UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the Quarterly Period Ended ~~September~~June 30, ~~2013~~2014

o TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE ~~SECURITIESEXCHANGE~~SECURITIES EXCHANGE ACT OF 1934

For the Transition Period From ____to _____

Commission File Number: 000-52670

PANACHE BEVERAGE INC. (Exact name of registrant as specified in its charter)

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

Delaware		38-3855631
(State or other jurisdiction of incorporation or organization)		(IRS Employer Identification No.)

150 Fifth Avenue, 3rd Floor~~, New York, NY 10011~~

New York, NY 10011

(Address of principal executive offices)

(646) 480-7479

(Issuer's telephone number)

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

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

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

Large ~~accelerated~~Accelerated ~~filer~~Filer o Accelerated Filer o Non-~~accelerated~~Accelerated ~~filer~~Filer o Smaller ~~reporting~~Reporting ~~company~~Company x (Do not check if a smaller reporting company)

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

Number of shares of common stock, par value $.001, outstanding as of ~~November~~August 520, ~~2013~~2014: 27,~~055~~355,891

~~CAUTIONARY~~INFORMATION ~~STATEMENT~~ REGARDING FORWARD -LOOKING ~~INFORMATION~~STATEMENTS

This Quarterly Report on Form 10-Q of Panache Beverage, Inc. contains "forward-looking statements" that may state our management's plans, future events, objectives, current expectations, estimates, forecasts, assumptions or projections about the company and its business. Statements contained in this Quarterly Report on Form 10-Q which are not historical facts are forward-looking statements within the meaning of the U.S. Securities Exchange Act of 1934, as amended.. ~~The issuer's actual results could differ significantly from those discussed herein.~~ These include statements about our expectations, beliefs, intentions or strategies for the future, which we indicate by words or phrases such as "anticipate," "expect," "intend," "plan," "will," "we believe," "the Company believes," "management believes" and similar language, including those set forth in the discussions under "Notes to Consolidated Financial Statements" and "Management's Discussion and Analysis or Plan of Operation" as well as those discussed elsewhere in this Form 10-Q. We base our forward-looking statements on information currently available to us, and we assume no obligation to update them. Statements contained in this Form 10-Q that are not historical facts are forward-looking statements that are subject to the "safe harbor" created by the Private Securities Litigation Reform Act of 1995. The issuer's actual results could differ significantly from those discussed herein.

The accuracy of these forward-looking statements may be impacted by a number of business risks and uncertainties that could cause actual results to differ materially from those projected or anticipated. These statements are not guarantees of future performance, and undue reliance should not be placed on these statements. It is important to note that our actual results could differ materially from what is expressed in our forward-looking statements due to the risk factors described in ~~“Item 1A — Risk Factors” of~~ the Company’s annual report on Form 10-K for the year ended December 31, 2012, and “Item 1A — Risk Factors” of the Company’s quarterly reports on Form 10-Q for the quarters ended March 31, 2013 and June 30, 2013, and the section of this Quarterly Report titled "Risk Factors," as well as the following risks and uncertainties:

Our ability to fund our operations in the short and long term through financing transactions on terms acceptable to us, or at all;

Our history of operating losses and the uncertainty surrounding our ability to achieve or sustain profitability;

Competition from producers of competing products;

Our ability to identify, consummate, and/or integrate strategic partnerships; and

The potential for manufacturing problems or delays.

We do not undertake any obligation to update publically any forward-looking statements, whether as a result of new information, future events or otherwise, except as required under applicable law.

TABLE OF CONTENTS

PART I. FINANCIAL INFORMATION

ITEM 1.	FINANCIAL STATEMENTS	3

ITEM 2.	MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	4

ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	9

ITEM 4.	CONTROLS AND PROCEDURES	9

PART II. OTHER INFORMATION

ITEM 1.	LEGAL PROCEEDINGS	10

ITEM 1A.	RISK FACTORS	10

ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	14

ITEM 3.	DEFAULTS UPON SENIOR SECURITIES	14

ITEM 4.	MINE SAFETY DISCLOSURES	14

ITEM 5.	OTHER INFORMATION	14

ITEM 6.	EXHIBITS	15

SIGNATURES		16

INDEX TO EXHIBITS		17

PART I. FINANCIAL INFORMATION

ITEM 1.	FINANCIAL STATEMENTS	4
ITEM 2.	MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	22
ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	26
ITEM 4.	CONTROLS AND PROCEDURES	26

PART II. OTHER INFORMATION

ITEM 1.	LEGAL PROCEEDINGS	27
ITEM 1A.	RISK FACTORS	27
ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	28
ITEM 3.	DEFAULTS UPON SENIOR SECURITIES	28
ITEM 4.	MINE SAFETY DISCLOSURES	28
ITEM 5.	OTHER INFORMATION	28
ITEM 6.	EXHIBITS	29
SIGNATURES		30
INDEX TO EXHIBITS		31

ITEM 1. FINANCIAL STATEMENTS

PANACHE BEVERAGE, INC.

CONSOLIDATED FINANCIAL STATEMENTS

~~SEPTEMBER~~June 30, ~~2013 AND 2012~~2014

PANACHE BEVERAGE, INC.

TABLE OF CONTENTS

SEPTEMBER 30, 2013 AND 2012

Consolidated Balance Sheets as of June 30, 2014 and December 31, 2013 (unaudited)			F-2

Consolidated Statements of Operations for the three and six months ended June 30, 2014 and 2013 (unaudited)			F-3

Consolidated Statement of Equity (Deficit) as of June 30, 2014 (unaudited)			F-4

Consolidated Statements of Cash Flows for the six months ended June 30, 2014 and 2013 (unaudited)			F-5

Notes to Consolidated Financial Statements (unaudited)			F-6

Consolidated Balance Sheets as of September 30, 2013 and December 31, 2012 (unaudited)			6
Consolidated Statements of Operations for the three and nine months ended September 30, 2013 and 2012 (unaudited)			7
Consolidated Statement of Equity (Deficit) as of September 30, 2013 (unaudited)			8
Consolidated Statements of Cash Flows for the nine months ended September 30, 2013 and 2012 (unaudited)			9
Notes to Consolidated Financial Statements (unaudited)			10

F-1

PANACHE BEVERAGE, INC. CONSOLIDATED BALANCE SHEETS - (Unaudited)

	September 30,			December 31,
	2013			2012
ASSETS
Current Assets
Cash and cash equivalents	$	25,367		$	714,178
Restricted cash		2,427,207			600,000
Accounts receivable – net		1,473,812			1,384,296
Inventory		771,684			94,696
Prepaid expenses and other current assets		188,220			100,301
Total Current Assets		4,886,290			2,893,471
Property and Equipment - net		4,359,907			10,981
TOTAL ASSETS	$	9,246,197		$	2,904,452
LIABILITIES AND EQUITY (DEFICIT)
Current Liabilities
Accounts payable	$	1,468,932		$	1,054,544
Due to factor		869,208			1,008,320
Notes payable		40,700			295,062
Loans payable – related parties		523,501			618,748
Accrued interest		234,046			54,946
Other current liabilities		536,877			569,087
Total Current Liabilities		3,673,264			3,600,707
Long term debt		11,000,000			2,100,000
Total Liabilities		14,673,264			5,700,707
Equity (Deficit)
Common stock, par value $0.001; 200,000,000 and 200,000,000 shares authorized as of September 30, 2013 and December 31, 2012, respectively; 27,055,891 and 26,760,891 shares issued and outstanding as of September 30, 2013 and December 31, 2012, respectively		27,056			26,761
Additional paid in capital		3,959,469			3,212,623
Additional paid in capital - warrants		450,798			234,117
Accumulated (deficit)		(9,050,065	)		(5,783,334	)
Total stockholders' deficit		(4,612,742	)		(2,309,833	)
Non-controlling interests		(814,325	)		(486,422	)
Total Equity (Deficit)		(5,427,067	)		(2,796,255	)
TOTAL LIABILITIES AND EQUITY (DEFICIT)	$	9,246,197		$	2,904,452

PANACHE BEVERAGE, INC.

CONSOLIDATED BALANCE SHEETS - (Unaudited)

	June 30,			December 31,
	2014			2013

ASSETS
Current Assets
Cash and cash equivalents	$	68,992		$	49,850
Restricted cash		207,208			1,942,158
Accounts receivable – net		140,695			173,803
Inventory		880,055			1,121,923
Prepaid expenses and other current assets		272,362			441,830
Total Current Assets		1,569,312			3,729,564

Property and Equipment - net		4,165,453			3,450,551

TOTAL ASSETS	$	5,734,765		$	7,180,115

LIABILITIES AND EQUITY (DEFICIT)

Current Liabilities
Accounts payable		1,129,963			1,219,419
Due to factor		178,528			312,500
Notes payable		28,000			33,187
Loans payable – related parties		498,231			498,231
Accrued interest		299,324			153,305
Other current liabilities		74,960			619,612
Total Current Liabilities		2,209,006			2,836,254

Long term debt		10,958,121			11,210,667

Total Liabilities		13,167,127			14,046,921

Equity (Deficit)
Common stock, par value $0.001; 200,000,000 shares authorized as of June 30, 2014 and December 31, 2013; 27,055,891 shares issued and outstanding as of June 30, 2014 and December 31, 2013		27,056			27,056
Additional paid in capital		5,179,529			4,191,572
Additional paid in capital - warrants		734,269			483,373
Accumulated (deficit)		(12,089,689	)		(10,366,003	)
Total stockholders' deficit		(6,148,835	)		(5,664,002	)
Non-controlling interests		(1,283,527	)		(1,202,804	)
Total Equity (Deficit)		(7,432,362	)		(6,866,806	)

TOTAL LIABILITIES AND EQUITY (DEFICIT)	$	5,734,765		$	7,180,115

F-2

PANACHE BEVERAGE, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS - (Unaudited)

	For the three months ended						For the ~~nine~~six months ended
	September 30,						September 30,
	June 30,						June 30,
	2013			2012			2013			2012
	2014			2013			2014			2013
REVENUES - NET	$	306,159		$	271,241		$	3,148,732		$	1,310,765
REVENUES-NET		655,689		$	1,425,435		$	1,290,606		$	2,842,573
COST OF GOODS SOLD		~~291~~490,~~974~~765			~~115~~855,~~122~~131			21,~~007~~006,~~532~~631			~~811~~1,~~462~~715,558
GROSS PROFIT		14164,~~185~~924			~~156~~570,~~119~~304			1283,~~141,200~~975			~~499~~1,~~303~~127,015
OPERATING EXPENSES
Advertising and promotion		271,849			177,415			748,817			704,516
Advertising & promotion		177,304			209,924			466,419			476,968
Consulting		~~214~~195,~~942~~879			48263,~~836~~235			~~506~~424,~~177~~988			~~333~~291,~~245~~235
Professional fees		~~676~~153,~~591~~164			~~151~~210,~~744~~236			1328,~~279,795~~980			~~773~~603,~~747~~204
General and administrative		318,630			498,071			1,876,250			1,386,777
General & administrative		(15,640	)		794,659			809,817			1,557,620
TOTAL OPERATING EXPENSES		1510,~~482,012~~707			~~876~~1,~~066~~478,054			42,~~411~~030,~~039~~204			32,~~198~~929,~~285~~027
LOSS FROM OPERATIONS		(1345,~~467,827~~783	)		(~~719~~907,~~947~~750	)		(31,~~269~~746,~~839~~229	)		(21,~~698~~802,~~982~~012	)
OTHER EXPENSE
Interest expense		(~~223~~245,~~077~~982	)		(38164,~~772~~397	)		(~~492~~498,~~056~~721	)		(61268,~~923~~979	)
Interest income		~~11,033~~225			-11,093			3311,~~187~~285			-22,154
Gain on extinguishment of debt		-			-			134,074			-
Gain on legal settlements		424,173			-			449,173			-
TOTAL OTHER EXPENSE		(212,044	)		(38,772	)		(324,795	)		(61,923	)
Gain on extinguishment of debt		-			75,778			-			134,074
LOSS FROM OPERATIONS AND BEFORE NON-CONTROLLING INTERESTS		(1,679,871	)		(758,719	)		(3,594,634	)		(2,760,905	)
Other expenses		(19,917	)		-			(19,917	)		-
LESS: LOSS ATTRIBUTABLE TO NON- CONTROLLING INTERESTS		157,543			74,020			327,903			480,329
TOTAL OTHER EXPENSE		158,499			(77,526	)		(58,180	)		(112,751	)
LOSS BEFORE PROVISION FOR INCOME TAXES		(1,522,328	)		(684,699	)		(3,266,731	)		(2,280,576	)
INCOME (LOSS) FROM OPERATIONS AND BEFORE NON-CONTROLLING INTERESTS		(187,284	)		(985,276	)		(1,804,409	)		(1,914,763	)
LESS: (INCOME) LOSS ATTRIBUTABLE TO NON-CONTROLLING INTERESTS		(100,863	)		49,388			80,723			170,360
INCOME (LOSS) BEFORE PROVISION FOR INCOME TAXES		(288,147	)		(935,888	)		(1,723,686	)		(1,744,403	)
PROVISION FOR INCOME TAXES		-			-			-			-
NET LOSS ATTRIBUTABLE TO PANACHE BEVERAGE, INC.	$	(1,522,328	)	$	(684,699	)	$	(3,266,731	)	$	(2,280,576	)
NET INCOME (LOSS) ATTRIBUTABLE TO PANACHE BEVERAGE, INC.	$	(288,147	)	$	(935,888	)	$	(1,723,686	)	$	(1,744,403	)
BASIC AND DILUTED RESULTS PER SHARE OF COMMON STOCK:
LOSS PER SHARE ATTRIBUTABLE TO PANACHE BEVERAGE, INC.: BASIC AND DILUTED	$	(0.0601	)	$	(0.0304	)	$	(0.1206	)	$	(0.0907	)
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING: BASIC AND DILUTED		27,055,891			26,392,674			27,010,616			26,025,519
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING: BASIC & DILUTED		27,055,891			26,177,031			27,055,891			26,364,074

7F-3

PANACHE BEVERAGE, INC.

CONSOLIDATED STATEMENT OF EQUITY (DEFICIT) - (Unaudited)

AS OF ~~SEPTEMBER~~JUNE 30, ~~2013~~2014

	Common Stock						Additional Paid in			Common Stock			~~Treasury~~Accumulated			~~Accumulated~~Total Stockholders' Equity			~~Total Stockholders' Equity~~Non-Controlling			~~Non-Controlling~~Total Equity			~~Total Equity~~
	Shares			Amount			Capital			Warrants			~~Stock~~Deficit			(Deficit)			~~(Deficit)~~Interests			~~Interests~~(Deficit)			~~(Deficit)~~
Balance, January 1, 2012		25,107,891		$	25,108		$	1,303,412		$	163,097		$	-		$	(2,516,269	)	$	(1,024,652	)	$	(123,696	)	$	(1,148,348	)
Balance, January 1, 2013		26,760,891			26,761			3,212,623			234,117			(5,783,334	)		(2,309,833	)		(486,422	)		(2,796,255	)
Capital contributions		-			-			-			-			-			-			-			257,944			257,944
Common stock issued for services rendered		260,000			260			145,740			-			-			146,000			-			146,000
Common stock and warrants issued for $0.50 per share		120,000			120			99,761			20,119			-			-			120,000			-			120,000
Warrants vested for services rendered		-			-			-			475,020			-			475,020			-			475,020
Common stock and warrants issued for $1.00 per share		590,000			590			631,712			105,198			-			-			737,500			-			737,500
Warrants expired		-			-			225,764			(225,764	)		-			-			-			-
Common stock & warrants issued for services rendered		487,000			487			487,213			-			-			-			487,700			-			487,700
Stock-based compensation		-			-			607,480			-			-			607,480			-			607,480
Warrants vested for services rendered		-			-			-			8,351			-			-			8,351			-			8,351
Issuance of shares from stock-based compensation		35,000			35			(35	)		-			-			-			-			-
Common stock issued to satisfy debt		150,000			150			149,850			-			-			-			150,000			-			150,000
Net loss for the period ended December 31, 2013		-			-			-			-			(4,582,669	)		(4,582,669	)		(716,382	)		(5,299,051	)
Shares repurchased		-			-			-			-			(150,000	)		-			(150,000	)		-			(150,000	)
Balance, December 31, 2013		27,055,891			27,056			4,191,572			483,373			(10,366,003	)		(5,664,002	)		(1,202,804	)		(6,866,806	)
Treasury shares sold		-			-			-			-			50,000			-			50,000			-			50,000
Warrants vested for services rendered		-			-			-			250,896			-			250,896			-			250,896
Treasury shares retired		(100,000	)		(100	)		(99,900	)		-			100,000			-			-			-			-
Stock-based compensation		-			-			102,125			-			-			102,125			-			102,125
Warrants from debt issuance		-			-			-			14,449			-			-			14,449			-			14,449
Warrants forfeited		-			-			(278,258	)		-			-			(278,258	)		-			(278,258	)
Warrants exercised		230,000			230			337,506			(47,736	)		-			-			290,000			-			290,000
Repayment of loan with shareholder common stock		-			-			1,164,090			-			-			1,164,090			-			1,164,090
Warrants modified		-			-			(148,395	)		148,395			-			-			-			-			-
Net loss for the period ended June 30, 2014		-			-			-			-			(1,723,686	)		(1,723,686	)		(80,723	)		(1,804,409	)
Warrants expired		-			-			177,756			(177,756	)		-			-			-			-			-
Balance, June 30, 2014		27,055,891		$	27,056		$	5,179,529		$	734,269		$	(12,089,689	)	$	(6,148,835	)	$	(1,283,527	)	$	(7,432,362	)
Stock-based compensation		-			-			248,884			-			-			-			248,884			-			248,884
Issuance of shares from stock-based compensation		176,000			176			(176	)		-			-			-			-			-			-
Beneficial interest in conversion feature of convertible debt		-			-			25,000			-			-			-			25,000			-			25,000
Net loss for the period ended December 31, 2012		-			-			-			-			-			(3,267,065	)		(3,267,065	)		(620,670	)		(3,887,735	)
Balance, December 31, 2012		26,760,891			26,761			3,212,623			234,117			-			(5,783,334	)		(2,309,833	)		(486,422	)		(2,796,255	)
Common stock issued for services rendered		260,000			260			145,740			-			-			-			146,000			-			146,000
Warrants vested for services rendered		-			-			-			351,877			-			-			351,877			-			351,877
Warrants expired		-			-			135,196			(135,196	)		-			-			-			-			-
Stock-based compensation		-			-			465,945			-			-			-			465,945			-			465,945
Issuance of shares from stock-based compensation		35,000			35			(35	)		-			-			-			-			-			-
Net loss for the period ended September 30, 2013		-			-			-			-			-			(3,266,731	)		(3,266,731	)		(327,903	)		(3,594,634	)
Balance, September 30, 2013		27,055,891		$	27,056		$	3,959,469		$	450,798		$	-		$	(9,050,065	)	$	(4,612,742	)	$	(814,325	)	$	(5,427,067	)

