be ~~liabilities”~~expected onfor the ~~consolidated~~full ~~statements~~year ofending ~~operations~~November 30, 2016.

5Principles of Consolidation

~~Table~~The unaudited condensed consolidated financial statements include accounts of ~~Contents~~Avalanche and its wholly-owned subsidiaries, SRB and RCG (collectively referred to as the “Company”). No operations existed in RCG during the six months ended May 31, 2016. All significant intercompany accounts and transactions have been eliminated in consolidation.

~~Avalanche~~Accounting ~~International, Corp. and Subsidiary~~Estimates

~~Notes~~The preparation of financial statements, in conformity with GAAP requires management to make estimates and assumptions that affect the ~~Consolidated~~reported ~~Financial~~amounts of ~~Statements~~assets ~~(Unaudited)~~and ~~(Continued)~~liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The Company’s critical accounting policies that involve significant judgment and estimates include fair value of bifurcated embedded conversion options and derivative warrant liabilities and the valuation of deferred income taxes. Actual results could differ from those estimates.

When the Company has determined that the embedded conversion options should not be bifurcated from their host instruments, the Company records, when necessary, discounts to convertible notes for the intrinsic value of conversion options embedded in debt instruments based upon the differences between the fair value of the underlying common stock at the commitment date of the note transaction and the effective conversion price embedded in the note. Debt discounts under these arrangements are amortized over the term of the related debt to their stated date of redemption.F-5

~~Debt~~Table ~~Discounts~~of Contents

~~The~~Avalanche ~~Company accounts for debt discount according to ASC 470-20~~International, ~~Debt with Conversion and Other Options~~Corp. Debt discounts are amortized through periodic charges to interest expense over the term of the related financial instrument using the effective interest method. During the three months ended February 29, 2016 and ~~February 28, 2015, the Company recorded amortization of debt discounts of $140,517 and nil, respectively.~~Subsidiaries

~~Revenue~~Notes ~~Recognition~~to Condensed Consolidated Financial Statements

~~The Company will recognize revenue when it is realized or realizable and earned. The Company considers revenue realized or realizable and earned when all of the following criteria are met:~~ (iUnaudited) persuasive evidence of an arrangement exists, (ii) the product has been shipped or the services have been rendered to the customer, (iii) the sales price is fixed or determinable, and (iv) collectability is reasonably assured. During the three months ended February 29, 2016, the Company did not generate any revenue. During the three months ended February 28, 2015, the Company’s revenues consisted solely of sales of flavored liquids for electronic vaporizers and eCigarettes and accessories from SRB.

~~Stock-Based~~Fair ~~Compensation~~Value of Financial Instruments

The Company’s significant ~~accounts~~financial ~~for~~instruments ~~stock~~include ~~option~~cash, ~~awards~~accounts inreceivable, ~~accordance~~notes ~~with~~receivable, ~~FASB~~accounts ~~ASC~~payable ~~Topic~~and ~~No.~~accrued ~~718~~expenses, ~~Compensation-Stock~~notes payable, ~~Compensation.~~and ~~Under~~convertible ~~FASB~~notes ~~ASC Topic No~~payable. ~~718,~~The ~~compensation~~recorded ~~expense~~values ~~related~~of tocash, ~~stock-based~~accounts ~~payments~~receivable, isnotes ~~recorded~~receivable, ~~over~~and ~~the~~accounts ~~requisite~~payable approximate ~~service~~their ~~period~~fair values based on ~~the~~their ~~grant~~short-term ~~date fair value of the awards~~nature. ~~Compensation~~Notes ~~previously~~payable ~~recorded~~and ~~for~~convertible ~~unvested~~notes ~~stock~~payable ~~options that~~ are ~~forfeited~~recorded isinclusive of ~~reversed upon forfeiture. The Company uses~~ the ~~Black-Scholes option pricing model for determining the estimated fair~~ value ~~for~~of ~~stock-based~~any ~~awards.~~bifurcated ~~The~~embedded ~~Black-Scholes~~feature, ~~model requires the use of assumptions~~ which ~~determine~~approximates ~~the~~their fair value ~~of stock-based awards, including the option’s expected term and the price volatility of the underlying stock~~.

~~The Company’s accounting policy for equity instruments issued to consultants and vendors in exchange for goods and services follows the provisions of FASB ASC Topic No. 505-50,~~ Equity ~~Based Payments to Non~~-~~Employees.~~Linked ~~Accordingly,~~Financial the measurement date for the fair value of the equity instruments issued is determined at the earlier of (i) the date at which a commitment for performance by the consultant or vendor is reached or (ii) the date at which the consultant or vendor’s performance is complete. In the case of equity instruments issued to consultants, the fair value of the equity instrument is recognized over the term of the consulting agreement.Instruments

~~Loss~~Derivative ~~per~~liabilities are ~~Common~~recognized ~~Share~~in the consolidated balance sheets at fair value based on the criteria specified in Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 815-15 – Derivatives and Hedging – Embedded Derivatives (“ASC 815-15”). The Company evaluates all of its financial instruments, including embedded conversion features in convertible debt and warrants, to determine if such instruments are derivatives or contain features that qualify as embedded derivatives. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is re-assessed at the end of each reporting period.

~~The~~Pursuant ~~Company~~to ~~utilizes FASB~~ ASC Topic 815-15 ~~No.~~an ~~260,~~evaluation ~~Earnings~~of ~~per~~the ~~Share.~~embedded ~~Basic~~conversion ~~loss~~feature ~~per~~of ~~share~~convertible debt is ~~computed~~evaluated byto ~~dividing~~determine ~~loss~~if ~~available~~the embedded debt conversion feature is required to ~~common~~be ~~shareholders~~bifurcated byfrom the ~~weighted-average~~debt ~~number~~instrument, ofvalued ~~common~~and ~~shares~~classified ~~outstanding~~with the related loan host instrument. ~~Diluted~~When the ~~loss~~terms ~~per~~of ~~share~~the isembedded ~~computed~~conversion ~~similar~~features toof ~~basic~~the ~~loss~~Company’s ~~per~~convertible ~~share~~debt ~~except~~provides ~~that~~for the ~~denominator~~issuance of shares of common stock at the election of the holders and the number of shares is ~~increased~~subject to ~~include~~adjustment for a decline in the ~~number~~price of ~~additional~~the Company’s common ~~shares~~stock, the Company determined that ~~would~~the ~~have~~embedded ~~been~~conversion ~~outstanding~~option ifshould be bifurcated. The estimated fair value of the conversion ~~potential~~features, ~~common~~when ~~shares~~bifurcated, ~~had~~are ~~been~~primarily ~~issued~~determined ~~and~~using ifa ~~the~~Monte ~~additional~~Carlo ~~common~~model ~~shares~~or, ~~were~~in ~~dilutive~~certain circumstances, the Black-Scholes option pricing model. ~~Diluted~~The ~~loss~~models ~~per~~utilize ~~common~~Level ~~share~~3 ~~reflects~~unobservable inputs to calculate the ~~potential~~fair ~~dilution~~value of the derivative liabilities at each reporting period. The Company determined that ~~could~~in ~~occur~~instances ifwhere ~~convertible~~a ~~promissory~~Black-Scholes ~~notes~~option ~~and~~pricing ~~Class~~model Awas ~~convertible~~used ~~preferred~~that ~~stock~~using an ~~were~~alternative tovaluation bemodel ~~exercised~~such oras ~~converted~~a orMonte ~~otherwise~~Carlo ~~resulted~~model would result in minimal differences. Each reporting period the ~~issuance~~embedded conversion offeature ~~common~~for ~~stock~~each ~~that~~applicable ~~then~~debt ~~shared~~instrument inis re-valued and adjusted through the ~~earnings~~caption “change in fair value of derivative liability” on the ~~entity~~consolidated statements of operations.

6Certain of the Company’s convertible notes issued during the year ended November 30, 2015 contain conversion terms that provide for a variable conversion price (e.g. 55% of the lowest trading price of the Company’s common stock for the 25 days preceding conversion) for a fixed amount (i.e. face value of the note). This results in the number of shares to be issued upon conversion to be essentially indeterminable and prevents the Company from concluding that the related conversion feature does not need to be bifurcated as a derivate liability in accordance with ASC 815. Thus, equity-linked financial instruments, which are convertible or exercisable into common stock, issued subsequent to the convertible notes are classified as derivative liabilities, with the exception of instruments related to employee share-based compensation.

~~Table~~Warrant ~~of Contents~~Liability

~~Avalanche~~The Company ~~International,~~accounts ~~Corp~~for certain common stock warrants outstanding as a liability at fair value and adjusts the instruments to fair value at each reporting period. This liability is subject to re-measurement at each balance sheet date until exercised, and ~~Subsidiary~~any change in fair value is recognized in the Company's consolidated statements of operations. The fair value of the warrants issued by the Company has been estimated using a Black-Scholes option pricing model, at each measurement date.

~~Notes~~Debt ~~to the Consolidated Financial Statements (Unaudited) (Continued)~~Discounts

~~Since~~The ~~the~~Company ~~effects~~accounts for ofdebt ~~the~~discounts originating in connection with conversion offeatures ~~convertible~~that ~~debt~~remain ~~are~~embedded ~~anti-dilutive~~in the related notes in ~~all~~accordance with ~~periods~~ASC ~~presented~~470-20, ~~shares~~Debt ofwith ~~common~~Conversion ~~stock~~and ~~underlying~~Other ~~these~~Options. ~~instruments~~These costs ~~have~~are ~~been~~classified ~~excluded~~on the consolidated balance sheet as a direct deduction from the ~~computation~~debt liability. The Company amortizes these costs over the term of ~~loss~~its ~~per~~debt ~~common~~agreements ~~share~~as interest expense-debt discount in the consolidated statement of operations.

~~The following sets forth the number of shares of common stock underlying convertible debt as of February 29, 2016 and February 28, 2015:~~Sequencing

	For the Three Months Ended
	February 29, 2016		February 28, 2015
Convertible notes payable		21,637,305		—
Warrants		175,000		—
		21,812,305		—

As of March 1, 2016, the Company adopted a sequencing policy whereby all future instruments may be classified as a derivative liability with the exception of instruments related to share-based compensation issued to employees or directors.

~~Reclassifications~~F-6

~~Certain~~Table ~~prior year amounts have been reclassified for comparative purposes to conform to the current-year financial statement presentation. These reclassifications had no effect on previously reported results~~ of ~~operations. In addition, certain prior year amounts from the restated amounts have been reclassified for consistency with the current period presentation.~~Contents

~~Recent~~Avalanche ~~Accounting~~International, ~~Standards~~Corp. and Subsidiaries

~~The~~Notes ~~Company~~to ~~has~~Condensed ~~considered~~Consolidated ~~all other recently issued accounting standards and does not believe the adoption of such standards will have a material impact on its condensed consolidated financial statements.~~Financial Statements

~~4. LOAN RECEIVABLE~~(Unaudited)

OnRevenue August 4, 2015, we entered into a Secured Promissory Note (the “JST Note”) with JS Technologies, Inc. (“JST”). Under the JST Note, we intended to lend up to $400,000 to JST in order to provide short-term financing pending our proposed acquisition of JST. The JST Note accrues interest at a rate of ten percent (10%) per year and is due in one year. The JST Note is secured by substantially all of the assets of JST. Between December 3, 2015 and February 26, 2016, the Company loaned JST $120,000 pursuant to the term of the JST Note. The JST Note, which was repaid subsequent to February 29, 2016 (see Note 11), included $13,333 of original issue discount, resulting in an aggregate amount due to the Company of $133,333.Recognition

The ~~original~~Company ~~issue~~recognizes revenue ~~discount~~when ofit ~~$13,333 on the JST Note~~ is ~~being~~realized ~~amortized~~or asrealizable ~~interest~~and ~~income through the maturity date using the interest rate method~~earned. ~~During~~The ~~the~~Company ~~quarter~~considers ~~ended~~revenue ~~February~~realized ~~29,~~or ~~2016,~~realizable ~~the~~and ~~Company~~earned ~~recorded~~when ~~$3,975~~ all of ~~interest~~the ~~income~~following ~~from~~criteria ~~the~~are ~~discount~~met: ~~accretion~~(i) ~~and~~persuasive ~~$2,466~~evidence of ~~interest~~an ~~income~~arrangement ~~based~~exists, ~~upon~~(ii) the ~~10%~~product ~~contractual~~has ~~rate.~~been Asshipped ofor ~~February~~the ~~29,~~services have ~~2016,~~been ~~and~~rendered ~~November~~to ~~30,~~the ~~2015~~customer, (iii) the ~~Company~~sales ~~had~~price ~~recorded~~is anfixed ~~interest~~or ~~receivable~~determinable, ~~attributed~~and to(iv) ~~the~~collectability ~~JST~~is ~~Note~~reasonably ~~of $2,466 and nil, respectively~~assured.

7No revenue was recorded during the three and six months ended May 31, 2016. During the three and six months ended May 31, 2016, the Company’s revenues consisted solely of sales of flavored liquids for electronic vaporizers and eCigarettes and accessories from SRB.

~~Table~~Loss ofper ~~Contents~~Common Share

~~Avalanche~~Pursuant ~~International~~to ASC Topic No. 260, ~~Corp~~Earnings per Share, basic net loss per share is computed by dividing loss available to common shareholders by the weighted-average number of common shares outstanding. Diluted net loss per share is computed similar to basic net loss per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and ~~Subsidiary~~if the additional common shares were dilutive. Diluted net loss per common share reflects the potential dilution that could occur if diluted instruments were to be exercised or converted or otherwise resulted in the issuance of common stock that then shared in the earnings of the Company.

~~Notes~~Since tothe effects of the ~~Consolidated~~conversion ~~Financial~~of ~~Statements~~convertible ~~(Unaudited)~~debt ~~(Continued)~~are anti-dilutive in all periods presented, shares of common stock underlying these instruments have been excluded from the computation of loss per common share.

5.The ~~CONVERTIBLE~~following ~~NOTES~~sets forth ~~PAYABLE~~the number of shares of common stock underlying convertible debt as of May 31, 2016 and 2015:

Convertible notes payable at February 29, 2016 and November 30, 2015, are comprised of the following:

	May 31,
	2016		2015

Convertible notes payable		11,449,546		604,167
Common stock warrants		175,000		-
		11,624,546		604,167

	February 29, 2016			November 30, 2015
Note payable to Adar Bays, LLC	$	115,000		$	115,000
Note payable to Union Capital, LLC		115,000			115,000
Note payable to Typenex Co-Investment, LLC		87,500			87,500
Note payable to Gary Gelbfish		100,000			100,000
Note payable to JMJ Financial		60,500			60,500
Note payable to Black Mountain Equities, Inc.		42,670			55,000
Note payable to LG Capital Funding, LLC		50,000			50,000
Note payable to GCEF Opportunity Fund, LLC		27,500			27,500
Note payable to Lord Abstract, LLC		8,800			8,800
Other notes payable		11,000			—
Total notes payable		617,970			619,300
Less: debt discount		(118,774	)		(202,325	)
Total convertible notes payable	$	499,196		$	416,975
Less: current portion		(498,352	)		(416,975	)
Notes payable – long-term portion	$	844		$	-

Reclassifications

~~The~~Certain ~~Company~~prior ~~has~~period amounts ~~entered~~have ~~into~~been ~~convertible~~reclassified ~~promissory~~for ~~notes~~comparative ~~with~~purposes ~~various~~to ~~entities.~~conform ~~During~~to the ~~three~~current ~~months~~period ~~ended~~financial ~~February~~statement ~~29, 2016 and the year ended November 30, 2015, the Company received aggregate proceeds of $11,000 and 508,000, respectively~~presentation. ~~During~~These reclassifications ~~the~~had ~~three~~no ~~months~~effect ended February 29, 2016 and the year ended November 30, 2015, the Company issued promissory notes in the aggregate principal amount of $11,000 and $569,300. The promissory notes that were issued during the year ended November 30, 2015 included loan fees of $40,000 and original issue discounts of $21,300. The convertible promissory notes accrue interest at rates ranging between 8% and 12% per annum. At February 29, 2016, the Company was in default on ~~the~~previously LGreported ~~Capital~~results ~~Funding, LLC, Gary Gelbfish and Typenex Co-Investment, LLC convertible promissory notes and subject to default interest rates~~ of ~~24%, 10% and 22%, respectively, on these convertible promissory notes~~operations. ~~Further~~In addition, ~~during~~certain ~~the~~prior ~~year~~period ~~ended~~amounts ~~November~~from ~~30, 2015,~~ the ~~Company~~revised ~~recorded~~amounts ahave ~~default~~been ~~penalty~~reclassified offor ~~$18,902~~consistency onwith the ~~Typenex~~current ~~Co-Investments, LLC convertible promissory note~~period presentation. ~~On April 4, 2017, the Company and Typenex agreed to a settlement, see Note 11. As of the date of this report, the Company was in default on all of the convertible notes payable.~~

8Recent Accounting Pronouncements

~~Table~~The Company has considered all recently issued accounting pronouncements and does not believe the adoption of ~~Contents~~such pronouncements will have a material impact on its condensed consolidated financial statements.

~~Avalanche International, Corp. and Subsidiary~~F-7

~~Notes~~Table toof ~~the Consolidated Financial Statements (Unaudited) (Continued)~~Contents

~~The~~Avalanche ~~table below summarizes the Company’s convertible promissory notes as of February 29~~International, ~~2016~~Corp. and Subsidiaries

			Inception							Original		Principal			Principal
	Inception	Due	Interest					Loan		Issue		Payments:			Amount of
	Date	Date	Rate			Cash		Fees		Discount		Cash and Stock			Note
Adar Bays, LLC	5/12/2015	5/12/2016		8	%	$	100,000	$	15,000	$	-	$	-		$	115,000
Union Capital, LLC	5/11/2015	5/11/2016		8	%		100,000		15,000		-		-			115,000
Typenex Co-Investment, LLC	6/2/2015	7/2/2016		10	%		70,000		10,000		7,500		-			87,500
Gary Gelbfish	4/1/2015	9/23/2015		10	%		100,000		-		-		-			100,000
JMJ Financial	4/29/2015	4/29/2017		12	%		55,000		-		5,500		-			60,500
Black Mountain Equities, Inc.	6/4/2015	6/4/2016		10	%		50,000		-		5,000		(12,330	)		42,670
LG Capital Funding, LLC	11/3/2014	11/3/2015		8	%		47,500		7,500		8,250		(13,250	)		50,000
GCEF Opportunity Fund, LLC	6/30/2015	6/30/2016		10	%		25,000		-		2,500		-			27,500
Lord Abstract, LLC	6/30/2015	6/30/2016		10	%		8,000		-		800		-			8,800
Other Convertible Notes	6/30/2015	6/30/2016		10	%		11,000		-		-		-			11,000
Total						$	566,500	$	47,500	$	29,550	$	(25,580	)	$	617,970

Notes to Condensed Consolidated Financial Statements

~~The table below summarizes the Company’s convertible promissory notes as of November 30, 2015.~~(Unaudited)

			Inception							Original		Principal			Principal
	Inception	Due	Interest					Loan		Issue		Payments:			Amount of
	Date	Date	Rate			Cash		Fees		Discount		Stock			Note
Adar Bays, LLC	5/12/2015	5/12/2016		8	%	$	100,000	$	15,000	$	-	$	-		$	115,000
Union Capital, LLC	5/11/2015	5/11/2016		8	%		100,000		15,000		-		-			115,000
Typenex Co-Investment, LLC	6/2/2015	7/2/2016		10	%		70,000		10,000		7,500		-			87,500
Gary Gelbfish	4/1/2015	9/23/2015		10	%		100,000		-		-		-			100,000
JMJ Financial	4/29/2015	4/29/2017		12	%		55,000		-		5,500		-			60,500
Black Mountain Equities, Inc.	6/4/2015	6/4/2016		10	%		50,000		-		5,000		-			55,000
LG Capital Funding, LLC	11/3/2014	11/3/2015		8	%		47,500		7,500		8,250		(13,250	)		50,000
GCEF Opportunity Fund, LLC	6/30/2015	6/30/2016		10	%		25,000		-		2,500		-			27,500
Lord Abstract, LLC	6/30/2015	6/30/2016		10	%		8,000		-		800		-			8,800
Total						$	555,500	$	47,500	$	29,550	$	(13,250	)	$	619,300

REVISION OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS

AsThe ~~reflected~~condensed ~~below,~~consolidated financial atstatements ~~February~~for ~~29,~~the ~~2016~~three and ~~November~~six 30months ended May 31, 2015, have been revised to expense the ~~Company’s~~previously ~~convertible~~capitalized ~~notes~~licensing fee ~~payable~~and ~~were~~to ~~convertible~~reclassify ~~into~~original ~~21,637,305~~issue ~~shares~~discount ~~and~~that ~~3,890,876~~was ~~shares,~~initially ~~respectively,~~recorded ofas ~~the~~a ~~Company’s~~prepaid ~~common~~asset ~~stock~~to atdebt ~~the~~discount. ~~conversion~~An analysis ~~terms~~of those revised numbers is reflected below.

Condensed Consolidated Balance Sheet (unaudited)
	May 31, 2015
	As reported		Adjustment			As revised
Assets:
Total current assets	$	356,883	$	-		$	356,883
Total assets	$	411,588	$	(54,000	)	$	357,588

Liabilities and Stockholders' Deficit:
Total current liabilities	$	687,772	$	-		$	687,772
Total liabilities and stockholders' deficit	$	411,588	$	(54,000	)	$	357,588

Table of Contents

Condensed Consolidated Statement of Operations (unaudited)

	For the Three Months Ended May 31, 2015
	As reported			Adjustment			As revised
General and administrative expenses	$	301,755		$	11,250		$	313,005
Loss from operations	$	(298,846	)	$	(11,250	)	$	(310,096	)
Net loss	$	(570,226	)	$	(11,250	)	$	(581,476	)
Basic and diluted net loss per share	$	(0.10	)	$	(0.00	)	$	(0.11	)
Weighted average shares outstanding, basic and diluted		5,451,384			5,451,384			5,451,384

Avalanche International, Corp. and Subsidiary

Condensed Consolidated Statement of Operations (unaudited)

	For the Six Months Ended May 31, 2015
	As reported			Adjustment			As revised
General and administrative expenses	$	475,085		$	24,750		$	499,835
Loss from operations	$	(465,715	)	$	(24,750	)	$	(490,465	)
Net loss	$	(748,295	)	$	(24,750	)	$	(773,045	)
Basic and diluted net loss per share	$	(0.14	)	$	(0.00	)	$	(0.14	)
Weighted average shares outstanding, basic and diluted		5,336,296			5,336,296			5,336,296

~~Notes~~In accordance with SEC Staff Accounting Bulletin No 108, the Company has evaluated this error, based on an analysis of quantitative and qualitative factors, as to whether it was material to the ~~Consolidated~~condensed ~~Financial~~consolidated ~~Statements~~statements ~~(Unaudited)~~of ~~(Continued)~~operations for the three and six months ended May 31, 2015 and if amendments of previously filed financial statements with the SEC are required. The Company has determined that the adjustment is qualitatively not material and, therefore, the error has no material impact to the condensed consolidated statements of operations for the three and six months ended May 31, 2015 or other prior periods.

		Shares Issuable Upon Conversion at
	Conversion terms	February 29, 2016	November 30, 2015
Adar Bays, LLC	55% of the lowest trading price of the Company's common stock for the 25 days preceding conversion	4,181,818	638,889
Union Capital, LLC	55% of the lowest trading price of the Company's common stock for the 25 days preceding conversion	4,181,818	638,889
Typenex Co-Investment, LLC	35% of lowest closing bid price of the Company's common stock for the 20 days preceding conversion	5,066,762	1,013,352
Gary Gelbfish	50% of the average of the closing price of the Company's common stock for the twenty days preceding conversion	1,895,735	455,063
JMJ Financial	60% of the lowest trading price of the Company's common stock in the 25 days prior to conversion	2,016,667	403,333
Black Mountain Equities, Inc.	70% of the average of the three lowest closing prices of the Company's common stock during the twenty days preceding conversion	1,188,671	261,905
LG Capital Funding, LLC	60% of the lowest trading price of the Company's common stock for the 20 days preceding conversion	1,666,667	277,778
GCEF Opportunity Fund, LLC	60% of the lowest closing price of the Company's common stock for the 20 days preceding conversion	916,667	152,778
Lord Abstract, LLC	60% of the lowest closing price of the Company's common stock for the 20 days preceding conversion	293,333	48,889
Other Convertible Notes	50% of the volume weighted average price of the Company's common stock for the twenty days preceding conversion	229,167	—
Number of shares of common stock underlying the convertible promissory notes		21,637,305	3,890,876

WARRANTS

~~The~~During ~~debt conversion features embedded in~~ the ~~Company’s~~six convertible promissory notes are accounted for under ASC Topic 815 – Derivatives and Hedging. At the time of issuance, the estimated fair value of the debt conversion features utilizing the Black Scholes option pricing model totaled $965,884. However, the fair value of the debt conversion features was limited by the amount of the gross proceeds of the convertible promissory notes of $566,500, and the respective debt discount of $563,101 is being amortized to interest expense over the term of the convertible promissory notes using the effective interest method. The difference between the estimated fair value of the debt conversion feature and the debt discount was reflected as a loss on issuance of convertible debt and during the three months ended ~~February~~May 2931, 2016 ~~and February 28~~, ~~2015,~~ the ~~loss on issuance amounted to $2,538 and nil, respectively. In January 2016, the~~ Company issued ~~457,619~~a ~~shares~~total of ~~common~~175,000 ~~stock~~warrants inat ~~payment~~an ofaverage ~~principal~~exercise ~~and accrued interest on three of its convertible notes. The shares were valued based on the closing~~ price of ~~the Company’s common stock on the date of issuance,~~ $~~183,048, resulting in a loss on conversion of $154,695~~0.13 Inper ~~aggregate, the Company recognized a loss related to its convertible notes of $157,233~~share.