8F-4

PANACHE BEVERAGE, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS - (Unaudited)

	For the nine months ended
	For the six months ended
	September 30,
	June 30,
	2013			2012
	2014			2013
CASH FLOWS FROM OPERATING ACTIVITIES
Net (loss) income for the period	$	(3,266,731	)	$	(2,280,576	)
Net loss for the period	$	(1,723,686	)	$	(1,744,403	)
Adjustments to Reconcile Net (Loss) Income to Net Cash Used in Operating Activities:
Adjustments to Reconcile Net Loss to Net Cash Used in Operating Activities:
Non-controlling interest		(~~327~~80,~~903~~723	)		(~~480~~170,~~329~~360	)
Depreciation		3332,~~011~~356			43,~~585~~181
Stock issued and warrants vested for services rendered		497,877			445,000
Gain on debt restructuring		-			-
Advertising expense from capital contribution		-			257,944
Stock issued & warrants vested for services rendered		250,896			374,735
Stock-based compensation		465,945			56,900
Warrants forfeited		(278,258	)		-
Stock based compensation		102,125			324,400
Changes in assets and liabilities:
Restricted cash		(1,~~827~~734,~~207~~950	)		-(3,382,896	)
Accounts receivable		~~(89~~33,~~516~~108	)		(~~108~~447,~~403~~545	)
Inventory		~~(676~~241,~~988~~868	)		37(70,~~034~~016	)
Prepaid expenses		~~(87~~169,~~919~~468	)		5(220,~~020~~367	)
Accounts payable		~~414~~(24,~~388~~003	)		~~353~~58,~~672~~012
Consulting fees payable – related party		-			(2,705	)
Accrued interest		412,564			23,745
Accrued interest		179,100			18,302
Other current liabilities		(544,652	)		(57,406	)
Other current liabilities		(32,210	)		163,703
CASH FLOWS PROVIDED BY (USED IN) OPERATING ACTIVITIES		326,013			(5,308,920	)
CASH FLOWS USED IN OPERATING ACTIVITIES		(4,718,153	)		(1,529,853	)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment		(~~881~~747,~~937~~257	)		(81,~~441~~087	)
CASH FLOWS USED IN INVESTING ACTIVITIES		(~~881~~747,~~937~~257	)		(81,~~441~~087	)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from notes payable		~~22,861~~-			~~272~~22,~~500~~861
Repayments of notes payable		(~~277~~5,~~223~~187	)		(7267,~~368~~062	)
Proceeds from loans payable – related parties		-			~~213~~41,~~198~~000
Repayments of loans payable – related parties		~~(95,247~~-	)		-(232,960	)
Net (decrease) increase in due to factor		(139,112	)		(17,296	)
Net proceeds from (repayment to) factor		(133,972	)		(317,262	)
Proceeds from long term debt		5,400,000			-
Proceeds from long term debt and related stock warrants		579,545			5,400,000
Proceeds from issuance of stock and warrants		-			1,022,700
CASH FLOWS PROVIDED BY FINANCING ACTIVITIES		440,386			4,646,577
Repurchase of treasury stock		-			(50,000	)
NET DECREASE IN CASH		19,142			(663,430	)
CASH FLOWS PROVIDED BY FINANCING ACTIVITIES		4,911,279			1,433,734
Cash, beginning of period		49,850			714,178
NET INCREASE (DECREASE) IN CASH		(688,811	)		(104,560	)
Cash, end of period	$	68,992		$	50,748
Cash, beginning of period		714,178			152,464
Cash, end of period	$	25,367		$	47,904
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for interest	$	~~312~~99,~~956~~963		$	80245,~~225~~234
NONCASH INVESTING AND FINANCING ACTIVITIES
Stock issued and warrants vested for services rendered	$	497,877		$	445,000
Stock and warrants issued for services rendered	$	250,896		$	374,735
Debt financed property and equipment purchases	$	3,500,000		$	-
Warrants forfeited	$	278,258		$	-
Capital contribution – Advertising services	$	-		$	257,944
Capitalization of accrued interest into debt principal	$	266,545		$	-
Conversion of accounts payable to notes payable - related party	$	-		$	21,000
Repayment of loan with shareholder common stock	$	1,164,089		$	-

9F-5

PANACHE BEVERAGE, INC.

CONSOLIDATED NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of operations

Panache Beverage Inc. ("the “Company”", "Panache Beverage", "Panache", "our Company", "we", "us", and similar references refer to Panache Beverage, Inc. and its subsidiaries). Panache was incorporated in the State of Florida on December 28, 2004 under the name as Biometrix International Inc. On May 30, 2007, the Company changed its name to BMX Development Corp. On ~~September~~August 619, 2011, the Company ~~filed~~completed ana ~~Articles~~stock ofexchange ~~Amendment~~transaction towith ~~the~~Panache ~~Articles~~LLC, ofa ~~Incorporation~~New ~~with~~York ~~the~~limited ~~Florida~~liability ~~Secretary~~company ofand ~~State~~in toconnection ~~change~~with such transaction changed its name to Panache Beverage Inc. ~~and~~to ~~believed the new name would~~ more accurately reflect its business. ~~after~~We acurrently ~~stock~~own ~~exchange~~65.5% ~~transaction~~ownership ~~with~~of ~~Panache~~Wodka LLC (“Wodka”), a New York Limited Liability Company organized on August 14, 2009. Upon its organization, Panache assumed ownership of Wodka from a related party. Wodka imports vodka under the brand name Wodka for wholesale distribution to retailers located throughout the United States and internationally.

On August 19, 2011, the Company completed a stock exchange transaction with Panache LLC (“Panache”). Panache was organized as a limited liability company in the State of New York on February 9, 2010. Panache is an alcoholic beverage company specializing in development, global sales and marketing of spirits brands, and currently owns 65.5% ownership of Wodka LLC (“Wodka”), a New York Limited Liability Company organized on August 14, 2009. Upon its organization, Panache assumed ownership of Wodka from a related party. Wodka imports vodka under the brand name Wodka for wholesale distribution to retailers located throughout the United States and internationally.

The stock exchange transaction involved two simultaneous transactions:

The majority shareholder of the Company delivered 2,560,000 shares of the Company’s common stock to ~~the~~James ~~Panache~~Dale, ~~Members~~our former CEO, in exchange for total payments of $125,000 in cash; and;

The Company issued to the Panache ~~Members~~LLC members an amount equal to 17,440,000 new ~~investment~~ shares of ~~common stock of~~ the Company’s ~~pursuant~~common tostock ~~Rule 144 under the Securities Act of 1933, as amended,~~ in exchange for one hundred percent (100%) of the issued and outstanding membership interest units of Panache LLC from the Panache ~~Members~~members.

In October 2013, the Company reincorporated in the State of Delaware.

Alibi NYC, LLC (“Alibi”) was organized as a limited liability company in the State of New York on May 17, 2007 and remained dormant until it conducted its first business operations during the first quarter of 2012. Effective January 1, 2012, the members of Alibi transferred their interests to Panache Beverage, Inc. and Alibi became a 100% owned subsidiary of Panache Beverage, Inc. Alibi markets and distributes Alibi American Whiskey.

Panache Distillery, LLC (“Panache Distillery”) was organized as a limited liability company in the State of Florida on February 20, 2013 as a wholly owned subsidiary of Panache Beverage, Inc. On August 23, 2013, Panache Distillery closed on the purchase of a distillery in New Port Richey, Florida for a total purchase price of $4,200,000, of which $700,000 was paid in cash at closing and the remaining $3,500,000 is payable in the form of a Promissory Note held by the sellers. The distillery ~~will~~has begun to offer full integration of domestic distillation, bottling and sales operations. The beginning phases include co-packing, bottling, bulk production of brandy, laying of rum & acting as a third party turn-key service provider.

Panache IP Holdings, Inc. (“IP Holdings”) was organized as a domestic corporation in the State of Delaware on September 26, 2013 as a wholly owned subsidiary of Panache Beverage, Inc. IP Holdings was established to preserve the Company’s patented intellectual property and trademarks. As of ~~September~~June 30, ~~2013~~2014, IP Holdings iscurrently ~~dormant~~holds ~~with~~intent noto ~~activity~~use registrations for Alibi American Bourbon, Alibi Banana Flavored American Whiskey and Alibi Cinnamon Flavored American Whiskey.

10F-6

PANACHE BEVERAGE, INC.

CONSOLIDATED NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – (Continued)

On March 10, 2014, the Company organized three limited liability companies, OGB Holdings, LLC (“OGB”), Old South Shine, LLC (“Old South Shine”) and Spirytus, LLC (“Spirytus”), in the State of Delaware as wholly owned subsidiaries of Panache Beverage, Inc. These entities were organized as part of the Company’s intention to release an entire line of spirits from its Panache Distillery facility in New Port Richey, FL. As of June 30, 2014, only Old South Shine is currently active. Old South Shine serves as the holding corporation for Old South Shine Grain Alcohol. In August of 2014, a new trade dress and a name change to the brand, South Shine, was filed with the TTB. The Company does not intend on moving forward with the brands that were to be under OGB Holdings LLC & Spirytus LLC and will be focusing its energy on the Wodka Vodka, Alibi American Whiskey, Alchemia Infused & South Shine 153.

Basis of consolidation

The consolidated financial statements include the accounts of Panache Beverage, Inc., Panache LLC, Wodka LLC, Alibi NYC, LLC, and Panache Distillery, LLC ~~and Panache IP Holdings, Inc.~~ (collectively, the “Company”). All material intercompany transactions have been eliminated.

Basis of presentation

The accompanying unaudited consolidated financial statements have been prepared in accordance with both generally accepted accounting principles for interim financial information, and the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. The accompanying unaudited consolidated financial statements reflect all adjustments (consisting of normal recurring accruals) that are, in the opinion of management, considered necessary for a fair presentation of the results for the interim periods presented. Interim results are not necessarily indicative of results to be expected for a full year.

The unaudited consolidated financial statements and related disclosures have been prepared with the presumption that users of the interim financial information have read or have access to the Company’s annual audited consolidated financial statements for the preceding fiscal year. The financial statements of the Company are presented in US dollars.

Accounting basis

The Company uses the accrual basis of accounting and generally accepted accounting principles in the United States of America (“US GAAP”). The Company has adopted a December 31 fiscal year end. Certain reclassifications were made to the ~~2012~~2013 financial statements presentation in order to conform to the ~~2013~~2014 presentation. Such reclassifications had no effect on reported income.

Revenue recognition

We recognize revenue when title and risk of loss pass to the customer, typically when the product is shipped. Some sales contracts contain customer acceptance provisions that grant a right of return. Under these provisions, customers can return products that are not merchantable and fit and suitable for their intended use, are not of the same premium quality as products currently in existence, or are defectively packaged, bottled or labeled. Customers may also return any product that does not comply with all applicable laws and regulations. We record revenue net of the estimated cost of sales returns and allowances. Gross revenue was reduced due to sales returns and allowances by $5,112 and $0 during the three months ended September 30, 2013 and 2012, respectively and $11,495 and $30,325 during the nine months ended September 30, 2013 and 2012, respectively.

~~Sales discounts were $0 and $1,677 for the three months ended September 30, 2013 and 2012 and $1,191 and $23,943 for the nine months ended September 30, 2013 and 2012.~~F-7

From time to time the Company provides incentives to its customers in the form of free product. The costs associated with producing this product is included as an expense in costs of goods sold. No revenue is recognized with respect to such product giveaways. The Company did not give away any product during the three and nine months ended September 30, 2013 and the three months ended September 30, 2012. The Company gave away product costing $1,440 during the nine months ended September 30, 2012.

PANACHE BEVERAGE, INC.

CONSOLIDATED NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – (Continued)

Advertising

Advertising costs are expensed as incurred and aggregated $~~271~~177,~~849~~304 and $~~177~~209,~~415~~924 for the three months ended ~~September~~June 30, ~~2013~~2014 and ~~2012~~2013, respectively, and $~~748~~466,~~817~~419 and $~~704~~476,~~516~~968 for the ~~nine~~six months ended ~~September~~June 30, ~~2013~~2014 and ~~2012~~2013, respectively.

Wodka received advertising services in the form of out of home media space from a related party who holds a non-controlling interest in Wodka. The Company recorded advertising expense and capital contributions from non-controlling interests of $0 and $257,944 in relation to this arrangement for the nine months ended September 30, 2013 and 2012, respectively.

Other Significant Accounting Policies

Other significant accounting policies are set forth in Note 1 of the audited financial statements included in the Company’s ~~2012~~2013 Annual Report on Form 10-K and remain unchanged as of ~~September~~June 30, ~~2013~~2014.

Use of estimates

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

Recently issued accounting standards

The Company has reviewed all recently issued, but not yet effective, accounting pronouncements and does not believe the future adoption of any such pronouncements may be expected to cause a material impact on its consolidated financial condition or the consolidated results of its operations.

NOTE 2 – ACCOUNTS RECEIVABLE

The Company grants customers standard credit terms as governed by the terms specified in the contracts. Our major customers receive payment credit terms that range between 30 and 6065 days.

The Company evaluates the need of an allowance for doubtful accounts based on specifically identified amounts that management believes to be uncollectible. If actual collections experience changes, revisions to the allowance may be required. Based on management’s review of outstanding balances, anno allowance for doubtful accounts ~~of $430,402~~ was recorded as of ~~September~~June 30, ~~2013~~2014 and ~~2012~~December 31, 2013.

NoBad ~~bad~~ debt expense was ~~recognized~~$0 for the three months ended June 30, 2014 and ~~nine~~2013, respectively, and $0 and $0 for the six months ended ~~September~~June 30, ~~2013~~2014 and ~~2012~~2013, respectively.

NOTE 3 – PREPAID EXPENSES

The Company has entered into various agreements with consultants whereby the Company issues common stock in exchange for consulting services. The Company values the common stock and the consulting services based on the closing price of its common stock on the date of the agreement or the negotiated value of the consulting services. The Company recognized $0.00 and $599,~~273~~167 of professional fee expense in relation to these agreements for the three months ended ~~September~~June 30, ~~2013~~2014 and ~~2012~~2013, respectively. ~~and~~No ~~$144,417~~prepaid ~~and $379,802 of professional fee expense in relation to these agreements for the nine months ended September 30, 2013 and 2012. Prepaid~~ expenses relating to these agreements were $0outstanding ~~and $54,683~~ as of ~~September~~June 30, ~~2013~~2014 and December 31, ~~2012, respectively~~2013.

12F-8

~~PANACHE~~NOTE ~~BEVERAGE,~~4 ~~INC.~~– FACTORING AGREEMENTS

~~CONSOLIDATED~~The ~~NOTES~~Company TOis ~~FINANCIAL~~party ~~STATEMENTS~~to ~~(UNAUDITED)~~ a purchase and sale factoring agreement with a commercial factor whereby the Company sells certain Alchemia accounts receivable to the factor. Under the terms of the agreement, the factor may, in its sole discretion, make advances to the Company of amounts representing up to 75% of the net amount of eligible accounts receivable up to an initial maximum of $250,000 for each brand and possible increased maximum of $1,000,000 and $500,000, respectively. The factor's purchase of the eligible accounts receivable includes a discount fee which is deducted from the face value of each collection. The Discount Fee is based on the number of days outstanding from the date of purchase. The Discount Fee is 3.0% if paid within 30 days and 1.0% for each 10 day period until the account is paid. Based on this arrangement, the Company is liable to the factor if the accounts receivable is not collected, and therefore the Company has accounted for cash received on factored receivables as a liability. We have not utilized this factoring arrangement since April 2014.

NOTE 4 – FACTORING AGREEMENT

In the third quarter of 2012, the Company entered into a purchase and sale factoring agreement with a commercial factor whereby the Company sells certain Alchemia accounts receivable to the factor. Under the terms of the agreement, the factor may, in its sole discretion, make advances to the Company of amounts representing up to 75% of the net amount of eligible accounts receivable up to an initial maximum of $150,000 with a possible increased maximum of $300,000. In the fourth quarter of 2012, the agreement was expanded to include Wodka and Alibi accounts receivable with the initial limits of $250,000 for each brand and possible increased maximum of $1,000,000 and $500,000, respectively. The factor's purchase of the eligible accounts receivable includes a discount fee which is deducted from the face value of each collection. The discount fee is based on the number of days outstanding from the date of purchase. In the second quarter of 2013, the agreement was amended to decrease the discount fee to 3.0% if paid within 30 days and 0.83% for each 10 day period until the account is paid. Based on this arrangement, the Company is liable to the factor if the accounts receivable is not collected, and therefore the Company has accounted for cash received on factored receivables as a liability.

From time to time, the Company enters into purchase and sale factoring agreement with a different commercial factor whereby the Company sells certain accounts receivable to the factor. Under the terms of these agreements, the factor makes advances to the Company of amounts representing up to 90% of certain accounts receivable. The factor purchases the accounts receivable at a $500 discount plus monthly compounded interest of 2% of the factored amount for the period the factored accounts receivable remain outstanding. Based on this arrangement, the Company is liable to the factor if the accounts receivable is not collected, and therefore the Company has accounted for cash received on factored receivables as a liability.

In the third quarter of 2013, the Company entered into a factoring and advance agreement with a commercial factor whereby the Company sells its accounts receivables to the factor. Under the terms of the agreement, the factor may purchase individually or collectively any invoice of the Company if the Company agrees to sell them and make advances of amounts representing up to 85% of the net amount of eligible accounts receivable up to $2,000,000. The factor's purchase of the eligible accounts receivable includes a discount fee which is deducted from the face value of each collection. The discount fee is based on the number of days outstanding from the date of purchase and shall be 2.5% if paid within 30 days and 0.85% for each 10 day period until the account is paid. Based on this arrangement, the Company is liable to the factor if the accounts receivable is not collected, and therefore the Company has accounted for cash received on factored receivables as a liability.

The combined balance due to the factors as of ~~September~~June 30, ~~2013~~2014 and December 31, ~~2012~~2013 was $~~869~~178,~~208~~528 and $1312,~~008~~500,~~320,~~ respectively. Factor expense ~~(refund)~~ charged to operations for the three months ended ~~September~~June 30, ~~2013~~2014 and ~~2012~~2013 amounted to $~~(18~~182,~~213)~~867 and $1046,~~263~~422, respectively, and $204,294 and $111,733 for the ~~nine~~six months ended ~~September~~June 30, ~~2013~~2014 and ~~2012 amounted to $93~~2013,~~520~~ ~~and $67,926,~~ respectively.

PANACHE BEVERAGE, INC.

CONSOLIDATED NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

NOTE 5 – NOTES PAYABLE

On June 11, 2013, the Company borrowed $22,860 from a third party at an interest rate of 7.20% per annum. The loan was used to finance directors’ and officers’ insurance and iswas due in nine equal monthly payments of $2,617. The balance of this loan was $120 and $5,~~700~~187 as of ~~September~~June 30, 2014 and December 31, 2013.

On ~~November~~August 1511, ~~2012~~2011, ~~Wodka~~the Company borrowed $1628,~~875~~000 from a third party atfor anworking ~~interest~~capital ~~rate of 7~~purposes.~~25%~~ ~~per annum.~~ The loan ~~was used to finance credit insurance and~~ is ~~due~~non-interest inbearing ~~three equal payments of $5,796 due December 15, 2012, March 15, 2013~~ and ~~June~~payable ~~15,~~on ~~2013~~demand. The balance of this loan was $~~0 and $11~~28,~~283~~000 as of ~~September~~June 30, ~~2013~~2014 and December 31, ~~2012, respectively~~2013.

On September 14, 2012, the Company borrowed $250,000 from a third party for working capital purposes payable on January 15, 2013. Per the agreement, interest of $25,000 was paid via regular payments through the term of the loan. The Company repaid the loan in full on January 15, 2013. The balance of the loan as of September 30, 2013 and December 31, 2012 was $0 and $248,145, respectively.F-9

On August 11, 2011, the Company borrowed $28,000 from a third party for working capital purposes. The loan is non-interest bearing and payable on demand. The balance of this loan was $28,000 as of September 30, 2013 and December 31, 2012.

NOTE 6 – LOANS PAYABLE – RELATED PARTIES

The Company had an outstanding loan payable to its former chief executive officer, majority shareholder and former member of Panache LLC in the amount of $245,000 as of ~~September~~March 3031, ~~2013~~2014 and December 31, ~~2012~~2013. The loan balance includes $110,275 that was transferred into Wodka from a related entity as a deemed distribution. The loan is unsecured, and non-interest bearing. In order to induce a new member to purchase a membership interest, the related party agreed that the loan would not be repaid without unanimous Board approval. In addition, the loan would not become due and payable until all of the equity interests of Wodka, or substantially all of the assets of Wodka are sold to an unrelated third party. On June 11, 2014, as part of that certain restructuring agreement, by and among the Company, Consilium Corporate Recovery Master Fund, Ltd. (“Consilium”), certain of the Company’s subsidiaries and former officers and directors (the “Restructuring Agreement”), the Company’s former CEO assigned this loan to Consilium. As part of the Restructuring Agreement, this loan was memorialized with a promissory note of the Company’s Wodka subsidiary, dated June 11, 2014, and as of June 30, 2014, this principal balance this note is $245,000.

OnThe ~~July 10, 2012, the~~ Company ~~entered~~had ~~into~~additional aloans ~~loan~~payable ~~agreement~~to ~~with~~related ~~its~~parties ~~chief~~totaling ~~executive officer and majority shareholder whereby it borrowed~~ $~~150~~253,~~000~~231 at anJune ~~interest~~30, ~~rate~~2014 ofand ~~24%~~December ~~per annum. The loan agreement provided the chief executive officer with the option to convert the outstanding loan balance into shares of Panache Beverage~~31, ~~Inc~~2013. ~~common stock at $1.00 per share.~~ The ~~loan~~loans ~~agreement~~are ~~also~~unsecured ~~allowed~~and ~~the~~non-interest ~~Company~~bearing towith ~~borrow~~no anstated ~~additional~~payment ~~$50,000 under the same~~ terms~~, which the Company did on August 16, 2012~~. ~~Per~~ ~~the~~Proceeds ~~terms~~from of the ~~agreement,~~loans ~~the~~were ~~loan~~used ~~was~~ to befund ~~repaid within four months of its commencement~~operations. ~~The Company repaid the loan on February 14, 2013. The balance of the loan as of September 30, 2013 and December 31, 2012 was $0 and $191,960, respectively.~~

Because the conversion feature was at a share price less than the Company’s share price at the time of the loan, it is deemed beneficial to the holder. As such, generally accepted accounting principles required the Company to record the intrinsic value of the conversion feature as additional paid in capital and record a corresponding discount on the loan payable. This discount was amortized to interest expense over the life of the loan. The full $25,000 discount on the loan payable due to the intrinsic value of the conversion feature was amortized to interest expense over the four month term of the loan in 2012.

The Company had additional loans payable to related parties totaling $278,501 and $281,898 at September 30, 2013 and December 31, 2012, respectively. The loans are unsecured and non-interest bearing with no stated payment terms. Proceeds from the loans were used to fund operations.

PANACHE BEVERAGE, INC.

CONSOLIDATED NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

NOTE 7 – OTHER CURRENT LIABILITIES

Other current liabilities consisted of the following as of:

	September 30,		December 31,
	June 30,		December 31,
	2013		2012
	2014		2013
Commissions payable	$	-	$	171,778
Excise taxes payable	$	-	$	75,954
Excise taxes payable		75,954		75,954
Customer deposits		-		9,561
Customer deposits		34,200		115,464
Accrued salaries	$	-		330,374
Accrued salaries		329,733		138,900
Deferred revenue	$	-		100,000
Accrued expenses and other liabilities	$	9674,~~990~~960		66103,~~991~~723
Total other current liabilities	$	~~536~~74,~~877~~960	$	~~569~~619,~~087~~612

NOTE 8 – LONG TERM DEBT

On ~~May~~August 922, 2013, in connection with the acquisition of the Panache ~~Beverage,~~Distillery ~~Inc.~~the Company issued a promissory note tofor ~~Consilium~~$3,500,000 ~~Corporate~~to ~~Recovery~~Douglas ~~Master~~Joint ~~Fund~~Venture, ~~LTD,~~Empire ~~which~~Joint ~~resulted~~Venture, inand ~~gross~~V-3 ~~proceeds~~Joint ~~of $4~~Venture,~~000,000~~ ~~before~~LLC ~~fees~~(“the ~~and~~Sellers”) ~~other~~due ~~expenses~~on ~~associated~~August ~~with~~22, ~~the~~2016 ~~transaction.~~and ~~The~~bearing ~~note bears~~ interest at 86% per annum. ~~with~~Interest ~~interest~~is payable ~~quarterly~~semiannually in arrears. AThe ~~final~~promissory ~~payment~~note ofis ~~all~~secured ~~principal~~by ~~due~~a ~~under~~first ~~the~~lien ~~promissory~~Purchase ~~note,~~Money ~~plus~~Mortgage ~~accrued~~and ~~interest~~Security toAgreement ~~date,~~secured ~~shall~~by bethe ~~made~~purchased ~~on May 9, 2016~~assets. The ~~balance~~principal amount of ~~the~~this note as of ~~September~~June 30, 2014 and December 31, 2013 iswas $43,~~000~~500,000.

On ~~February~~May 149, 2013, ~~pursuant~~Panache ~~to a Term Loan Agreement dated February 14~~Beverage, ~~2013~~Inc. ~~(“2013~~issued ~~Loan~~a ~~Agreement”)~~promissory ~~between~~note ~~the~~to ~~parties~~Consilium, ~~Wodka~~which ~~issued~~resulted ain ~~promissory~~gross ~~note~~proceeds ~~for~~of $14,~~400~~000,000 tobefore ~~Consilium~~fees ~~Corporate~~and ~~Recovery~~other ~~Master~~expenses ~~Fund,~~associated ~~LTD~~with ~~due~~the ontransaction ~~February~~(the 14“$4,000,000 ~~2016~~Note”). The ~~and~~$4,000,000 ~~bearing~~Note bears interest at 128% per annum~~. Interest~~ iswith interest payable quarterly in arrears starting on March 31, 2014. ~~The~~ ~~Company~~Interest isaccrued ~~using~~through ~~the~~December ~~proceeds~~31, to2013 ~~fund~~of ~~operations~~$210,667 was capitalized and ~~repay~~added ~~existing~~to ~~debt~~the principal amount of the $4,000,000 Note. The Company ~~pledged~~agreed ~~its~~to ~~tangible~~retain ~~and~~a ~~intangible~~portion ~~assets~~of ~~pursuant~~this loan in escrow to be released in accordance with annual budgets approved by the ~~2013~~lender. ~~Loan~~In ~~Agreement~~March 2014, the Company and ~~agreed~~Consilium toentered ~~retain~~into an agreement that extended the maturity date of the $~~800~~4,000,000 ofNote ~~the~~to ~~proceeds~~May in9, ~~escrow~~2017.

On December 21, 2012, pursuant to a Term Loan Agreement (“Loan Agreement”) between the parties, the Company issued a promissory note for $2,100,000 to Consilium Corporate Recovery Master Fund, LTD due on December 31, 2015 and bearing interest at 12% per annum. Interest is payable quarterly in arrears. The Company is using the proceeds to fund operations and repay existing debt. The Company pledged its tangible and intangible assets pursuant to the Loan Agreement and agreed to retain $600,000 of the proceeds in escrow. Concurrent with the issuance of the note, the managing director of Consilium Investment Management, LLC (“Consilium”) was appointed to the Board of Directors of the Company.F-10

On August 22, 2013, pursuant to an Amendment to the Asset Purchase Agreement for the purchase of the Panache Distillery previously executed on May 15, 2013 (“APA Amendment”) between the the Company and Douglas Joint Venture, Empire Joint Venture, and V-3 Joint Venture, LLC (“the Sellers”), the Company issued a promissory note for $3,500,000 to the Sellers due on August 22, 2016 and bearing interest at 6% per annum.

Interest is payable quarterly in arrears. The Promissory note is secured by a first lien Purchase Money Mortgage and Security Agreement secured by the Purchased Assets, as defined in the Asset Purchase Agreement.

PANACHE BEVERAGE, INC.

CONSOLIDATED NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

NOTE 8 – LONG TERM DEBT – (Continued)

~~Future~~On ~~maturities~~February of14, 2013, pursuant to a term loan agreement dated February 14, 2013 (“2013 Loan Agreement”) between the parties, Wodka issued a promissory note for $1,400,000 to Consilium due on February 14, 2016 and bearing interest at 12% per annum (the “$1,400,000 Note”). Interest is payable quarterly in arrears. The Company used the proceeds to fund operations and repay existing debt. asThe Company pledged its tangible and intangible assets pursuant to the 2013 Loan Agreement and agreed to retain $800,000 of ~~September~~the proceeds in escrow to be released in accordance with annual budgets approved by the lender. As of May 30, 2014, $7,000 of such funds remained in escrow. In March 2014, the Company and Consilium entered into an agreement that extended the maturity date of the $1,400,000 Note to May 9, 2017. As of June 30, 2014 and December 31, 2013, ~~are~~the asprincipal ~~follows:~~amount of the note is $1,400,000.

For the year ended:
December 31, 2013	$	564,201
December 31, 2014		-
December 31, 2015		2,100,000
December 31, 2016		8,900,000
December 31, 2017		-
	$	11,564,201

On December 21, 2012, pursuant to a term loan agreement (“December Loan Agreement”) between the parties, the Company issued a promissory note for $2,100,000 to Consilium due on December 31, 2015 and bearing interest at 12% per annum (the “$2,100,000 Note”). Interest is payable quarterly in arrears.

The Company used the proceeds to fund operations and repay existing debt. The Company pledged its tangible and intangible assets pursuant to the December Loan Agreement and agreed to retain $600,000 of the proceeds in escrow to be released in accordance with annual budgets approved by the lender. Concurrent with the issuance of the note, the managing director of Consilium Investment Management, LLC (“CIM”) was appointed to the Board of Directors of the Company. On April 21, 2014, the Managing Director of CIM resigned from the Board of Directors of the Company and as Chairman. In March 2014, the Company and Consilium entered into an agreement that extended the maturity date of the $2,100,000 Note to May 9, 2017.

On May 6, 2014, the Company received written notice from Consilium (the “Default Notice”) of certain events of defaults under the $4,000,000 Note and $2,100,000 Note (collectively, the “Previous Loans”). The aggregate principal amount due as of the date of the Default Notice was $6,310,667. Pursuant to the Default Notice, Consilium agreed not to charge the default interest rate or late fee on the outstanding obligations and does not intend to exercise any other rights and remedies available to it at this time, but reserved the right to do so.

On May 8, 2014, in connection with the Default Notice, the Company entered into a forbearance agreement (the “Forbearance Agreement”) with Consilium, which provided that Consilium would not exercise any of its rights under the above noted loan agreements for a period ending on June 6, 2014, which period was later extended to June 13, 2014. In addition, the Forbearance Agreement allowed the Company to draw down the remaining funds held in escrow.

On June 11, 2014, as part of the Restructuring Agreement the Company entered into a Loan Modification Agreement with Consilium that, amongst other things, reduced the principal amount of the Previous Loans by $1,164,091, waived all current defaults under the Previous Loans and added the additional $345,000 of funding provided by Consilium through June 11, 2014 to the principal amount of the Previous Loans. The Loan Modification Agreement also required the capitalization of accrued but unpaid interest, as of June 11, 2014, in the aggregate amount of $266,545, making the newly combined restructured principal balance due Consilium $5,758,121, as of June 11, 2014. From June 12, 2014 through June 30, 2014, Consilium provided additional funding of $300,000, making the principal balance of the new restructured loans $6,058,121, as of June 30, 2014

F-11

NOTE 8 – LONG TERM DEBT – (Continued)

As part of the Loan Modification Agreement, the interest rate of the obligations under the Previous Loans was reduced to 4% per annum until December 31, 2015, which interest shall be compounded, capitalized and added to the unpaid principal amount of such obligations quarterly. After December 31, 2015, the principal amount of the obligations shall bear interest at 10% per annum, payable as prescribed under the terms of the Previous Loans. In addition, the Lender terminated a stock pledge and security agreement with MIS Beverage Holdings, LLC, a principal stockholder, thereby releasing 2,000,000 shares of common stock as collateral under the Previous Loans and the Company authorized the Lender to record and otherwise perfect its security interest in the Company’s distillery property. In connection with such security interest, Consilium and the Company’s Panache Distillery, LLC subsidiary entered into a subordination agreement with the holders of the first mortgage on the distillery property setting forth the respective rights and obligations of such lenders with respect to such security interests.

On June 18, 2014, in connection with the 2013 Loan Agreement, we received written notice from Consilium (the “Wodka Default Notice”) of an event of default under the 2013 Loan Agreement in connection with a missed quarterly payment of interest of $62,533.33. On July 2, 2014, the cure period for remedying this event of default expired without payment. The aggregate principal amount due under the 2013 Loan Agreement as of the date hereof is $1,400,000.

The 2013 Loan Agreement provides that upon the occurrence of an event of default, among other things, all obligations of the Company owed to Consilium will bear the interest at the default rate of 17% per annum while such defaults exist and the Company is required to pay Consilium a late fee of 5% of any monthly installment of principal, interest and/or fees and expenses. In addition, upon the election of Consilium, all obligations under the 2013 Loan Agreement may become immediately due and payable.

Pursuant to the Wodka Default Notice, Consilium has stated that it has certain rights and remedies available to it under the 2013 Loan Agreement which it has not waived and that it expressly reserves all of its rights under the 2013 Loan Agreement, including, but not limited to, the right to assert the existence of an Event of Default (as defined in the Loan Agreement); to declare all obligations due under the 2013 Loan Agreement immediately due and payable, to commence any legal or other action to collect any of the obligations owed Consilium or foreclose or otherwise realize on the collateral secured under the 2013 Loan Agreement. Consilium has agreed that is not at this time seeking to charge the default interest rate or late fee on the outstanding obligations and that it does not currently intend to exercise any other rights and remedies available to it at this time.

Pursuant to the 2013 Loan Agreement, Panache pledged to Consilium as collateral (i) all of its equity interests in Wodka (constituting 65.5% of such equity interests) and (ii) its depository account, pursuant to a Pledge and Assignment of Depository Account.

Future maturities of long term debt as of June 30, 2014 are as follows:

For the year ended:
December 31, 2014	$	0
December 31, 2015		0
December 31, 2016		3,500,000
December 31, 2017		7,458,121
	$	10,958,121

F-12

NOTE 9 – RELATED PARTY TRANSACTIONS

OnAs ~~May~~noted 9above, ~~2013,~~the ~~Panache~~Company ~~Beverage~~recorded unsecured, ~~Inc.~~non-interest ~~issued~~bearing aloans ~~promissory~~totaling ~~note~~$245,000 to ~~Consilium~~a ~~Corporate~~related ~~Recovery~~party ~~Master~~in ~~Fund,~~2009. ~~which~~The ~~resulted~~loan consists of $110,275 transferred in ~~gross~~from ~~proceeds~~a related entity as a deemed distribution, plus cash loans of $4134,~~000,000~~725 ~~before~~for ~~fees~~operations. ~~and~~On ~~other~~June ~~expenses~~11, ~~associated~~2014, ~~with~~as part of the ~~transaction.~~Restructuring ~~The~~Agreement ~~note~~between ~~bears~~the ~~interest~~Company atand 8%Consilium, ~~per~~the ~~annum~~Company’s ~~with~~former ~~interest~~chief ~~payable~~executive ~~quarterly~~officer, inmajority ~~arrears.~~shareholder Aand ~~final~~former ~~payment~~member of ~~all~~Panache ~~principal~~LLC ~~due~~assigned ~~under~~ the ~~promissory~~loan ~~note,~~to ~~plus~~Consilium. ~~accrued~~As ~~interest~~part toof ~~date~~the Restructuring Agreement, ~~shall~~this beloan ~~made~~was onmemorialized ~~May~~with 9,a ~~2016. The~~promissory ~~balance~~note of the ~~note~~Company’s Wodka subsidiary, dated June 11, 2014, and as of ~~September~~June 30, ~~2013~~2014, this loan balance is $4245,000~~,000~~.