During the three months ended February 29, 2016 and February 28, 2015, interest expense of $140,517 and nil, respectively, was recorded from the debt discount amortization. Additionally, the Company is required to mark to market the value of the conversion feature liability. Therefore, as of February 29, 2016 and November 30, 2015, the Company revalued the fair value of the debt conversion feature for the convertible promissory notes and determined the conversion feature liability to be $1,084,408 and $1,313,012, respectively, a decrease of $228,604. Adjusting for $13,539 in derivative liabilities that were recognized as a result of new loans that were entered into during the three months ended February 29, 2016, the Company recognized an aggregate decrease of $242,143 from the fair value determined at November 30, 2015. Changes in the conversion feature liability are recorded as income or expense during the reporting period that the change occurs.F-8

10Table of Contents

~~Table~~Avalanche ofInternational, ~~Contents~~Corp. and Subsidiaries

~~Avalanche~~Notes ~~International,~~to ~~Corp.~~Condensed ~~and~~Consolidated ~~Subsidiary~~Financial Statements

~~Notes to the Consolidated Financial Statements~~ (Unaudited) ~~(Continued)~~

~~The~~(i) ~~tables~~On ~~below~~December ~~summarize~~2, 2015, the Company’s ~~derivative~~issued ~~liabilities~~warrants ~~and~~to ~~the~~purchase ~~related~~an ~~non-cash~~aggregate ~~charges~~of 100,000 shares of common stock at ~~February~~an 29exercise price equal to $0.01 per share of common stock in connection with the issuance of a promissory note in the aggregate principal amount of $125,000 ~~2016~~(See Note 8d).

							Amortization
	Debt		Accumulated		Debt		for the Three
	Discount at		Amortization at		Discount at		Months Ended		Debt Discount at
	Inception		November 30, 2015		November 30, 2015		February 29, 2016		February 29, 2016
Adar Bays, LLC	$	100,000	$	59,589	$	40,411	$	24,932	$	15,479
Union Capital, LLC		100,000		59,904		40,096		24,932		15,164
Typenex Co-Investment, LLC		55,801		27,671		28,130		13,912		14,218
Gary Gelbfish		100,000		100,000		-		-		-
JMJ Financial		57,500		12,924		44,576		7,169		37,407
Black Mountain Equities, Inc.		55,000		26,972		28,028		13,712		14,316
LG Capital Funding, LLC		47,500		47,500		-		-		-
GCEF Opportunity Fund, LLC		27,500		11,527		15,973		6,856		9,117
Lord Abstract, LLC		8,800		3,689		5,111		2,194		2,917
Other convertible notes		11,000		—		—		844		10,156
Total convertible promissory notes		563,101		349,776		202,325		94,551		118,774
Notes payable:
Studio Capital, LLC		26,968		7,674		19,294		13,410		5,884
Other note payable		55,987		—		—		32,556		23,431
Total	$	646,056	$	357,450	$	221,619	$	140,517	$	148,089

(ii)

On January 20, 2016, the Company entered into an agreement with LG Capital Funding, LLC to amend the terms of a convertible promissory note in the principal amount of $50,000. Pursuant to the amendment, the Company granted LG Capital 75,000 warrants with an exercise price of $0.30 per share (See Note 7f).

	Estimated FV of		Estimated FV of
	Debt Conversion		Debt Conversion		Change in FV of
	Feature at		Feature at		Debt Conversion
	November 30, 2015		February 29, 2016		Feature
Adar Bays, LLC	$	207,659	$	198,887	$	(8,772	)
Union Capital, LLC		207,536		198,553		(8,983	)
Typenex Co-Investment, LLC		380,858		276,139		(104,719	)
Gary Gelbfish		118,391		89,346		(29,045	)
JMJ Financial		155,017		120,276		(34,741	)
Black Mountain Equities, Inc.		81,951		49,544		(32,407	)
LG Capital Funding, LLC		94,905		89,300		(5,605	)
GCEF Opportunity Fund, LLC		50,532		45,806		(4,726	)
Lord Abstract, LLC		16,163		2,165		(13,998	)
Other convertible notes		-		14,392		853
	$	1,313,012	$	1,084,408	$	(242,143	)

The following table summarizes information about common stock warrants outstanding at May 31, 2016:

Outstanding							Exercisable
			Weighted
			Average		Weighted				Weighted
			Remaining		Average				Average
Exercise	Number		Contractual		Exercise		Number		Exercise
Price	Outstanding		Life (Years)		Price		Exercisable		Price
$0.01		100,000		0.51	$	0.01		100,000	$	0.01
$0.30		75,000		2.64	$	0.30		75,00	$	0.30
$0.01 - $0.30		175,000		1.42	$	0.13		175,000	$	0.13

~~Table~~The Company has valued the warrants at their date of ~~Contents~~grant utilizing the Black-Scholes option pricing model. This model is dependent upon several variables such as the warrants’ term, exercise price, current stock price, risk-free interest rate and estimated volatility of our stock over the contractual term of the warrants. The risk-free interest rate used in the calculations is based on the implied yield available on U.S. Treasury issues with an equivalent term approximating the contractual life of the warrants.

~~Avalanche~~The following ~~International,~~weighted ~~Corp.~~average ~~and~~assumptions ~~Subsidiary~~were used for grants during the six months ended May 31, 2016:

Notes to the Consolidated Financial Statements (Unaudited) (Continued)

	May 31, 2016
Weighted average risk-free interest rate		0.52%
Weighted average life (in years)		2.0
Volatility		167.9% — 184.9%
Expected dividend yield		0%
Weighted average grant-date fair value per share of warrants granted	$	0.41

As reflected in the table below, during the three months ended February 29, 2016 and February 28, 2015, the Company incurred interest expense, excluding amortization of debt discount, of $27,114 and $1,248, respectively, on the convertible promissory notes6. AtNOTES February 29, 2016 and November 30, 2015, accrued interest on the convertible promissory notes totaled $67,417 and $42,426, respectively, and is recorded in accounts payable and accrued expenses on the consolidated balance sheets.RECEIVABLE

	Interest Expense for the Three Months Ended					Accrued Interest at
	May 31, 2016
	February 29, 2016			February 28, 2015		February 29, 2016		November 30, 2015
Notes receivable - Philo Group	$	325,000
Adar Bays, LLC	$	2,294		$	-	$	7,385	$	5,091
Notes receivable - JS Technologies, Inc.		103,659
Union Capital, LLC		2,294			-		7,410		5,117
Total notes receivable		428,659
Typenex Co-Investment, LLC		5,836			-		18,463		6,225
Less: original issue discount		(53,159	)
Gary Gelbfish		2,493			-		9,288		6,795
Total notes receivable, net	$	375,500
JMJ Financial		-			-		4,236		7,260
Less: current portion		(103,659	)
Black Mountain Equities, Inc.		10,000			-		10,000		5,500
Notes receivable – long-term portion	$	271,841
LG Capital Funding, LLC		2,992			1,248		7,883		4,891
GCEF Opportunity Fund, LLC		721			-		1,893		1,172
Lord Abstract, LLC		231			-		606		375
Other convertible notes		253			-		253		-
Total	$	27,114		$	1,248	$	67,417	$	42,426

In January 2016, the Company entered into Amendments to its promissory notes with Adar Bays, Union Capital, LG Capital, and Typenex (the “Amendments”). In general, each of the Amendments stipulates that the lender will, for a period of ninety (90) days, convert no more than ten percent (10%) of the principal amount due under their notes in any thirty (30) day period. In addition, the specific Amendments also provide as follows:F-9

·Table ~~The Adar Bays and Union Capital Amendments each provide that the conversion discount shall be increased by 5%, such that these notes are convertible at 55%, rather than 60%,~~ of market price as defined in the notes. Further, the pricing period, or “look-back” for determining the conversion price has been extended from 20 days to 25 days, and the pre-payment penalty has been increased to 150%.Contents

·Avalanche ~~The LG Capital Amendment also calls for additional consideration to LG Capital in the form of warrants to purchase 75~~International,~~000~~ ~~shares of our common stock at a price of $0~~Corp.30 ~~per~~and share, exercisable for 3 years. The Company recorded non-cash interest expense in the amount of $26,250 based on the estimated fair value of the warrants. The Company computed the fair value of these warrants using the Black-Scholes option pricing model. The non-cash interest expense was expensed at the time of issuance due to the short-term nature of the LG Capital convertible promissory note.Subsidiaries

·Notes ~~The~~to ~~Typenex~~Condensed ~~Amendment~~Consolidated also allows pre-payment in accord with the terms for such pre-payment as set forth in the note, and contains certain affirmations and representations and warranties regarding our liability under the Typenex note and other matters.Financial Statements

12(Unaudited)

~~Table~~On April 13, 2016, the Company entered into an agreement to finance a new restaurant owned by Philo Group, LLC (“Philo”). Between April 13, 2016 and May 31, 2016, the Company provided $250,000 in financing to Philo under the terms of ~~Contents~~a Senior Secured Property Note dated April 4, 2016, as amended (the “Philo Note”). The Philo Note bears interest at a rate of sixteen percent (16%) per annum, requires monthly interest payments, and was due within six (6) months from the date of issue. Due to delays in the opening of the restaurant, the Philo Note has not yet been repaid and is in default. The Company has not made a formal demand upon Philo for payment but has reserved its rights as provided for in the Philo Note. The Company is currently in discussions with Philo regarding payment of the Philo Note and actively monitoring the restaurant operations. The Philo Note features an original issue discount of $75,000 and allows for legal fees up to $5,000. The Philo Note is personally guaranteed by the principal of Philo and secured by all assets of Philo. In addition, the principal of Philo has agreed to further secure the loan by pledging several pieces of real property located in California.

~~Avalanche~~The ~~International~~original issue discount of $75,000 ~~Corp~~on the Philo Note is being amortized as interest income through the maturity date using the interest rate method. During the three and ~~Subsidiary~~six months ended May 31, 2016, the Company recorded $21,841 of interest income from the discount accretion and $8,208 of interest income based upon the 16% contractual rate.

~~Notes~~JS toTechnologies, ~~the Consolidated Financial Statements (Unaudited) (Continued)~~Inc.

6On August 4, 2015, the Company entered into a Secured Promissory Note (the “JST Note”) with JS Technologies, Inc. ~~NOTES~~(“JST”). Under ~~PAYABLE~~the JST Note, the Company entered into an agreement to lend up to $400,000 to JST in order to provide short-term financing pending the Company’s proposed acquisition of JST. The JST Note accrues interest at a rate of ten percent (10%) per annum and was due on August 5, 2016. The JST Note is secured by substantially all of the assets of JST. Between December 3, 2015 and February 26, 2016, the Company loaned JST $120,000 pursuant to the term of the JST Note, which included an original issue discount of $13,333 to the overall JST Note. Of the $120,000 loaned to JST, a payment of $95,000 was made by the Company and a payment of $25,000 was made by MCKEA Holdings, LLC (“MCKEA”) directly to JST on the Company’s behalf. Through May 31, 2016, the note receivable was offset by a payment of $19,674 by JST and JST’s payment of $10,000 directly to a third-party noteholder. The $10,000 payments made by JST reduced the Company’s outstanding note payable. The JST Note was fully repaid on June 15, 2016.

~~Notes~~The ~~payable~~original atissue discount ~~February~~of 29$13,333 on the JST Note was being amortized as interest income using the effective interest rate method. During the three and six months ended May 31, 2016, the Company recorded $9,358 and ~~November~~$13,333, 30respectively, ~~2015~~of interest income from the discount accretion and $2,860 ~~are~~and ~~comprised~~$5,326, respectively, of interest income based upon the ~~following:~~10% contractual rate.

	February 29, 2016			November 30, 2015
Notes payable to Studio Capital, LLC (a)	$	125,000		$	125,000
Notes payable to Argent Offset, LLC (b)		13,075			16,825
Notes payable to Strategic IR, Inc. (c)		12,500			12,500
Notes payable to Lori Livingston (d)		125,000			—
Total notes payable		275,575			154,325
Less: debt discount		(29,315	)		(19,294	)
Notes payable	$	246,260		$	135,031

F-10

~~(a)~~Table On October 8, 2015, Studio Capital, LLC, (“Studio Capital”) loaned $100,000 to the Company. As consideration for the loan, the Company issued Studio Capital a promissory note in the aggregate principal amount of $125,000, which included a loan discount of $25,000 (the “Studio Capital Note”) with net proceeds of $100,000. The Studio Capital note does not accrue interest; however, the note provides for a loan fee of 5,000 shares of the Company’s common stock and has a maturity date of April 8, 2016. The Studio Capital Note was not repaid on the maturity date and, as a result of this default, on April 8, 2016, the Company recorded a default penalty of $25,000, 20% of the outstanding balance of the Studio Capital Note. The Company recorded a debt discount in the amount of $26,968 based on the estimated fair value of the 5,000 shares of common stock, derived from the closing market price of the Company’s common stock on the date of the loan, and the $25,000 loan discount. The debt discount is being amortized as non-cash interest expense over the term of the debt using the effective interest method. During the three months ended February 29, 2016 and February 28, 2015, interest expense of $13,410 and nil, respectively, was recorded from the debt discount amortization.Contents

~~(b)~~Avalanche ~~On November 26~~International, 2014, the Company issued Argent Offset, LLC (“Argent”) a promissory note in consideration of expenses that it paid on the Company’s behalf in the aggregate principal amount of $13,000 (the “Argent Note”)Corp. ~~The Argent Note included a $500 loan fee, accrued interest at 10%, compounded monthly,~~ and was due December 5, 2014. A late payment fee of $500 per day was to be incurred from December 6, 2014 through December 7, 2014 and then increases to $1,000 per day. On February 1, 2015, the Company entered into a Temporary Forbearance Agreement with Argent. Under the forbearance agreement, the Company agreed to pay a forbearance fee of $7,000 and to extend the maturity date to August 1, 2015. Argent also advanced the Company an additional $19,825 pursuant to the terms of the Argent Note. As of February 29, 2016, $19,750 has been repaid on the Argent Note. The Argent Note is currently in default. During the three months ended February 29, 2016 and February 28, 2015, the Company incurred interest expense, excluding loan fees, of $579 and $466, respectively, on the Argent Note. At February 29, 2016 and November 30, 2015, accrued interest on the Argent Note totaled $2,644 and $2,064, respectively.Subsidiaries

~~(c)~~Notes Onto ~~March~~Condensed ~~17,~~Consolidated 2015, the Company issued Strategic, IR, Inc. (“Strategic”) a promissory note in consideration of expenses that it paid on the Company’s behalf in the aggregate principal amount of $12,500 (the “Strategic Note”). The Strategic Note included a $1,750 loan fee, accrued interest at 10% and was due April 16, 2015. The Strategic Note is currently in default and accruing interest at the default rate of 21% per annum. During the three months ended February 29, 2016 and February 28, 2015, the Company incurred interest expense, excluding loan fees, of $654 and nil, respectively, on the Strategic Note. At February 29, 2016 and November 30, 2015, accrued interest on the Strategic Note totaled $2,397 and $1,742, respectively.Financial Statements

13(Unaudited)

~~Table~~7. ofCONVERTIBLE ~~Contents~~NOTES PAYABLE

Avalanche International, Corp. and Subsidiary

	May 31, 2016			November 30, 2015
Adar Bays, LLC Note (a):
Principal value	$	115,000		$	115,000
Fair value of bifurcated put option of Adar Bays, LLC Note		186,694			207,659
Debt discount		-			(40,411	)
Carrying amount of Adar Bays, LLC Note		301,694			282,248

Union Capital, LLC Note (a):
Principal value		115,000			115,000
Fair value of bifurcated put option of Union Capital, LLC Note		186,611			207,536
Debt discount		-			(40,096	)
Carrying amount of Union Capital, LLC Note		301,611			282,440

Typenex Co-Investement, LLC Note (b):
Principal value		87,500			87,500
Fair value of bifurcated put option of Typenex Co-Investement, LLC Note		373,733			380,858
Debt discount		(153	)		(28,130	)
Carrying amount of Typenex Co-Investement, LLC Note		461,080			440,228

~~Notes to the Consolidated Financial Statements (Unaudited) (Continued)~~F-11

~~(d)~~Table ~~On December 2, 2015, the Company entered into a Promissory Note (the “Note”) with a third party. Under the Note, the Company borrowed the sum~~ of $125,000. The Note featured an original issue discount of $25,000, resulting in net funding to the Company of $100,000. The Note is due in sixty (60) days and does not bear interest. As additional consideration to the investor, the Company agreed to issue a warrant to purchase up to 100,000 shares of the Company’s common stock at a price of $0.01 per share, exercisable for a period of one year. The exercise price of the warrant is subject to adjustment for customary stock splits, stock dividends, combinations and other standard anti-dilution events. The Company recorded debt discount in the amount of $30,987 based on the estimated fair value of the warrants. The Company computed the fair value of these warrants using the Black-Scholes option pricing model. The debt discount is being amortized as non-cash interest expense over the one-year term of the warrant using the effective interest method. During the three months ended February 29, 2016, the Company recorded $7,556 in debt discount.Contents

7.Avalanche ~~FAIR~~International, ~~VALUE~~Corp. ~~MEASUREMENTS~~and Subsidiaries

~~The~~Notes ~~following~~to ~~tables~~Condensed ~~classify~~Consolidated ~~the Company’s liabilities measured at fair value on a recurring basis into the fair value hierarchy as of February 29, 2016 and November 30, 2015:~~Financial Statements

	Fair value measured at February 29, 2016
	Fair value at February 29, 2016		Quoted prices in active markets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)
Derivative liabilities	$	1,084,408	$	-	$	-	$	1,084,408

(Unaudited)

	Fair value measured at November 30, 2015
	May 31, 2016			November 30, 2015
	Fair value at November 30, 2015			Quoted prices in active markets (Level 1)			Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)
Gary Gelbfish Note (c):
Derivative liabilities	$	1,313,012		$	-		$	-	$	1,313,012
Principal value		100,000			100,000
Fair value of bifurcated put option of Gary Gelbfish Note		203,030			118,391
Debt discount		-			-
Carrying amount of Gary Gelbfish Note		303,030			218,391
JMJ Financial Note (d):
Principal value		60,500			60,500
Fair value of bifurcated put option of JMJ Financial Note		212,973			155,017
Debt discount		(30,160	)		(44,576	)
Carrying amount of JMJ Financial Note		243,313			170,941
Black Mountain Equities, Inc. Note (e):
Principal value		42,670			55,000
Fair value of bifurcated put option of Black Mountain Equities, Inc. Note		57,516			81,951
Debt discount		(453	)		(28,028	)
Carrying amount of Black Mountain Equities, Inc. Note		99,733			108,923
LG Capital Funding, LLC Note (f):
Principal value		50,000			50,000
Fair value of bifurcated put option of LG Capital Funding, LLC Note		76,462			94,905
Debt discount		-			-
Carrying amount of LG Capital Funding, LLC Note		126,462			144,905
GCEF Opportunitity Fund, LLC Note (g):
Principal value		27,500			27,500
Fair value of bifurcated put option of GCEF Opportunity Fund, LLC Note		39,809			50,532
Debt discount		(2,185	)		(15,973	)
Carrying amount of GCEF Opportunitity Fund, LLC Note		65,124			62,059
Lord Abstract, LLC Note (h):
Principal value		8,800			8,800
Fair value of bifurcated put option of Lord Abstract, LLC Note		18,186			16,163
Debt discount		(699	)		(5,111	)
Carrying amount of Lord Abstract LLC Note		26,287			19,852
JLA Realty Notes (i):
Principal value		160,600			-
Fair value of bifurcated conversion option of JLA Realty Notes		166,930			-
Debt discount		(156,451	)		-
Carrying amount of JLA Realty Notes		171,079			-
Other convertible notes payable (j):
Principal value		11,000			-
Fair value of bifurcated put option of other convertible notes payable		33,206			-
Debt discount		(9,232	)		-
Carrying amount of other convertible notes payable		34,974			-
Total carrying amount of convertible notes	$	2,134,387		$	1,729,987
Total short-term carrying amount of convertible notes	$	1,928,334		$	-
Total long-term carrying amount of convertible notes	$	206,053		$	-

~~There were no transfers between Level 1, 2 or 3 during the three months ended February 29, 2016 or the year ended November 30, 2015.~~F-12

~~The~~Table following table presents changes in Level 3 liabilities measured at fair value for the three months ended February 29, 2016. Both observable and unobservable inputs were used to determine the fair value of positions that the Company has classified within the Level 3 category. Unrealized gains and losses associated with liabilities within the Level 3 category include changes in fair value that were attributable to both observable (e.g., changes in market interest rates) and unobservable (e.g., changes in unobservable long-dated volatilities) inputs.Contents

		December 1, 2015				Derivative Liabilities from Convertible Notes Payable				Change in estimated fair value recognized in results of operations				February 29, 2016
Derivative liabilities		$	1,313,012			$	13,539			$	(242,143	)		$	1,084,408

Avalanche International, Corp. and Subsidiaries

14Notes to Condensed Consolidated Financial Statements

~~Table of Contents~~(Unaudited)

Avalanche International, Corp. and Subsidiary

	May 31, 2016			November 30, 2015
Total convertible notes payable:
Principal value	$	778,570		$	619,300
Fair value of bifurcated put option of other convertible notes payable		1,555,150			1,313,012
Debt discount		(199,333	)		(202,325	)
Carrying amount of other convertible notes payable	$	2,134,387		$	1,729,987

~~Notes~~Accounting tofor ~~the~~Redemption ~~Consolidated~~Feature- ~~Financial~~Put Option ~~Statements (Unaudited) (Continued)~~

~~The~~Management ~~development~~determined that ~~and~~the ~~determination~~variable ofshare ~~the~~settlement ~~unobservable~~feature ~~inputs~~as ~~for~~a ~~Level~~“conversion 3feature” ~~fair~~as ~~value~~defined ~~measurements~~above ~~and~~represented, ~~fair~~in ~~value~~substance, ~~calculations~~a put ~~are~~option ~~the~~(redemption ~~responsibility~~feature) ofdesigned to provide the ~~Company’s~~investor ~~management. A~~with ~~summary~~a offixed ~~quantitative~~monetary ~~information~~amount, ~~about~~settleable ~~significant~~in ~~unobservable~~shares. ~~inputs~~Management determined ~~(Level~~that 3this ~~inputs)~~put ~~used~~option inshould ~~measuring~~be ~~the~~separated ~~Company’s~~and accounted for as a derivative ~~liabilities~~and ~~that~~classified ~~are~~as ~~categorized~~a ~~within~~liability ~~Level~~primarily 3because the ofput option met the ~~fair~~net ~~value~~settlement ~~hierarchy~~criterion ~~for~~and the ~~year~~settlement ~~ended~~provisions ~~November~~were ~~30,~~not ~~2015~~consistent iswith asa ~~follows:~~fixed-for-fixed equity instrument.

	Date of valuation
	February 29, 2016			November 30, 2015
Stock price	$	0.07		$	0.45
Conversion price	$	0.02 – 0.22		$	0.10 – 0.22
Volatility		162% – 250	%		161% – 239	%
Risk free interest rate		.23% – 1.33	%		.11% – .86	%
Years to maturity		.20 – 3.00			.45 – 1.74

The put option, with a fair value of approximately $1.2 million at inception, was initially recorded as a derivative liability on the accompanying balance sheet and a corresponding discount to the note. The Company accreted the discount to interest expense on the statement of operations over the term of the note using the effective interest rate method. During the three months ended May 31, 2016 and 2015, the Company recognized interest expense of $75,891 and $84,178, respectively, resulting from amortization of the debt discount for the above convertible promissory notes. During the six months ended May 31, 2016 and 2015, the Company recognized interest expense of $170,441 and $84,178, respectively, resulting from amortization of the debt discount for the above convertible promissory notes. The difference between the estimated fair value of the conversion feature and the debt discount was reflected as a loss on issuance of convertible debt and during the three and six months ended March 31, 2016, the loss on issuance amounted to $68,522 and $71,061, respectively. In January 2016, the Company issued 457,619 shares of common stock in payment of principal and accrued interest on three of its convertible notes. The shares were valued based on the closing price of the Company’s common stock on the date of issuance, $183,048, resulting in a loss on conversion of $154,694. The accrued interest associated with the convertible notes was $130,419 as of May 31, 2016. All long-term notes are due in fiscal year 2019.

(a) The Adar Bays, LLC and Union Capital, LLC convertible notes payable were due and payable 12 months after issuance date of May 11, 2015 and bore interest at 8% per annum. ~~RELATED~~At ~~PARTY~~the ~~TRANSACTIONS~~election of the holder, outstanding principal and accrued but unpaid interest under the notes were convertible into shares of the Company’s common stock at any time prior to maturity at a conversion price per share equal to a forty percent (40%) discount to the lowest trading price for the twenty (20) consecutive trading days immediately preceding the notice of conversion. If these notes were not paid at maturity, the outstanding principal due under these notes shall increase by 10%. In January 2016, the notes were amended to decrease the conversion price per share equal to a forty-five percent (45%) discount to the lowest trading price for the twenty-five (25) consecutive trading days immediately preceding the notice of conversion, and the pre-payment penalty was increased to 150%. The amendments did not result in a material change to the fair value of the notes. The notes were not repaid on the maturity date of May 12, 2016 and as such were in default as of May 31, 2016. The Company recorded in interest expense, including penalties, on the condensed statements of operations a one-time default penalty of $23,000 representing 10% of the outstanding principal balance of the Notes. As of May 31, 2016, there were 1,916,667 shares issuable upon conversion for each note.