OnIn ~~February 14~~addition, ~~2013,~~the ~~pursuant~~Company tohas areceived ~~Term~~various ~~Loan~~loans ~~Agreement~~from ~~dated~~related ~~February~~parties ~~14,~~to ~~2013~~fund ~~(“2013~~operations. ~~Loan~~The ~~Agreement”)~~related ~~between~~party ~~the~~loans ~~parties,~~totaled ~~Wodka issued a promissory note for~~ $1253,~~400,000~~231 toat ~~Consilium~~June ~~Corporate Recovery Master Fund~~30, ~~LTD~~2014 ~~due~~and onDecember ~~February~~31, 142013, ~~2016~~ and ~~bearing~~are ~~interest~~unsecured atand ~~12%~~non-interest ~~per~~bearing ~~annum. Interest~~with isno ~~payable~~stated ~~quarterly~~payment ~~in arrears~~terms. ~~The~~ ~~Company~~As ispart ~~using~~of the ~~proceeds~~Restructuring toAgreement, ~~fund~~$39,688 ~~operations~~of ~~and~~the ~~repay~~$253,231 ~~existing~~was ~~debt. The~~memorialized ~~Company~~with ~~pledged~~a ~~its~~promissory ~~tangible~~note ~~and~~of ~~intangible assets pursuant to~~ the ~~2013~~Company’s ~~Loan~~Wodka ~~Agreement~~subsidiary, ~~and~~dated ~~agreed~~June ~~to retain $800~~11,~~000~~ ~~of the proceeds in escrow~~2014.

On ~~December~~July 218, ~~2012~~2014, ~~pursuant~~David toShara, a ~~Term~~director ~~Loan~~of ~~Agreement~~the ~~(“Loan~~Company, ~~Agreement”)~~purchased ~~between~~300,000 ~~the~~shares ~~parties,~~of the Company’s ~~issued~~common astock ~~promissory note~~ for ~~$2,100,000~~an toaggregate ~~Consilium~~purchase ~~Corporate~~price ~~Recovery~~of ~~Master Fund~~$45,000. ~~LTD~~In ~~due~~connection onwith ~~December~~such 31purchase, ~~2015~~Consilium and ~~bearing~~its ~~interest~~affiliates atwaived ~~12%~~all ~~per~~rights ~~annum. Interest~~of isfirst ~~payable~~refusal ~~quarterly~~under ~~in arrears. The Company is using the proceeds to fund operations and repay existing debt. The Company pledged~~ its ~~tangible~~loan ~~and~~agreements ~~intangible assets pursuant to the Loan Agreement~~ and ~~agreed~~anti-dilution toprotection ~~retain~~under ~~$600,000~~warrants ofheld ~~the~~by ~~proceeds~~such ~~in escrow~~entities. ~~Concurrent with the issuance of the note, the managing director of Consilium was appointed to the Board of Directors of the Company.~~

On February 14, 2013, the Company issued Consilium warrants to purchase up to 1,840,000 shares of the Company’s common stock at an exercise price of $0.50 per share in exchange for consulting services to be provided over four years. The warrants vest in eight equal tranches every six months over the consulting period and are exercisable upon at least 61 days notice. The warrants expire on February 14, 2018. The Company valued the stock warrants at $740,968 using the Black Scholes model.

On December 21, 2012, the Company also issued Consilium warrants to purchase up to 2,760,000 shares of the Company’s common stock at an exercise price of $0.50 per share in exchange for consulting services to be provided over four years. The warrants vest in eight equal tranches every six months over the consulting period and are exercisable upon at least 61 days notice. The warrants expire on December 21, 2017. The Company valued the stock warrants at $1,229,304 using the Black Scholes model.

The Company has recognized $123,142 and $351,416 of consulting expense in relation to these warrant agreements with Consilium for consulting services for the three and nine months ended September 30, 2013, respectively.

PANACHE BEVERAGE, INC.

CONSOLIDATED NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

NOTE 9 – RELATED PARTY TRANSACTIONS– (Continued)

As noted above, the Company recorded unsecured, non-interest bearing loans totaling $245,000 to a related party in 2009. The loan consists of $110,275 transferred in from a related entity as a deemed distribution, plus cash loans of $134,725 for operations. The loan balance of $245,000 was outstanding as of September 30, 2013 and December 31, 2012.

In addition, the Company received various loans from related parties to fund operations. The related party loans totaled $278,501 and $281,898 at September 30, 2013 and December 31, 2012, respectively, and are unsecured and non-interest bearing with no stated payment terms.

Wodka received advertising services in the form of out of home media space from a related party who holds a non-controlling interest in Wodka during 2012. The Company recorded advertising expense and

capital contributions from non-controlling interests of $0 and $257,944 in relation to this arrangement for the three and nine months ended September 30, 2012.

NOTE 10 – COMMITMENTS AND CONTINGENCIES

On ~~May~~August 28, 2013, the Company ~~settled~~entered ~~its~~into ~~dispute~~an agreement with ~~Incubrands~~Engine ~~Spirits~~Shop ~~Group~~LLC, ~~(“Incubrands”)~~to ~~concerning~~sublease anadministrative ~~equity~~space ~~agreement~~for ~~with~~monthly arent ~~predecessor~~ of ~~the~~$5,000 ~~Company~~through ~~dated~~January ~~April~~ 30, ~~2007~~2018. ~~Per~~The ~~the~~Company ~~terms~~has of the ~~settlement,~~right to terminate the ~~Company~~sublet ~~paid~~agreement ~~Incubrands~~with ~~40,000~~30 ~~shares~~days’ ofnotice. ~~the~~Rent ~~Company’s~~expense ~~common~~was ~~stock~~$17,000 and $845,~~000~~400 ~~payable~~for ~~over~~the ~~ninety~~three ~~days. As~~months ofended ~~September~~June 30, 2014 and 2013, respectively, and $32,000 and $6,480 for the ~~dispute~~six ~~amount~~months ~~has~~ended ~~been~~June ~~paid~~30, ~~off~~2014 inand ~~full~~2013, respectively.

~~The~~In ~~Company~~June ~~rents~~2014, ~~furnished~~the ~~office~~company ~~space~~elected ~~on a month-~~to~~-month~~ ~~basis. Rent~~terminate ~~expense~~the ~~was~~sublet ~~$7,900~~agreement and ~~$3,240~~is ~~for~~now ~~the~~paying ~~three~~rent ~~months~~on ~~ended~~a ~~September~~month-to-month ~~30,~~basis ~~2013~~at ~~and~~the ~~2012,~~rate ~~respectively,~~of ~~and~~ $142,~~380~~000 ~~and~~per $9month,~~560~~ ~~for~~and ~~the~~has ~~nine~~prepaid ~~months ended September 30~~July, ~~2013~~August and ~~2012,~~September ~~respectively~~2014.

NOTE 11 – STOCKHOLDERS’ DEFICIT

On ~~February~~June 1411, ~~2013~~2014, as ~~noted~~part ~~above~~of the Restructuring Agreement, the Company issued Consilium ~~warrants~~Investment toPartners, ~~purchase~~LLC upwarrants to 1purchase 2,~~840~~500,000 shares of ~~the~~ Company’s common stock atas ancompensation ~~exercise~~for ~~price~~advice ofprovided ~~$0.50~~and ~~per~~consultation ~~share~~during inthe ~~exchange~~forbearance ~~for~~period. ~~consulting~~The ~~services~~Company also issued stock options to bepurchase ~~provided~~an ~~over~~aggregate ~~four~~800,000 ~~years. The~~shares ~~warrants~~of ~~vest~~the inCompany’s ~~eight~~common ~~equal~~stock ~~tranches~~to ~~every~~certain ~~six~~employees ~~months~~and ~~over~~directors ~~the~~for ~~consulting~~their ~~period~~role ~~and~~in ~~are~~the ~~exercisable~~successful ~~upon~~conclusion atof ~~least~~the 61transaction ~~days~~associated ~~notice~~with the Restructuring Agreement. The warrants ~~expire~~and onoptions ~~February~~vest ~~14,~~over ~~2018. The~~two ~~Company~~years ~~valued~~with ~~the~~an ~~stock~~exercise ~~warrants~~price atof $~~740~~0.15 per share and expire on June 11,~~968~~ ~~using~~2017. Using the Black -Scholes ~~model~~Model, ~~with~~the Company valued the ~~following~~stock ~~assumptions~~warrants at $176,750.

Risk free rate		0.9	%
Expected dividend yield		0.0	%
Expected volatility		99	%
Expected life of options	5.00 years
Exercise price	$	0.50
Stock price on issuance date	$	0.54

On March 31, 2014, the Company issued a director warrants to purchase 15,000 shares of common stock at an exercise price of $1.50 with an expiration date of December 31, 2015. The warrants vest on September 30, 2014. The Company valued the stock warrants at $447 using the Black Scholes model.

On December 21, 2012, the Company issued Consilium warrants to purchase up to 2,760,000 shares of the Company’s common stock at an exercise price of $0.50 per share in exchange for consulting services to be provided over four years. The warrants vest in eight equal tranches every six months over the consulting period and are exercisable upon at least 61 days notice. The warrants expire on December 21, 2017. The Company valued the stock warrants at $1,229,304 using the Black Scholes model.F-13

PANACHE BEVERAGE, INC.

CONSOLIDATED NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

NOTE 11 – STOCKHOLDERS’ DEFICIT– (Continued)

The ~~Company~~fair ~~is amortizing the~~ value of ~~the~~ warrants toand ~~consulting~~options ~~expense~~issued ~~ratably~~in ~~over~~2014 ~~the~~was ~~four~~estimated ~~year~~to ~~consulting~~be ~~periods. The Company has recognized~~ $~~123~~56,~~124~~550 ~~and~~using ~~$351,416~~the ofBlack ~~consulting~~Scholes ~~expense~~model inwith ~~relation to these agreements for~~ the ~~three~~following ~~and~~weighted ~~nine~~average ~~months ended September 30, 2013.~~assumptions

On December 21, 2012, pursuant to the 2012 Non-Qualified Stock and Option Compensation Plan, the Company issued employees warrants to purchase 2,700,000 shares of common stock at an exercise price of $1.00 per share with an expiration date of December 21, 2015. The warrants vest in two equal tranches on December 31, 2013 and December 31, 2014.

Risk free rate		0.9	%
Expected dividend yield		0.0	%
Expected volatility		80.7	%
Expected life of options	3 years
Exercise price	$	0.15
Stock price on issuance date	$	0.14

On June 3011, ~~2013,~~2014 in accordance with the ~~Company~~Restructuring ~~issued~~Agreement, acertain ~~director~~former executives agreed to the cancellation of warrants to purchase 15an aggregate 1,200,000 shares of the Company’s common stock atheld anby ~~exercise price of $1~~them.50 ~~with~~The anCompany ~~expiration~~reversed ~~date~~$278,259 of ~~June~~compensation ~~30,~~expense ~~2015. The~~in ~~warrants~~relation ~~vest~~to onthis ~~December 31, 2013~~cancellation.

OnThe ~~August~~Company 15recognized $54,691 ~~2013~~and $102,125 of other stock compensation expense for the ~~Company~~three ~~issued~~and ansix ~~employee~~months ~~warrants~~ended toJune ~~purchase~~30, 102014, respectively. The Company recognized $111,000 ~~shares~~and $281,900 of ~~common~~ stock atcompensation anexpense ~~exercise~~for ~~price~~the ~~$1.50~~three ~~with~~and ansix ~~expiration~~months ~~date~~ended ofJune ~~August~~30, 152013, ~~2016~~respectively. ~~The warrants vested immediately.~~

OnThe ~~September~~following ~~30,~~table ~~2013,~~shows the ~~Company~~warrant ~~issued~~and aoption ~~director~~activity ~~warrants~~for tothe ~~purchase~~six ~~15,000~~months ~~shares~~ended ofJune ~~common stock at an exercise price of $1.50 with an expiration date of September~~ 30, ~~2015. The warrants vest on March 31,~~ 2014.:

The Company has recognized $141,545 and $423,445 of stock compensation expense relating to warrants issued to employees and directors for the three and nine months ended September 30, 2013, respectively.

Warrants	Number of Warrants/ Options			Weighted Average Exercise Price		Weighted Average Remaining Term	Aggregate Intrinsic Value
Outstanding as of January 1, 2014		7,365,000		$	0.45
Issued		3,315,000		$	.15
Exercised		-		$	-
Expired/Forfeited		(1,200,000	)	$	1.00
Outstanding as of June 30, 2014		9,480,000		$	0.61	3.0 years		$	-

~~The~~On ~~following~~February ~~table~~14, ~~shows~~2013, pursuant to the ~~warrant~~Financial ~~activity~~Advisory ~~for~~Agreement dated November 28, 2012 (“Financial Advisor Agreement”), the ~~nine~~Company issued CIM warrants to purchase up to 1,840,000 shares of the Company’s common stock at an exercise price of $0.50 per share in exchange for consulting services to be provided over four years. The warrants vest in eight equal tranches every six months ~~ended~~over ~~September~~the 30consulting period and are exercisable upon at least 61 days’ notice. The warrants expire on February 14, ~~2013:~~2018. The Company valued the stock warrants at $740,968 using the Black Scholes model.

Warrants	Number of Warrants			Weighted Average Exercise Price		Weighted Average Remaining Term	Aggregate Intrinsic Value
Outstanding as of January 1, 2013		6,263,750		$	0.86
Issued		1,890,000		$	0.53
Exercised		-
Expired		(460,000	)
Outstanding of September 30, 2013		7,693,750		$	0.74	3.4 years	$	-

On December 21, 2012, pursuant to the Financial Advisory Agreement, the Company issued CIM warrants to purchase up to 2,760,000 shares of the Company’s common stock at an exercise price of $0.50 per share in exchange for consulting services to be provided over four years. The warrants vest in eight equal tranches every six months over the consulting period and are exercisable upon at least 61 days’ notice. The warrants expire on December 21, 2017. The Company valued the stock warrants at $1,229,304 using the Black Scholes model.

OnThe ~~January 24, 2013, the~~ Company ~~entered~~has ~~into~~recognized a$127,756 ~~mutual~~and ~~release~~$250,897 ~~with~~of aconsulting ~~consultant~~expense ~~whereby~~in itrelation ~~issued~~to ~~200,000 shares of~~ the ~~Company’s~~various ~~common~~warrant ~~stock~~agreements inwith ~~consideration~~CIM ~~and final payment~~ for ~~all~~the ~~compensation~~three ~~due~~and ~~pursuant~~six tomonths aended ~~consulting~~June ~~agreement~~30, ~~between~~2014, ~~the parties~~respectively. The Company ~~valued~~has ~~the~~recognized ~~shares~~$123,324 atand $~~0.60~~228,274 ~~per~~of ~~share~~consulting ~~and~~expense ~~recognized~~in $0relation ~~and~~to ~~$120,000~~the ofvarious ~~expense~~warrant agreements with CIM for the three and ~~nine~~six months ended ~~September~~June 30, 2013, respectively.

On March 12, 2013, the Company engaged a law firm to provide counsel in exchange for 15,000 shares of the Company’s common stock. The Company valued the shares at $0.60 per share and recognized $0 and $9,000 of professional fees for the three and nine months ended September 30, 2013.F-14

PANACHE BEVERAGE, INC.

CONSOLIDATED NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

NOTE 11 – STOCKHOLDERS’ DEFICIT– (Continued)

The Company recognized $0 and $42,500 of compensation expense for the three and nine months ended September 30, 2013, respectively, in relation to the grant of 35,000 shares of common stock as stock-based compensation during the nine months ended September 30, 2013. The shares immediately vested and the fair value of this stock issuance was determined by the value of the services provided.

NOTE 12 – NON-CONTROLLING INTERESTS

As of ~~September~~June 30, ~~2013~~2014 and December 31 ~~2012~~2013, the non-controlling interests balance was a deficit of $(~~814~~1,~~325~~283,527) and $(~~486~~1,~~422~~202,804), respectively, due to minority members owning 34.5% of the membership interests of Wodka.

Profits and losses are allocated to the members of Wodka in accordance with Wodka’s Limited Liability Company Agreement (the “Agreement”). Profits are allocated first to members in the amounts and proportions necessary to bring the members’ respective capital account balances in proportion to their percentage ownership interests and thereafter to the members pro rata in accordance with their percentage ownership interests. The Agreement allocates losses first to the members in an amount equal to the positive balances in their Capital Accounts until the balances in such accounts are reduced to zero and thereafter to the members pro rata in accordance with their respective percentage ownerships interests.

For the ~~three~~six months ended ~~September~~June 30, ~~2013~~2014 and ~~2012~~2013, $~~299~~153,~~102~~256 and $~~140~~323,~~532~~437, respectively, of Wodka’s net loss was allocated to Panache and $~~157~~80,~~543~~723 and $74170,~~020~~360, respectively, was allocated to non-controlling interests.

For the ~~nine~~three months ended ~~September~~June 30, ~~2013~~2014 and ~~2012~~2013, $~~622~~191,~~540~~493 and $~~422~~(93,~~210~~768), respectively, of Wodka’s net income (loss) was allocated to Panache and $~~327~~100,~~903~~863 and $~~480~~(49,~~329~~388), respectively, was allocated to non-controlling interests.

NOTE 13 – CONCENTRATIONS AND RISK

Major customers

The Company had ~~five~~eleven customers ~~representing~~represent approximately 8267% of revenues for the three months ended ~~September~~June 30, ~~2013~~2014. These customers represented approximately 1375% of the receivables outstanding as of ~~September~~June 30, 2014. The Company had one customer represent approximately 98% of revenues for the three months ended June 30, 2013. This customer represented approximately 99% of the receivables outstanding as of June 30, 2013.

The Company had ~~two~~nineteen customers ~~representing~~represent approximately 9863% of revenues for the ~~three~~six months ended ~~September~~June 30, ~~2012~~2013. ~~This~~ These customers represented approximately 75% of the receivables outstanding as of June 30, 2013. The Company had one customer representing approximately 99% of revenues for the six months ended June 30, 2013. These customers represented approximately 4699% of the receivables outstanding as of ~~September~~June 30, ~~2012~~2013.

The Company had one customer representing approximately 89% of revenues for the nine months ended September 30, 2013. This customer represented approximately 83% of the receivables outstanding as of September 30, 2013.

The Company had three customers representing approximately 97% of revenues for the nine months ended September 30, 2012. This customer represented approximately 99% of the receivables outstanding as of September 30, 2012.

PANACHE BEVERAGE, INC.

CONSOLIDATED NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

NOTE 13 – CONCENTRATIONS AND RISK – (Continued)

Major suppliers

The Company had ~~three~~four suppliers represent approximately 9897% of purchases for the three months ended ~~September~~June 30, ~~2013~~2014. These suppliers represented approximately 4% of the payables outstanding as of June 30, 2014. The Company ~~did~~had ~~not~~two ~~have~~suppliers ~~any~~represent ~~account~~approximately ~~payable~~98% ~~outstanding~~of topurchases ~~these~~for the three months ended June 30, 2013. These suppliers represented approximately 0% of the payables outstanding as of ~~September~~June 30, 2013.

The Company had ~~two~~four suppliers ~~representing~~represent approximately 9498% of purchases for the ~~three~~six months ended ~~September~~June 30, ~~2012~~2014. ~~This~~ ~~supplier~~These suppliers represented approximately 454% of the payables outstanding as of ~~September~~June 30, ~~2012~~2014. The Company had two suppliers represent approximately 98% of purchases for the six months ended June 30, 2013. The Company did not have any account payable outstanding to these suppliers as of June 30, 2013.

The Company had two suppliers represent approximately 91% of purchases for the nine months ended September 30, 2013. The Company did not have any account payable outstanding to these suppliers as of September 30, 2013.F-15

~~The~~NOTE ~~Company~~13 ~~had~~– ~~two~~CONCENTRATIONS ~~suppliers~~AND ~~representing~~RISK ~~approximately~~– ~~97% of purchases for the nine months ended September 30, 2012. This supplier represented approximately 45% of the payables outstanding as of September 30, 2012.~~(Continued)

Credit risk

Financial instruments that potentially subject the Company to significant concentrations of credit risk consist principally of cash and trade accounts receivable. The Company places its cash with commercial banking institutions. At times, such cash may be in excess of the Federal Deposit Insurance Corporation’s insurance limit. From time to time the Company may also hold cash in accounts with foreign financial institutions. The Company regularly assesses the risk associated with its foreign cash portfolio. The Company performs ongoing credit evaluations of its customers’ financial condition, but does not require collateral to support such receivables.

NOTE 14 – LOSS PER SHARE

Basic net gain/loss per share is computed using the weighted average number of common shares outstanding during the three ~~and nine~~ months ended ~~September~~June 30, 2014 and 2013, respectively. There was no dilutive ~~earning~~earnings per share due to net losses during the periods.

PANACHE BEVERAGE, INC.

CONSOLIDATED NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

NOTE 14 – LOSS PER SHARE– (Continued)

The following table sets forth the computation of basic net loss per share for the periods indicated:

	Three months ended September 30,						Nine months ended September 30,
	Three months ended June 30,						Six months ended June 30,
	2013			2012			2013			2012
	2014			2013			2014			2013
Numerator:
Net (loss) income attributable to Panache Beverage, Inc.	$	(1,522,329	)	$	(684,699	)	$	(3,266,731	)	$	(2,280,576	)
Net Gain/(loss) attributable to Panache Beverage, Inc.	$	(288,147	)	$	(935,888	)	$	(1,723,686	)	$	(1,744,403	)
Denominator:
Weighted average shares outstanding		27,055,891			26,392,674			27,010,616			26,025,519
Weighted average sharesoutstanding		27,055,891			26,177,031			27,055,891			26,364,074
Basic net (loss) income per share	$	(0.06	)	$	(0.03	)	$	(0.12	)	$	(0.09	)
Basic net Gain/(loss) per share	$	(0.01	)	$	(0.04	)	$	(0.06	)	$	(0.07	)

NOTE 15 – GOING CONCERN

~~These~~The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and the discharge of liabilities in the normal course of business for the foreseeable future. The Company’s net loss attributable to stockholders was approximately $1.7 million for the six months ended June 30, 2014 and approximately $4.5 million and $3.3 million for the years ended December 31, 2013 and 2012, respectively.

AsAt ofJune ~~September~~ 30, ~~2013,~~ the Company had ana ~~accumulated~~working capital deficit of approximately $5640 thousand,~~427,067.~~ ~~Management~~an ~~has~~accumulated ~~taken~~deficit ~~certain~~of ~~actions~~approximately ~~and~~$12 ~~continues~~million ~~to implement changes designed to improve the Company’s financial results~~ and ~~operating~~our available cash ~~flows. These~~at ~~actions~~June ~~involve certain cost-saving initiatives and growth strategies~~30, ~~including~~2014 a)is ~~examination~~insufficient onto ~~sales~~meet ~~and~~our ~~marketing~~operating ~~initiatives~~requirements ~~resulting~~for in the ~~expansion~~next oftwelve the Company's sales force and marketing efforts in key areas in the United States; b) downward vertical integration into domestic distillation and bottling resulting in diversification of revenue streams; c) upward vertical integration into domestic importationmonths. ~~Management~~ ~~believes~~The ~~that~~Company ~~these actions~~ will ~~enable~~require ~~the~~additional ~~Company~~funds to ~~improve~~meet ~~future profitability and cash flow in~~ its ~~continuing~~working ~~operations~~capital ~~through September 30~~needs, ~~2014.~~execute Asits abusiness ~~result,~~strategy ~~the financial statements do not include any adjustments to reflect the possible future effects on the recoverability~~ and ~~classification~~further ofdevelop ~~assets~~its ~~or the amounts and classification of liabilities that may result from the outcome of the Company’s ability to continue as a going concern~~business.

~~NOTE~~Management 16expects –that ~~SUBSEQUENT~~the ~~EVENTS~~Company’s operating expenses will continue to consume a significant portion of its cash resources and that it will not be able to generate gross profits in amounts necessary to offset or exceed such expenses for the foreseeable future. Accordingly, management anticipates that the Company will continue to record net losses in future periods. Management has taken certain actions and continues to implement changes designed to improve the Company’s financial results and operating cash flows. The actions involve certain cost-saving initiatives and growing strategies, including (a) reductions

~~The Company has evaluated subsequent events from September 30, 2013 to the date on which these financial statements were available to be issued.~~F-16

21NOTE 15 – GOING CONCERN – (Continued)

in operating expenses and (b) expansion of the business model into new markets. Management is evaluating other steps that it may be able to take to reduce its operating expenses and increase gross profits, but management cannot predict if or when the Company will achieve net income.

The Company’s ability to continue is highly dependent to funding from its senior lender and principal stockholder to fund its current and planned operating levels. In addition to reducing operating costs and increasing gross profits, management’s plan for funding future operations may include additional equity or debt financings. No assurance can be given, however, that financing will be available at desirable times, amounts or terms, if at all.

These factors raise substantial doubt as to the Company’s ability to continue as a going concern. In the event that the Company’s operations do not generate sufficient cash flows to fund operations and/or the Company is unable to obtain additional funds on a timely basis, the Company may be forced to curtail or cease its activities, which would likely result in the loss to investors of all or a substantial portion of their investment and uncertainty as to the payment of its obligations. The accompanying condensed consolidated financial statements do not include any adjustments necessary to reflect the possible future effects on the recoverability and classification of assets or the amounts and classifications of liabilities that may result from the outcome of these uncertainties.

NOTE 16 – CEDC SETTLEMENT

As of April 7, 2014, Wodka LLC and Panache LLC had accounts payable recorded as due to CEDC international (“CEDC”) of $358,719.30 and $65,453.20, respectively.

On April 8, 2014, the Company settled the balance owed with CEDC resulting in a $424,172 gain. In consideration for CEDC not requiring Wodka LLC and Panache LLC to pay their respective accounts payable balances due CEDC, the Company agreed to pay CEDC a total of $275,000, with minimum monthly payments of $15,000. Should the Company pay prior to December 31, 2014, the total will be discounted by $25,000.00. The balance must be paid in full no later than March 31, 2015. The payment schedule allows for goods to be released pro rata that have been stored at the Polish distillery.

NOTE 17 - SUBSEQUENT EVENTS

The Company has evaluated subsequent events through the date on which these financial statements were available to be issued.

On July 7, 2014, in connection with that certain Factoring Agreement, dated February 11, 2014, by and among Natwest Finance Limited, a New Zealand corporation (“Natwest”), Wodka, LLC, Panache, LLC and James Dale, we received written notice from Natwest of demand for repayment of the aggregate principal amount and interest due of $190,032 as of June 30, 2014. Management disputes the claim made by Natwest.

On July 8, 2014, David Shara, a director of the Company, purchased 300,000 shares of the Company’s common stock for an aggregate purchase price of $45,000. In connection with such purchase, Consilium and its affiliates waived all rights of first refusal under its loan agreements and anti-dilution protection under warrants held by such entities.

F-17

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

The Private Securities Litigation Reform Act of 1995 provides a safe harbor for forward-looking statements. This Quarterly Report may contain certain statements of a forward-looking nature relating to future events or future business performance. Any such statements that refer to the Company’s estimated or anticipated future results or other non-historical facts are forward-looking and reflect the Company’s current perspective of existing trends and information. These statements involve risks and uncertainties that cannot be predicted or quantified and, consequently, actual results may differ materially from those expressed or implied by such forward-looking statements. Such risks and uncertainties include, among others, risks and uncertainties detailed in the Company’s ~~Annual~~periodic ~~Report~~reports ~~on Form 10-K and 10K/A,~~ filed with the Securities and Exchange Commission ~~on April 1, 2013 and August 21, 2013, respectively~~. Any forward-looking statements contained in or incorporated into this Quarterly Report speak only as of the date of this Quarterly Report. Except as may be required by law, the Company undertakes no obligation to update or alter these forward-looking statements, whether as a result of new information, future events, or otherwise.

This management's discussion and analysis should be read in conjunction with the consolidated financial statements and notes included elsewhere in this Quarterly Report on Form 10-Q as well as in our ~~most~~periodic ~~recent~~reports ~~Annual~~filed ~~Report~~with onthe ~~Form 10-K~~SEC.

InOverview ~~this Quarterly Report on Form 10-Q, unless the context indicates otherwise, references to "the Company", "Panache Beverage", "Panache", "our Company", "we", "us",~~ and ~~similar~~Recent ~~references refer to Panache Beverage, Inc. and its subsidiaries.~~Events

~~Business~~Panache ~~Overview~~Beverage Inc. ("the Company", "Panache Beverage", "Panache", "our Company", "we", "us", and similar references refer to Panache Beverage, Inc. and its subsidiaries) was incorporated under the laws of the State of Florida in 2004 and reincorporated in the State of Delaware in 2013. We are an alcoholic beverage company originally specializing in the development and aggressive early growth of spirits brands in order to establish our assets as viable and attractive acquisition candidates for the major global spirits companies. Panache’s initial focus was to build its brands as individual acquisition candidates while continuing to develop its pipeline of new brands into the Panache portfolio. Panache's existing portfolio contains spirit brands and the Panache Distillery, LLC. Panache purchased the Empire Winery and Distillery in New Port Richey, FL in August 2013 and opened Panache Distillery LLC. Panache entered the distillery business to strengthen its core business offering. Additionally, Panache Distillery offers third party contract distillation and co-packing adding a new revenue stream to the Panache business. The two central facets of the Panache value creation strategy are the growth of existing assets and creation of brand assets to develop inside the portfolio. Panache is committed to delivering on these strategies through innovation – made possible through the acquisition of the distillery and its capabilities. Using our key industry relationships, we expect to create true asset value through our investment in Panache Distillery. In Q2 of 2014, we installed our bottle.

~~Panache~~Notice ~~Beverages, Inc. specializes in the strategic development and aggressive early growth~~ of ~~spirits~~Default ~~brands~~under ~~establishing~~Consilium ~~its~~Loan assets as viable and attractive acquisition candidates for the major global spirits companies. Panache builds its brands as individual acquisition candidates while continuing to develop its pipeline of new brands into the Panache portfolio. Panache's existing portfolio contains three brands and a distillery:Agreements

~~Wodka~~On ~~Vodka~~May 6, 2014, we received written notice from Consilium (~~www.welovewodka.com~~the “Default Notice”) of certain events of defaults under that certain Amended and Restated Loan Agreement, dated as of May 9, 2013, as amended to date, and the ancillary promissory notes and related loan documents related thereto (collectively, the “Amended Loan Agreement”).

~~Wodka~~Pursuant is triple distilled and charcoal filtered earning it a 90 point rating by the Beverage Testing Institute – a first for any brand available for under $10. Wodka was developed as an egalitarian brand – coming from the position that consumers shouldn’t have to ~~pay $30 for a bottle of quality vodka. This position was authentic –~~ the ~~brand~~Default ~~was discovered by Panache while walking through a distillery in Eastern Poland – Wodka Vodka~~Notice, aConsilium ~~relic~~has ~~from~~agreed ~~Poland's~~not ~~communist~~to ~~era,~~charge ~~was government owned/issued vodka. Wodka stands tall in~~ the ~~exploding~~default ~~category~~interest ofrate ~~“quality~~or ~~for~~late ~~value”~~fee ~~spirit~~on ~~brands. It is uniquely positioned in~~ the ~~category~~outstanding asobligations ~~fun,~~and ~~quirky,~~does ~~aloof~~not –intend ~~all~~to ~~attributes~~exercise ~~which~~any ~~have~~other ~~been~~rights ~~embraced by trade~~ and ~~consumers~~remedies ~~making~~available ~~Wodka~~to ~~a true “brand” very quickly. Since launching in the United States~~ it ~~has~~at ~~been~~this ~~recognized~~time, asbut areserves ~~category leader by Time Magazine,~~ the ~~Wall~~right ~~Street~~to ~~Journal,~~do ~~Bloomberg Magazine, and CNBC amongst a host of traditional consumer media~~so.

~~Wodka is produced by Przedsiebiorstwo Handlowo-Produkcyjne Wieslaw Wawrzyniak, Kalisz, Poland.~~4

Pursuant to the Amended Loan Agreement, the Company pledged certain of its assets to Consilium, including (i) its second priority security interest in the real and personal property constituting the distillery own by Panache Distillery, LLC, pursuant to the Distillery Mortgage, (ii) its security interest in its membership interests in Panache, LLC, Panache USA, LLC, Alibi ~~American~~NYC, ~~Whiskey~~LLC, Alchemy International, LLC and Panache Distillery, LLC, pursuant to an Amended and Restated Pledge and Security Agreement, dated as of May 9, 2013, (~~www~~iii) trademarks held by its subsidiaries Alibi NYC, LLC and Alchemy International, LLC pursuant to a Trademark Security Agreement and (iv) its depository account and the escrow account holding funds yet to be disbursed pursuant to the Amended Loan Agreement, pursuant to a Pledge and Assignment of Depository Account.~~alibiamerica~~ In addition, the Amended Loan Agreement is additionally secured by the limited guaranty of Panache, LLC, Alibi NYC, LLC, and Alchemy International, LLC.~~com)~~

~~Alibi~~The ~~has~~Amended ~~been~~Loan ~~developed~~Agreement towas ~~exploit~~also asecured ~~gap~~by incertain ~~the~~stock ~~exploding~~pledge ~~brown~~agreements ~~spirits~~with ~~category~~certain –former ~~the~~officers ~~need~~and ~~for~~director anof ~~edgy, cool, premium Whiskey that appeals to~~ the ~~younger~~Company ~~generation of LDA drinkers. Whiskey~~ and ~~Bourbon~~MIS ~~brands~~Beverage ~~today~~Holdings, ~~are~~LLC, ~~largely~~who ~~positioning~~pledged ~~themselves~~an ~~alongside~~aggregate ~~“tradition”~~of ~~and “heritage”~~19, ~~creating brands that look~~900,000 ~~feel~~shares ~~and~~of ~~are marketing against~~ the ~~classic~~Company’s ~~cocktail~~common ~~era. Forgotten~~stock isas ~~the brown spirits tradition Jack Daniels left behind decades ago – badasses drink Whiskey, Whiskey is dangerous and Whiskey is about a mindset of true cool~~collateral.

~~Alibi~~In ~~American~~connection ~~Whiskey~~with isthe aDefault ~~smooth~~Notice, 90on ~~proof~~May ~~blended~~8, ~~whiskey~~2014, ~~that~~we isentered ~~easy~~into toa ~~drink;~~forbearance ~~any~~agreement ~~way~~(the ~~you~~“Forbearance ~~want~~Agreement”) towith ~~drink~~Consilium ~~it. Alibi~~which isprovided ~~excellent~~that ~~for~~Consilium ~~shooting,~~would ~~sipping~~not ~~with~~exercise ~~your~~any ~~favorite~~of ~~beer~~its orrights ~~mixing~~under ~~with~~the ~~your~~Loan ~~favorite~~Agreement ~~juice,~~for ~~soda~~a orperiod asending aon ~~key~~June ~~ingredient~~6, in2014, awhich ~~great~~period ~~cocktail. Since~~was ~~its~~extended ~~launch~~until inJune Q413, it2014. ~~has~~In ~~been~~addition, ~~embraced~~the byForbearance ~~trade~~Agreement ~~and~~allowed ~~consumers~~the asCompany ato ~~unique~~draw ~~alternative~~down tothe ~~what~~remaining ~~already~~$200,000 ~~exists~~held in escrow under the ~~marketplace~~Amended Loan Agreement.