~~During~~On ~~the~~January ~~three months ended February 28~~23, ~~2015~~2018, the Company, Adar ~~sold $10~~Bays,~~236~~ inLLC ~~products~~and toUnion ~~Vape~~Capital, ~~Nation.~~LLC ~~These~~entered ~~sales~~into ~~represented~~Note ~~68%~~Settlement ofand ~~total~~Termination ~~revenue~~Agreements. ~~Vape~~Pursuant ~~Nation,~~to isthe ~~50%~~terms ~~owned~~of bythe ~~MCKEA Holdings~~settlement agreements, ~~LLC~~the ~~(“MCKEA”).~~Company ~~MCKEA~~agreed isto ~~the~~satisfy ~~majority~~each ~~member~~ of ~~Philou~~the ~~Ventures,~~outstanding ~~LLC,~~notes ~~which~~for is$200,000 ~~the~~and ~~Company’s~~100,000 ~~controlling~~shares ~~shareholder.~~of ~~Kristine~~common Lstock. ~~Ault,~~The ~~the~~payments were ~~wife~~made ofon ~~Milton~~January C26, 2018. ~~Ault~~The ~~III,~~closing ~~Chairman~~price of the Company’'s ~~Board~~common ofstock ~~Directors~~on January 23, is2018 ~~the~~was ~~manager~~$1.40 ~~and~~per ~~owner~~share resulting in an aggregate value of ~~MCKEA~~$340,000 per note.

~~During~~(b) ~~the~~The ~~three~~Typenex Co-Investment, LLC convertible note payable is due and payable 13 months ~~ended~~after ~~February~~issuance 28date of May 29, 2015, ~~Cross~~and ~~Click~~bears ~~Media,~~interest ~~Inc~~at 10% per annum. ~~(“Cross~~At ~~Click”)~~the ~~performed~~election ~~sales,~~of ~~marketing~~the holder, ~~investor~~outstanding ~~relation~~principal and ~~other~~accrued ~~incidental~~but ~~services~~unpaid oninterest ~~behalf~~under the note are convertible into shares of the Company’s common stock at any time prior to maturity at a conversion price per share equal to $1.30. However, in the ~~amount~~event ofthe ~~approximately~~Company’s market capitalization falls below $603.0 million at any time,~~000~~ the conversion price per share shall be equal to the lower of $1.30 or the market price at the date of conversion. The note was not repaid on the maturity date of June 29, ~~which~~2016 isand ~~included~~was also in ~~advertising~~default ~~and~~of ~~marketing~~certain ~~expense~~conditions ~~and~~of ~~general~~the ~~and~~note ~~administrative~~as ~~expense~~of May 31, 2016. The Company recorded in interest expense, including penalties, on the ~~statement~~condensed statements of operations a one-time default penalty of approximately $18,200. ~~MCKEA~~As isof ~~the~~May ~~controlling~~31, ~~shareholder~~2016, there were 2,966,548 shares issuable upon conversion of ~~Cross~~this ~~Click~~note.

AtOn ~~February~~or 29around April 19, 2016, the Company received from counsel for Typenex, a written demand to accelerate and demand payment of the entire outstanding balance of the Typenex note entered into between the Company ~~owed~~and ~~MCKEA~~Typenex ~~$53~~on May 29,~~790~~ 2015. On June 7, ~~which~~2016, isTypenex ~~included~~filed suit in ~~accounts~~the ~~payable~~State of ~~and~~Utah, ~~accrued~~the ~~expenses~~Third Judicial District Court, ~~related~~County ~~party~~of Salt Lake, for repayment of all principal, default effects, late fee and accrued interest. OfAccording ~~this~~to the complaint, Typenex asserted an aggregate amount due, as of June 6, 2016, of $25149,~~000~~054. ~~was~~On ~~advanced~~April 4, ~~directly~~2017, bythe ~~MCKEA~~Company toand ~~JST~~Typenex ~~pursuant~~agreed to settle the ~~terms~~lawsuit for payment of $90,000, which was paid in April 2017. On May 9, 2017, an order of dismissal with prejudice was entered by the ~~JST~~Third ~~Note~~Judicial District Court.

On June 5, 2015, the Company entered into a promissory note with Cross Click for $12,500. The note is unsecured, accrues interest at 10% per annum and is due on December 31, 2015. As of November 30, 2015, this note was deemed to be uncollectable and was written off to bad debt expense.F-13

~~During~~Table ~~2015,~~of ~~the Company repaid $4,200 to Cross Click and $1,100 to MCKEA for short-term advances that the Company received during 2014.~~Contents

InAvalanche ~~addition~~International, ~~during the year ended November 30, 2015, the Company advanced Cross Click $202,766~~Corp. ~~The Company offset the advances by $54,078 in accounts payable due to Cross Click for sales, marketing,~~ and investor relation services it had performed. The advances were due in one year and accrue interest at 12%. As of November 30, 2015, the advances were deemed to be uncollectable and the remaining balance due from Cross Click of $148,688 was written off to bad debt expense.Subsidiaries

15Notes to Condensed Consolidated Financial Statements

~~Table of Contents~~(Unaudited)

~~Avalanche~~(c) ~~International~~The Gary Gelbfish convertible note payable was due and payable six months after the issuance date of March 27, ~~Corp~~2015 and bore interest at 10% per annum. If this note was not paid at maturity, at the election of the holder, outstanding principal and ~~Subsidiary~~accrued but unpaid interest under the note was convertible into shares of the Company’s common stock at a conversion price per share equal to lesser of: (i) fifty percent (50%) discount to the average closing price for the twenty (20) consecutive trading days immediately preceding the maturity date or (ii) $0.50 per share. The note was not repaid on the maturity date of September 23, 2015 and as such was in default as of May 31, 2016 and remains in default as of the date of this report. As of May 31, 2016, there were 767,754 shares issuable upon conversion of this note.

~~Notes~~(d) toThe JMJ Financial convertible note payable is due and payable 24 months after issuance date of April 29, 2015 and bears interest at 12% per annum. At the ~~Consolidated~~election ~~Financial~~of ~~Statements~~the holder, outstanding principal and accrued but unpaid interest under the notes are convertible into shares of the Company’s common stock at any time prior to maturity at a conversion price per share equal to a forty percent (~~Unaudited~~40%) discount to the lowest trading price for the twenty-five (~~Continued~~25) consecutive trading days immediately preceding the notice of conversion. As of May 31, 2016, there were 875,000 shares issuable upon conversion of this note. Between May 2018 and July 2018, the Company made payments of $35,000 on this note and the remaining principal balance of $25,500 remains in default as of the date of this report.

9(e) The Black Mountain Equities, Inc. ~~EQUITY~~convertible ~~TRANSACTIONS~~note payable is due and payable 12 months after issuance date of June 4, 2015 and bears interest at 10% per annum. At the election of the holder, outstanding principal and accrued but unpaid interest under the note is convertible into shares of the Company’s common stock at any time prior to maturity at a conversion price per share equal to the lesser of: (i) forty percent (40%) discount to the lowest trading price for the twenty-five (25) consecutive trading days immediately preceding the notice of conversion or (ii) $1.06 per share. As of May 31, 2016, there were 627,024 shares issuable upon conversion of this note. The Note was not repaid on the maturity date of June 4, 2016 and remains in default as of the date of this report.

~~Preferred~~(f) ~~Stock~~The LG Capital Funding, LLC convertible note payable was due and payable 13 months after issuance date of November 3, 2014 and bore interest at 8% per annum. At the election of the holder, outstanding principal and accrued but unpaid interest under the note were convertible into shares of the Company’s common stock, at any time after 180 days from the date of issuance, at a conversion price per share equal to a forty percent (40%) discount to the lowest trading price for the twenty (20) consecutive trading days immediately preceding the notice of conversion. In January, 2016, the note was amended to grant LG Capital 75,000 warrants with an exercise price of $0.30 per share, and to permit the Company to re-pay the LG Capital Note with a pre-payment penalty of 120%. The amendment did not result in a material change to the fair value of the note. The fair value of the warrants was $26,250, which was expensed at the time of issuance due to the short-term nature of the note. The note was not repaid on the maturity date and as such is in default as of May 31, 2016 and as of the date of this report. Upon default, the note accrues interest at 24% per annum. As of May 31, 2016, there were 694,444 shares issuable upon conversion of this note.

(g) The ~~Company~~GCEF Opportunity Fund, LLC convertible note payable is ~~authorized~~due toand ~~issue~~payable ~~10,000,000~~12 ~~shares~~months after issuance date of ~~Preferred~~June ~~Stock~~30, ~~with~~2015 aand ~~par~~bears ~~value~~interest ofat ~~$0.001~~10% per ~~share~~annum. OnAt ~~July~~the ~~31,~~election ~~2014,~~of the ~~Board~~holder, ofoutstanding ~~Directors~~principal ~~designated~~and ~~50,000~~accrued ~~shares~~but ofunpaid ~~its~~interest ~~Preferred~~under ~~Stock~~the asnote ~~“Class~~are Aconvertible ~~Convertible~~into ~~Preferred~~shares ~~Stock”~~of (the ~~“Class~~Company’s Acommon ~~Preferred~~stock, ~~Shares”).~~at ~~Each~~any ~~share~~time ofafter ~~Class~~30 Adays ~~Preferred~~from ~~Stock~~the ~~has~~date aof ~~stated~~issuance, ~~value~~at ofa ~~$5.00~~conversion price per share. ~~The~~equal ~~holders~~to ofthe ~~Class~~lower Aof: ~~Preferred~~(i) ~~Stock~~a ~~have~~forty nopercent ~~voting~~(40%) ~~rights.~~discount ~~The~~to ~~holders~~the ~~are~~lowest ~~entitled~~closing toprice ~~receive~~for ~~cumulative~~the ~~dividends~~twenty at(20) aconsecutive ~~rate~~trading ofdays ~~10%~~immediately ofpreceding the ~~stated~~notice ~~value~~of ~~per~~conversion ~~annum,~~or ~~payable~~(ii) ~~twice~~$1.00. aIf ~~year,~~this ~~subject~~note tois ~~the~~not ~~availability~~paid ofat ~~funds~~maturity, ~~and~~then ~~approval~~the byinterest ~~the~~rate ~~Board~~shall ofincrease ~~Directors.~~to In24% ~~the~~thereafter. ~~discretion~~As of ~~the~~May ~~Board~~31, of2016, ~~Directors~~there were 381,944 ~~dividends~~shares ~~may~~issuable beupon ~~paid~~conversion ~~with~~of ~~common~~this ~~stock~~note. InOn ~~the~~March ~~event~~9, of2017, athe ~~liquidation~~Company orissued ~~dissolution~~an aggregate of ~~the~~216,946 ~~Company~~shares ~~each holder~~ of ~~Class~~its Acommon ~~Preferred~~stock ~~Stock~~as ~~shall~~full berepayment ~~entitled~~of tothe beprincipal ~~paid~~and inaccrued ~~cash~~interest $5on ~~per~~the ~~share~~note.

At(h) ~~any~~The ~~time~~Lord Abstract, LLC convertible note payable is due and payable 12 months after ~~August~~issuance 31date of June 30, 2015, aand ~~holder~~bears interest at 10% per annum. At the election of ~~Class~~the Aholder, ~~Preferred~~outstanding ~~Stock~~principal ~~may~~and accrued but unpaid interest under the note are convertible into shares of the Company’s common stock, at ~~their~~any ~~option~~time after 30 days from the date of issuance, ~~convert~~at ~~all~~a orconversion price per share equal to a ~~portion~~forty percent (40%) discount to the lowest closing price for the twenty (20) consecutive trading days immediately preceding the notice of ~~their~~conversion. ~~outstanding~~If ~~shares~~this ~~into~~note ~~common~~is ~~stock~~not paid at maturity, then the interest rate shall increase to 24% thereafter. OnAs ~~February~~of 1May 31, 2016, ~~all~~there ~~issued~~were 122,222 shares issuable upon conversion of this note. Between June 2016 and ~~outstanding~~August ~~preferred~~2016, ~~stock~~the ~~were~~Company tomade bepayments ~~automatically~~of ~~converted~~$7,500 ~~into~~on ~~shares~~this note and the remaining principal balance of ~~common~~$1,300 ~~stock~~remains in default as of the date of this report.

On January 30, 2015, the Company issued 15,380 shares of Class A Preferred Stock to Finiks Capital, LLC at a price of $5.00 per share for total proceeds of $76,900. The proceeds from the sale were paid directly to Cross Click, a related party, for accrued expenses.F-14

OnTable ~~September 21, 2015, pursuant to individual Notices~~ of Conversion executed by each of the holders of its Class A Preferred Stock, the Company exchanged all 29,380 shares of its outstanding Class A Preferred Stock, as well as accrued dividends thereon in the amount of $11,558, at a $0.30 conversion ratio per share for a total of 528,193 shares of common stock. The conversion of the Class A Preferred Shares resulted in an additional return to the preferred stockholders of $105,638 based on the difference of the carrying amount of the preferred stock and the fair value of the consideration transferred which is based on the closing price of the Company’s common stock on the date of conversion.Contents

~~Common~~Avalanche ~~Stock~~International, Corp. and Subsidiaries

OnNotes ~~December~~to ~~10,~~Condensed ~~2015,~~Consolidated ~~the Company entered into a Subscription Agreement with a third party, whereby it sold 25,000 shares of its common stock at a price of $0.20 per share for total cash proceeds of $5,000.~~Financial Statements

~~Stock based compensation~~(Unaudited)

~~During~~(i) ~~the~~The ~~three~~JLA Realty convertible note payable is due and payable 36 months ~~ended~~after ~~February~~proceeds 29have been received by the Company, which occurred between April 25, 2016 and ~~February~~May 284, ~~2015,~~2016 and bears interest at 12% per annum. At the ~~Company~~election ~~issued~~of 50the holder,~~000~~ outstanding principal and ~~212,500~~accrued ~~shares,~~but ~~respectively,~~unpaid interest under the note is convertible into shares of the Company’s common stock at any time prior to ~~service~~maturity ~~providers~~at a fixed price per share equal to $0.15. ~~The~~In ~~shares~~connection ~~were~~with ~~valued~~the atissuance of the JLA Realty note described above, the Company recognized a debt discount of $20146,000 and a loss on issuance of $~~340~~68,~~250~~522 during the three months ended May 31, ~~respectively~~2016, ~~and~~which ~~are~~represents ~~being~~the ~~expensed~~excess ~~over~~of the ~~term~~fair value of the ~~services~~bifurcated ~~being~~conversion ~~provided.~~feature Asat ainitial ~~result~~issuance of ~~these~~approximately ~~issuances~~$215,000 over the ~~Company~~principal ~~has~~amount ~~recorded~~of ~~stock~~convertible ~~based~~debt ~~compensation~~issued. The fair value of $7the bifurcated conversion feature is separately measured at fair value,~~556~~ with changes in fair value recognized in operations. During the three and ~~$56~~six months ended May 31,~~708~~ 2016, ~~respectively~~the Company recognized interest expense of $4,151 resulting from amortization of the debt discount for the JLA Realty note. ~~The~~As of May 31, 2016, the bifurcated conversion option has a fair value of ~~the~~$166,930 ~~shares~~and ~~was~~is ~~determined~~presented ~~based~~ on a combined basis with the ~~closing~~related ~~price~~loan ofhost in the Company’s ~~common~~Condensed ~~stock~~Consolidated onBalance ~~the~~Sheet ~~issuance~~at ~~date~~May 31, ~~and~~2016. isAs ~~being~~of ~~recognized~~May ~~over~~31, ~~the~~2016, ~~term~~there ofwere ~~the~~1,070,607 ~~consulting~~shares ~~agreement~~issuable upon conversion of this note.

~~Stock~~(j) ~~issued~~The ~~for~~other convertible notes payable ~~and~~are ~~notes~~due and payable 36 months after issuance and bear interest at 10% per annum. At the election of the holder, outstanding principal and accrued but unpaid interest under the note are convertible into shares of the Company’s common stock, at any time after six months from the date of issuance, at a conversion price per share equal the lesser of: (i) fifty percent (50%) discount to the volume weighted average price over the twenty (20) consecutive trading days immediately preceding the notice of conversion. As of May 31, 2016, there were 110,609 shares issuable upon conversion of these notes.

~~On March 27, 2015, the Company issued 50,000 shares of common stock to Dr~~8. ~~Gary~~NOTES Gelbfish in connection with the issuance of a convertible promissory note. As a result of this issuance, the Company recognized debt discount of $41,349 based on the fair value of the common stock issued to Dr. Gelbfish relative to the fair value of the convertible promissory note.PAYABLE

OnNotes ~~October~~payable 8,at ~~2015~~May 31, ~~the Company entered into a promissory note with Studio Capital. As additional consideration~~2016, ~~the~~and ~~Company~~November ~~issued Studio Capital 5~~30,~~000~~ ~~shares of its common stock. As a result of the issuance of 5~~2015,~~000~~ ~~shares~~are ofcomprised ~~common stock, the Company recognized debt discount~~ of ~~$1,968 based on~~ the fair value of the common stock issued to Studio Capital relative to the fair value of the promissory note. Inclusive of the $25,000 loan discount provided for in the Studio Capital Note, the Company recorded aggregate debt discount of $26,968 as a result of the transaction with Studio Capital.following:

	May 31, 2016			November 30, 2015

Notes payable to Studio Capital, LLC ^(a)	$	125,000		$	125,000
Notes payable to Argent Offset, LLC ^(b)		6,575			16,825
Notes payable to Strategic IR, Inc. ^(c)		12,500			12,500
Notes payable to Lori Livingston ^(d)		105,000			-
Notes payable to JLA Realty ^(e)		330,000			-
Total notes payable		579,075			154,325
Less: debt discount		(68,369	)		(19,294	)
Total notes payable	$	510,706		$	135,031

~~Table~~During the three and six months ended May 31, 2016, the Company recognized interest expense of ~~Contents~~$35,947 and $81,912, respectively, resulting from amortization of the debt discount for the above notes payable. The Company did not recognize any interest expense from amortization of the debt discount during the three and six months ended May 31, 2015. The debt discount is being amortized as non-cash interest expense over the term of the debt using the effective interest method. The accrued interest associated with the above notes payable was $82,746 as of May 31, 2016, which is recorded in accrued interest on convertible and promissory notes payable on the accompanying condensed consolidated balance sheet.

~~Avalanche~~(a) ~~International~~On October 8, ~~Corp~~2015, the Company entered into a promissory note agreement with Studio Capital, LLC, (“Studio Capital”) for an aggregate principal amount of $125,000 (the “Studio Capital Note”). The Studio Capital Note carries an original issue discount of $25,000, provided for a loan fee of 5,000 shares of the Company’s common stock and ~~Subsidiary~~had a maturity date of April 8, 2016. The Studio Capital Note was not repaid on the maturity date and as such is in default as of May 31, 2016 and remains in default as of the date these financial statements are issued. The Company recorded in interest expense, including penalties, on the condensed statements of operations a one-time default penalty of $25,000 representing 20% of the outstanding principal balance of the Studio Capital Note.

~~Notes to the Consolidated Financial Statements (Unaudited) (Continued)~~F-15

OnTable ~~October 8, 2015, the Company issued 30,000 shares~~ of common stock to an individual for consideration of personally guaranteeing the promissory note to Studio Capital. The fair value of the common stock issued was determined to be $11,997 based on the closing price of the Company’s common stock on the date of grant.Contents

~~During~~Avalanche ~~the year ended November 30~~International, ~~2015, in connection with the issuance of certain convertible promissory notes, the Company issued 48,990 shares of its common stock, for total non-cash consideration of $56,013~~Corp. ~~All~~and ~~of the shares of common stock were valued based on the closing price of the Company’s common stock on the date of grant.~~Subsidiaries

~~Conversion~~Notes ofto ~~debt~~Condensed Consolidated Financial Statements

Between August 19, 2015 and September 21, 2015, the Company issued 61,452 shares of common stock to LG Capital Funding, LLC in conversion of $13,250 of principal and $887 of accrued interest on its convertible promissory note. The shares of common stock were valued $26,276 resulting in a loss on conversion of $12,139.(Unaudited)

(b) On ~~January~~November 26, ~~2016~~2014, the Company ~~issued~~entered ~~297~~into a promissory note agreement with Argent Offset,~~619~~ ~~shares~~LLC (“Argent”) for an aggregate principal amount of ~~common~~$13,000 ~~stock~~(the “Argent Note”). The Argent Note included a $500 loan fee, accrues interest at 10%, compounded monthly, and had a maturity date of December 5, 2014. On February 1, 2015, the Company entered into a Temporary Forbearance Agreement with Argent. Under the forbearance agreement, the Company agreed to ~~Typenex~~pay ~~Co-Investment~~a forbearance fee of $7,000 ~~LLC~~to inextend ~~conversion~~the maturity date to August 1, 2015. Argent also advanced the Company an additional $19,825 pursuant to the terms of the Argent Note. During the six months ended May 31, 2016, the Company paid $1210,~~500~~250 on the Argent Note. As of ~~accrued~~November ~~interest~~30, 2016, all remaining amounts due had been repaid on the Argent Note.

(c) On ~~January~~March 2817, ~~2016~~2015, the Company ~~issued~~entered ~~100~~into a promissory note agreement with Strategic,~~000~~ ~~shares~~IR, Inc. (“Strategic”) for an aggregate principal amount of ~~common~~$12,500 ~~stock~~(the to“Strategic ~~Black~~Note”). ~~Mountain~~The ~~Equities~~Strategic Note included a $1,750 ~~Inc~~loan fee, accrued interest at 10% and had a maturity date of April 16, 2015. The Strategic Note is currently is in ~~conversion~~default as of ~~$12~~May 31,~~830~~ 2016 and remains in default as of ~~principal~~the date these financial statements are issued and ~~accrued~~is accruing interest at the default rate of 21% per annum.

(d) On ~~January~~December 292, ~~2016~~2015, the Company ~~issued~~entered 60into a promissory note agreement (the “Livingston Note”) with a third party for an aggregate principal amount of $125,000. The Livingston Note carries an original issue discount of $25,000. As additional consideration to the investor, the Company agreed to issue a warrant to purchase up to 100,000 shares of the Company’s common stock toat ~~JMJ~~a ~~Investments,~~price ~~Inc~~of $0.01 per share. The Company recorded debt discount in ~~conversion~~the amount of $330,~~024~~987 based on the fair value of ~~accrued~~the warrants. The Livingston Note is currently in default and accruing interest at the default rate of 29%. In January 2016, the Company recorded in interest expense a one-time default penalty of $25,000 representing 20% of the outstanding principal balance of the Livingston Note.

17(e) On April 7, 2016 and September 14, 2016, RCG entered into promissory note agreements with JLA Realty (the “JLA Notes”) for an aggregate amount of $480,000. The JLA Notes accrue interest at 16% per annum and have maturity dates of October 4, 2016 and March 14, 2017 and carry an original issue discount of $125,000. Between November 2016 and December 2016, the Company made payments of $150,000 on the JLA Notes and the remaining principal balance of $330,000 remains in default as of the date of these financial statements are issued.

~~Table~~9. ofNOTE ~~Contents~~PAYABLE, RELATED PARTY

~~Avalanche~~Note ~~International~~payable, ~~Corp.~~related party, at May 31, 2016 and ~~Subsidiary~~November 30, 2015, are comprised of the following:

Notes to the Consolidated Financial Statements (Unaudited) (Continued)

	May 31, 2016			November 30, 2015

Note payable to MCKEA Holdings, LLC	$	40,937		$	-
Less: debt discount		(2,800	)		-
Total note payable, related party	$	38,137		$	-

On March 4, 2016, RCG entered into a promissory note (the “MCKEA Note”) with MCKEA Holdings, LLC. The MCKEA Note provides for proceeds up to $100,000 and bears interest a rate of fifteen percent (15%) per year. All principal and interest accrued under the MCKEA Note was due on or before August 4, 2016. The MCKEA Note features an original issue discount of 10% of the total cash advanced to RCG. ~~RESTATEMENTS~~Between March 4, 2016 and May 31, 2016, $56,788 was advanced to RCG, inclusive of $5,163 of original issue discount of which $15,851 has been repaid resulting in an outstanding principal balance of $40,937 at May 31, 2016. During the three and six months ended May 31, 2016, the Company recognized interest expense of $2,363 resulting from amortization of the debt discount for the above note payable, related party.

The consolidated financial statements for the three months ended February 29, 2015 have been restated to expense the previously capitalized licensing fee and to reclassify original issue discount that was initially recorded as a prepaid asset to debt discount. An analysis of those restated numbers is reflected below.F-16

Consolidated Balance Sheet (unaudited)
	February 28, 2015
	As Reported			Adjustment			(As Restated)
ASSETS
CURRENT ASSETS
Cash	$	1,271		$	—		$	1,271
Accounts receivable		46			—			46
Prepaid stock for services		283,542			—			283,542
Inventory		20,758			—			20,758
TOTAL CURRENT ASSETS		305,617			—			305,617
Other assets		705			—			705
Product license		42,750			(42,750	)		—
TOTAL ASSETS	$	349,072		$	(42,750	)	$	306,322
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES
Accounts payable and accrued expenses	$	70,883		$	—		$	70,883
Accounts payable, related party		90,175			—			90,175
Accrued interest		2,553			—			2,553
Accrued compensation		32,073			—			32,073
Due to related parties		32,935			—			32,935
Convertible notes payable, net of discount of $6,575		56,675			—			56,675
Loans payable		20,000			—			20,000
TOTAL CURRENT LIABILITIES		305,294			—			305,294
STOCKHOLDERS' DEFICIT
Preferred stock, $0.001 par value: 10,000,000 shares authorized;
Class A Preferred Stock, $0.001 par value; 50,000 shares designated,
29,380 shares issued and outstanding		29			—			29
Common stock, $0.001 par value: 75,000,000 shares authorized;
5,358,500 shares issued and outstanding		5,359			—			5,359
Additional paid-in capital		622,365			—			622,365
Accumulated deficit		(583,975	)		(42,750	)		(626,725	)
TOTAL STOCKHOLDERS' DEFICIT		43,778			(42,750	)		1,028
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT	$	349,072		$	(42,750	)	$	306,322

Table of Contents

18Avalanche International, Corp. and Subsidiaries

~~Table~~Notes ofto ~~Contents~~Condensed Consolidated Financial Statements

~~Avalanche International, Corp. and Subsidiary~~(Unaudited)

~~Notes~~10. toFAIR ~~the~~VALUE ~~Consolidated Financial Statements (Unaudited) (Continued)~~MEASUREMENTS

Consolidated Statements of Operations (unaudited)
	For the Three Months Ended February 28, 2015
	As Reported			Adjustment			As Restated
Revenue	$	14,995		$	—		$	14,995
Cost of revenue		8,534			—			8,534
Gross profit		6,461			—			6,461
Operating expenses
Advertising and marketing		8,364			—			8,364
Salary expense		22,920			—			22,920
Professional fees		5,450			—			5,450
General and administrative		143,596			13,500			157,096
Total operating expenses		180,330			13,500			193,830
Loss from operations		(173,869	)		(13,500	)		(187,369	)
Other expenses
Interest expense		(4,200	)		—			(4,200	)
Total other expenses		(4,200	)		—			(4,200	)
Net loss	$	(178,069	)	$	(13,500	)	$	(191,569	)
Basic and diluted net loss per common share	$	(0.03	)	$	(0.01	)	$	(0.04	)
Basic and diluted weighted average common shares outstanding		5,218,650			5,218,650			5,218,650

The following tables classify the Company’s embedded conversion options, put options, and derivative warrant liabilities measured at fair value on a recurring basis into the fair value hierarchy as of May 31, 2016 and November 30, 2015:

11. SUBSEQUENT EVENTS

	Fair value measured at May 31, 2016

		Fair value at May 31 2016		Quoted prices in active markets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)
Bifurcated conversion options, put options, and derivative warrant liabilities	$	1,588,104	$	-	$	-	$	1,588,104

In accordance with FASB ASC 855-10, the Company has analyzed its operations subsequent to February 29, 2016, and has determined that it does not have any material subsequent events to disclose in these financial statements except for the following.