~~Alibi~~On isJune ~~produced~~18, by2014, ~~Florida~~in ~~Distillers~~connection with the 2013 Loan Agreement we received written notice from Consilium (the “Wodka Default Notice”) of an event of default under the 2013 Loan Agreement in connection with a missed quarterly payment of interest of $62,533.33. ~~Auburndale~~On July 2, ~~Florida~~2014, ~~USA~~the cure period for remedying this event of default expired without payment. The aggregate principal amount due under the 2013 Loan Agreement as of the date hereof is $1,400,000.

22The 2013 Loan Agreement provides that upon the occurrence of an event of default, among other things, all obligations of the Company owed to Consilium will bear the interest at the default rate of 17% per annum while such defaults exist and the Company is required to pay Consilium a late fee of 5% of any monthly installment of principal, interest and/or fees and expenses. In addition, upon the election of Consilium, all obligations under the 2013 Loan Agreement may become immediately due and payable.

~~Alchemia~~Pursuant ~~Infused~~to ~~Vodka~~the Wodka Default Notice, Consilium has stated that it has certain rights and remedies available to it under the 2013 Loan Agreement which it has not waived and that it expressly reserves all of its rights under the 2013 Loan Agreement, including, but not limited to, the right to assert the existence of an Event of Default (~~www~~as defined in the 2013 Loan Agreement); to declare all obligation due under the 2013 Loan Agreement immediately due and payable, to commence any legal or other action to collect any of the obligations owed Consilium or foreclose or otherwise realize on the collateral secured under the 2013 Loan Agreement.~~alchemiainfusions~~ Consilium has agreed that is not at this time seeking to charge the default interest rate or late fee on the outstanding obligations and that it does not currently intend to exercise any other rights and remedies available to it at this time.~~com)~~

~~Alchemia~~Pursuant isto athe ~~premium,~~2013 ~~traditional~~Loan ~~Polish~~Agreement, ~~vodka~~Panache ~~that~~pledged isto ~~naturally~~Consilium ~~infused~~as ~~with~~collateral ~~select~~(i) ~~raw~~all ~~ingredients and made in the “Spiritus Vini”, or “Spirit~~ of ~~Wine”.~~its ~~The~~equity ~~spirit~~interests ~~is available~~ in ~~three~~Wodka ~~varieties:~~(constituting ~~Chocolate, Ginger, and Wild Cherry~~65.5% ~~Alchemia’s~~of ~~infusions~~such ~~are~~equity ainterests) ~~fresh escape for consumers who have been offered very little from a spirits world rife with the artificially flavored vodkas presently taking up store shelves~~ and ~~back~~(ii) ~~bars.~~its ~~Alchemia~~depository ~~has~~account, ~~found~~pursuant ato ~~strategic niche in the exploding culinary world and is being favored by celebrity chefs and their restaurants. Cherry received~~ a 94Pledge ~~PTS by Wine Enthusiast~~ and ~~was~~Assignment ~~named~~of aDepository ~~Top 50 Spirit for 2011~~Account. ~~Chocolate received a 92 by The Tasting Panel.~~

~~Alchemia is produced by Przedsiebiorstwo Handlowo-Produkcyjne Wieslaw Wawrzyniak, Kalisz, Poland.~~5

~~Panache~~Restructuring ~~Distillery~~Agreement ~~LLC~~with ~~(www.panachedistillery.com)~~Consilium

InOn ~~August~~June 11, 2014, the Company entered into the Restructuring Agreement, in consideration for the cancellation of ~~2013~~approximately ~~Panache~~$1,164,000 ~~Beverage Inc.~~principal ~~acquired~~amount aof ~~pre-existing~~indebtedness ~~distillery~~under the Previous Loans, certain former officers and ~~opened~~directors ~~Panache~~of ~~Distillery~~the ~~LLC.~~Company ~~The~~agreed ~~distillery~~to ~~provides~~transfer ~~Panache~~an ~~with~~aggregate of 16,629,876 shares of the ~~means~~Company’s common stock to ~~manage~~Consilium or its ~~own~~designated ~~supply~~assignee ~~chain~~and ~~for~~to ~~its~~cancel ~~brands~~warrants ~~while~~to ~~providing~~purchase ~~the~~an ~~parent~~aggregate ~~company~~1,200,000 ~~with~~shares ~~new~~of ~~and~~Company ~~diverse~~common ~~revenue~~stock ~~streams~~held by them. ~~Production~~ ofIn ~~Wodka~~connection ~~Vodka~~with such transactions, Consilium terminated various stock pledge and ~~Alibi~~security ~~American~~agreements ~~Whiskey~~it ~~will~~had beentered ~~transitioned~~into towith such individuals. As additional consideration for entering into the ~~Panache~~transactions ~~Distillery~~associated ~~over~~with the ~~next~~Restructuring Agreement, an affiliate of Consilium was issued three-year. ~~Additionally~~warrants to purchase 2, ~~Panache~~500,000 ~~Distillery~~shares ~~will~~of ~~offer~~the ~~third~~Company’s ~~party~~common ~~contract~~stock, ~~distillation~~exercisable ~~and~~at ~~co-packing~~$0.15 asper ~~ancillary~~share, ~~businesses~~vesting ~~and~~over ~~additional~~a ~~revenue~~two-year ~~streams~~period.

~~History~~As part of ~~Success~~the Restructuring Agreement, the Company entered into a Loan Modification Agreement with Consilium that, amongst other things, in addition to reducing the principal amount of the Previous Loans, waived all current defaults under the Previous Loans and added the additional $345,000 of funding through June 11, 2014 to the principal amount of the Previous Loans. The Loan Modification Agreement also required the capitalization of accrued but unpaid interest, as of June 11, 2014, in the aggregate amount of $266,545, making the newly combined restructured principal balance due Consilium $5,758,121, as of June 11, 2014. From June 12, 2014 through June 30, 2014, Consilium provided additional funding of $300,000, making the principal balance of the new restructured loans $6,058,121, as of June 30, 2014

~~Panache~~As ~~was~~part ~~formed~~of inthe ~~November~~Loan ~~2004~~Modification byAgreement ~~James~~and ~~Dale as~~ the ~~import~~interest ~~company~~rate of ~~record~~the ~~for~~obligations under the ~~premium~~Previous ~~vodka~~Loans was reduced to 4% per annum until December 31, 422015, ~~BELOW~~which ~~NZ.~~interest Atshall ~~that~~be ~~time~~compounded, 42capitalized ~~BELOW~~and ~~was~~added ato ~~publically~~the ~~traded~~unpaid ~~company~~principal ~~but~~amount ~~lacked~~of ~~traction~~such inobligations ~~the~~quarterly. ~~most~~After ~~important~~December ~~liquor~~31, ~~markets~~2015, inthe principal amount of the ~~world~~obligations shall bear interest at 10% per annum, ~~including~~payable as prescribed under the ~~United~~Previous ~~States~~Loans. ~~Panache~~In ~~provided~~addition, the ~~marketing~~Lender ~~solution~~terminated ~~for~~a 42stock ~~BELOW,~~pledge and itsecurity ~~became~~agreement with MIS Beverage Holdings, LLC, a ~~brand~~principal ~~available~~stockholder, inthereby 19releasing ~~strategically~~2,000,000 ~~selected~~shares ~~states~~of common stock as collateral under the Previous Loans and ~~was~~the ~~over-performing~~Company inauthorized ~~top~~the ~~tier~~Lender ~~image~~to ~~accounts~~record aand ~~year~~otherwise ~~later~~perfect its security interest in the Company’s distillery property. ByIn ~~mid-2005~~connection 42with ~~BELOW~~such ~~was~~security interest, Consilium and the Company’s Panache Distillery, LLC subsidiary entered into a ~~major~~subordination ~~player~~agreement inwith the ~~business~~holders ~~and~~of ~~was~~the ~~being~~first ~~noticed~~mortgage inon the ~~United~~distillery ~~States~~property bysetting ~~major~~forth ~~suppliers~~the respective rights and obligations of such lenders with respect to such security interests.

~~After~~Critical ~~noticing~~Accounting ~~that~~Policies 42 BELOW has replaced Grey Goose in numerous key accounts, Bacardi added 42 BELOW to a list of top threats to Grey Goose in the US. Shortly thereafter 42 BELOW was formally approached for global acquisition by Barcardi USA Inc. At this stage Panache was responsible for over 50% of the total annual cases sold globally by 42 BELOW and ~~was among the key driving factors in the success of the brand. The Panache/42 Below Importer agreement was purchased in December 2006.~~ Estimates

~~During~~Our ~~this~~consolidated ~~time~~financial ~~Panache~~statements ~~was~~have ~~developing~~been ~~its~~prepared ~~current~~in ~~pipeline~~accordance ~~brands~~with ~~Alchemia~~accounting ~~Vodka~~principles generally accepted in the United States of America. The preparation of these financial statements requires management to make estimates and ~~Alibi~~assumptions ~~Whiskey~~that ~~with~~affect anthe ~~eye~~reported ~~toward~~amounts ~~developing~~of aassets ~~value~~and ~~brand,~~liabilities ~~which~~and ~~became~~the ~~Wodka~~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.

~~Today~~On an ongoing basis, ~~Panache~~we ~~has~~evaluate ~~developed~~our aestimates ~~unique~~and ~~set~~judgments offor ~~wholesale~~all assets and ~~retail~~liabilities, ~~relationships~~including asthose ~~well~~related to stock-based compensation expense and the fair value determined for stock purchase warrants classified as ~~sales~~derivative liabilities. We base our estimates and ~~marketing~~judgments ~~infrastructure~~on historical experience, current economic and ~~proprietary~~industry ~~partnerships~~conditions ~~enabling~~and iton various other factors that are believed to ~~develop,~~be ~~roll~~reasonable ~~out~~under the circumstances. This forms the basis for making judgments about the carrying values of assets and ~~exit~~liabilities ~~its~~that ~~brands~~are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. There have been no changes in our critical accounting policies and estimates from our 2013 Annual Report.

~~Recent~~We ~~Developments~~believe that full consideration has been given to all relevant circumstances that we may be subject to, and the consolidated financial statements accurately reflect our best estimate of the results of operations, financial position and cash flows for the periods presented.

In the summer of 2013 the Company terminated its exclusive importation agreement with Domaine Select Wine Estates (DSWE) for Wodka Vodka. The Company is now the importer of record for Wodka Vodka as well as the registered agent for Alibi American Whiskey. This upward integration offers Panache the autonomy to tailor national pricing and programming, as well as creates the potential to generate additional profit.6

OnResults ~~August 23, 2013, Panache Distillery, LLC ("PDL"), a wholly owned subsidiary~~ of ~~Panache~~Operations ~~Beverage,~~for ~~Inc., closed on~~ the ~~Asset~~Three ~~Purchase Agreement (“APA”) with Douglas Joint Venture, Empire Joint Venture,~~ and ~~V-3~~Six ~~Joint~~Months ~~Venture,~~Ended ~~LLC,~~June ~~(collectively the "Sellers")~~30, ~~pursuant~~2014 ~~to which, PDL acquired all right, title~~ and interest in and to certain assets owned by the Sellers located at 11807 Little Road, New Port Richey, Florida. This property includes land, buildings, and machinery used in the distillation, bottling and sales operations as consideration, PDL paid to the Sellers a total purchase price of $4,200,000, of which $700,000 was paid in cash at the closing, and the remaining $3,500,000 was paid in the form of a Promissory Note (the “Note) for the benefit of the Sellers, which accrues interest at a rate of 6% payable in semiannual installments of interest only, is prepayable without penalty, and is due thirty six months from the date of execution. The Note is secured by a first lien Purchase Money Mortgage and Security Agreement secured by the Purchased Assets.2013

Results of Operations for the Three and Nine Months Ended September 30, 2013 and 2012

Revenues

~~Revenues~~Net revenues were $~~306~~655,~~159~~689 and $~~271~~1,~~241~~425,435 for the three months ended ~~September~~June 30, ~~2013~~2014 and ~~2012~~2013, respectively, anand ~~increase of 13%. Revenues~~ were $31,~~148~~290,~~732~~606 and $12,~~310~~842,~~765~~573 for the ~~nine~~six months ended ~~September~~June 30, ~~2013~~2014 and ~~2012~~2013, respectively~~, an increase of 140%~~. We currently generate our revenues mostly from sales of distilled spirits. The revenues are recognized when persuasive evidence of a sale exists, transfer of title has occurred, the selling price is fixed or determinable and collectability is reasonably assured. Our sales arrangements are not subject to warranty. Gross revenue was reduced due to sales returns and allowances by $~~5,112~~815 and $06,000 during the three months ended ~~September~~June 30, ~~2013~~2014 and ~~2012~~2013, respectively, and $~~11,495~~815 and $306,~~325~~383 during the ~~nine~~six months ended ~~September~~June 30, ~~2013~~2014 and ~~2012~~2013, respectively.

The ~~increase~~decrease in ~~revenue~~quarterly ~~during~~revenues ~~the~~from ~~three and nine months ended September 30,~~ 2013 ~~compared~~ to ~~the~~2014 ~~same periods in 2012~~ was ~~primarily~~most ~~due~~attributable to ~~the~~changes ~~implementation~~implemented ofin our ~~marketing~~distribution ~~and sales~~ strategies aswhich ~~well~~were not as ~~the~~ successful. ~~launch~~A ofshortfall ~~the~~in ~~Alibi~~sales ~~brand~~did innot ~~the~~allow ~~fourth~~for ~~quarter~~anticipated ofinventory ~~2012~~depletions.

Cost of Goods Sold

Cost of goods sold included expenses directly related to selling our products. ~~Product~~including product delivery, broker fees and direct labor ~~would be examples of cost of goods sold items~~. Cost of goods sold was $~~291~~490,~~974~~765, or 95approximately 75% of revenue, and $~~115~~855,~~122~~131, or approximately 4260% of revenue, during the three months ended ~~September~~June 30, ~~2013~~2014 and ~~2012~~2013, respectively., ~~Cost~~and ~~of goods sold was~~ $21,~~007~~006,~~532~~631, or approximately 6478% of revenue, and $~~811~~1,~~462~~715,558, or approximately 6260% of revenue, during the ~~nine~~six months ended ~~September~~June 30, ~~2013~~2014 and ~~2012~~2013, respectively.

~~These~~The ~~increases~~increase in cost of goods sold ~~are attributable to increases~~ in ~~revenue. The~~the ~~increase~~second inquarter ~~costs~~ of ~~goods~~2014 ~~sold~~ as a percentage of revenue ~~during~~was attributable the ~~three~~implementation ~~and~~of ~~nine~~distribution ~~month~~strategy ~~periods~~changes ~~ended~~which ~~September~~resulted ~~30, 2013~~ in ~~comparison~~a todecrease ~~the same periods in 2012 is mostly due to costs associated with the transition to becoming our own importer~~ of ~~Wodka Vodka and the agent for Alibi American Whiskey~~revenues.

Expenses

Operating expenses were $1510,~~482,012~~707 and $~~876~~1,~~066~~478,054 for the three months ended ~~September~~June 30, 2014 and 2013, respectively, and ~~2012~~$2,030,204 and $2,929,027 for the six months ended June 30, 2014 and 2013, respectively. Consulting expenses decreased $67,356 and general and administrative expenses decreased $4810,~~411~~299 in the three months ended June 30,~~039~~ 2014, compared to the three months ended June 30, 2013, due to the Company restructure and overhead expense reduction programs. Consulting expenses were $3424,~~198~~988 and $291,~~285~~235 for the ~~nine~~six months ended ~~September~~June 30, 2014 and 2013, respectively, and ~~2012~~general and administrative expenses were $809,817 and $1,557,620 for the six months ended June 30, 2014 and 2013 respectively. Do to $512,422 of accrued bonuses, salaries and related payroll expenses being reversed in the three months ended June 30, 2014, the total general and administrative expenses for the quarter were ($15,640).

The increase in operating expenses was primarily caused by professional fees increasing $524,847 for quarter ended September 30, 2013 compared to the same period in 2012 and $506,048 for the nine months ended September 30, 2013 compared to the same period in 2012 as the Company successfully went through the acquisition of a distillery and two legal proceedings. General and administrative expenses increased $489,473 for the nine months ended September 30, 2013 over the same period in 2012 due to higher head count and stock compensation, as well as to pre-launch activity at Panache Distillery in 2013.

Net Loss

The Company’s net loss for stockholders was $1288,~~522,328~~147 and $~~684~~935,~~699~~888 for the three months ended ~~September~~June 30, ~~2013~~2014 and ~~2012~~2013, respectively and $31,~~266~~723,~~731~~686 and $21,~~280~~744,~~576~~403 for the ~~nine~~six months ended ~~September~~June 30, ~~2013~~2014 and ~~2012~~2013, respectively. The ~~change~~decrease in ~~net~~Net ~~loss~~Losses ~~for the nine months ended September 30, 2013 compared to the same 2012 period~~ was attributable to ~~higher~~the ~~operating~~Company ~~expenses~~restructure, ~~increased~~overhead ~~interest~~ expense ~~and~~reduction ~~less~~programs ~~loss~~and ~~allocated to non-controlling interests. The increase in~~ the ~~loss~~ramping ~~for~~up ~~the~~of ~~three~~our ~~months~~distillery ~~ended~~operations ~~September~~and ~~30,~~its ~~2013~~contribution ~~compared~~ to ~~the same 2012 period was due to the increase in operating expenses and interest expense~~revenues.

~~There can be no assurance that we will achieve or maintain profitability, or that any revenue growth will take place in the future.~~7

Liquidity and Capital Resources

~~Cash~~Our ~~flows~~principal ~~used~~sources inof ~~operating~~liquidity ~~activities~~generally ~~were~~include ~~$4,718,153~~operating ~~and $1,529,853 for the nine months ended September 30, 2013 and 2012, respectively. Negative~~ cash flows ~~from~~and ~~operations~~financing ~~for the nine months ended September 30, 2013 were due primarily to the restrictions on cash stemming~~ from ~~loans~~our ~~from~~senior ~~Consilium Corporate Recovery Master Fund~~lender, ~~LTD, which decreased cash flows from operations by $1,827,207~~Consilium. ~~Negative~~Our ~~cash~~principal ~~flows~~uses ~~from operations also caused by the net loss~~ of ~~$3,266,731~~liquidity ~~and~~generally ~~the~~include ~~loss~~capital ~~allocated~~expenditures ~~to non-controlling interests of $327,903 partially offset by stock issued for services~~ and ~~compensation~~working ~~of $963,822~~capital. Negative cash flows from operations for the nine months ended September 30, 2012 were due primarily to the net loss of $2,280,576 and the loss allocated to non-controlling interests of $480,329 offset by non-cash advertising of $257,944 and stock issued for services and compensation of $501,900.