	Fair value measured at November 30, 2015

		Fair value at November 30, 2015		Quoted prices in active markets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)
Bifurcated conversion options and derivative warrant liabilities	$	1,313,012	$	-	$	-	$	1,313,012

~~Notes~~There ~~Receivable~~were no transfers between Level 1, 2 or 3 during the six months ended May 31, 2016 and during the year ended November 30, 2015.

OnThe ~~August~~following 4,table presents ~~2015~~changes in Level 3 liabilities measured at fair value for the six months ended May 31, 2016. Both observable and unobservable inputs were used to determine the ~~Company~~fair ~~entered~~value ~~into~~of apositions ~~Secured~~that ~~Promissory~~the ~~Note~~Company ~~with~~has ~~JST~~classified within the Level 3 category. ~~The~~Unrealized ~~amount~~gains ~~due~~and ~~under~~losses associated with liabilities within the Level ~~JST~~3 category include ~~Note~~changes in offair ~~$133~~value that were attributable to both observable (e.g.,~~333~~ ~~was~~changes ~~fully~~in ~~repaid~~market ~~during~~interest ~~June~~rates) ~~2016~~and unobservable (e.g., changes in unobservable long-dated volatilities) inputs.

Convertible Notes Payable

December 1, 2015

Derivative
Liabilities from
Convertible
Notes Payable and

Notes Payable

Fair value at
Inception

Change in estimated
fair value recognized

in
results of operations

May 31, 2016

Embedded conversion
options, put options, and
derivative warrant
liabilities

1,313,012

228,061

57,237

10,206

)

1,588,104

OnThe ordevelopment ~~around~~and ~~April~~determination ~~19,~~of ~~2016,~~ the unobservable ~~Company~~inputs ~~received from counsel~~ for ~~Typenex,~~Level a3 ~~written~~fair ~~demand~~value tomeasurements ~~accelerate~~ and ~~demand~~fair ~~payment~~value ofcalculations are the ~~entire~~responsibility ~~outstanding balance~~ of the ~~Convertible~~Company’s management. The ~~Note entered into between the~~ Company’s ~~and~~put ~~Typenex~~options onare ~~May~~valued ~~29,~~using ~~2015~~a ~~(the~~using ~~“Typenex~~a ~~Note”).~~Monte OnCarlo ~~June~~model 7or, ~~2016, Typenex filed suit~~ in ~~the~~certain ~~State of Utah~~circumstances, the Black-Scholes ~~Third~~option ~~Judicial~~pricing ~~District Court, County of Salt Lake, for repayment of all principal, default effects, late fee and accrued interest~~model. ~~According~~As ~~to the complaint, Typenex asserted an aggregate amount due, as~~ of ~~June~~May 631, 2016, ofthe ~~$149,054.~~inputs Onused ~~April~~in ~~4, 2017,~~ the ~~Company~~analysis ~~and~~included ~~Typenex~~discount ~~agreed~~rates toper ~~settle~~ the ~~lawsuit~~conversion terms ~~for payment~~ of ~~$90,000, which was paid in April 2017. On May 9, 2017, an order of dismissal with prejudice was entered by~~ the ~~Third~~convertible ~~Judicial~~promissory ~~District Court~~notes.

Between April 2016 and August 2016, the Company entered into a convertible promissory note with JLA Realty (the “JLA Note”). Under the terms of the JLA Note, the Company borrowed the sum of $296,000. The Note featured an original issue discount of $29,600, resulting in a note payable of $325,600. The JLA Note is due in three years and accrues interest at 12% per annum. The JLA Note is convertible into 2,170,667 shares of the Company’s common stock.F-17

19Table of Contents

~~Table~~Avalanche ofInternational, ~~Contents~~Corp. and Subsidiaries

~~Avalanche~~Notes ~~International,~~to ~~Corp.~~Condensed ~~and~~Consolidated ~~Subsidiary~~Financial Statements

~~Notes to the Consolidated Financial Statements~~ (Unaudited) ~~(Continued)~~

~~Between~~A ~~October~~summary ~~2016~~of ~~and~~quantitative information ~~February~~about ~~2017,~~significant ~~the~~unobservable ~~Company~~inputs ~~entered into three convertible promissory notes with Digital Power Corporation~~ (~~NYSE:~~Level ~~DPW)~~3 ~~(the “DPW Notes”~~inputs). ~~Under~~used ~~the~~in ~~terms~~measuring of the ~~DPW Notes, the~~ Company’s ~~borrowed~~embedded ~~the~~conversion ~~sum~~options that ofare ~~$1,500,000.~~categorized ~~The~~within ~~DPW~~Level ~~Notes~~3 ~~featured an original issue discount~~ of ~~$75,000.~~the ~~The~~fair ~~DPW~~value ~~Notes~~hierarchy ~~are due in two years and accrue interest at 12% per annum. Subject to adjustment as provided~~ for by the ~~DPW~~six ~~Notes,~~months ~~the~~ended ~~DPW~~May ~~Note~~31, ~~inclusive~~2016 ~~of the original issue discount, is convertible into 2,113,086 shares of the Company’s common stock at a conversion price of $0.745 per share. Between March 2017~~ and ~~April~~for ~~2017,~~ the ~~Company~~year ~~received~~ended ~~and additional $400~~November 30,~~871~~ in2015 ~~loans~~is ~~from~~as ~~DPW. The Company and DPW have not yet finalized the terms of the additional borrowings.~~follows:

On March 9, 2017, the Company issued an aggregate of 216,946 shares of its common stock as repayment of the principal and accrued interest on the convertible note due to GCEF Opportunity Fund, LLC. The shares were valued at $32,542, an average of $0.15 per share.

	Date of valuation
	May 31, 2016			November 30, 2015
Stock price	$	0.25		$	0.45
Conversion price	$	.15			$0.10 – $0.22
Volatility		77.11	%		161% – 239%
Risk free interest rate		1.03	%		0.11% – 0.86%
Years to maturity		2.90 – 2.93			0.45 – 1.74

~~Common~~A ~~Stock~~summary of quantitative information about significant unobservable inputs (Level 3 inputs) used in measuring the Company’s derivative warrant liabilities that are categorized within Level 3 of the fair value hierarchy for the six months ended May 31, 2016:

On October 27, 2016, the Company authorized the issuance of 250,000 shares of common stock as payment for services to an officer. The Company issued the shares on February 28, 2017. The shares were valued at $40,000, $0.16 per share, based on the closing price of the Company’s common stock on the date of grant.

	May 31, 2016
Stock price	$	0.25
Conversion price		$0.001 – $0.30
Volatility		75.31% – 79.70%
Risk free interest rate		0.68% – 1.03%
Years to maturity		0.77 – 3.08

~~Warrants~~11. RELATED PARTY TRANSACTIONS

OnDuring ~~March~~the 7three and six months ended May 31, ~~2017~~2015, the Company ~~issued~~sold ~~warrants~~$23,547 toand ~~purchase 5~~$33,~~000,000~~784 ~~shares~~in ofproducts ~~common~~to Vape ~~stock~~Nation. toThese ~~Philou~~sales asrepresented ~~compensation~~88% of total revenue for ~~services~~the ~~that~~six itmonth ~~provides~~period toresulting ~~the~~in ~~Company.~~accounts ~~The~~receivable, ~~warrant~~related isparty of ~~exercisable~~$17,222, inwhich ~~whole~~was orpaid in ~~part~~December 2016. Vape Nation, atis ~~any~~50% ~~time~~owned ~~prior~~by toMCKEA. ~~its~~MCKEA ~~expiration~~is ~~date,~~the ~~March~~majority 7member of Philou Ventures, LLC ~~2022~~(“Philou”), which is the Company’s controlling shareholder. ~~The~~ ~~fair~~Kristine ~~value~~L. ofAult, the ~~warrant~~wife ~~will~~of beMilton ~~expensed~~C. ~~during~~Ault III, Chairman of the ~~quarter~~Company’s ~~ended~~Board ~~May~~of 31Directors, ~~2017~~is asthe ~~stock-based~~manager ~~compensation~~and owner of MCKEA.

~~Preferred~~At ~~Stock~~February 29, 2016, the Company owed MCKEA $53,790, which was included in accounts payable and accrued expenses, related party. Of this amount, $25,000 was advanced directly by MCKEA to JST pursuant to the terms of the JST Note (see Note 6). The Company paid the amount owed MCKEA during the three months ended May 31, 2016.

On May ~~March 6~~1, ~~2017~~2016, the Company ~~withdrew~~entered ~~its~~into ~~former~~a ~~Class~~management Aservices ~~Convertible~~agreement ~~Preferred Stock~~ (the “~~Previous~~MSA”) ~~Class~~with Alzamend Neuro, Inc. (“Alzamend”), ~~all~~a ~~shares~~related party. Alzamend was formed on February 26, 2016 under the laws of ~~which~~the ~~were~~State of ~~converted~~Delaware ~~into~~to ~~shares~~acquire and commercialize patented intellectual property and the know-how to prevent, treat and cure Alzheimer’s. Avalanche provides management, consulting and financial services to Alzamend. Such services include advice and assistance concerning any and all aspects of ~~Common~~operations, ~~Stock~~planning asand financing of ~~September~~Alzamend 21and conducting relations with accountants, ~~2015~~attorneys, financial advisors and other professionals. The ~~certificate~~term of ~~designations~~the ofMSA, as amended, is for the ~~Previous~~period ~~Class~~May ~~was~~1, ~~originally~~2016 ~~filed~~to December 31, 2017, and may be extended by written agreement, with Avalanche having initially received $40,000 per month and, beginning February 2017, currently receiving $20,000 per month for the ~~Secretary~~remainder of ~~State~~2017. ofDuring the ~~State~~three ofand ~~Nevada~~six onmonths ~~July~~ended May 31, ~~2014~~2016, the Company recorded no revenue related to the management service agreement with Alzamend.

On12. ~~March~~EQUITY 7, 2017, the Company filed a new Certificate of Designations, Preferences, Rights and Limitations of Class A Convertible Preferred Stock (the “Class A Certificate of Designations”) with the Secretary of State of the State of Nevada, setting forth the terms of the Class A Shares.TRANSACTIONS

~~The~~Preferred ~~Class A Shares each carry a stated value of $20.00. The Class A Shares shall vote together with the shares of Common~~ Stock as a single class and, regardless of the number of Class A Shares outstanding, provided that at least 25,000 of such Class A Shares are outstanding, shall represent eighty percent (80%) of all votes entitled to be voted at any annual or special meeting of shareholders of the Company or action by written consent of shareholders, including any shares of preferred stock other than the Class A Shares that are voted with the Common Stock. Each outstanding Class A Share shall represent its proportionate share of the 80% which is allocated to the outstanding Class A Shares. The Class A Shares are convertible at the Holder’s option into shares of Common Stock of the Company at a conversion price derived by dividing the stated value of each Class A Share by $0.50 per share, subject to customary adjustment, which conversion may occur at any time at the option of the Holder.

OnThe ~~March~~Company 7,is ~~2017~~authorized to issue 10,000,000 ~~the~~shares ~~Company~~of ~~entered~~Preferred ~~into~~Stock anwith ~~agreement~~a ~~(the~~par ~~“Exchange~~value ~~Agreement”)~~of ~~with~~$0.001 ~~Philou~~per ~~pursuant~~share. toOn ~~which~~July it31, ~~agreed~~2014, tothe ~~issue~~Board toof ~~Philou~~Directors designated 50,000 shares of its ~~newly~~Preferred ~~created~~Stock as “Class A Convertible Preferred Stock” (the “Class A ~~Shares~~Preferred Stock”). Each inshare ~~exchange~~of ~~for~~Class ~~the~~A ~~surrender~~Preferred byStock ~~Philou~~has a stated value of ~~2,000,000~~$5.00 ~~shares~~per share. The holders of ~~its~~Class ~~Common~~A Preferred Stock have no voting rights. OnThe ~~April~~holders ~~26,~~are ~~2017,~~entitled to receive cumulative dividends at a rate of 10% of the ~~Class~~stated Avalue ~~Shares~~per ~~were~~annum, ~~issued~~payable ~~simultaneously~~twice a ~~with~~year, subject to the ~~surrender~~availability of funds and ~~cancellation~~approval by the Board of Directors. In the ~~2,000,000~~discretion ~~shares~~of the Board of Directors, dividends may be paid with common stock. In the event of a liquidation or dissolution of the Company each holder of Class A Preferred Stock shall be entitled to be paid in cash $5 per share.

20F-18

Table of Contents

Avalanche International, Corp. and ~~Subsidiary~~Subsidiaries

Notes to ~~the~~Condensed Consolidated Financial Statements ~~(Unaudited) (Continued)~~

~~On March 7, 2017, the Company filed the Certificate of Designations, Preferences, Rights and Limitations of Class B Convertible Preferred Stock~~ (~~the “Class B Certificate of Designations”~~Unaudited) ~~with the Secretary of State of the State of Nevada, setting forth the terms of its Class B Convertible Preferred Stock (the “Class B Shares”).~~

~~The~~At ~~Company~~any ~~designated~~time ~~100,000~~after ~~shares of its preferred stock~~August 31, ~~par value $0.001 per share~~2015, ~~as Class B Shares. The Class B Shares will have~~ a ~~priority~~holder ~~over all~~ of ~~the~~Class ~~shares~~A ofPreferred ~~Common~~ Stock ~~on liquidation or sale of the Company~~may, at ~~the~~its ~~rate of $50.00 per Class B Share~~option, orconvert ~~a liquidation preference of $5,000,000 (the “Class B Stated Value”) as to~~ all ~~Class B Shares. The Class B Shares will pay an annual dividend (at the option of the Company, either in cash~~ or ina ~~additional~~portion ~~shares~~ of ~~Common~~its Stock), in an amount that shall be the greater of (i) an annual rate of 5% per annum, or (ii) 5% of MTIX’s net income as determined in accordance with United States Generally Accepted Accounting Principles for the fiscal year then ended. The Class B Shares will vote with the Common Stock on all matters as to which shareholders of the Company are entitled to vote, on an “as converted” basis, as though all outstanding ~~Class~~shares ~~B Shares had been converted~~ into ~~Common Stock immediately prior to the taking of the record date for all shareholders entitled to vote at any regular or special meeting of the Company’s shareholders~~common stock. Commencing two (2) years after the Closing Date, the Class B Shares shall be convertible into shares of Common Stock by dividing the Class B Stated Value by the Conversion Price applicable to the Notes. The Class B Shares shall contain the respective rights, privileges and designations as are set forth in the Certificate of Designations, Preferences, Rights and Limitations of Class B Convertible Preferred Stock.

~~Management~~Common ~~Services Agreement~~Stock

~~On May, 1,~~ 2016, the Company entered into management services agreement (the “MSA”) with Alzamend Neuro, Inc. (“Alzamend”), a related party. Alzamend, which was formed on February 26, 2016 under the laws of the State of Delaware, was formed to acquire and commercialize patented intellectual property and know how to prevent, treat and cure the crippling and deadly disease, Alzheimer’s. Avalanche provides management, consulting and financial services to Alzamend. Such services include advice and assistance concerning any and all aspects of operations, planning and financing of Alzamend and conducting relations with accountants, attorney, financial advisors and other professionals. The term of the MSA, as amended, is for the period May 1, 2016 to December 31, 2017 with Avalanche having initially received $40,000 per month and, beginning February 2017, currently receiving $20,000 per month for the remainder of 2017.Transactions

~~MTIX~~On December 10, ~~Ltd~~2015, the Company entered into a subscription agreement with a third party, whereby it sold 25,000 shares of its common stock at a price of $0.20 per share for total cash proceeds of $5,000.

On ~~October~~January 26, 2016, the Company ~~made~~issued an50,000 ~~initial~~fully ~~payment~~vested and non-forfeitable shares of ~~$50,000~~common ~~towards~~stock ~~the~~to ~~purchase~~a ofthird-party ~~MTIX~~service ~~Ltd~~provider of consulting services., anThe ~~advanced~~aggregate ~~materials~~fair ~~and~~value ~~processing~~of ~~technology~~the ~~company~~shares ~~located~~amounted into ~~Huddersfield~~$20,000 ~~West~~based ~~Yorkshire,~~on UKthe ~~(“MTIX”).~~closing ~~MTIX~~price ~~has~~of ~~developed~~the aCompany’s ~~novel~~common ~~cost~~stock on ~~effective~~the ~~and~~issuance ~~environmentally~~date. ~~friendly~~The ~~material~~related ~~synthesis~~services ~~technology~~were ~~for~~completed ~~textile~~during ~~applications~~the six months ended May 31, 2016.

OnConversion ~~March 3, 2017, the Company entered into a Share Exchange Agreement (the “Exchange Agreement”) with MTIX and the three (3) current shareholders~~ of MTIX (individually, a “Seller” and collectively, the “Sellers”). Upon the terms and subject to the conditions set forth in the Exchange Agreement, the Company will acquire MTIX from the Sellers through the transfer of all issued and outstanding ordinary shares of MTIX (the “MTIX Shares”) by the Sellers to the Company in exchange (the “Exchange”) for the issuance by the Company of: (a) 7% secured convertible promissory notes (individually, a “Note” and collectively, the “Notes”) in the aggregate principal face amount of $9,500,000 to the Sellers in pro rata amounts commensurate with their current respective ownership percentages of MTIX’s ordinary shares, (b) (i) $500,000 in cash, $50,000 of which has already been paid, and (ii) 100,000 shares of the Company’s newly designated shares of Class B Convertible Preferred Stock (the “Class B Shares”) to the principal shareholder of MTIX (the “Majority Shareholder”).debt

~~Consummation~~2016 of the Exchange (the “Closing”) is subject to a number of closing conditions, including, among other things: (i) absence of litigation that seeks to prohibit the Exchange and certain other matters; (ii) the accuracy of the representations and warranties, subject to customary materiality qualifiers; (iii) the performance by the parties of certain covenants and agreements in all material respects, and (iv) the absence of a Material Adverse Effect (as defined in the Exchange Agreement). The Exchange Agreement does not contain a financing condition.Transactions

21On January 26, 2016, the Company issued 297,619 shares of common stock to Typenex Co-Investment, LLC in conversion of $12,500 of accrued interest. The shares of common stock were valued at $119,048 resulting in a loss on conversion of $106,548.

~~Table~~On January 28, 2016, the Company issued 100,000 shares of ~~Contents~~common stock to Black Mountain Equities, Inc. in conversion of $12,830 of principal and accrued interest. The shares of common stock were valued at $40,000 resulting in a loss on conversion of $27,170.

~~Avalanche~~On ~~International~~January 29, ~~Corp~~2016, the Company issued 60,000 shares of common stock to JMJ Investments, Inc in conversion of $3,024 of accrued interest. ~~and~~The ~~Subsidiary~~shares of common stock were valued at $24,000 resulting in a loss on conversion of $20,976.

~~Notes~~Common toStock ~~the Consolidated Financial Statements (Unaudited) (Continued)~~Warrants

At On December ~~the~~2, ~~Closing~~2015, ~~the~~in ~~Company~~connection ~~shall~~with ~~deliver~~issuing to the ~~Majority~~Livingston ~~Shareholder~~Note ~~and the two Sellers other than Majority Shareholder~~ (~~the~~see ~~“Minority~~Note ~~Shareholders”~~8d) ~~three Notes~~, ~~which Notes shall be in~~ the ~~principal~~Company ~~face~~issued ~~amount of $6~~100,~~166,666~~000 ~~with~~common ~~respect~~stock towarrants which ~~the~~were ~~Majority~~valued ~~Shareholder~~at ~~and in the principal face amount of~~ $130,~~666,667 with respect to each of the Minority Shareholders~~987. ~~Other than the principal amount under the foregoing Notes, the Notes shall be in all respects identical to the Note.~~

~~The~~In ~~Notes~~January 2016, in connection with an amendment to the LG Capital Funding, LLC Note (see Note 7f), the Company issued 75,000 common stock warrants, which were valued at $26,250.

The Notes bear interest at 7% per annum with interest payable (i) in cash upon maturity or in connection with any voluntary or mandatory conversion or, (ii) at the option of the Seller, in arrears on the first day of each calendar quarter after the date of issuance (the “Closing Date”) by issuing and delivering that number of shares of Common Stock ~~determined~~based ~~by dividing the interest accrued for such quarter by the average price per share for the ten (10) trading days immediately preceding the determination date as reported by Bloomberg, L.P.~~compensation

~~Commencing~~During ~~two~~the ~~(2)~~three ~~years~~and six ~~from~~months ~~the~~ended ~~Closing~~May ~~Date~~31, 2016, the Company ~~may~~issued ~~prepay~~nil ~~any~~and ~~portion~~50,000 shares, respectively, of ~~the~~common ~~principal~~stock ~~amount~~to ofservice providers. During the ~~Notes~~three ~~without~~and ~~the~~six ~~prior~~months ~~written~~ended ~~consent~~May of31, 2015, the ~~holders~~Company issued 100,000 ~~provided~~and 312,500 ~~however~~shares, ~~that~~respectively, ~~the~~of ~~Company~~common ~~shall~~stock ~~provide~~to service providers. The shares of common stock are being expensed over the ~~Sellers~~term ~~with~~of 90the ~~days’~~services ~~notice~~being provided. As a result of ~~such~~these ~~prepayment~~issuances, the ~~and~~Company ~~any~~has ~~prepayment~~recorded ~~must~~stock-based becompensation ~~undertaken~~during onthe athree ~~pro~~and ~~rata~~six ~~basis~~months ~~for~~ended ~~all~~May ~~Notes~~31, ~~then~~2016 ~~outstanding.~~of nil and $20,000, respectively. The ~~holders~~Company ofrecorded ~~Notes~~stock-based ~~shall~~compensation ~~have~~during the ~~right~~three toand ~~convert~~six ~~any~~months orended ~~all~~May 31, 2015 of $100,000 and $251,833, respectively. The fair value of the ~~amount~~shares towas bedetermined ~~redeemed~~based ~~into~~on the closing price of the Company’s common stock ~~prior~~on tothe ~~prepayment~~issuance date and is being recognized over the term of the respective consulting agreement.

Each Note ranks pari passu in right of payment with all other Notes now or hereafter issued in accordance with the Exchange Agreement and matures on the five-year anniversary of the issuance date thereof13. ~~Subject~~SUBSEQUENT to certain limitations, the Notes are convertible at any time at the option of the holder into shares of the Company’s common stock at a conversion price equal to either (i) if the aggregate market capital of the Company on the date of conversion (the “Market Cap”) is $35,000,000 or less, at a 25% discount to the Market Price, or (ii) if the Market Cap is greater than $35,000,000, at a 25% discount to the Market Price, provided that such discount shall be increased by dividing it by the quotient that shall be obtained by dividing $35,0000,000 by the Market Cap at the time of conversion, provided, however, any increase in the discount to the Market Price shall not result in a discount that is greater than a 75% discount (the “Conversion Price”). Notwithstanding the foregoing, in no event shall the Conversion Price be less than $0.35. In addition, the Company may force the conversion of the Notes at any time commencing two (2) years from the Closing Date, provided certain conditions are met.EVENTS

~~Certificate~~In ofaccordance ~~Designations~~with ASC of855-10, ~~Class~~the BCompany ~~Convertible~~has ~~Preferred~~analyzed ~~Stock~~its operations subsequent to May 31, 2016 through December 6, 2018, the date these financial statements were issued and has determined that there are no material subsequent events to disclose in these financial statements except for the following.

Upon Closing, the Company will issue the 100,000 Class B Shares to the Majority Shareholder. The Class B Shares will have a priority over all of the shares of Common Stock on liquidation or sale of the Company, at the rate of $50.00 per Class B Share, or a liquidation preference of $5,000,000 (the “Class B Stated Value”) as to all Class B Shares. The Class B Shares will pay an annual dividend (at the option of the Company, either in cash or in additional shares of Common Stock), in an amount that shall be the greater of (i) an annual rate of 5% per annum, or (ii) 5% of MTIX’s net income as determined in accordance with United States Generally Accepted Accounting Principles for the fiscal year then ended. The Class B Shares will vote with the Common Stock on all matters as to which shareholders of the Company are entitled to vote, on an “as converted” basis, as though all outstanding Class B Shares had been converted into Common Stock immediately prior to the taking of the record date for all shareholders entitled to vote at any regular or special meeting of the Company’s shareholders. Commencing two (2) years after the Closing Date, the Class B Shares shall be convertible into shares of Common Stock by dividing the Class B Stated Value by the Conversion Price applicable to the Notes.F-19

~~Security~~Table ~~Agreement~~of Contents

~~The~~Avalanche ~~Notes will be secured~~International, ~~pursuant to a Security Agreement, by a lien on certain of the Company’s assets, including but not limited to the intellectual property of MTIX~~Corp. Upon the occurrence of an event of default under the Notes, a majority in interest of the Notes may require the Company to repay all of its Notes in cash, at a price equal to 100% of the principal, accrued and ~~unpaid interest and any amounts, costs and liquidated damages, as applicable.~~Subsidiaries

22Notes to Condensed Consolidated Financial Statements

~~Table of Contents~~(Unaudited)

~~Avalanche~~Convertible ~~International,~~Notes ~~Corp. and Subsidiary~~Payable

~~Notes~~On toOctober 5, 2016, November 30, 2016, and February 22, 2017, the ~~Consolidated~~Company ~~Financial~~entered ~~Statements~~into three convertible promissory notes with DPW Holdings, Inc. (~~Unaudited~~NYSE: DPW) (~~Continued~~the “DPW Notes”), a related party. Under the terms of the DPW Notes, the Company borrowed the sum of $1,575,000. The DPW Notes featured an original issue discount of $75,000, resulting in net funding to the Company of $1,500,000. The DPW Notes were due in two years and accrued interest at 12% per annum. The DPW Notes, were convertible into shares of the Company’s common stock at a conversion price of $0.745 per share.