Cash flows used in ~~investing~~operating activities were $326,013 for the six months ended June 30, 2014 compared to cash flows used in ~~both~~operating activities of $5,308,920 for the six months ended June 30, 2013. ~~and~~Cash ~~2012~~flows ~~were~~from ~~due~~operations toin the ~~purchase~~first six months of ~~property~~2014 ~~and~~resulted ~~equipment.~~primarily ~~The~~from ~~Company~~a ~~purchased~~decrease in restricted cash of $1,734,950 offset by a ~~distillery~~net onloss ~~August~~of 23$1,723,686. ~~2013~~Negative cash flows from operations for athe ~~total~~six ~~purchase~~months ~~price~~ended June 30, 2013 were due mostly to the net loss of $41,~~200~~744,~~000~~403, plus the loss allocated to non-controlling interest of $170,360, partially offset by non-cash expenses of $374,735 from issuing stock and warrants to employees and external professionals for services rendered.

Cash flows ~~provided~~used byin ~~financing~~investing activities were $4747,~~911,279~~257 and $1,~~433,734~~087 ~~during~~for the ~~nine~~six months ended ~~September~~June 30, ~~2013~~2014 and ~~2012~~2013, respectively~~. Positive cash flows from financing activities during the nine months ended September 30~~, ~~2013~~resulting ~~were due primarily to proceeds of $5,400,000~~ from ~~issuances of long term debt partially offset by~~ the ~~net~~purchase ~~repayments~~ of ~~short~~distillery ~~term debt of $349,609 and a reduction in factor liabilities of $139,112~~equipment. ~~Positive cash flows from financing activities during nine months ended September 30, 2012 were due primarily to proceeds of $1,022,700 from sales of common stock.~~

WeCash ~~had~~flows ~~cash~~provided ofby ~~$2,452,574~~financing onactivities ~~hand~~were ~~(including~~$440,386 ~~restricted~~and ~~cash) as of September 30~~$4,646,577 ~~2013.~~during ~~We do not anticipate that additional funding will be needed for~~ the ~~next~~six ~~twelve~~ months. Weended ~~plan~~June to30, ~~strengthen~~2014 ~~our position in the global markets through aggressive marketing~~ and ~~sales of our products~~2013, ~~as well as through implementation of other elements of our business plan~~respectively. ~~However,~~Positive ifcash ~~our~~flows ~~revenue~~from ~~projections~~financing ~~fail~~activities toduring ~~materialize and/or our future costs substantially exceed our current estimates, we would need to obtain additional capital to sustain our operations. In~~ the ~~past~~second wequarter ~~have funded our cash needs with a series~~ of ~~debt~~2014 ~~and~~were ~~equity~~due ~~transactions,~~ primarily ~~with related parties. If we are unable~~ to ~~receive~~the ~~additional~~proceeds ~~cash~~ from ~~our~~Consilium. ~~related~~Positive ~~parties,~~cash weflows ~~may~~from ~~need to rely on~~ financing ~~from~~activities ~~outside~~during ~~sources~~the ~~through~~six ~~debt~~months orended ~~equity~~June ~~transactions.~~30, ~~Our~~2013 ~~related~~were ~~parties~~due ~~are~~primarily ~~under no legal obligation~~ to ~~provide~~issuance usof ~~with~~long ~~capital~~term ~~infusions.~~debt ~~Failure~~in tothe ~~obtain~~amount ~~such~~of ~~financing~~$5,400,000 ~~could~~partially ~~have~~offset aby ~~material~~reduction ~~adverse~~in ~~effect~~factor onliabilities ~~operations~~of ~~and~~$317,262, ~~financial~~the ~~condition.~~net ~~For example~~$191,960 ifrepayment weof ~~unable~~related toparty ~~raise~~notes ~~sufficient~~payable, ~~capital~~and torepayment ~~develop~~of ~~our~~notes ~~business~~payable ~~plan,~~in wethe ~~may~~amount ~~need~~of ~~to:~~$267,062.

·We ~~Curtail~~had ~~new~~cash ~~product~~on ~~launches~~hand ·of ~~Limit~~$276,200 ~~our~~as ~~future~~of ~~marketing~~June ~~efforts~~30, to2014 ~~areas~~including ~~that~~restricted wecash. ~~believe~~We ~~would~~expect this amount, to be insufficient to fund future operating cash flow and will require additional capital. The Company is in the ~~most~~process ~~profitable~~of evaluating potential sources of such capital and may use equity and/or debt instruments to fund its future operating cash flow or enter into a strategic arrangement with one or more third parties.

~~Demand~~The ~~for~~Company ~~the~~is ~~products~~currently ~~and~~reviewing ~~services~~its ~~will~~business bestrategies ~~dependent~~taking ~~on,~~significant ~~among~~steps ~~other~~toward ~~things,~~reducing ~~market acceptance of our products~~overhead, ~~our~~implementing ~~brands’~~revised ~~recognition,~~sales ~~distilled spirits market in general,~~ and ~~general~~marketing ~~economic~~strategies. ~~conditions,~~If ~~which~~we are ~~cyclical~~unable into ~~nature.~~raise ~~Inasmuch~~sufficient ascapital ato ~~major~~develop ~~portion of~~ our ~~activities~~business ~~is the receipt of revenues from the sales of our products~~plan, ~~our~~we ~~business operations~~ may beneed ~~adversely affected by our competitors and prolonged recession periods.~~to:

~~Our~~● ~~success~~Curtail ~~will~~launch beof ~~dependent~~new ~~upon~~products ~~implementing~~and ~~our~~lines ~~plan~~ of ~~operations~~business ~~and~~● ~~the~~Forgo ~~risks~~opportunities ~~associated~~to ~~with~~secure ~~our~~supply ~~business~~of ~~plans.~~bulk Wespirits ~~specialize~~and into ~~development,~~enter ~~global~~into ~~sales~~certain ~~and~~agreements ~~marketing~~at ofPanache ~~spirits~~Distillery ~~brands.~~● WeLimit ~~plan to strengthen~~ our ~~position~~future inmarketing ~~these~~efforts ~~markets.~~to Weareas ~~also~~that ~~plan~~we tobelieve ~~expand~~would ~~our~~be ~~operations~~the ~~through~~most ~~aggressively~~profitable. ~~marketing~~● ~~our~~Terminate ~~products~~key employee and ~~our~~consultant ~~concept~~agreements.

25Our cash at June 30, 2014 is insufficient to meet our operating requirements for the next twelve months and we must obtain significant additional capital resources in order to maintain the current cash needs and our product development efforts, production capabilities, general and administrative expenses and other working capital requirements are dependent on such funding. Accordingly, we lack liquidity and capital resources and are dependent on Consilium’s continued financing of the Company. In the alternative, we may seek to use debt and equity financing to raise additional capital. However, we have no formal agreements with either our senior lender or any third parties to issue any debt or equity securities and cannot predict whether equity or debt financing will become available at acceptable terms, if at all. Moreover, in light of the current unfavorable economic conditions and other factors, including our development stage and our ability to continue as a going concern, we do not believe that any such financing is likely to be in place in the immediate future.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements, including unrecorded derivative instruments that have or are reasonably likely to have a current or future material effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources. We have certain warrants and options outstanding but we do not expect to receive sufficient proceeds from the exercise of these instruments unless and until the underlying securities are registered, and/or all restrictions on trading, if any, are removed, and in either case the trading price of our Common Stock is significantly greater than the applicable exercise prices of the options and warrants.

Effect of Inflation and Changes in Prices

Management does not believe that inflation and changes in price will have a material effect on the Company’s operations.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The information to be reported under this item is not required of smaller reporting companies.

ITEM 4. CONTROLS AND PROCEDURES.

~~Disclosure~~The ~~controls~~Company ~~and~~failed ~~procedures are controls and other procedures that are designed~~ to ~~ensure~~timely ~~that~~file ~~information~~its ~~required~~amended toannual bereport ~~disclosed~~on inForm ~~company~~10K/A ~~reports~~for ~~filed or submitted under~~ the ~~Securities~~year ~~Exchange~~ended ~~Act~~December ~~of 1934 (the “Exchange Act”) is recorded~~31, ~~processed~~2013, ~~summarized~~its ~~and~~quarter ~~reported,~~report ~~within~~on ~~the~~Form ~~time~~10-Q ~~periods~~for ~~specified in~~ the ~~Securities~~quarter ~~and~~ended ~~Exchange~~March ~~Commission’s rules and forms. Disclosure controls and procedures include~~31, ~~without limitation~~2014, ~~controls~~ and ~~procedures~~this ~~designed~~quarterly toreport ~~ensure~~on ~~that~~Form ~~information required to be disclosed in company reports filed under the Exchange Act is accumulated and communicated to management~~10-Q, ~~including~~which ~~the~~demonstrates ~~Company’s~~that ~~Chief~~its ~~Executive~~Disclosure ~~Officer~~Controls and ~~its~~Procedures ~~Principal~~have ~~Accounting~~been ~~Officer (the “Certifying Officers”), as appropriate to allow timely decisions regarding required disclosure~~inadequate.

AsDisclosure ~~required~~controls byand ~~Rules~~procedures ~~13a-15~~are controls and ~~15d-15~~other ~~under~~procedures ~~the~~that ~~Exchange~~are ~~Act,~~designed ~~the~~to ~~Certifying~~ensure ~~Officers~~that ~~carried~~information ~~out~~required anto ~~evaluation~~be ofdisclosed ~~the~~in ~~effectiveness~~company ofreports ~~the~~filed ~~design~~or ~~and~~submitted ~~operation~~under of the ~~Company’s~~Securities ~~disclosure~~Exchange ~~controls~~Act ~~and procedures as~~ of ~~September~~1934 ~~30,~~(the ~~2013.~~“Exchange ~~Their~~Act”) ~~evaluation~~is ~~was~~recorded, ~~carried~~processed, ~~out~~summarized ~~with~~and ~~the~~reported, ~~participation~~within ~~of other members of~~ the ~~Company’s~~time ~~management.~~periods ~~Based~~specified onin ~~an evaluation conducted by~~ the ~~Certifying~~Securities ~~Officers,~~and ofExchange ~~the~~Commission’s ~~effectiveness~~rules ~~of the design~~ and ~~operation~~forms. ofDisclosure ~~our disclosure~~ controls and procedures include, aswithout ~~required by Exchange Act Rule 13a-15(e)~~limitation, ~~the Certifying Officers concluded that our disclosure~~ controls and procedures ~~were~~designed ~~effective as of September 30, 2013~~ to ~~provide~~ensure ~~reasonable assurance~~ that information required to be disclosed ~~by us~~ in ~~the~~company reports ~~that~~filed ~~we file or submit~~ under the Exchange Act is ~~recorded,~~accumulated ~~processed,~~and ~~summarized~~communicated ~~and~~to ~~reported~~management, ~~within~~including the ~~time~~Company’s ~~periods~~Chief ~~specified~~Executive inOfficer ~~the applicable rules~~ and ~~forms,~~its ~~and~~Chief ~~that~~Financial itOfficer ~~is accumulated and communicated to our management, including~~ (the “Certifying Officers”), as appropriate to allow timely decisions regarding required disclosure.

~~Changes~~As required by Rules 13a-15 and 15d-15 under the Exchange Act, the Certifying Officers carried out an evaluation of the effectiveness of the design and operation of the Company’s disclosure controls and procedures as of March 31, 2014. Their evaluation was carried out with the participation of other members of the Company’s management. Based on an evaluation conducted by the Certifying Officers, of the effectiveness of the design and operation of our disclosure controls and procedures, as required by Exchange Act Rule 13a-15(e), the Certifying Officers concluded that our disclosure controls and procedures were not effective as of June 30, 2014 to provide reasonable assurance that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the applicable rules and forms, and that such information is accumulated and communicated to our management, including the Certifying Officers, as appropriate to allow timely decisions regarding required disclosure due to the Company’s limited internal ~~controls~~resources and lack of ability to have multiple levels of transaction review. However, as a result of our evaluation and review process, management believes that the financial statements and other information presented herewith are materially correct.

~~There~~Going ~~were~~forward nofrom ~~changes~~this filing, the Company intends to re-establish and maintain disclosure controls and procedures (as defined in ~~our~~Rules ~~internal~~13a-15(e) ~~control~~and ~~over~~15d-15(e) ~~financial~~of ~~reporting~~the ~~during~~Exchange Act that are designed to be effective in providing reasonable assurance that information required to be disclosed in our reports under the ~~quarter~~Exchange ~~ended~~Act ~~September~~is 30recorded, ~~2013~~processed, ~~that~~summarized ~~have~~and ~~materially~~reported ~~affected,~~within orthe ~~are~~time ~~reasonably~~periods ~~likely~~specified toin ~~materially~~the ~~affect~~rules and forms of the Securities and Exchange Commission, and that such information is accumulated and communicated to our ~~internal~~management ~~control~~to ~~over~~allow ~~financial~~timely ~~reporting~~decisions regarding required disclosure.

26Change in Internal Control over Financial Reporting

The Company has made changes in our internal control over financial reporting during the period ended June 30, 2014, and anticipated completing its implementation of said controls during the third quarter of 2014.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

Natwest Finance Limited v. Julia Drew, et al. District Court of New South Wales, Australia, No. 2012/267599. In this action filed in August 2012, Natwest Finance Limited, a New Zealand corporation (“Natwest”) sued Drew seeking to collect on a debt Drew owed to two subsidiaries of the Company pursuant to a guaranty that had been assigned to Natwest. The Company isbecame involved as a result of dispute over the alleged wrongful termination of a distribution agreement involving Pure Beverage Pty. Ltd, Drew and Natwest and conflicting claims over the ownership of product located in the ~~following~~UK. In November 2013, there was a settlement in the case which (a) resolved the dispute between Natwest and Drew, along with the dispute between the Company (and its subsidiaries) and Pure regarding ownership of the UK product; (b) confirmed Pure's ownership of the UK product; (c) included general releases between (1) Natwest, Drew and Pure, and (2) the Panache Parties, Drew and Pure (including claims under the distribution agreement); and (d) placed on each party the responsibility for paying their own costs. The Company has been paying Natwest’s legal ~~proceedings:~~bills in this matter. To date, $105,299 has been paid in Natwest legal fees.

~~Caribbean~~On ~~Distillers~~July 7, ~~LLC~~2014, ~~d/b/a~~in ~~Florida~~connection ~~Caribbean~~with ~~Distillers~~that v.certain ~~Ronnie~~Factoring ~~Call~~Agreement, etdated alFebruary v.11, ~~Arturo De La Cruz~~2014, ~~10th~~by ~~Circuit Court in~~ and ~~for~~among ~~Polk County~~Natwest, ~~Florida~~Wodka, ~~No. 2013A-2564. In this action filed at the end of April~~LLC, ~~2013~~Panache, ~~plaintiff~~LLC ~~named~~and ~~the Company,~~ James Dale, ~~the~~our ~~Company’s~~former ~~CEO,~~chief ~~and~~executive ~~William Gerhauser~~officer, ~~the~~we ~~Company’s~~received ~~head~~written ofnotice ~~Investor~~from ~~Relations,~~Natwest asof ~~defendants~~demand ~~along~~for ~~with~~repayment ~~3 former employees~~ of the ~~plaintiff. Plaintiff~~aggregate ~~accused~~principal ~~the~~amount ~~Company~~ and ~~its~~interest ~~representative~~due of ~~misappropriating confidential information and trade secrets and intentionally interfering in its business relations and sought injunctive relief against the Company to prevent it from~~ $190,032 ~~among~~as ~~other~~of ~~things,~~June ~~competing in the bulk alcohol market. After hearing only the plaintiff’s evidence~~30, and without the need for the defendants to complete their defense, the Polk County court dismissed plaintiff’s claims for injunctive relief and indicated that based on the defendants’ abbreviated evidence, the information about which plaintiff was complaining was not, in fact, confidential2014. ~~The~~Management ~~parties~~disputes ~~have since settled~~ the ~~remaining~~claim ~~issues~~made ~~and~~by ~~the case has been dismissed with prejudice without any material adverse effect on the Company~~Natwest.

Pacific Edge Marketing Group, Inc. v. Panache Beverage, Inc., US District Court for the Central District of California, Case No. CV13-3957, & Panache Beverage, Inc. v. Pacific Edge Marketing Group, Inc., US District Court for the Southern District of New York, Civil Action No. 13-cv-04575. After Panache learned that Pacific Edge had changed the trade dress of its Gruven brand vodka to be confusingly similar to the Company’s Wodka brand vodka, the Company demanded that Pacific Edge cease the use of its infringing trade dress. In response, Pacific Edge preemptively filed an action for declaratory judgment in California federal court. The Company successfully moved to dismiss the California action, and it filed an action in New York federal court against Pacific Edge for violation of the Lanham Act and ancillary state law violations. Pacific Edge's answered the Company’s complaint and discovery is proceeding. The Company believes it will prevail in protecting the trade dress of Wodka brand vodka, and the litigation is not expected to have any material adverse effect on the Company.