~~Registration~~On September ~~Rights~~6, 2017, DPW Holdings, Inc. and the Company entered into a Loan and Security Agreement (the “Loan Agreement”) with an effective date of August 21, 2017 pursuant to which DPW will provide the Company a non-revolving credit facility of up to $10,000,000, for a period ending on August 21, 2019.

In ~~connection~~consideration ~~with~~of entering ~~the~~into ~~Exchange,~~ the ~~Company~~Loan ~~and~~Agreement, the ~~Sellers~~DPW ~~will~~Notes ~~enter~~were ~~into~~cancelled aand ~~Registration Rights Agreement under which~~ the ~~Company~~DPW ~~shall~~Notes bewere ~~required~~consolidated toand ~~file~~ a ~~registration~~new ~~statement~~Convertible ~~with~~Promissory Note ~~the~~was ~~Commission~~issued ~~covering~~ (the ~~resale~~“New ofDPW ~~the~~Note”). ~~shares~~At ofDecember ~~the~~3, ~~Common~~2018, ~~Stock~~DPW ~~issuable~~has ~~pursuant~~provided loans to ~~conversion of: (i)~~ the ~~Notes eighteen~~Company ~~(18)~~in ~~months from~~ the ~~Closing~~principal amount ~~Date~~$6,795,346 and, ~~(ii)~~in ~~the~~addition ~~Class~~to ~~B Shares twenty-four (24) months from~~ the ~~Closing~~12% ~~Date.~~convertible Inpromissory ~~addition~~notes, the Company ~~use~~has ~~its~~issued ~~best efforts~~ to ~~have~~DPW ~~the~~warrants ~~registration~~to ~~statement declared effective as soon as practicable~~purchase 13,590,692 ~~but~~shares inof ~~no event later than 90 days after~~ the ~~filing~~Company’s ~~date~~common ifstock. ~~the~~The ~~registration~~New ~~statement~~DPW Note is ~~not~~due ~~subject~~in totwo ayears ~~full~~and ~~review~~accrues byinterest ~~the~~at ~~Commission,~~12% orper ~~120~~annum on ~~days after filing if~~ the ~~registration~~face ~~statement is subject to a full review by the Commission~~amount. The ~~Company~~New ~~will~~DPW beNote ~~subject~~contains tostandard ~~certain~~events ~~monetary~~of ~~penalties,~~defaults. asFuture ~~set~~advances ~~forth~~under in the ~~Registration~~Loan ~~Rights~~ Agreement, if ~~the~~any, ~~registration~~will be ~~statement~~evidenced isby ~~not~~a ~~filed,~~convertible ~~does~~promissory ~~not~~containing ~~become~~a ~~effective~~conversion onprice afeature ~~timely~~at ~~basis,~~$0.50 orper ~~does~~share ~~not~~and ~~remain~~warrant ~~available~~with ~~for~~an ~~the~~exercise price ~~resale~~of ~~(subject~~$0.50 toper ~~certain~~share. ~~allowable~~Further, ~~grace~~under ~~periods)~~the terms of the ~~Registrable~~Loan ~~Securities~~Agreement, asthe ~~such~~New ~~term~~DPW isNotes ~~defined~~are insecured by the ~~Registration~~assets ~~Rights~~of ~~Agreement~~Avalanche.

~~Stock~~Mr. ~~Incentive~~Ault ~~Plan~~is the Chief Executive Officer and Chairman of the Board of Directors of DPW’s Board of Directors and the Chairman of the Company’s Board of Directors. Mr. William B. Horne is the Chief Financial Officer and a director of DPW and the Chief Financial Officer and a director of the Company.

OnPreferred ~~October 27, 2016, subject to stockholder approval, the Company’s Board of Directors approved the Company’s 2016~~ Stock Incentive Plan (the “Plan”), which provides for the issuance of a maximum of three million (3,000,000) shares of the Company’s common stock to be offered to the Company’s directors, officers, employees, and consultants. Options granted under the Plan have an exercise price equal to or greater than the fair market value of the underlying common stock at the date of grant and become exercisable based on a vesting schedule determined at the date of grant. The options expire between 5 and 10 years from the date of grant. Restricted stock awards granted under the Plan are subject to a vesting period determined at the date of grant.

~~Restaurant~~On ~~Capital~~March ~~Group~~6, 2017, the Company withdrew its former Class A Convertible Preferred Stock (the “Previous Class”), all shares of which were converted into shares of Common Stock as of September 21, 2015. The certificate of designations of the Previous Class was originally filed with the Secretary of State of the State of Nevada on July 31, 2014.

On ~~April~~March 137, ~~2016~~2017, ~~through~~the Company ~~our~~filed ~~wholly-owned~~a ~~subsidiary,~~new ~~Restaurant~~Certificate ~~Capital~~of ~~Group~~Designations, ~~LLC~~Preferences, ~~(“RCG”)~~Rights weand ~~entered~~Limitations ~~into~~of anClass ~~agreement~~A toConvertible ~~finance~~Preferred aStock ~~new~~(the “Class ~~restaurant~~A ~~owned~~Certificate byof ~~Philo Group, LLC (“Philo~~Designations”). ~~The restaurant is named Giulia, and features Italian fusion cuisine and two stylish full-service bars~~ with anthe ~~intimate~~Secretary ~~lounge~~of ~~atmosphere.~~State ~~Giulia,~~of ~~which~~the ~~opened~~State inof ~~March 2017~~Nevada, issetting ~~located~~forth ~~near~~ the ~~Financial~~terms of ~~District, LA Live, and~~ the ~~Staples~~Class ~~Center~~A ~~in downtown Los Angeles~~Shares.

~~Between~~The ~~April~~Class ~~2016~~A ~~and~~Shares each ~~April~~carry ~~2017,~~a ~~the~~stated ~~Company~~value ~~provided~~of $~~931,000~~20.00. inThe ~~financing~~Class toA ~~Philo~~Shares ~~under~~shall vote together with the ~~terms~~shares of aCommon ~~Senior~~Stock ~~Secured~~as ~~Property~~a ~~Note~~single ~~dated~~class ~~April 4~~and, regardless ~~2016,~~of ~~as amended (~~the ~~“Philo~~number ~~Note”).~~of ~~The~~Class ~~Philo~~A ~~Note~~Shares ~~bears~~outstanding, ~~interest~~provided that at aleast ~~rate~~25,000 of ~~sixteen~~such Class A Shares are outstanding, shall represent eighty percent (1680%) ~~per~~of ~~year,~~all ~~requires~~votes ~~monthly~~entitled ~~interest~~to ~~payments,~~be ~~and~~voted ~~was~~at ~~due~~any ~~within~~annual ~~six~~or ~~(6)~~special ~~months~~meeting ~~from~~of ~~the~~shareholders ~~date~~ of ~~issue. Due~~the toCompany or ~~delays~~action inby ~~the~~written ~~opening~~consent of ~~Giulia~~shareholders, ~~the~~including ~~Philo~~any ~~Note~~shares ~~has~~of ~~not~~preferred ~~yet~~stock ~~been~~other ~~repaid~~than ~~and~~the isClass ~~currently~~A inShares ~~default~~that are voted with the Common Stock. ~~The~~ ~~Philo~~Each ~~Note~~outstanding ~~features~~Class anA ~~original~~Share ~~issue~~shall ~~discount~~represent ofits ~~$285,000~~proportionate ~~and~~share ~~allows~~of ~~for~~the ~~legal~~80% ~~fees~~which upis allocated to the ~~$20,000~~outstanding Class A Shares. The ~~Philo~~Class ~~Note~~A isShares ~~personally~~are ~~guaranteed~~convertible byat the ~~principal~~Holder’s option into shares of ~~Philo,~~Common ~~and~~Stock ~~secured~~of the byCompany ~~all~~at ~~assets~~a ofconversion ~~Philo.~~price Inderived ~~addition,~~by dividing the ~~principal~~stated value of ~~Philo~~each ~~has~~Class ~~agreed~~A Share by $0.50 per share, subject to ~~further~~customary adjustment, ~~secure~~which ~~the~~conversion ~~loan~~may byoccur ~~pledging~~at ~~several~~any ~~pieces~~time ofat ~~real~~the ~~property~~option ~~located~~of inthe ~~California~~Holder.

WeOn ~~partially~~March ~~funded~~7, 2017, the Company ~~Philo~~entered ~~Note~~into ~~from~~an ~~our~~agreement ~~loans~~(the ~~dated~~“Exchange ~~April~~Agreement”) ~~13,~~with ~~2016~~Philou ~~and~~pursuant ~~September~~to ~~15,~~which ~~2016,~~it ~~with~~agreed ~~JLA~~to ~~Realty~~issue ~~Associates~~to Philou 50,000 ~~LLC~~shares ~~and~~of its ~~principals~~newly ~~(“JLA”),~~created inClass ~~the~~A ~~form~~Convertible ofPreferred ~~Senior~~Stock ~~Secured Property Notes in~~ (the ~~amount~~“Class ofA ~~$330,000~~Shares”) and ~~$150~~5,000,000 ~~respectively,~~common stock ~~(the~~warrants ~~“JLA~~in ~~Notes”)~~exchange ~~issued~~for tothe ~~JLA~~surrender by ~~RCG.~~Philou ~~The initial JLA Note featured terms mirroring those~~ of ~~the Philo Note~~2, ~~including 16% annual interest~~000,000 ashares ~~due~~of ~~date~~its ~~six~~Common ~~months from issue, and required monthly interest payments~~Stock. AsOn ofApril ~~the~~26, ~~date of this report~~2017, the ~~Company~~Class ~~has~~A Shares ~~only~~were ~~repaid~~issued ~~$100,000~~simultaneously ofwith the ~~JLA~~surrender ~~Notes~~ and iscancellation ~~currently in default. The JLA notes are secured by all~~ of the ~~assets of RCG and~~2, ~~in addition~~000,000 isshares ~~personally~~of ~~guaranteed~~common bystock. ~~our~~The ~~Chairman,~~warrants ~~Milton~~have a C.five ~~Ault~~year ~~III.~~term ~~Mr.~~and ~~Ault~~an ~~serves~~exercise asprice ~~the~~of ~~Manager~~$0.35 ofper ~~RCG~~share.

InOn ~~addition~~March to7, 2017, the Company ~~financing~~filed ~~from~~the ~~JLA~~Certificate ~~discussed~~of ~~above~~Designations, ~~RCG has received financing from MCKEA Holdings~~Preferences, ~~LLC~~Rights ~~under~~and aLimitations ~~Promissory~~of ~~Note~~Class ~~dated~~B ~~March~~Convertible 4,Preferred ~~2016~~Stock (the “~~MCKEA~~Class ~~Note”).~~B ~~The~~Certificate ~~MCKEA Note has a face amount~~ of ~~$100,000~~ ~~and bears interest a rate of fifteen percent (15%~~Designations”) ~~per~~with ~~year. All principal and interest accrued under~~ the ~~MCKEA~~ ~~Note~~Secretary ~~was due on or before August 4, 2016. The MCKEA Note features and original issue discount~~ of ~~10%~~State of the ~~total~~State ~~cash~~of ~~advanced to RCG. Between March 2016 and December 2016~~Nevada, ~~$58,350~~setting ~~has~~forth ~~been~~the ~~advanced to RCG, inclusive~~ terms of ~~$5,305~~its ofClass ~~original~~B ~~issue~~Convertible ~~discount,~~Preferred ~~under~~Stock (the ~~MCKEA~~“Class ~~Note,~~B ~~of which $42,125 has been repaid~~Shares”).

23The Company designated 100,000 shares of its preferred stock, par value $0.001 per share, as Class B Shares. The Class B Shares will have a priority over all of the shares of Common Stock on liquidation or sale of the Company, at the rate of $50.00 per Class B Share, or a liquidation preference of $5,000,000 (the “Class B Stated Value”) as to all Class B Shares. The Class B Shares will pay an annual dividend (at the option of the Company, either in cash or in additional shares of Common Stock), in an amount that shall be the greater of (i) an annual rate of 5% per annum, or (ii) 5% of MTIX’s net income as determined in accordance with United States Generally Accepted Accounting Principles for the fiscal year then ended. The Class B Shares will vote with the Common Stock on all matters as to which shareholders of the Company are entitled to vote, on an “as converted” basis, as though all outstanding Class B Shares had been converted into Common Stock immediately prior to the taking of the record date for all shareholders entitled to vote at any regular or special meeting of the Company’s shareholders. Commencing two (2) years after the Closing Date, the Class B Shares shall be convertible into shares of Common Stock by dividing the Class B Stated Value by the Conversion Price applicable to the Notes. The Class B Shares shall contain the respective rights, privileges and designations as are set forth in the Certificate of Designations, Preferences, Rights and Limitations of Class B Convertible Preferred Stock.

~~Table of Contents~~F-20

~~ITEM~~Table ~~2. MANAGEMENT’S~~of ~~DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS~~Contents

~~CAUTIONARY~~Avalanche ~~NOTE~~International, ~~REGARDING~~Corp. ~~FORWARD-LOOKING~~and ~~STATEMENTS~~Subsidiaries

~~This~~Notes Quarterly Report on Form 10-Q contains forward-looking statements that involve a number of risks and uncertainties. Words such as "anticipates," "expects," "intends," "goals," "plans," "believes," "seeks," "estimates," "continues," "may," "will," “would,” "should," “could,” and variations of such words and similar expressions are intended to ~~identify~~Condensed ~~such~~Consolidated forward-looking statements. In addition, any statements that refer to projections of our future financial performance, our anticipated growth and trends in our businesses, uncertain events or assumptions, and other characterizations of future events or circumstances are forward-looking statements. Such statements are based on management's expectations as of the date of this filing and involve many risks and uncertainties that could cause our actual results to differ materially from those expressed or implied in our forward-looking statements. Such risks and uncertainties include those described throughout this report and our Annual Report on Form 10-K for the year ended November 30, 2015, particularly the "Risk Factors" sections of such reports. Given these risks and uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements. Readers are urged to carefully review and consider the various disclosures made in this Form 10-Q and in other documents we file from time to time with the Securities and Exchange Commission that disclose risks and uncertainties that may affect our business. The forward-looking statements in this Form 10-Q do not reflect the potential impact of any divestitures, mergers, acquisitions, or other business combinations that had not been completed as of August 4, 2017. In addition, the forward-looking statements in this Form 10-Q are made as of the date of this filing, and we do not undertake, and expressly disclaims any duty, to update such statements, whether as a result of new information, new developments or otherwise, except to the extent that disclosure may be required by law.Financial Statements

~~General~~(Unaudited)

~~Avalanche~~Common is a holding company currently engaged in acquiring and/or developing businesses in which the Company maintains a controlling interest. The Company anticipates that its subsidiaries will be engaged in a number of diverse business activities. The Company currently has two wholly-owned subsidiaries, Smith and Ramsay Brands, LLC (“SRB”) and Restaurant Capital Group, LLC (“RCG”). SRB was formed on May 19, 2014, and RCG was formed on October 22, 2015. SRB was originally formed as a manufacturer and distributor of flavored liquids for electronic vaporizers and eCigarettes and accessories; this business was discontinued in June 2015. RCG was formed to hold the Company’s investments in the restaurant industry. In March 2017, the Company entered into a definitive agreement to acquire a third business, MTIX Ltd., an advanced materials and processing technology company located in Huddersfield, West Yorkshire, UK (“MTIX”). MTIX has developed a novel cost effective and environmentally friendly material synthesis technology for textile applications that uses a combination of plasma and photonic energy to effect material synthesis of a substrate surface.Stock

~~The~~On ~~Company~~February is28, ~~engaged in a variety of activities which we believe will expand~~ 2017, the ~~number and type of businesses in which we invest and ultimately have a controlling interest. The~~ Company ~~identifies~~issued ~~investment~~250,000 ~~opportunities~~shares ~~through an extensive network~~ of ~~contacts~~its ~~with~~common ~~investment~~stock ~~banking and venture capital firms and other associations with high net-worth individuals and individuals at universities such~~ as ~~the~~payment ~~University~~for ofservices ~~South~~to ~~Florida and the Byrd Institute. Upon identification of~~ an ~~investment opportunity the Company relies upon the executive management team to conduct a thorough evaluation of the target and its technology~~officer. AsThe ~~required,~~shares ~~the~~were ~~executive~~valued ~~management~~at ~~team may consult with individuals that have specialized expertise in the target industry. In the case of an investment where the executive management team is satisfied with its evaluation~~$40, ~~the basic terms of an investment are negotiated directly by the executive management team and~~000, ~~depending on the amount of the transaction, presented to the Board for approval~~ $0.16 ~~Upon~~per ~~mutual acceptance of the basic terms, outside counsel would prepare the transaction investment documents~~share.

~~Avalanche’s~~On ~~operating~~March ~~businesses~~9, ~~are~~2017, ~~managed on a centralized basis. The~~ the Company’s ~~senior~~issued ~~management~~an ~~participates~~aggregate inof ~~and is ultimately responsible for significant capital allocation decisions~~216,946 ~~investment~~shares ~~activities and the selection~~ of ~~the~~its ~~key~~common ~~executive~~stock ~~officers~~as torepayment ~~head each~~ of the ~~operating~~principal ~~businesses.~~and ~~Our~~accrued ~~capital~~interest ~~allocation~~on ~~decisions~~the ~~are~~convertible note ~~based~~due onto ~~extensive~~GCEF ~~analysis~~Opportunity ofFund, ~~potential~~LLC ~~subsidiary~~(See ~~companies'~~Note ~~business~~7g). ~~operations~~The ~~supported~~shares byhad an ~~in-depth~~aggregate ~~understanding~~fair ofvalue ~~the quality~~ of ~~their revenues and cash flow potential~~$32,542, ~~variability~~an ofaverage ~~costs and the inherent value~~ of ~~their~~$0.15 ~~assets, including proprietary intangible assets and intellectual property~~per share.

24On January 23, 2018, the Company, Adar Bays, LLC and Union Capital, LLC entered into Note Settlement and Termination Agreements. Pursuant to the terms of the settlement agreements, the Company agreed to satisfy each of the outstanding notes for $200,000 and 100,000 shares of common stock. The payments were made on January 26, 2018 (See Note 7a).

~~Table~~On May 11, 2018, the Company issued an aggregate of ~~Contents~~20,000 shares of its common stock as repayment of $4,550 in principal on the convertible note due to JMJ Financial (See Note 7d). The shares had an aggregate fair value of $4,550, an average of $0.23 per share.

~~Restaurant Capital Group~~MTIX, ~~LLC~~Ltd. Acquisition

On ~~April~~August 1322, ~~2016~~2017, pursuant ~~RCG~~to ~~entered~~the ~~into~~terms anof ~~agreement~~a toShare ~~finance~~Exchange aAgreement ~~new~~dated ~~restaurant~~as ~~owned~~of byMarch ~~Philo~~3, ~~Group~~2017, ~~LLC~~and as amended on July 13, 2017 and August 21, 2017 (the “~~Philo~~Exchange Agreement”). ~~The~~with ~~restaurant~~MTIX isLimited, ~~named~~a ~~Giulia,~~company ~~and~~formed ~~features~~under ~~Italian~~the ~~fusion~~laws ~~cuisine~~of England and ~~two~~Wales ~~stylish~~(“MTIX”) and ~~full-service~~the ~~bars~~three ~~with~~(3) anshareholders ~~intimate~~of ~~lounge~~MTIX ~~atmosphere.~~(the ~~Giulia~~“Sellers”), ~~which~~the ~~opened~~Company completed its acquisition of MTIX. Upon the terms and subject to the conditions set forth in ~~March~~the ~~2017~~Exchange Agreement, isthe ~~located~~Company ~~near~~acquired MTIX from the ~~Financial~~Sellers ~~District,~~through LAthe ~~Live,~~transfer of all issued and ~~the~~outstanding ~~Staples~~ordinary ~~Center~~shares inof ~~downtown~~MTIX ~~Los~~(the ~~Angeles.~~“MTIX ~~Philo~~Shares”) ~~has~~by ~~placed~~the aSellers ~~significant~~to ~~emphasis~~the onCompany in exchange (the ~~distinctive,~~“Exchange”) ~~contemporary~~for ~~interior~~the ~~design~~issuance ~~and~~by ~~decor~~the Company of: ~~Giulia.~~(a) We7% ~~believe~~secured ~~that~~convertible ~~this~~promissory ~~stylish~~notes ~~restaurant~~(individually, ~~design~~a “Note” and ~~decor~~collectively, ~~will~~the ~~contribute~~“Notes”) in the aggregate principal face amount of $9,500,000 to the ~~distinctive~~Sellers ~~dining~~in ~~experience~~pro ~~enjoyed~~rata byamounts commensurate ~~customers~~with ~~and~~their ~~generate~~current ~~higher~~respective ~~annual~~ownership ~~sales~~percentages ~~per~~of ~~square~~MTIX’s ~~foot~~ordinary ~~that~~shares, ~~than~~(b) is(i) ~~typical~~$500,000 in ~~our~~cash, ~~industry~~$50,000 of which was paid on October 26, 2016, and (ii) 100,000 shares of the Company’s newly designated shares of Class B Shares to the principal shareholder of MTIX (the “Majority Shareholder”).

~~Our~~At ~~initial~~the ~~investment~~Closing inthe Company ~~Philo~~delivered ~~was~~to ~~structured~~the asMajority aShareholder ~~loan~~ and ~~between April 2016 and April 2017, we provided $931,000 in financing to Philo under~~ the ~~terms~~two ofSellers ~~Senior~~other ~~Secured~~than ~~Property~~Majority ~~Note~~Shareholder ~~dated April 4, 2016, as amended~~ (the “~~Philo~~Minority ~~Note~~Shareholders”)~~. The~~ three ~~Philo~~Notes, ~~Note~~which ~~bears~~Notes ~~interest~~were atin athe ~~rate~~principal offace ~~sixteen~~amount ~~percent~~of ~~(16%)~~$6,166,666 ~~per~~with ~~year~~respect ~~and~~to ~~is personally guaranteed by~~ the ~~principal~~Majority ofShareholder ~~Philo,~~ and ~~secured~~in bythe ~~all~~principal face ~~assets~~amount of ~~Philo. In addition~~$1,666,667 wewith ~~expect~~respect to ~~renegotiate~~each ~~the terms~~ of ~~our~~the ~~investment~~Minority ~~in Philo such that we obtain a significant ownership in Giulia~~Shareholders.

~~Smith~~The ~~and Ramsay Brands, LLC~~Notes

The ~~Company~~Notes ~~established~~bear ~~SRB~~interest at as7% aper ~~manufacturer~~annum ~~and~~with ~~distributor~~interest ofpayable ~~flavored liquids for electronic vaporizers and eCigarettes and accessories~~ (~~the “Vape Business”~~i). ~~SRB~~in ~~had~~cash ~~intended~~upon tomaturity ~~aggressively~~or ~~expand~~in ~~the~~connection ~~Vape business~~ with ~~additional~~any ~~flavors~~voluntary inor ~~its~~mandatory ~~signature~~conversion ~~brand~~or, (ii) ~~and~~at bythe ~~expanding~~option ~~through~~of ~~additional~~the ~~new~~Seller, ~~brands~~in ~~and~~arrears on the ~~acquisition~~first ~~and~~day ~~distribution~~ of ~~signature~~each ~~and~~calendar ~~non-signature~~quarter ~~accessories.~~after Inthe ~~mid-Fall~~date of ~~2014,~~issuance ~~SRB~~(the ~~began~~“Closing Date” a) ~~targeted~~by ~~rollout~~issuing ~~of its Vape Business~~ and ~~during~~delivering ~~June~~that ~~2015~~number weof ~~made~~shares ~~the~~of ~~decision~~Common toStock ~~discontinue~~determined ~~operations~~by individing the ~~Vape~~interest ~~Business.~~accrued ~~The~~for ~~decision~~such quarter toby ~~discontinue~~the ~~this~~average ~~line~~price ofper ~~business~~share ~~was~~for ~~based upon~~ the ~~highly~~ten ~~competitive~~(10) ~~marketplace~~trading ~~and~~days ~~exceedingly~~immediately ~~small~~preceding ~~gross margins that we were realizing in~~ the ~~Vape~~determination ~~Business~~date ~~combined with other business opportunities, such~~ as ~~the~~reported ~~restaurant business~~by Bloomberg, ~~where we expect to generate much greater returns~~L.P.

~~Recent~~Commencing ~~Developments~~two (2) years from the Closing Date, the Company may prepay any portion of the principal amount of the Notes without the prior written consent of the holders, provided, however, that the Company shall provide the Sellers with 90 days’ notice of such prepayment, and any prepayment must be undertaken on a pro rata basis for all Notes then outstanding. The holders of Notes shall have the right to convert any or all of the amount to be redeemed into common stock prior to prepayment.

OnEach ~~March~~Note 3,ranks ~~2017,~~pari passu ~~the~~in ~~Company~~right ~~entered~~of ~~into~~payment awith ~~Share~~all ~~Exchange~~other ~~Agreement~~Notes ~~(the~~now ~~“Exchange~~or ~~Agreement”)~~hereafter ~~with~~issued ~~MTIX~~in ~~Limited,~~accordance anwith ~~English~~the ~~company~~Exchange ~~(“MTIX”)~~Agreement and matures on the ~~three~~five-year ~~(3)~~anniversary ~~current~~of ~~shareholders~~the ofissuance ~~MTIX~~date ~~(individually,~~thereof. aSubject ~~“Seller”~~to ~~and~~certain ~~collectively~~limitations, the ~~“Sellers”).~~Notes ~~Upon~~are ~~the~~convertible ~~terms~~at ~~and~~any ~~subject~~time to at the ~~conditions~~option ~~set~~of ~~forth~~the inholder ~~the~~into ~~Exchange~~shares ~~Agreement,~~of the Company’s ~~will~~common ~~acquire~~stock ~~MTIX~~at ~~from~~a ~~the~~conversion ~~Sellers~~price ~~through~~equal to either (i) if the ~~transfer~~aggregate market capital of ~~all~~the ~~issued~~Company ~~and~~on ~~outstanding~~the ~~ordinary~~date ~~shares~~ of ~~MTIX~~conversion (the “~~MTIX~~Market ~~Shares~~Cap”) byis ~~the~~$35,000,000 ~~Sellers~~or less, at a 25% discount to the ~~Company~~Market inPrice, ~~exchange~~or (~~the “Exchange”~~ii) ~~for~~if the ~~issuance~~Market byCap ~~the~~is ~~Company~~greater ~~of:~~than ($35,000,000, at a) 725% ~~secured~~discount ~~convertible~~to ~~promissory~~the ~~notes~~Market ~~(individually~~Price, aprovided ~~“Note”~~that such ~~and~~discount ~~collectively,~~shall ~~the~~be ~~“Notes”)~~increased inby dividing it by the ~~aggregate~~quotient ~~principal~~that ~~face~~shall ~~amount~~be ofobtained by dividing $935,~~500~~0000,000 toby the ~~Sellers~~Market Cap at the time of conversion, provided, however, any increase in ~~pro~~the ~~rata~~discount ~~amounts~~to ~~commensurate~~the ~~with~~Market ~~their~~Price ~~current~~shall ~~respective~~not ~~ownership~~result ~~percentages~~in ofa ~~MTIX’s~~discount ~~ordinary~~that is ~~shares,~~greater ~~(b)~~than a 75% discount (ithe “Conversion Price”). ~~$500~~Notwithstanding the foregoing,~~000~~ in ~~cash,~~no ~~$50,000~~event ofshall ~~which~~the ~~has~~Conversion Price ~~already~~be ~~been~~less ~~paid,~~than ~~and~~$0.35. ~~(ii)~~In ~~100~~addition,~~000~~ ~~shares of~~ the Company’s ~~newly~~may ~~designated~~force ~~shares~~the conversion of ~~Class~~the BNotes ~~Convertible~~at ~~Preferred~~any ~~Stock~~time ~~(the~~commencing ~~“Class~~two ~~B Shares”~~(2) toyears from the ~~principal~~Closing ~~shareholder~~Date, ofprovided ~~MTIX~~certain ~~(the~~conditions ~~“Majority~~are ~~Shareholder”)~~met.

Consummation of the Exchange (the “Closing”) is subject to a number of closing conditions, including, among other things: (i) absence of litigation that seeks to prohibit the Exchange and certain other matters; (ii) the accuracy of the representations and warranties, subject to customary materiality qualifiers; (iii) the performance by the parties of certain covenants and agreements in all material respects, and (iv) the absence of a Material Adverse Effect (as defined in the Exchange Agreement). The Exchange Agreement does not contain a financing condition.F-21

AtTable the Closing, the Company shall deliver to the Majority Shareholder and the two Sellers other than Majority Shareholder (the “Minority Shareholders”) three Notes, which Notes shall be in the principal face amount of $6,166,666 with respect to the Majority Shareholder and in the principal face amount of $1,666,667 with respect to each of the Minority Shareholders. Other than the principal amount under the foregoing Notes, the Notes shall be in all respects identical to the Note.Contents

25Avalanche International, Corp. and Subsidiaries

~~Table~~Notes ofto ~~Contents~~Condensed Consolidated Financial Statements

~~The Notes~~(Unaudited)

~~The~~Security Notes bear interest at 7% per annum with interest payable (i) in cash upon maturity or in connection with any voluntary or mandatory conversion or, (ii) at the option of the Seller, in arrears on the first day of each calendar quarter after the date of issuance (the “Closing Date”) by issuing and delivering that number of shares of Common Stock determined by dividing the interest accrued for such quarter by the average price per share for the ten (10) trading days immediately preceding the determination date as reported by Bloomberg, L.P.Agreement

~~Commencing~~The ~~two~~Notes ~~(2)~~are ~~years~~secured, pursuant ~~from~~to ~~the~~a ~~Closing~~Security ~~Date~~Agreement, ~~the~~by ~~Company~~a ~~may~~lien ~~prepay~~on ~~any~~certain ~~portion~~ of the ~~principal~~Company’s ~~amount~~assets, ofincluding ~~the~~but ~~Notes~~not ~~without~~limited to the ~~prior~~intellectual property ~~written~~of ~~consent~~MTIX. ofUpon the ~~holders,~~occurrence ~~provided,~~of ~~however,~~an ~~that~~event ~~the~~of ~~Company~~default ~~shall~~under ~~provide~~ the ~~Sellers~~Notes, ~~with~~a 90majority ~~days’~~in ~~notice~~interest of ~~such~~the ~~prepayment,~~Notes ~~and~~may ~~any~~require ~~prepayment~~the Company ~~must~~to berepay ~~undertaken~~all onof aits ~~pro~~Notes ~~rata~~in ~~basis~~cash, ~~for~~at ~~all~~a ~~Notes~~price ~~then~~equal ~~outstanding.~~to ~~The~~100% ~~holders~~ of ~~Notes~~the ~~shall~~principal, ~~have~~accrued ~~the~~and ~~right~~unpaid tointerest ~~convert~~and any oramounts, costs ~~all~~and ofliquidated ~~the~~damages, ~~amount~~as ~~to be redeemed into common stock prior to prepayment~~applicable.

~~Each~~Registration ~~Note~~Rights ~~ranks pari passu in right of payment with all other Notes now or hereafter issued in accordance with the Exchange~~ Agreement and matures on the five-year anniversary of the issuance date thereof. Subject to certain limitations, the Notes are convertible at any time at the option of the holder into shares of the Company’s common stock at a conversion price equal to either (i) if the aggregate market capital of the Company on the date of conversion (the “Market Cap”) is $35,000,000 or less, at a 25% discount to the Market Price, or (ii) if the Market Cap is greater than $35,000,000, at a 25% discount to the Market Price, provided that such discount shall be increased by dividing it by the quotient that shall be obtained by dividing $35,0000,000 by the Market Cap at the time of conversion, provided, however, any increase in the discount to the Market Price shall not result in a discount that is greater than a 75% discount (the “Conversion Price”). Notwithstanding the foregoing, in no event shall the Conversion Price be less than $0.35. In addition, the Company may force the conversion of the Notes at any time commencing two (2) years from the Closing Date, provided certain conditions are met.

~~Certificate~~In connection with the Exchange, the Company and the Sellers entered into a Registration Rights Agreement under which the Company shall be required to file a registration statement with the Commission covering the resale of ~~Designations~~the shares of the Common Stock issuable pursuant to conversion of: (i) the Notes eighteen (18) months from the Closing Date, and (ii) the Class B ~~Convertible~~Shares ~~Preferred~~twenty-four ~~Stock~~(24) months from the Closing Date. In addition, the Company use its best efforts to have the registration statement declared effective as soon as practicable, but in no event later than 90 days after the filing date if the registration statement is not subject to a full review by the Commission, or 120 days after filing if the registration statement is subject to a full review by the Commission. The Company will be subject to certain monetary penalties, as set forth in the Registration Rights Agreement, if the registration statement is not filed, does not become effective on a timely basis, or does not remain available for the resale (subject to certain allowable grace periods) of the Registrable Securities, as such term is defined in the Registration Rights Agreement.

Upon Closing, the Company will issue the 100,000 Class B Shares to the Majority Shareholder. The Class B Shares will have a priority over all of the shares of Common Stock on liquidation or sale of the Company, at the rate of $50.00 per Class B Share, or a liquidation preference of $5,000,000 (the “Class B Stated Value”) as to all Class B Shares. The Class B Shares will pay an annual dividend (at the option of the Company, either in cash or in additional shares of Common Stock), in an amount that shall be the greater of (i) an annual rate of 5% per annum, or (ii) 5% of MTIX’s net income as determined in accordance with United States Generally Accepted Accounting Principles for the fiscal year then ended. The Class B Shares will vote with the Common Stock on all matters as to which shareholders of the Company are entitled to vote, on an “as converted” basis, as though all outstanding Class B Shares had been converted into Common Stock immediately prior to the taking of the record date for all shareholders entitled to vote at any regular or special meeting of the Company’s shareholdersLtd. ~~Commencing~~Exchange ~~two (2) years after the Closing Date, the Class B Shares shall be convertible into shares of Common Stock by dividing the Class B Stated Value by the Conversion Price applicable to the Notes.~~Agreement

~~Security~~On December 5, 2017, DPW entered into an exchange agreement with WT Johnson & Sons (Huddersfield) Limited (the “WT Johnson”), pursuant to which the Company issued to the WT Johnson, (a) a convertible promissory note in the principal amount of $600,000 (“Note A”), and (b) a convertible promissory note in the principal amount of $1,667,766 (“Note B”), in exchange for cancellation of (i) an outstanding loan made by WT Johnson to MTIX in the amount of $265,666; and (ii) cancellation of an aggregate of $2,002,500 owed by MTIX to WT Johnson pursuant to an Agreement for the Sale and Purchase of a Textile Multi-Laser Enhancement Technology Machine dated as of July 21, 2017 by and between MTIX and WT Johnson.

~~The~~Note ~~Notes~~A ~~will~~was beconvertible into ~~secured,~~DPW’s ~~pursuant~~common tostock at a ~~Security~~conversion ~~Agreement,~~price byof a$1.00 ~~lien~~per onshare, ~~certain~~does ofnot ~~the~~bear ~~Company’s assets~~interest, ~~including~~and ~~but~~matured ~~not~~two ~~limited~~years tofrom ~~the~~issuance. Note ~~intellectual~~B ~~property~~was ofconvertible ~~MTIX.~~into ~~Upon~~DPW’s ~~the~~common ~~occurrence~~stock ofat ana ~~event~~conversion price of ~~default~~$0.85 ~~under~~per ~~the Notes~~share, adoes ~~majority~~not inbear interest, ofand ~~the~~matured two ~~Notes~~years ~~may~~from ~~require~~issuance. However, WT Johnson did not have the ~~Company~~right to ~~repay~~convert ~~all~~any portion of ~~its~~Note ~~Notes~~B, infollowing ~~cash,~~receipt atby WT aJohnson ~~price~~of ~~equal~~an toaggregate ~~100%~~of $2,267,766 of gross proceeds from the ~~principal,~~sale ~~accrued~~of ~~and~~shares ~~unpaid~~of ~~interest~~common ~~and~~stock ~~any~~issued ~~amounts,~~upon ~~costs~~conversion ~~and~~of ~~liquidated~~Note A ~~damages,~~or asNote ~~applicable~~B.

~~Registration~~During ~~Rights~~December ~~Agreement~~2017, DPW issued 600,000 shares of its common stock upon the conversion of Note A and WT Johnson notified DPW that gross proceeds during the month of December 2017 from sales of the 600,000 shares of common stock were sufficient to satisfy the entire $2,267,766 obligation. As a result of entering into the exchange agreement with WT Johnson, MTIX is obligated to pay DPW $2,668,266, consisting of the amount of the exchange agreement of $2,267,766 and a value added tax of $400,500 from the sale of the Textile Multi-Laser Enhancement Technology Machine. Concurrent with entering into the exchange agreement, MTIX issued a promissory note in the amount of $2,668,266 to DPW and Note B was cancelled.

InPhilo ~~connection with the Exchange~~Group, ~~the~~LLC ~~Company~~Note and the Sellers will enter into a Registration Rights Agreement under which the Company shall be required to file a registration statement with the Commission covering the resale of the shares of the Common Stock issuable pursuant to conversion of: (i) the Notes eighteen (18) months from the Closing Date, and (ii) the Class B Shares twenty-four (24) months from the Closing Date. In addition, the Company use its best efforts to have the registration statement declared effective as soon as practicable, but in no event later than 90 days after the filing date if the registration statement is not subject to a full review by the Commission, or 120 days after filing if the registration statement is subject to a full review by the Commission. The Company will be subject to certain monetary penalties, as set forth in the Registration Rights Agreement, if the registration statement is not filed, does not become effective on a timely basis, or does not remain available for the resale (subject to certain allowable grace periods) of the Registrable Securities, as such term is defined in the Registration Rights Agreement.Receivable

26Between June 2016 to November 2017, the Company provided $947,092 in financing to Philo under the terms of a Senior Secured Property Note dated April 4, 2016, as amended (the “Philo Note”). The Philo Note bears interest at a rate of sixteen percent (16%) per year, requires monthly interest payments, and was due within six (6) months from the date of issue.

~~Table~~Stock ofIncentive ~~Contents~~Plan

~~RESULTS~~On OFOctober ~~OPERATIONS~~27, 2016, subject to stockholder approval, the Company’s Board of Directors approved the Company’s 2016 Stock Incentive Plan (the ”Plan”), which provides for the issuance of a maximum of three million (3,000,000) shares of the Company’s common stock to be offered to the Company’s directors, officers, employees, and consultants. Options granted under the Plan will have an exercise price equal to or greater than the fair market value of the underlying common stock at the date of grant and become exercisable based on a vesting schedule determined at the date of grant. The options will expire between 5 and 10 years from the date of grant. Restricted stock awards granted under the Plan are subject to a vesting period determined at the date of grant.

~~THREE MONTHS ENDED FEBRUARY 29, 2016 COMPARED TO THREE MONTHS ENDED FEBRUARY 28, 2015~~F-22

~~The~~Table ~~following table summarizes the results~~ of ~~our operations for the three months ended February 29, 2016 and February 28, 2015.~~Contents

	For the Three Months Ended
	February 29, 2016			February 28, 2015
Revenue	$	—		$	14,995
Cost of revenue		—			8,534
Gross margin		—			6,461
Total operating expense		202,020			193,830
Loss from operations		(202,020	)		(187,369	)
Total other expenses		(106,236	)		(4,200	)
Net loss	$	(308,256	)	$	(191,569	)
Basic and diluted net loss per common share	$	(0.05	)	$	(0.04	)
Basic and diluted weighted average common shares outstanding		6,517,372			5,218,650

Avalanche International, Corp. and Subsidiaries

~~Revenue~~Notes to Condensed Consolidated Financial Statements

During the three months ended February 29, 2016 and February 28, 2015, the Company recognized total revenue of nil and $14,995, respectively. Total revenue was derived from sales of our vape liquid business, including vape pens and accessories. The decrease in total revenue is attributed to our decision to focus on the development of RCG and other opportunities and to discontinue operations in the vape liquid business.(Unaudited)

~~Cost~~On October 27, 2016, the Company’s Board of ~~Revenue~~Directors granted incentive stock option awards for 1,000,000 shares of common stock to each of the Company’s Chairman, President and Chief Executive Officer and Chief Financial Officer (collectively, the “Stock Option Grants”). The Stock Option Grants were issued pursuant to the Plan. Upon obtaining stockholder approval for the Plan an accounting grant date will be established. The Stock Option Grants have an exercise price of $0.16 and are exercisable for seven years. The Stock Option Grants will initially vest equally in annual tranches over a three (3) year period beginning on October 27, 2017. Upon closing of the acquisition of MTIX, the vesting terms of the options change and will vest 50% upon closing and 50% one year after closing.

The Company reported cost of revenue for the three months ended February 28, 2015 of $8,534 as opposed to no cost of revenue during the three months ended February 29, 2016. The absence of cost of revenue during the quarter ended February 29, 2016, is due to the decision to discontinue the manufacturing and distribution of flavored liquids for electronic vaporizers and eCigarettes and accessories in June 2015.F-23

~~Operating~~Table ~~expenses~~of Contents

~~Operating~~ITEM ~~expenses for the three months ended February 29, 2016 and 2015, were $175,770 and $193,830, respectively~~2. As reflected in the table below, the decrease in operating expenses of $18,060 for the three months ended February 29, 2016, when compared to the three months ended February 28, 2015, was primarily the result of fluctuations in the following expense categories: stock-~~based~~ ~~compensation,~~MANAGEMENT’S ~~professional~~DISCUSSION ~~fees,~~AND ~~salaries~~ANALYSIS ~~and~~OF ~~employee~~FINANCIAL ~~benefits,~~CONDITION ~~loan~~AND ~~fees~~RESULTS ~~and~~OF ~~advertising and marketing expenses.~~OPERATIONS

27CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

~~Table~~This Quarterly Report on Form 10-Q contains forward-looking statements that involve a number of ~~Contents~~risks and uncertainties. Words such as “anticipates,” “expects,” “intends,” “goals,” “plans,” “believes,” “seeks,” “estimates,” “continues,” “may,” “will,” “would,” “should,” “could,” and variations of such words and similar expressions are intended to identify such forward-looking statements. In addition, any statements that refer to projections of our future financial performance, our anticipated growth and trends in our businesses, uncertain events or assumptions, and other characterizations of future events or circumstances are forward-looking statements. Such statements are based on management's expectations as of the date of this filing and involve many risks and uncertainties that could cause our actual results to differ materially from those expressed or implied in our forward-looking statements. Such risks and uncertainties include those described throughout this report and our Annual Report on Form 10-K for the fiscal year ended November 30, 2015, particularly the “Risk Factors” sections of such reports. Given these risks and uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements. Readers are urged to carefully review and consider the various disclosures made in this Form 10-Q and in other documents we file from time to time with the Securities and Exchange Commission that disclose risks and uncertainties that may affect our business. The forward-looking statements in this Form 10-Q do not reflect the potential impact of any divestitures, mergers, acquisitions, or other business combinations that had not been completed as of December 3, 2018. In addition, the forward-looking statements in this Form 10-Q are made as of the date of this filing, and we do not undertake, and expressly disclaims any duty, to update such statements, whether as a result of new information, new developments or otherwise, except to the extent that disclosure may be required by law.

	Three Months Ended
	February 29, 2016		February 28, 2015		$ Change
Stock-based compensation	$	7,556	$	56,708	$	(49,152	)
Professional fees		57,959		73,761		(15,802	)
Salaries and employee benefits		91,000		22,920		68,080
Loan fees		—		7,000		(7,000	)
Advertising and marketing		—		8,364		(8,364	)
General and administrative		19,255		25,077		(5,822	)
Total operating expenses	$	175,770	$	193,830	$	(18,060	)

General

~~Stock~~Avalanche International Corp. (the “Company” or “Avalanche”) is a holding company currently engaged in acquiring and/or developing businesses in which the Company maintains a controlling interest. The Company anticipates that its subsidiaries will be engaged in a number of diverse business activities. The Company initially had two wholly-~~based~~owned ~~compensation~~ subsidiaries, Smith and Ramsay Brands, LLC (“SRB”) and Restaurant Capital Group, LLC (“RCG”). SRB was formed on May 19, 2014, and RCG was formed on October 22, 2015. SRB was originally formed as a manufacturer and distributor of flavored liquids for electronic vaporizers and eCigarettes and accessories; this business was discontinued in June 2015. RCG was formed to hold the Company’s investments in the restaurant industry.

~~During~~The ~~the~~Company ~~three~~is ~~months~~engaged in ~~ended~~a ~~February~~variety ~~29,~~of ~~2016,~~activities ~~the~~which ~~Company~~we ~~entered~~believe ~~into~~will aexpand ~~consulting~~the ~~agreement~~number ~~for~~and ~~services~~type ~~related~~of tobusinesses ~~general~~in ~~corporate~~which ~~matters.~~we ~~The~~invest ~~consulting~~and ~~agreement~~ultimately ~~was for~~ have a ~~three-month~~controlling ~~term~~interest. ~~and~~The ~~provided~~Company ~~for~~identifies ~~the~~investment ~~issuance~~opportunities ofthrough ~~50,000~~an ~~shares~~extensive network of ~~common~~contacts ~~stock~~with investment banking and ~~cash~~venture ~~compensation~~capital offirms ~~$25,000~~and asother ~~payment~~associations ~~for~~with ~~the~~high ~~services.~~net-worth ~~The~~individuals ~~shares~~and ~~were~~individuals ~~valued~~ at ~~$20,000,~~universities ~~determined~~such ~~based on~~ as the ~~closing~~University ~~price~~ of ~~the~~South ~~Company’s~~Florida ~~common stock on the issuance date,~~ and ~~are being expensed over~~ the ~~term~~Byrd ~~of the consulting agreement~~Institute. AsUpon aidentification ~~result~~ of ~~this~~an ~~issuance,~~investment opportunity the Company ~~has~~relies ~~recorded~~upon the ~~stock~~executive ~~based~~management ~~compensation~~team ofto ~~$7,556~~conduct ~~and~~a ~~prepaid~~thorough ~~expense~~evaluation of ~~$12,444. Conversely, during~~ the ~~three~~target ~~months~~and ~~ended~~its ~~February~~technology. ~~28,~~As ~~2015~~required, the ~~Company~~executive ~~entered~~management team ~~into~~may ~~two~~consult ~~consulting~~with ~~agreements~~individuals ~~for~~that ~~services~~have ~~related~~specialized toexpertise ~~general~~in ~~corporate~~the ~~matters~~target industry. ~~The~~In ~~terms~~the case of ~~these~~an ~~consulting~~investment ~~agreements~~where ~~were~~the executive ~~from~~management ~~six~~team tois ~~eleven~~satisfied ~~months~~with ~~and~~its ~~provided~~evaluation, ~~for~~ the ~~issuance~~basic ofterms ~~212,500 shares~~ of ~~common~~an ~~stock~~investment asare ~~payment~~negotiated ~~for~~directly by the ~~services.~~executive management ~~The~~team ~~shares were valued at $340~~and,~~250~~ ~~and~~depending ~~were~~on ~~expensed over~~ the ~~terms~~amount of the ~~consulting~~transaction, ~~agreements.~~presented Asto athe ~~result~~Board offor ~~these~~approval. ~~issuance,~~Upon ~~the~~mutual ~~Company~~acceptance ~~has~~of the ~~recorded~~basic ~~stock~~terms, ~~based~~outside ~~compensation~~counsel ofwould ~~$56,708~~prepare ~~and~~the ~~prepaid~~transaction ~~expense~~investment ~~of $283,542~~documents.

~~Professional~~Avalanche’s operating ~~fees~~businesses are managed on a centralized basis. The Company’s senior management participates in and is ultimately responsible for significant capital allocation decisions, investment activities and the selection of the key executive officers to head each of the operating businesses. Our capital allocation decisions are based on extensive analysis of potential subsidiary companies' business operations supported by an in-depth understanding of the quality of their revenues and cash flow potential, variability of costs and the inherent value of their assets, including proprietary intangible assets and intellectual property.

~~During~~Restaurant ~~the~~Capital ~~three months ended February 29~~Group, ~~2016, the Company incurred professional fees of $57,959, a decrease of $15,802 as compared to the three months ended February 28, 2015. The decrease is attributed to several factors:~~LLC

·On ~~The~~April ~~Company~~13, ~~experienced~~2016, RCG entered into an ~~aggregate~~agreement ~~increase~~to offinance ~~$25~~a new restaurant owned by Philo Group,~~867~~ inLLC ~~audit~~(“Philo”). The restaurant is named Giulia and ~~legal~~features ~~fees~~Italian ~~due~~fusion tocuisine and two stylish full-service bars with an ~~overall~~intimate ~~increase~~lounge atmosphere. Giulia, which opened in March 2017, is located near the ~~operations~~Financial ~~conducted~~District, LA Live, and the ~~level~~Staples ofCenter ~~complexity~~in downtown Los Angeles. Philo has placed a significant emphasis on the distinctive, contemporary interior design and decor of Giulia. We believe that this stylish restaurant design and decor will contribute to the ~~transactions~~distinctive ~~entered~~dining ~~into~~experience ~~during~~enjoyed ~~fiscal~~by ~~year~~customers ~~2015~~and generate higher annual sales per square foot that than is typical in our industry.

·Our Ininitial ~~December~~investment in ~~2014,~~Philo ~~the~~was ~~Company~~structured ~~initiated~~as ~~multiple~~a ~~projects~~loan toand ~~increase~~between ~~awareness~~June of2016 to November 2017, the Company. Asprovided ~~a result~~$947,092 ~~during~~in financing to Philo under the ~~three~~terms ~~months~~of ~~ended~~a ~~February~~Senior 28Secured Property Note dated April 4, ~~2015~~2016, as amended (the ~~Company~~“Philo ~~incurred~~Note”). ~~$57,043~~The inPhilo ~~fees~~Note ~~for~~bears interest ~~public~~at ~~and~~a ~~investor~~rate ~~relations~~of ~~services.~~sixteen Inpercent ~~the~~(16%) ~~quarter~~per ~~ended~~annum ~~February~~and ~~29,~~is ~~2016,~~personally ~~due~~guaranteed toby the ~~emphasis~~principal onof ~~ongoing~~Philo ~~projects~~and ~~such~~secured asby ~~the~~all assets ~~pending~~of ~~acquisition~~Philo. ofIn ~~MTIX~~addition, ~~the~~we ~~Company~~expect ~~did~~to ~~not~~renegotiate ~~make~~the anterms of our investment in ~~these~~Philo ~~types~~such ofthat ~~activities~~we obtain a significant ownership in Giulia.

·- ~~During the three months ended February 29, 2016, the Company incurred $~~1~~,142~~ for information technology and website services, a decrease of $10,126. The decrease is attributed to the absence of public and investor relations services during the current period. In the past, the Company incurred significant expense on information technology services needed to support and maintain the call center, website and email systems utilized for these services.-

·Table ~~The remaining decrease in professional fees during the three months ended February 29, 2016 are attributed to various items, none~~ of ~~which are significant individually.~~Contents

28Smith and Ramsay Brands, LLC

~~Table~~The Company established SRB as a manufacturer and distributor of ~~Contents~~flavored liquids for electronic vaporizers and eCigarettes and accessories (the “Vape Business”). SRB had intended to aggressively expand the Vape Business with additional flavors in its signature brand and by expanding through additional new brands and the acquisition and distribution of signature and non-signature accessories. In mid-Fall of 2014, SRB began a targeted rollout of its Vape Business and during June 2015 we made the decision to discontinue operations in the Vape Business. The decision to discontinue this line of business was based upon the highly competitive marketplace and exceedingly small gross margins that we were realizing in the Vape Business combined with other business opportunities, such as the restaurant business, where we expect to generate greater returns.

~~Salaries~~RESULTS ~~and~~OF ~~employee benefits~~OPERATIONS

OnTHREE ~~May~~MONTHS ~~14,~~ENDED ~~2014,~~MAY ~~the Company entered into an Agreement of Conveyance~~31, Transfer and Assignment of Assets and Assumption of Obligations (the “Agreement”) with John Pulos, its prior sole officer and director. In conjunction with the Agreement, there was a change in management and the Company began compensating its officers and directors. Prior to the resignation of Mr. Pulos, which was effective May 15, 2014, the Company did recognize any compensation expense for the services of its director and officer. Subsequent to May 15, 2014, the Company began compensating its Chief Executive Officer, Chief Financial Officer and Chairman of the Board of Directors (the “Chairman”) and in November 2015, the Company approved the payment of monthly fees to its Chairman, Milton C. Ault III, in the amount of $20,000. During the three months ended February 29, 2016 ~~and~~COMPARED ~~February~~TO ~~28,~~THREE ~~2015,~~MONTHS ENDED ~~salaries~~MAY ~~and employee benefits were $91~~31,~~000~~ and $22,920, respectively. The $68,080 increase in salaries and employee benefits is primarily attributed to the monthly compensation paid to the Chairman, which amounted to $60,000 for the quarter ended February 29, 2016.2015

~~General~~The following table summarizes the results of our operations for the three months ended May 31, 2016 and ~~administrative~~2015.

General and administrative expenses during the three months ended February 29, 2016 and February 28, 2015 were $19,255 and $25,077, respectively. During the three months ended February 28, 2015, the Company incurred $13,500 in license fees related to its Vape business, which was discontinued in June 2015. During the three months ended February 29, 2016 and February 28, 2015, the Company incurred travel related expenses of $12,800 and $3,374, respectively. The increase in travel related costs are due to the shift in the focus of the Company’s operations away from the Vape Business, which was conducted with limited travel to a significant emphasis on raising capital to fund the Company which required extensive travel. The remaining general and administrative costs consist of a significant number of different types of expenses, none of which were individually materially, and are consistent for a public company of our size and operations.

	For the Three Months Ended May 31,
	2016			2015

Revenue - related party	$	-		$	23,547
Revenue		-			120
Total Revenue		-			23,667
Cost of revenue		-			(20,758	)
Gross profit		-			2,909
Total operating expenses		196,225			313,005
Loss from operations		(196,225	)		(310,096	)
Other income (expense)
Interest income		42,268			-
Interest expense, including penalties		(109,351	)		(68,669	)
Interest expense - debt discount		(118,351	)		(84,178	)
Loss on issuance of convertible debt		(68,522	)		(301,309	)
Change in fair value of bifurcated conversion options and derivative warrant liabilities		(231,937	)		182,776
Total other expense, net		(485,893	)		(271,380	)

Net loss	$	(682,118	)	$	(581,476	)

~~Other~~Operating ~~Income and Expenses~~expenses

Other income and expense includes interest expense, amortization of discounts on notes payable, changes in the fair value of the Company’s derivative liabilities associated with issuances of debt and losses recognized on issuances of the Company’s derivative liabilities. During the three months ended February 29, 2016, the Company reported other expense of $132,486 compared with expense of $4,200 during the three months ended February 28, 2015.

	For the Three Months Ended May 31,
	2016		2015		$ Change

Stock-based compensation	$	12,444	$	195,125	$	(182,681	)
Professional fees		32,037		73,791		(41,754	)
Salaries and employee benefits		103,953		13,814		90,139
General and administrative		47,791		30,275		17,516
Total operating expenses	$	196,225	$	313,005	$	(116,780	)

	For the Three Months Ended
	February 29, 2016			February 28, 2015
Other expense
Interest income	$	6,441		$	—
Interest expense		(83,320	)		(4,200	)
Interest expense - debt discount		(140,517	)		—
Loss on issuance of convertible debt		(157,233	)		—
Change in fair value of derivative liability		242,143			—
Total other expenses	$	(132,486	)	$	(4,200	)

- 2 -

~~Interest~~Table ~~expense increased by $79,120, resulting in interest expense~~ of $83,320 in the three months ended February 29, 2016, as compared to interest expense of $4,200 in the three months ended February 28, 2015. The increase in interest expense was due to an increase in the amount of the Company’s total borrowings. At February 29 2016, the outstanding balance of the Company’s convertible notes payable and notes payable was $893,545 compared with $83,250 at February 28, 2015, an increase of $810,295.Contents

~~The~~Stock-based other primary components of other income and expense consist of amortization of discounts on notes payable of $140,517, losses recognized on issuances of the Company’s derivative liabilities of $157,233 and changes in the fair value of the Company’s derivative liabilities of $242,143 are primarily all attributed to the debt conversion features embedded in the Company’s convertible promissory notes, which are accounted for as derivative liabilities.compensation

AtStock-based ~~issuance,~~compensation expense for the ~~estimated~~three ~~fair~~months ~~value~~ended ofMay ~~the~~31, ~~debt~~2016 ~~conversion~~was ~~features~~$12,444 ~~totaled~~compared to $~~965~~195,~~885.~~125 ~~However,~~for the ~~fair~~three ~~value~~months ofended May 31, 2015. During the ~~debt~~three ~~conversion~~months ~~features~~ended ~~was~~May ~~limited~~31, by2016, the ~~amount~~Company issued 50,000 shares of ~~the~~common ~~gross~~stock ~~proceeds~~as ofpayment ~~the~~for ~~convertible~~services ~~promissory~~related ~~notes~~to general corporate matters. ~~During~~The ~~the~~shares ~~three~~were ~~months~~valued ~~ended~~based ~~February~~on ~~29,~~the ~~2016,~~closing price of the Company's ~~recorded~~common ~~non-cash~~stock ~~interest~~on ~~expense~~the ofissuance ~~$140~~date,~~517~~ ~~primarily~~and ~~due~~were expensed toover the ~~debt~~term ~~discount~~ of the consulting agreement. During January 2015, the Company’s ~~convertible~~had ~~notes~~entered ~~payable~~into two consulting agreements for services related to general corporate matters. ~~Debt~~ ~~discounts~~The ~~are~~terms ~~amortized~~of ~~through~~these ~~periodic~~consulting ~~charges~~agreements were from six to ~~interest~~eleven ~~expense~~months ~~over~~and provided for the ~~term~~issuance of ~~the~~212,500 ~~related~~shares ~~financial~~of ~~instrument~~common ~~using~~stock ~~the~~as ~~effective~~payment ~~interest~~for ~~method~~the services. ~~During~~The ~~the~~shares ~~three~~were ~~months~~valued ~~ended~~at ~~February 29~~$340,250 ~~2016~~ and were ~~2015,~~expensed over the ~~Company~~terms ~~recorded~~of ~~amortization~~the ofconsulting ~~debt~~agreements. ~~discounts~~The January 2015 issuances resulted in stock-based compensation of $~~140~~195,~~517~~125 during ~~and~~the ~~nil~~three months ended May 31, ~~respectively~~2015.

29Professional fees

~~Table~~During the three months ended May 31, 2016, the Company incurred professional fees of ~~Contents~~$32,037, a decrease of $41,754 as compared to the three months ended May 31, 2015. The decrease is attributed to several factors:

· The ~~difference~~Company ~~between~~experienced ~~the estimated fair value of the debt conversion feature and the debt discount is reflected as~~ a ~~loss~~decrease ~~on issuance~~ of ~~convertible debt and such loss amounted to~~ $~~140,517 and nil, respectively, during the three months ended February 29, 2016 and February~~ 28,378 ~~2015.~~in ~~Additionally,~~legal ~~the~~fees ~~Company~~due ~~is required~~ to ~~mark~~an tooverall ~~market~~decrease ~~the~~in ~~value of~~ the ~~conversion~~number ~~feature liability. Therefore, as~~ of ~~February~~financing ~~29,~~transactions ~~2016,~~conducted ~~the~~and ~~Company revalued~~ the ~~fair~~level ~~value~~ of ~~the~~complexity ~~debt conversion feature for the convertible promissory notes and determined the conversion feature liability to be $1,084,409, a decrease~~ of ~~$242,143 from~~ the ~~fair~~transactions ~~value~~entered ~~determined~~into atduring ~~November~~fiscal ~~30,~~year 2015. ~~Changes in the conversion feature liability are recorded as income or expense during the reporting period that the change occurred.~~

~~Net~~· ~~Loss~~In December 2014, the Company initiated multiple projects to increase awareness of the Company. As a result, during the three months ended May 31, 2015, the Company incurred $20,000 in fees for public and investor relations services. In the quarter ended May 31, 2016, due to the emphasis on ongoing projects such as the pending acquisition of MTIX, the Company did not make an investment in these types of activities.

~~For~~Salaries ~~the~~and ~~foregoing~~employee ~~reasons, the Company’s net loss for the three months ended February 29, 2016, was $308,256 compared to a net loss of $191,569 for the three months ended February 28, 2015.~~benefits

AsDuring ~~reflected~~the inthree months ended May 31, 2016, the amount of the Company’s ~~consolidated~~salaries ~~statement~~and employee benefits were $103,953, an increase of ~~cash~~$90,139 ~~flows~~as compared to the $13,814 for the three months ended ~~February~~May 2931, ~~2016~~2015. ~~and~~The ~~February~~increase ~~28,~~in ~~2015,~~salaries ~~the~~and ~~Company’s~~employee ~~reported~~benefits ~~net loss~~ is ~~comprised~~primarily ofattributed to ~~non-cash~~Board ~~charges~~Fees of $6360,~~163~~000, ~~and~~monthly ~~$56~~compensation paid to the Company’s Chairman,~~708,~~ ~~respectively.~~and Ato ~~summary~~a oflesser ~~these~~extent ~~non-cash~~the ~~charges~~expansion isof asthe management ~~follows:~~team.

	For the Three Months Ended
	February 29, 2016			February 28, 2015
Stock-based compensation to consultants	$	7,556		$	56,708
Loss on issuance of convertible debt		157,233			—
Change in fair value of derivative liability		(242,143	)		—
Amortization of debt discount		140,517			—
Non-cash items included in net loss	$	63,163		$	56,708

On May 14, 2014, the Company entered into an Agreement of Conveyance, Transfer and Assignment of Assets and Assumption of Obligations (the “Agreement”) with John Pulos, its prior sole officer and director. In conjunction with the Agreement, there was a change in management and the Company began compensating its officers and directors. Prior to the resignation of Mr. Pulos, which was effective May 15, 2014, the Company did not recognize any compensation expense for the services of its director and officer. Subsequent to May 15, 2014, the Company began compensating its Chief Executive Officer, Chief Financial Officer and Chairman of the Board of Directors (the “Chairman”) and in November 2015, the Company approved the payment of monthly fees to its Chairman, Milton C. Ault III, in the amount of $20,000.

~~FINANCIAL~~General ~~CONDITION~~and administrative

~~Our~~During ~~negative~~the ~~working~~three ~~capital~~months ended ofMay $231,~~129~~ 2016,~~516~~ asthe ofCompany’s ~~February~~general ~~29,~~and ~~2016,~~administrative ~~increased~~expenses were $4247,~~127 from our November 30~~791, ~~2015~~an ~~negative~~increase ~~working capital~~ of $217,~~087,389.~~516 ~~Our~~as ~~operating~~compared ~~losses~~to the ~~during~~$30,275 for the three months ended ~~February~~May 2931, ~~2016~~2015. ~~were~~The ~~funded~~increase ~~primarily~~in bygeneral ~~proceeds~~and ~~from~~administrative ~~convertible~~expenses ~~notes~~is ~~payable~~primarily ~~and~~due ~~loans~~to ~~payable~~an increase ofin ~~$111,000~~travel and ~~from~~meals anexpense ~~increase~~related into ~~accounts~~ongoing ~~payable~~projects ~~and~~such ~~accrued~~as ~~expenses~~the pending acquisition of ~~$212,687~~MTIX.

~~LIQUIDITY~~Other ~~AND~~Income ~~CAPITAL~~and ~~RESOURCES~~Expense

WeOther ~~have~~income ~~historically financed operations through cash flows from equity transactions~~ and ~~debt~~expense includes ~~financings. The~~interest ~~outstanding~~expense, ~~balance~~amortization of ~~the~~discounts ~~Company’s~~on ~~convertible~~ notes payable ~~and notes payable increased $119~~,~~920~~ ~~during~~changes ~~the three months ended February 29, 2016. Due to the uncertainty of our ability to meet our current operating expenses,~~ in ~~their report on our audited annual financial statements as of and for~~ the ~~years~~fair ~~ended~~value November 30, 2015 and 2014, our independent auditors included an explanatory paragraph regarding concerns about our ability to continue as a going concern. Our financial statements contain additional note disclosures describing the circumstances that led to this disclosure by our independent auditors. There is substantial doubt about our ability to continue as a going concern as the continuation and expansion of ~~our business is dependent upon either obtaining future equity or debt financings or achieving profitable operations in order to repay~~ the ~~existing~~Company’s ~~short-term~~derivative liabilities ~~debt~~ and tolosses ~~provide~~recognized aon ~~sufficient~~issuances ~~source~~ of ~~operating capital. No assurances can be made that~~ the Company’s ~~will~~derivative ~~be successful in obtaining equity or debt financing needed to continue to fund its operations, or that the Company will achieve profitable operations and positive cash flow~~liabilities. ~~Our inability to take these actions as and when necessary would materially adversely affect our liquidity, results of operations and financial condition.~~

~~Net~~Interest cash used in operating activities for the three months ended February 29, 2016 and February 28, 2015, was $12,597 and $23,684, respectively. During the three months ended February 29, 2016 and February 28, 2015, the Company reported a net loss of $308,256 and $191,569, respectively.income

30During the three months ended May 31, 2016 and 2015, interest income totaled $42,268 and nil, respectively. The increase in interest income is due to the secured promissory notes the Company entered into with JS Technologies, Inc. (“JST”) and Philo Group, LLC (“Philo”). The Company recorded interest of $31,200 from the amortization of original issue discounts and contractual interest of $11,068 based on the contractual interest rates on these two secured promissory notes.

~~Table~~- of3 ~~Contents~~-

~~Net~~Table ~~proceeds from the issuance~~ of convertible notes payable of $11,000 and notes payable of $100,000 offset the negative cash flows from operating activities. However, as a result of loans the Company made to JS Technologies, Inc., of $95,000, ultimately, we experienced a slight decrease in cash of $347 during the three months ended February 29, 2016.Contents

~~CRITICAL~~Interest ~~ACCOUNTING POLICIES~~expense

InDuring ~~our~~the ~~Annual~~three ~~Report~~months ended onMay ~~Form 10-K~~31, ~~for~~2016, interest expense totaled $227,702, an increase of $74,855, as compared to interest expense of $152,847 in the three ~~year~~months ended ~~November~~May 3031, 2015,. weThe ~~identified~~increase ~~the~~in ~~critical~~interest ~~accounting~~expense ~~policies~~was ~~which~~primarily ~~affect~~due ~~our~~to ~~more~~an ~~significant~~increase ~~estimates~~in amortization of debt discounts on convertible notes and ~~assumptions~~notes ~~used~~payable and an increase in ~~preparing~~the ~~our~~amount ~~consolidated~~of ~~financial~~the ~~statements. The~~Company’s ~~basis~~total ~~for~~borrowings. ~~developing~~During the ~~estimates~~three months ~~and~~ended ~~assumptions~~May ~~within~~31, ~~our~~2016 ~~critical~~and ~~accounting~~2015, ~~policies~~the isCompany ~~based~~recorded onamortization ~~historical~~of ~~information~~debt discounts of $118,351 and ~~known~~$84,178, ~~current~~respectively, an ~~trends~~increase ~~and~~of ~~factors~~$34,173. The ~~estimates~~remaining ~~and~~increase ~~assumptions~~in ~~are~~interest ~~evaluated~~expense onof an$40,682 ~~ongoing~~is ~~basis~~primarily ~~and~~due ~~actual~~to ~~results~~an ~~have~~increase ~~been~~in ~~within~~the ~~our~~amount ~~expectations~~of the Company’s total borrowings. We ~~have~~At ~~not~~May ~~changed~~31, ~~these~~2016, ~~policies~~the ~~from~~outstanding ~~those~~principal ~~previously~~balance ~~disclosed~~of inthe ~~our~~Company’s ~~Annual~~convertible ~~Report~~notes payable, notes payable and note payable, related party was $1,398,582 compared with $453,750 at May 31, 2015, an increase of $944,832.

~~ITEM~~Change 3.in ~~QUANTITATIVE~~fair ~~AND~~value ~~QUALITATIVE~~of ~~DISCLOSURES~~derivative ~~ABOUT MARKET RISK~~liabilities

~~Not~~Changes ~~applicable~~in the fair value of the Company's derivative liabilities are attributed to the debt conversion features embedded in the Company's convertible promissory notes issued during the three months ended May 31, 2016 and 2015 and warrants which are accounted for as derivative liabilities totaled a ~~smaller~~loss ~~reporting~~of ~~company~~$231,937 and a gain of $182,776, respectively. The Company is required to mark-to-market the value of its conversion feature liabilities.

~~ITEM~~SIX 4.MONTHS ~~CONTROLS~~ENDED ~~AND~~MAY ~~PROCEDURES~~31, 2016 COMPARED TO SIX MONTHS ENDED MAY 31, 2015

~~Evaluation~~The following table summarizes the results of ~~Disclosure~~our ~~Controls~~operations for the six months ended May 31, 2016 and ~~Procedures~~2015.

We have established disclosure controls and procedures designed to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in SEC rules and forms and is accumulated and communicated to management, including the principal executive officer and principal financial officer, to allow timely decisions regarding required disclosure.

	For the Six Months Ended May 31,
	2016			2015

Revenue - related party	$	-		$	33,848
Revenue		-			4,814
Total Revenue		-			38,662
Cost of revenue		-			(29,292	)
Gross profit		-			9,370
Total operating expenses		371,995			499,835
Loss from operations		(371,995	)		(490,465	)
Other income (expense)
Interest income		48,708			-
Interest expense, including penalties		(192,671	)		(79,869	)
Interest expense - debt discount		(258,867	)		(84,178	)
Loss on issuance of convertible debt		(71,061	)		(301,309	)
Loss on conversion of convertible debt		(154,694	)		-
Change in fair value of bifurcated conversion options and derivative warrant liabilities		10,206			182,776
Total other expense, net		(618,379	)		(282,580	)

Net loss	$	(990,374	)	$	(773,045	)

~~Our~~Operating principal executive officer and principal financial officer, with the assistance of other members of the Company's management, have evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this quarterly report and has subsequently determined that our disclosure controls and procedures were not effective as of February 29, 2016 due to certain material weaknesses as described in our Form 10-K, as filed on April 28, 2017. As a result of such material weaknesses, our disclosure controls and procedures were not effective. Our management has worked, and will continue to work to remediate the above material weaknesses in our disclosure controls and procedures.expenses

Limitations on the Effectiveness of Disclosure Controls.

	For the Six Months Ended May 31,
	2016		2015		$ Change

Stock-based compensation	$	20,000	$	251,833	$	(231,833	)
Professional fees		90,001		153,915		(63,914	)
Salaries and employee benefits		194,952		36,735		158,217
General and administrative		67,042		57,352		9,690
Total operating expenses	$	371,995	$	499,835	$	(127,840	)

Readers are cautioned that our management does not expect that our disclosure controls and procedures or our internal control over financial reporting will necessarily prevent all fraud and material error. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the company have been detected. These inherent limitations include the realities that judgments in decision-~~making~~ ~~can~~4 be faulty and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people or by management override of the controls.-

31Table of Contents

~~Table~~Stock-based ~~of Contents~~compensation

~~Changes~~Stock inbased ~~Internal~~compensation expense ~~Control~~for the six months ended May 31, 2016 was $20,000 as compared to $251,833 for the six months ended May 31 ,2015, a decrease of $231,833. During the six months ended May 31, 2016, the Company issued 50,000 shares of common stock as payment for services related to general corporate matters. The shares were valued based on the closing price of the Company's common stock on the issuance date, and were expensed over ~~Financial~~the ~~Reporting~~term of the consulting agreement. During the six months ended May 31, 2015, the Company entered into two consulting agreements for services related to general corporate matters. The terms of these consulting agreements were from six to eleven months and provided for the issuance of 312,500 shares of common stock as payment for the services. The shares were valued at $440,250 based on the closing price of the Company's common stock on the issuance date, and were expensed over the term of the consulting agreements.

~~During~~Professional the most recent fiscal quarter 2016 (the first fiscal quarter of 2016) there were no significant changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) that have materially affected or are reasonably likely to materially affect our internal control over financial reporting.fees

~~Significant~~During ~~changes were and are being implemented and tested during~~ the ~~latter~~six ~~half~~months ended ofMay ~~fiscal~~31, 2016, ~~through~~ the ~~date~~Company ofincurred ~~this~~professional ~~report~~fees toof ~~remediate~~$89,997, ~~our~~a ~~material~~decrease ~~weaknesses~~of in$57,554 ~~internal~~as ~~control~~compared ~~over financial reporting. Management believes that such measures we have implemented~~ to ~~remediate~~ the ~~material~~six ~~weaknesses~~months inended May ~~internal~~31, ~~control over financial reporting have had a favorable impact on our internal control over financial reporting~~2015. ~~Changes~~The indecrease ~~our~~is ~~internal~~attributed ~~control over financial reporting through the date of this report that have materially affected, or are reasonably likely~~ to ~~materially~~several ~~affect, our internal control over financial reporting are described below.~~factors:

~~Remediation~~· ~~Process~~The ~~for~~Company ~~November~~experienced 30a decrease of $20,617 ~~2015~~in ~~Material~~legal ~~Weaknesses:~~fees due to an overall decrease in the number of financing transactions conducted and the level of complexity of the transactions entered into during fiscal year 2015.

~~Management~~· In December 2014, inthe ~~coordination~~Company ~~with~~initiated multiple projects to increase awareness of the ~~input~~Company. As a result, ~~oversight~~during ~~and~~the ~~support~~six ofmonths ~~our~~ended ~~Board~~May of31, ~~Directors~~2015, ~~has~~the ~~identified~~Company incurred $35,000 in fees for public and investor relations services. In the ~~measures~~six ~~below~~months ended May 31, 2016, due to ~~strengthen~~the ~~our~~emphasis ~~control~~on ~~environment~~ongoing ~~and~~projects ~~internal~~such ~~control~~as ~~over~~the ~~financial~~pending ~~reporting~~acquisition of MTIX, the Company did not make an investment in these types of activities.

~~We hired a new Chief Financial Officer in~~ ~~June 2016,~~Salaries ~~who~~and ~~performs~~employee ~~the following:~~benefits

·During ~~assists~~the ~~with~~six ~~documentation~~months ended ~~and~~May ~~implementation~~31, 2016, the amount of ~~policies~~the Company’s salaries and ~~procedures~~employee benefits were $194,952 an increase of $158,217 as compared to the $36,735 for the six months ended May 31, 2015. The increase in salaries and ~~monitoring~~employee benefits is primarily attributed to Board Fees of ~~controls~~$180,000, monthly compensation paid to the Company’s Chairman, and to a lesser extent the expansion of the management team.

·On ~~prepares~~May ~~budgets~~14, ~~financial~~2014, ~~statements~~the Company entered into the Agreement with John Pulos, its prior sole officer and ~~journal~~director. ~~entries~~In conjunction with the Agreement, there was a change in management and the Company began compensating its officers and directors. Prior to the resignation of Mr. Pulos, which was effective May 15, 2014, the Company did not recognize any compensation expense for the services of its director and officer. Subsequent to May 15, 2014, the Company began compensating its Chief Executive Officer, Chief Financial Officer and Chairman and in November 2015, the Company approved the payment of monthly fees to its Chairman, Milton C. Ault III, in the amount of $20,000.

·General ~~reviews account reconciliations~~ and ~~journal entries.~~administrative

~~While~~During ~~these~~the ~~remedial~~six ~~actions~~months ~~were~~ended ~~implemented~~May in31, ~~fiscal year~~ 2016, the ~~some~~Company’s ~~may~~general ~~not~~and beadministrative inexpenses ~~place~~were ~~for~~$67,046, aan ~~sufficient~~increase ~~period~~ of ~~time~~$9,694 ~~to help us certify that material weaknesses have been fully remediated~~ as ofcompared ~~the end of fiscal year 2016. If the remedial measures described above are insufficient~~ to ~~address any of~~ the ~~identified material weaknesses or are not implemented effectively~~$57,352 orfor ~~additional~~the six ~~deficiencies~~months ~~arise~~ended inMay ~~the future~~31, ~~material~~2015. ~~misstatements~~The inincrease ~~our interim or annual financial statements may occur~~ in ~~the~~general ~~future~~ and weadministrative ~~may~~expenses ~~continue~~is toprimarily bedue ~~delinquent in our filings. We are currently working~~ to ~~improve~~an ~~and~~increase ~~simplify~~in ~~our~~travel ~~internal processes~~ and meals ~~implement~~expense ~~enhanced~~related ~~controls, as discussed above,~~ to ~~address~~ongoing ~~the~~projects ~~material~~such ~~weaknesses~~as ~~in our internal control over financial reporting and to remedy~~ the ~~ineffectiveness~~pending ofacquisition our disclosure controls and procedures. Any unremediated material weaknesses could have the effects described in Part I, Item 1A, "Risk Factors," in our 2015 Form 10-K filed with the SEC on April 28, 2017, “In preparing our consolidated financial statements, our management determined that our disclosure controls and procedures were ineffective as of ~~November 30, 2015 which could result in material misstatements in our financial statements~~MTIX.”

~~PART~~Other IIIncome —and ~~OTHER INFORMATION~~Expense

~~ITEM~~Other 1.income ~~LEGAL~~and ~~PROCEEDINGS~~expense includes interest income, interest expense, amortization of discounts on notes payable, changes in the fair value of the Company’s derivative liabilities and losses recognized on issuances of the Company’s derivative liabilities.

OnInterest or around April 19, 2016, we received from counsel for Typenex Co-Investment, LLC, a Utah limited liability company (“Typenex”), a written demand to accelerate and demand payment of the entire outstanding balance of the Convertible Note entered into between the Company and Typenex on May 29, 2015 (the “Typenex Note”). On June 7, 2016, Typenex filed suit in the State of Utah, the Third Judicial District Court, County of Salt Lake, for repayment of all principal, default effects, late fee and accrued interest (the “Typenex Suit”). According to the complaint, Typenex asserted an aggregate amount due, as of June 6, 2016, of $149,054. The Company’s answer to the complaint was filed on February 20, 2017. On April 4, 2017, the Company and Typenex agreed to settle the lawsuit for payment of $90,000, which was paid in April 2017. On May 9, 2017, an order of dismissal with prejudice was entered by the Third Judicial District Court.income

~~There~~During ~~are~~the nosix ~~other~~months ended ~~material~~May ~~claims~~31, ~~actions~~2016 and 2015, ~~suits~~interest income totaled $48,708 ~~proceedings~~and nil, orrespectively. ~~investigations~~The ~~that~~increase ~~are~~in ~~currently~~interest ~~pending~~income ~~or,~~is due to the secured promissory notes the Company’s ~~knowledge,~~entered ~~threatened~~into bywith orJST ~~against~~and ~~the~~Philo. The Company orrecorded ~~respecting~~interest ~~its~~of ~~operations~~$35,174 orfrom ~~assets,~~the oramortization of byoriginal orissue ~~against~~discounts ~~any~~and contractual interest of $13,534 based on the ~~Company’s~~contractual ~~officers,~~interest ~~directors,~~rates oron ~~affiliates~~these two secured promissory notes.

32Interest expense

~~Table~~During the six months ended May 31, 2016, interest expense totaled $451,538, an increase of ~~Contents~~$287,491, as compared to interest expense of $164,047 in the six months ended May 31, 2015. The increase in interest expense was primarily due to an increase in amortization of debt discounts on convertible notes and notes payable and an increase in the amount of the Company’s total borrowings. During the six months ended May 31, 2016 and 2015, the Company recorded amortization of debt discounts of $258,867 and $84,178, respectively, an increase of $174,869. The remaining increase in interest expense of $112,802 is primarily due to an increase in the amount of the Company’s total borrowings.

~~ITEM~~- ~~1A.~~5 ~~RISK FACTORS~~-

~~The~~Table ~~risks described in Part I, Item 1A, "Risk Factors," in our 2015 Form 10-K, could materially and adversely affect our business, financial condition and results~~ of operations, and the trading price of our common stock could decline. These risk factors do not identify all risks that we face - our operations could also be affected by factors that are not presently known to us or that we currently consider to be immaterial to our operations. Due to risks and uncertainties, known and unknown, our past financial results may not be a reliable indicator of future performance and historical trends should not be used to anticipate results or trends in future periods. The Risk Factors section of our 2015 Annual Report on Form 10-K remains current in all material respects.Contents

~~ITEM~~Change 2.in ~~UNREGISTERED~~fair ~~SALES~~value OFof ~~EQUITY~~derivative ~~SECURITIES AND USE OF PROCEEDS~~liabilities

OnChanges ~~December~~in 2,the ~~2015,~~fair value of the Company's derivative ~~issued~~liabilities ~~100,000~~are ~~warrants~~attributed to athe ~~third~~debt ~~party~~conversion infeatures ~~connection~~embedded ~~with~~in ~~a loan to~~ the Company.'s ~~The~~convertible ~~warrants~~promissory ~~were~~notes ~~valued~~issued during ~~at $30,987 and were expensed at~~ the ~~time~~six ofmonths ~~issuance~~ended asMay ~~non-cash~~31, ~~interest~~2016 ~~expense~~and ~~using~~2015 ~~the~~and ~~effective~~warrants ~~interest~~which ~~method.~~are ~~These~~accounted ~~securities~~for ~~were~~as ~~issued~~derivative ~~pursuant~~liabilities tototaled ~~Section 4(~~a~~)(2)~~ gain of ~~the~~$10,206 ~~Securities~~and ~~Act~~$182,776, respectively. ~~These~~The ~~warrants~~Company ~~were~~is ~~issued~~required into ~~reliance~~mark-to-market ~~upon~~ the ~~exemption~~value ~~provided by Section 4(a)(2)~~ of ~~the~~its ~~Securities~~conversion ~~Act~~feature liabilities.

OnFINANCIAL December 10, 2015, the Company issued and sold to an accredited investor 25,000 shares of its common stock. This issuance resulted in aggregate gross proceeds, which were used for general operating expenses, to the Company of $5,000. These securities were sold in reliance upon the exemption provided by Section 4(a)(2) of the Securities Act and the safe harbor of Rule 506 under Regulation D promulgated under the Securities Act.CONDITION

OnOur ~~January~~negative ~~26,~~working capital ~~2016,~~of ~~the Company issued 50~~$2,~~000~~927,449 ~~shares~~as of ~~its~~May ~~common~~31, ~~stock~~2016, asincreased ~~payment~~by ~~for~~$840,060 ~~services~~from toour aNovember ~~third~~30, ~~party~~2015 ~~for~~negative ~~consulting~~working ~~services.~~capital ~~The~~of ~~shares were valued at~~ $202,~~000~~087,389. Our anoperating ~~average~~losses ofduring ~~$0.40~~the ~~per~~six ~~share.~~months ~~These~~ended ~~shares~~May 31, 2016 were ~~issued~~funded inprimarily ~~reliance~~by ~~upon~~proceeds ~~the~~from ~~exemption~~convertible ~~provided~~notes bypayable and ~~Section~~loans ~~4(a)(2)~~payable of ~~the Securities Act~~$563,625.

~~During~~LIQUIDITY ~~January~~AND ~~2016,~~CAPITAL the Company issued an aggregate of 457,619 shares of its common stock as payment for principal and accrued interest. The shares were valued at $183,048, an average of $0.40 per share. These shares were issued in reliance upon the exemption provided by Section 4(a)(2) of the Securities Act.RESOURCES

OnWe ~~February~~have ~~28,~~historically financed ~~2017,~~operations through cash flows from equity transactions and debt financings. The outstanding principal balance of the Company’s ~~issued~~convertible ~~250~~notes payable and notes payable increased $624,~~000~~957 ~~shares~~during ofthe ~~its~~six ~~common~~months ~~stock~~ended asMay ~~payment~~31, ~~for~~2016 ~~services~~as compared to anNovember ~~officer~~30, 2015. ~~The~~Due ~~shares~~to ~~were~~the ~~valued~~uncertainty atof ~~$40~~our ability to meet our current operating expenses,~~000,~~ $0there is substantial doubt about our ability to continue as a going concern.16 ~~per~~Our ~~share~~financial statements contain additional note disclosures describing the circumstances that led to this disclosure. ~~These~~The ~~shares~~continuation ~~were~~and ~~issued~~expansion inof ~~reliance~~our business is dependent upon either obtaining future equity or debt financings or achieving profitable operations in order to repay the ~~exemption~~existing ~~provided~~short-term bydebt ~~Section~~and 4(to provide a~~)(2)~~ sufficient source of operating capital. No assurances can be made that the ~~Securities~~Company ~~Act~~will be successful in obtaining equity or debt financing needed to continue to fund its operations, or that the Company will achieve profitable operations and positive cash flow. Our inability to take these actions as and when necessary would materially adversely affect our liquidity, results of operations and financial condition.

OnAs ~~March~~reflected 9,in ~~2017,~~ the Company’s ~~issued~~condensed anconsolidated ~~aggregate~~statements of ~~216,946~~cash ~~shares~~flows offor ~~its~~the ~~common~~six ~~stock~~months asended ~~payment~~May ~~for~~31, ~~principal~~2016 and ~~accrued~~2015, ~~interest.~~the ~~The~~Company’s reported ~~shares~~net ~~were~~loss ~~valued~~is atcomprised ~~$32,542,~~of annon-cash ~~average~~charges, net of $~~0.15~~485,492 ~~per~~and ~~share~~$456,763, respectively. ~~These~~A ~~shares~~summary ~~were~~of ~~issued~~these innon-cash ~~reliance~~charges is ~~upon~~as ~~the exemption provided by Section 4(a)(2) of the Securities Act.~~follows:

On April 26, 2017, pursuant to the terms of an Exchange Agreement entered on March 7, 2017 between the Company and Philou, the Company issued to Philou 50,000 shares of its newly created Class A Convertible Preferred Stock (the “Class A Shares”) in exchange for the surrender by Philou of 2,000,000 shares of its Common Stock. These Class A Shares were issued in reliance upon the exemption provided by Section 3(a)(9) of the Securities Act.

	For the Six Months Ended May 31,
	2016			2015

Stock-based compensation to consultants	$	20,000		$	251,833
Stock issued for loan fees		-			50,314
Amortization expense-loan fees		-			(48,095	)
Interest income on amortization of original issue discount		(35,174	)		-
Interest expense on warrant issuance		26,250			-
Loss on issuance of convertible debt		71,061			301,309
Loss on conversion of convertible debt		154,694			-
Change in fair value of derivative liability		(10,206	)		(182,776	)
Amortization of debt discount		258,867			84,178
Non-cash items included in net loss	$	485,492		$	456,763

~~ITEM~~Net 3.cash ~~DEFAULTS~~used ~~UPON~~in ~~SENIOR~~operating activities ~~SECURITIES~~for the six months ended May 31, 2016 was $200,041, excluding the non-cash charges, was impacted by changes in working capital components of $304,841 primarily related to an increase in accrued interest on convertible and promissory notes payable of $155,712.

~~None~~Net cash used in investing activities for the six months ended May 31, 2016 included payments of $345,000 for notes receivable to Philo offset by proceeds of $19,674 from notes receivable from JST. No further amounts are due from JST.

~~ITEM~~On 4April 13, 2016, through our wholly-owned subsidiary, Restaurant Capital Group, LLC (“RCG”) we entered into an agreement to finance a new restaurant owned by Philo. ~~MINE~~The ~~SAFETY~~restaurant, ~~DISCLOSURES~~which opened in March 2017, is located in downtown Los Angeles, California.

~~None~~- 6 -

~~ITEM~~Table 5.of ~~OTHER INFORMATION~~Contents

~~None~~Between April 13, 2016 and May 31, 2016, the Company provided $250,000 in financing to Philo under the terms of a Senior Secured Property Note dated April 4, 2016, as amended (the “Philo Note”). The Philo Note bears interest at a rate of sixteen percent (16%) per annum, requires monthly interest payments, and was due within six (6) months from the date of issue. Due to delays in the opening of the restaurant, the Philo Note has not yet been repaid. The Philo Note features an original issue discount of $75,000 and allows for legal fees up to $5,000. The Philo Note is personally guaranteed by the principal of Philo and secured by all assets of Philo. In addition, the principal of Philo has agreed to further secure the loan by pledging several pieces of real property located in California.

33Net cash used in financing activities for the six months ended May 31, 2016 included proceeds from convertible notes of $157,000, notes payable of $406,625 ($51,625 from related parties) and $5,000 from the sale of 25,000 shares of common stock offset by payments on convertible notes of $5,000 and notes payable of $36,101 ($15,851 from related parties).

~~Table~~CRITICAL ofACCOUNTING ~~Contents~~POLICIES

~~ITEM~~In 6our Annual Report on Form 10-K for the year ended November 30, 2015, we identified the critical accounting policies which affect our more significant estimates and assumptions used in preparing our consolidated financial statements. The ~~EXHIBITS~~basis for developing the estimates and assumptions within our critical accounting policies is based on historical information and known current trends and factors. The estimates and assumptions are evaluated on an ongoing basis and actual results have been within our expectations. We have not changed these policies from those previously disclosed in our Annual Report.

Exhibit
Number		Description
3.1		Articles of Incorporation of Avalanche International, Corp. (Incorporated by reference to Exhibit 3.1 of the Company’s registration statement on Form S-1 filed with the Securities and Exchange Commission on January 17, 2012)
3.2		Bylaws of Avalanche International, Corp. (Incorporated by reference to Exhibit 3.2 of the Company’s registration statement on Form S-1 filed with the Securities and Exchange Commission on January 17, 2012)
3.3		Certification of Designation of Class A Convertible Preferred Stock of Avalanche International, Corp. (Incorporated by reference to Exhibit 3.2 of the Company’s quarterly report on Form 8-K filed with the Securities and Exchange Commission on March 9, 2017)
3.4		Certification of Designation of Class B Convertible Preferred Stock of Avalanche International, Corp. (Incorporated by reference to Exhibit 3.3 of the Company’s quarterly report on Form 8-K filed with the Securities and Exchange Commission on March 9, 2017)
10.1		Avalanche International, Corp. 2016 Stock Incentive Plan (Incorporated by reference to Exhibit 21 of the Company’s annual report on Form 10-K filed with the Securities and Exchange Commission on April 28, 2016)
21		List of Subsidiaries (Incorporated by reference to Exhibit 21 of the Company’s annual report on Form 10-K filed with the Securities and Exchange Commission on April 28, 2016)
31.1*		Certification of Chief Executive Officer required by Rule 13a-14(a) or Rule 15d-14(a)
31.2*		Certification of Chief Financial Officer required by Rule 13a-14(a) or Rule 15d-14(a)
32.1**		Certification of Chief Executive Officer and Chief Financial Officer required by Rule 13a-14(b) or Rule 15d-14(b) and Section 1350 of Chapter 63 of Title 18 of the United States Code
101.INS***		XBRL Instance Document
101.SCH***		XBRL Taxonomy Extension Schema Document
101.CAL***		XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF***		XBRL Taxonomy Extension Definition Linkbase Document
101.LAB***		XBRL Taxonomy Extension Label Linkbase Document
101.PRE***		XBRL Taxonomy Extension Presentation Linkbase Document

ITEM 3.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

* FiledNot applicable ~~herewith~~for a smaller reporting company.

** FurnishedITEM ~~herewith~~4. CONTROLS AND PROCEDURES

*** InEvaluation ~~accordance with Rule 406T~~ of ~~Regulation~~Disclosure ~~S-T,~~Controls the information in these exhibits shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to liability under that section, and shall not be incorporated by reference into any registration statement or other document filed under the Securities Act of 1933, as amended, except as expressly set forth by specific reference in such filing.Procedures

34We have established disclosure controls and procedures designed to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in SEC rules and forms and is accumulated and communicated to management, including the principal executive officer and principal financial officer, to allow timely decisions regarding required disclosure.

~~Table~~Our principal executive officer and principal financial officer, with the assistance of ~~Contents~~other members of the Company's management, have evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this quarterly report and has subsequently determined that our disclosure controls and procedures were not effective as of May 31, 2016 due to certain material weaknesses as described in our Form 10-K for our fiscal year ended November 30, 2015, as filed on April 28, 2017. As a result of such material weaknesses, our disclosure controls and procedures were not effective. Our management has worked and will continue to work to remediate the above material weaknesses in our disclosure controls and procedures.

~~SIGNATURES~~Limitations on the Effectiveness of Disclosure Controls.

~~Pursuant~~Readers toare ~~the~~cautioned that ~~requirements~~our ofmanagement ~~Section~~does 13not expect that our disclosure controls and procedures or ~~15(d)~~our internal control over financial reporting will necessarily prevent all fraud and material error. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the ~~Securities~~control ~~Exchange~~system ~~Act~~are met. Further, the design of a ~~1934~~control system must reflect the fact that there are resource constraints, and the ~~registrant~~benefits ~~has~~of ~~duly~~controls ~~caused~~must ~~this~~be ~~report~~considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the company have been detected. These inherent limitations include the realities that judgments in decision-making can be ~~signed~~faulty onand ~~its~~that ~~behalf~~breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the ~~undersigned~~individual ~~thereunto~~acts ~~duly~~of ~~authorized~~some persons, by collusion of two or more people or by management override of the controls.

	AVALANCHE INTERNATIONAL, CORP.
Date: August 4, 2017	By:	/s/ Phillip Mansour
		Philip Mansour
		Chief Executive Officer,
		Principal Executive Officer and Director
Date: August 4, 2017	By:	/s/ William B. Horne
		William B. Horne
		Chief Financial Officer and
		Principal Accounting Officer

Changes in Internal Control over Financial Reporting

35During the most recent fiscal quarter 2016 (the first fiscal quarter of 2016) there were no significant changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) that have materially affected or are reasonably likely to materially affect our internal control over financial reporting.

Significant changes were and are being implemented and tested during the latter half of fiscal 2016 through the date of this report to remediate our material weaknesses in internal control over financial reporting. Management believes that such measures we have implemented to remediate the material weaknesses in internal control over financial reporting have had a favorable impact on our internal control over financial reporting. Changes in our internal control over financial reporting through the date of this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting are described below.

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Table of Contents

Remediation Process for November 30, 2015 Material Weaknesses:

Management, in coordination with the input, oversight and support of our Board of Directors, has identified the measures below to strengthen our control environment and internal control over financial reporting.

We hired a new Chief Financial Officer in June 2016, who performs the following:

assists with documentation and implementation of policies and procedures and monitoring of controls,

prepares budgets, financial statements and journal entries,

reviews account reconciliations and journal entries.

While these remedial actions were implemented in fiscal year 2016, some may not be in place for a sufficient period of time to help us certify that material weaknesses have been fully remediated as of the end of fiscal year 2016. If the remedial measures described above are insufficient to address any of the identified material weaknesses or are not implemented effectively, or additional deficiencies arise in the future, material misstatements in our interim or annual financial statements may occur in the future and we may continue to be delinquent in our filings. We are currently working to improve and simplify our internal processes and implement enhanced controls, as discussed above, to address the material weaknesses in our internal control over financial reporting and to remedy the ineffectiveness of our disclosure controls and procedures. Any unremediated material weaknesses could have the effects described in Part I, Item 1A, “Risk Factors,” in our 2015 Form 10-K filed with the SEC on April 28, 2017, “In preparing our consolidated financial statements, our management determined that our disclosure controls and procedures were ineffective as of November 30, 2015 which could result in material misstatements in our financial statements.”

PART II — OTHER INFORMATION

ITEM 1.

LEGAL PROCEEDINGS

On or around April 19, 2016, we received from counsel for Typenex Co-Investment, LLC, a Utah limited liability company (“Typenex”), a written demand to accelerate and demand payment of the entire outstanding balance of the Convertible Note entered into between the Company and Typenex on May 29, 2015 (the “Typenex Note”). On June 7, 2016, Typenex filed suit in the State of Utah, the Third Judicial District Court, County of Salt Lake, for repayment of all principal, default effects, late fee and accrued interest (the “Typenex Suit”). According to the complaint, Typenex asserted an aggregate amount due, as of June 6, 2016, of $149,054. The Company’s answer to the complaint was filed on February 20, 2017. On April 4, 2017, the Company and Typenex agreed to settle the lawsuit for payment of $90,000, which was paid in April 2017. On May 9, 2017, an order of dismissal with prejudice was entered by the Third Judicial District Court.

There are no other material claims, actions, suits, proceedings, or investigations that are currently pending or, to the Company’s knowledge, threatened by or against the Company or respecting its operations or assets, or by or against any of the Company’s officers, directors, or affiliates

ITEM 1A.

RISK FACTORS

The risks described in Part I, Item 1A, “Risk Factors,” in our 2015 Form 10-K, could materially and adversely affect our business, financial condition and results of operations, and the trading price of our common stock could decline. These risk factors do not identify all risks that we face - our operations could also be affected by factors that are not presently known to us or that we currently consider to be immaterial to our operations. Due to risks and uncertainties, known and unknown, our past financial results may not be a reliable indicator of future performance and historical trends should not be used to anticipate results or trends in future periods. The Risk Factors section of our 2015 Annual Report on Form 10-K remains current in all material respects.

ITEM 2.

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

On December 2, 2015, the Company issued 100,000 warrants to a third party in connection with a loan to the Company. The warrants were valued at $30,987 and were expensed at the time of issuance as non-cash interest expense using the effective interest method. These securities were issued pursuant to Section 4(a)(2) of the Securities Act. These warrants were issued in reliance upon the exemption provided by Section 4(a)(2) of the Securities Act.

On December 10, 2015, the Company issued and sold to an accredited investor 25,000 shares of its common stock. This issuance resulted in aggregate gross proceeds, which were used for general operating expenses, to the Company of $5,000. These securities were sold in reliance upon the exemption provided by Section 4(a)(2) of the Securities Act and the safe harbor of Rule 506 under Regulation D promulgated under the Securities Act.

- 8 -

Table of Contents

On January 26, 2016, the Company issued 50,000 shares of its common stock as payment for services to a third party for consulting services. The shares were valued at $20,000, an average of $0.40 per share. These shares were issued in reliance upon the exemption provided by Section 4(a)(2) of the Securities Act.

During January 2016, the Company issued an aggregate of 457,619 shares of its common stock as payment for principal and accrued interest. The shares were valued at $183,048, an average of $0.40 per share. These shares were issued in reliance upon the exemption provided by Section 4(a)(2) of the Securities Act.

On February 28, 2017, the Company issued 250,000 shares of its common stock as payment for services to an officer. The shares were valued at $40,000, $0.16 per share. These shares were issued in reliance upon the exemption provided by Section 4(a)(2) of the Securities Act.

On March 9, 2017, the Company issued an aggregate of 216,946 shares of its common stock as payment for principal and accrued interest. The shares were valued at $32,542, an average of $0.15 per share. These shares were issued in reliance upon the exemption provided by Section 4(a)(2) of the Securities Act.

On April 26, 2017, pursuant to the terms of an Exchange Agreement entered on March 7, 2017 between the Company and Philou, the Company issued to Philou 50,000 shares of its newly created Class A Convertible Preferred Stock (the “Class A Shares”) in exchange for the surrender by Philou of 2,000,000 shares of its Common Stock. These Class A Shares were issued in reliance upon the exemption provided by Section 3(a)(9) of the Securities Act.

On January 23, 2018, the Company issued an aggregate of 200,000 shares of its common stock as payment for principal. The shares were valued at $280,000, an average of $1.40 per share. These shares were issued in reliance upon the exemption provided by Section 4(a)(2) of the Securities Act.

On May 11, 2018, the Company issued an aggregate of 20,000 shares of its common stock as repayment of principal. The shares were valued at $4,550, an average of $0.23 per share. These shares were issued in reliance upon the exemption provided by Section 4(a)(2) of the Securities Act.

ITEM 3.

DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4.

MINE SAFETY DISCLOSURES

None

ITEM 5.

OTHER INFORMATION

None

- 9 -

Table of Contents

ITEM 6.

EXHIBITS

Exhibit
Number		Description
3.1		Articles of Incorporation of Avalanche International, Corp. (Incorporated by reference to Exhibit 3.1 of the Company’s registration statement on Form S-1 filed with the Securities and Exchange Commission on January 17, 2012)

3.2		Bylaws of Avalanche International, Corp. (Incorporated by reference to Exhibit 3.2 of the Company’s registration statement on Form S-1 filed with the Securities and Exchange Commission on January 17, 2012)

3.3		Certification of Designation of Class A Convertible Preferred Stock of Avalanche International, Corp. (Incorporated by reference to Exhibit 3.2 of the Company’s quarterly report on Form 8-K filed with the Securities and Exchange Commission on March 9, 2017)

3.4		Certification of Designation of Class B Convertible Preferred Stock of Avalanche International, Corp. (Incorporated by reference to Exhibit 3.3 of the Company’s quarterly report on Form 8-K filed with the Securities and Exchange Commission on March 9, 2017)

10.1		Avalanche International, Corp. 2016 Stock Incentive Plan (Incorporated by reference to Exhibit 21 of the Company’s annual report on Form 10-K filed with the Securities and Exchange Commission on April 28, 2016)

21		List of Subsidiaries (Incorporated by reference to Exhibit 21 of the Company’s annual report on Form 10-K filed with the Securities and Exchange Commission on April 28, 2016)

31.1*		Certification of Chief Executive Officer required by Rule 13a-14(a) or Rule 15d-14(a)

31.2*		Certification of Chief Financial Officer required by Rule 13a-14(a) or Rule 15d-14(a)

32.1**		Certification of Chief Executive Officer and Chief Financial Officer required by Rule 13a-14(b) or Rule 15d-14(b) and Section 1350 of Chapter 63 of Title 18 of the United States Code

101.INS*		XBRL Instance Document

101.SCH*		XBRL Taxonomy Extension Schema Document

101.CAL*		XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF*		XBRL Taxonomy Extension Definition Linkbase Document

101.LAB*		XBRL Taxonomy Extension Label Linkbase Document

101.PRE*		XBRL Taxonomy Extension Presentation Linkbase Document

___________________________________________________________________________________________________

* Filed herewith.

** Furnished herewith

- 10 -

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SIGNATURES

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

	AVALANCHE INTERNATIONAL, CORP.

Date: December 6, 2018	By:	/s/ Phillip Mansour
		Philip Mansour
		Chief Executive Officer
		Principal Executive Officer


Date: December 6, 2018	By:	/s/ William B. Horne
		William B. Horne
		Chief Financial Officer
		Principal Accounting Officer

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Filing Compare · AVALANCHE INTERNATIONAL, CORP.