ITEM 1A. RISK FACTORS

The ~~following~~report ~~risk~~issued ~~factors~~by ~~reflect~~our ~~material~~independent ~~changes~~registered topublic ~~the~~accounting ~~risk~~firm ~~factors~~with ~~disclosed~~respect into our ~~Annual~~financial ~~Report~~statements onfor ~~Form 10-K filed with~~ the ~~SEC~~year onended ~~April~~December 131, 2013 ~~(the~~includes ~~“2012~~an ~~Annual~~explanatory ~~Report”). For~~paragraph awith ~~detailed~~respect ~~discussion~~to ofour ~~the~~ability ~~other~~to ~~risk~~continue ~~factors~~as ~~that~~a ~~should~~going beconcern, ~~understood~~the byexistence ~~any~~of ~~investor~~which ~~contemplating~~may anadversely ~~investment~~affect in our ~~stock,~~ability ~~please refer~~ to ~~Part~~raise ~~I, Item 1A “Risk Factors” in the 2012 Annual Report.~~capital

In their report dated March 21, 2014 on our audited financial statements that were included in our Annual Report on Form 10-K for the year ended December 31, 2013, our independent registered public accounting firm expressed substantial doubt about our ability to continue as a going concern. We have ~~terminated~~a history of incurring losses and negative cash flows from operations, have an accumulated deficit as of June 30, 2014, and will require additional financing to fund operations beyond June 30, 2014. The financial statements included in this Quarterly Report do not include any adjustments that might result from the uncertainty about our ~~exclusive~~ability ~~distribution~~to ~~agreement~~continue ~~with~~in ~~Domaine~~business. ~~Select~~Our ~~Wine~~ability ~~Estates~~to ~~(“DSWE”)~~continue as a going concern is subject to our ability to obtain necessary funding from outside sources, which may include obtaining additional funding from the sale of our securities. The risk that we may not continue as a going concern may cause investors to lose confidence in the Company, which may have a material and adverse effect on the market prices of our securities. In addition, this risk may prevent us from obtaining financing in the amounts that management believes are necessary to fund operations for the remainder of 2014 and/or on terms that are favorable to us. If we are unable to obtain the financing that we need to fund future operations, then we could be required to cease or significantly curtail our operations and investors could lose their entire investments.

We have ~~terminated~~had ~~our~~limited ~~exclusive~~profitability ~~distribution~~and ~~agreement~~continue ~~with~~to ~~Domaine~~incur ~~Select~~significant ~~Wine~~operating ~~Estates~~losses ~~(“DSWE”).~~similar Asto athe ~~result~~past ofand ~~the~~may ~~termination~~not ofbe ~~the~~able ~~distribution~~to ~~agreement~~achieve ~~with~~or ~~DSWE~~sustain weprofitability ~~now~~in ~~are~~ the ~~importer for Wodka and Agent for Alibi~~future.

We have ~~become~~experienced significant cumulative operating losses since our ~~own~~inception ~~importer~~and limited profitability. Our net loss attributable to Panache Beverage, Inc. for ~~Wodka~~the ~~Vodka~~fiscal years ended December 31, 2013 and 2012 was $4,582,669 and $3,267,065, respectively and for the fiscal quarters ended June 30, 2014 and 2013 was $288,147 and $935,888, respectively. In addition, we had an accumulated deficit of $10,366,003 as of December 31, 2013 and $12,089,689 as of June 30, 2014. We anticipate that we may continue to incur operating losses for the foreseeable future. Consequently, it is possible that we may never achieve positive earnings and, if we do achieve positive earnings, we may not be able to achieve them on a sustainable basis. If we are unable to achieve or sustain profitability, we may need to curtail, suspend or terminate certain operations. We have very limited cash available to meet our obligations at this time.

We have become our own importer for Wodka Vodka. While becoming our own importer for Wodka allows us to have more control over our sales and pricing, we take on the risk of dealing directly with distributors and handling billing with a multitude of vendors rather than previously with DSWE being the major vendor.10

27Our debts currently exceed our assets and all of our assets are pledged to secure such indebtedness. The inability to repay such indebtedness would have a material adverse effect on our financial condition and ability to continue as a going concern.

We ~~have~~are ~~become~~currently operating at a loss but are decreasing our ~~own~~operating ~~Agent~~expenses ~~for~~in ~~Alibi~~order ~~American~~to ~~Whiskey~~reduce go-forward losses, in connection with the modification of our business operations and business plan. At June 30, 2014, we had total current assets of $1,569,312 and current liabilities of $2,209,006, resulting in negative working capital of $(639,694). In addition, at June 30, 2014, we had total assets of $5,734,765 and total liabilities of $13,167,127, resulting in stockholders’ deficit of $7,432,362. At June 30, 2014, we had unrestricted cash of $68,992.

WeAs ~~have~~of ~~become~~June 30, 2014, Consilium had approximately $7,458,121 of principal owing under its senior secured indebtedness and $3,500,000 principal amount of secured indebtedness to the sellers of our ~~own~~distillery ~~Agent~~property. ~~for~~This ~~Alibi~~indebtedness ~~American~~is ~~Whiskey~~senior in right of payment to almost all other indebtedness of the Company. ~~While~~The ~~becoming~~Company’s obligations to the sellers of the our ~~own~~distillery ~~Agent~~property ~~for~~are ~~Alibi~~secured ~~allows~~by usa first mortgage on such property and our obligations to ~~have~~Consilium ~~more~~are ~~control~~by ~~over~~substantially all of our ~~sales~~assets ~~and~~used ~~pricing~~in continuing operations, weincluding ~~must~~a ~~take~~second mortgage on the ~~risk~~distillery ofproperty. ~~handling~~If ~~billing~~we ~~with~~do not have sufficient capital to pay interest and/or repay principal under these obligations as and when they become due, then the Company would be in default under such obligations, which would have a ~~multitude~~material ofadverse ~~vendors~~effect ~~rather~~on ~~than~~our ~~previously~~business, ~~with~~our ~~DSWE~~ability ~~being~~to raise capital in the ~~major~~future ~~vendor~~and our ability to continue as a going concern. In addition, wethe ~~take~~terms onof the ~~risk~~some of ~~growing~~ the ~~brand’s~~obligations ~~distributor~~contain ~~relationships~~various asaffirmative and negative covenants which could restrict the ~~brand~~manner isin ~~currently~~which ~~still~~we ~~new~~conduct business. If we were to default in any of such covenants or otherwise default under these obligations, then the ~~United~~lenders ~~States~~could, among other actions, accelerate the maturity dates of the indebtedness and exercise their rights to, among other things, foreclose on our assets.

~~We,~~Consilium ~~through~~has been a significant source of our ~~wholly~~financing ~~owned~~and ~~subsidiary~~although ~~Panache~~they ~~Distillery,~~restructured ~~LLC~~our debt, we may not have ~~purchased~~the aresources ~~Distillery~~to pay our debt to Consilium or the sellers of our distillery property.

WeSince 2012, ~~through~~we ~~our~~have ~~wholly~~received ~~owned~~our ~~subsidiary~~financing ~~Panache~~primarily ~~Distillery,~~from ~~LLC~~Consilium, ~~have~~which ~~purchased~~after athe ~~distillery.~~restructure Wenow ~~intend~~aggregates to$7,458,121 ~~procure~~of ~~all~~secured ~~necessary~~indebtedness ~~permits and licenses in order~~ to ~~operate~~date. ~~the~~Other ~~facility~~than weour ~~purchased~~distillery ~~in New Port Richey~~assets, ~~Florida,~~on ~~but~~which dothe ~~not~~sellers ~~yet~~of ~~have~~ such ~~permits,~~property ~~and~~currently dohold ~~not~~a ~~know~~first ~~for~~mortgage, ~~certain~~all ~~how~~of ~~long~~our itother ~~will~~assets ~~take~~are ~~for~~currently uspledged to ~~acquire~~Consilium, ~~such~~who ~~permits.~~also ~~While~~holds wea dosecond ~~not~~mortgage ~~have~~on the ~~permits,~~distillery property. If we are unable to ~~use~~repay ~~the~~our ~~distillery~~obligations ~~for the production of alcoholic beverages. Additionally, there is no guarantee that we will be able~~ to ~~successfully~~Consilium ~~integrate~~or the ~~ownership~~sellers of ~~the~~our distillery ~~within~~property ~~our~~when ~~organization~~they ~~and~~become due the ~~acquisition~~assets ~~could~~of ~~disrupt~~the ~~our~~Company ~~ongoing~~may ~~business,~~be ~~distract~~seized ~~our~~in ~~management~~order ~~from~~to ~~other~~satisfy ~~business operations, and increase~~ our ~~expenses.~~outstanding ~~This acquisition may also impair relationships with our current suppliers~~obligations.

Our indebtedness reduces our financial flexibility and could impede our ability to operate or obtain additional financing to complete subsequent stages of our business plan.

Our loan agreements with Consilium required us to provide security for the debt in the form of liens on our assets, including but not limited to, our holdings in our subsidiaries, our trademarks, our distillery and other valuable assets of the Company. The existence of these liens may preclude us from financing future obligations. In addition to these obligations to Consilium, we have other indebtedness totaling $5,709,006 as of June 30, 2014.

We may need to raise additional capital.

We are currently operating at a loss and there can be no assurance that we will be able to generate sufficient, if any, operating profits to fund our operations and unforeseen costs, delays and problems could result in our inability to fund operations. If we are unable to generate sufficient revenue and cash flow from operations, we will need to seek additional financing, either through borrowings, public offerings, private offerings, or some type of business combination (e.g., merger, buyout, etc.). Such additional financing may not be readily available, if at all, and even if such financing is available, it may not be available on acceptable terms. While Consilium has been funding our operations, there are no assurances that it wishes, or will be able, to continue funding us at the levels necessary to meet our continued working capital needs. If we do not have sufficient capital, we may not be able to achieve or maintain competitiveness or continue to operate our business, and, more significantly, we might default under certain of our contractual obligations, including, without limitation, our payment obligations to our senior lender and the sellers of our distillery property. In that case, we may be required to delay, scale back, or eliminate the development of business opportunities and our operations and financial condition may be materially adversely affected. Additional debt financing, if obtained, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, could increase our expenses, and require that our assets be provided as a security for such debt. Additional debt financing would also be required to be repaid regardless of our operating results. Equity financing, if obtained, could result in dilution to our then existing stockholders and/or require such stockholders to waive certain rights and preferences.

Our Senior Lender is our controlling stockholder.

Pursuant to the Restructuring Agreement, Consilium acquired 16,629,876 shares of our issued and outstanding common stock from former officers and directors of the Company, and an affiliate of Consilium was issued a warrant to purchase 2,500,000 shares of our common stock. In addition, another affiliate of Consilium holds warrants to purchase an aggregate 4,600,000 additional shares of common stock. Accordingly, Consilium now has the ability to control the election of our directors and the outcome of corporate actions requiring stockholder approval, such as: (i) a merger or a sale of our company, (ii) a sale of all or substantially all of our assets, and (iii) amendments to our articles of incorporation and bylaws. This concentration of voting power and control could have a significant effect in delaying, deferring or preventing an action that might otherwise be beneficial to our other stockholders and be disadvantageous to our stockholders with interests different from Consilium.

We are modifying our business model which is expected to continue to evolve and, accordingly, there can be no assurance that we will generate revenue sufficient to sustain our operations in the near future, if ever.

In lieu of brand sales projections falling short and realization that gross profit goals have been significantly less than expected, the Company will focus most of its resources into achieving contract value at Panache Distillery. In order to be successful, our current and future product and service offerings will need to continue to achieve broad market acceptance. Our ability to generate significant revenue will depend, in large part, on our ability to attract a sufficient number of customers. We are subject to the all of the risks, uncertainties, expenses, delays, problems and difficulties typically encountered in the growth of an emerging business and the development and market acceptance of new products and services.

Our future success is dependent on our existing key employees and hiring and assimilating new key employees; our inability to attract or retain key personnel in the future would materially harm our business and results of operations.

Our success depends on the continuing efforts and abilities of our current management team. In addition, our future success will depend, in part, on our ability to attract and retain highly skilled employees, including management, logistics and sales personnel. The loss of the services of any of our key personnel, the inability to attract or retain key personnel in the future, or delays in hiring required personnel could materially harm our business and results of operations. In addition, we could experience business disruption and/or increased costs related to organizational changes, reductions in workforce, or other cost-cutting measures.

The success of our business relies on brand image, reputation, and product quality.

It is important we have the ability to maintain and increase the image and reputation of our existing products. Concerns about product quality, even when unsubstantiated, could be harmful to our image and reputation of our products. Deterioration to our brand equity may have a material effect on our business and financial results.

We have in the past, and may continue in the future, to rely upon a limited number of Major Customers for our products.

The Company had two customers representing approximately 76% and 85% of revenues for the years ended December 31, 2013 and 2012, respectively. These customers represented approximately 0% and 79% of the receivables outstanding as of December 31, 2013 and 2012, respectively. While we recently named DSWE as our importer which has improved our inventory depletion, there can be no assurances that our reliance on a limited number of customers will improve.

Our common stock is currently quoted on the OTC Markets OTCQB under the symbol “WDKA”. To date, however, trading activity in our common stock has been extremely limited. There is no assurance as to the depth or liquidity of any such market or the prices at which holders may be able to sell the securities.

Our common stock is quoted on the OTC Markets OTCQB under the symbol “WDKA”. To date, however, trading activity in our common stock has been extremely limited. Because of this limited trading volume, holders of our securities may not be able to sell quickly any significant number of such shares, and any attempted sale of a large number of our shares will likely have a material adverse impact on the price of our common stock. Because of the limited number of shares being traded, the price per share is subject to volatility and may continue to be subject to rapid price swings in the future.

The price of our common stock is volatile.

The price of our common stock has fluctuated substantially. The market price of our common stock may be highly volatile as a result of factors specific to us and the securities markets in general. Factors affecting volatility may include: variations in our annual or quarterly financial results or those of our competitors; economic conditions in general; and changes in applicable laws or regulations, or their judicial or administrative interpretations affecting us or our subsidiaries or the securities industry. In addition, volatility of the market price of our common stock is further affected by its thinly-traded nature.

There are risks associated with our common stock trading on the OTCQB rather than on a national exchange.

There may be significant consequences associated with our common stock trading on the OTCQB rather than a national exchange. The effects of not being able to list our common stock securities on a national exchange include:

	●	limited release of the market price of our securities;

	●	limited news coverage;

	●	limited interest by investors in our securities;

	●	volatility of our common stock price due to low trading volume;

	●	increased difficulty in selling our securities in certain states due to "blue sky" restrictions; and

	●	limited ability to issue additional securities or to secure additional financing.

We never have and do not anticipate paying cash dividends on our common stock in the foreseeable future.

We have paid no cash dividends on our common stock to date. We currently intend to retain our future earnings, if any, to fund the development and growth of our business, and we do not anticipate paying cash dividends in the foreseeable future on shares of our common stock. As a result, capital appreciation, if any, of our common stock will be the sole source of gain for the foreseeable future for our common stockholders.

Our stock is a penny stock. Trading of our stock may be restricted by the SEC’s penny stock regulations and the FINRA’s sales practice requirements, which may limit a stockholder’s ability to buy and sell our stock.

Our common shares may be deemed to be "penny stock" as that term is defined in Regulation Section "240.3a51-1" of the Securities and Exchange Commission (the "SEC"). Penny stocks are stocks: (a) with a price of less than U.S. $5.00 per share; (b) that are not traded on a "recognized" national exchange; (c) whose prices are not quoted on the NASDAQ automated quotation system (NASDAQ - where listed stocks must still meet requirement (a) above); or (d) in issuers with net tangible assets of less than U.S. $2,000,000 (if the issuer has been in continuous operation for at least three years) or U.S. $5,000,000 (if in continuous operation for less than three years), or with average revenues of less than U.S. $6,000,000 for the last three years.

Under these penny stock rules, broker-dealers that recommend such securities to persons other than institutional accredited investors:

	●	must make a special written suitability determination for the purchaser;

	●	receive the purchaser's written agreement to a transaction prior to sale;

	●	provide the purchaser with risk disclosure documents which identify certain risks associated with investing in "penny stocks" and which describe the market for these "penny stocks" as well as a purchaser's legal remedies; and

	●	obtain a signed and dated acknowledgment from the purchaser demonstrating that the purchaser has actually received the required risk disclosure document before a transaction in a "penny stock" can be completed.

Accordingly, broker-dealers may find it difficult to effectuate customer transactions and trading activity in our securities may be adversely affected. As a result, the market price of our securities may be depressed, and stockholders may find it more difficult to sell our securities.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

~~None~~On July 8, 2014, David Shara, a director of the Company, purchased 300,000 shares of the Company’s common stock for an aggregate purchase price of $45,000. In connection with such purchase, Consilium and its affiliates waived all rights of first refusal under its loan agreements and anti-dilution protection under warrants held by such entities. Exemption from registration under the Securities Act of 1933, as amended (the “Securities Act”), for the issuance of the warrants was based on Section 4(a)(2) of the Securities Act of 1933, as amended, and Regulation D promulgated thereunder. The proceeds from this issuance were used for general working capital needs.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

None.

ITEM 5. OTHER INFORMATION

None.

2814

ITEM 6. EXHIBITS

10.1		~~Amendment~~Employment ~~No. 5 to the Asset Purchase~~ Agreement, dated as of ~~August~~April 2229, ~~2013~~2014, by and between the Company and ~~Douglas~~Thomas ~~Joint Venture, Empire Joint Venture and V-3 Joint Venture, LLC~~Smith. *
10.2		$3,500,000 Promissory Note, dated August 22, 2013, payable to Douglas Joint Venture, Empire Joint Venture and V-3 Joint Venture, LLC.
10.4		Purchase Money Mortgage and Security Agreement and Assignment of Rents and Leases and Fixture Filing, dated August 23, 2013 by and between the Company and Douglas Joint Venture, Empire Joint Venture and V-3 Joint Venture, LLC.
21		List of Subsidiaries of the Registrant
31.1		Certification of Chief Executive Officer
31.2		Certification of ~~Acting~~Chief ~~Principal~~Financial ~~Accounting~~ Officer
32.1		Statement required by 18 U.S.C. Section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002.
32.2		Statement required by 18 U.S.C. Section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002

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

_______________

*	Management contract or compensatory plan or arrangement.

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

2915

SIGNATURES

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

	PANACHE BEVERAGE INC.
Date: November 14, 2013	By:	/s/ James Dale
Date: August 22, 2014	By:	/s/ Michael Romer
		James Dale Chief Executive Officer
		Michael Romer Interim Chief Executive Officer
Date: August 22, 2014	By:	/s/ Thomas G. Smith
		Thomas G. Smith Chief Financial Officer

3016

INDEX TO EXHIBITS

Exhibit No.		Description
10.1		~~Amendment~~Employment ~~No. 5 to the Asset Purchase~~ Agreement, dated as of ~~August~~April 2229, ~~2013~~2014, by and between the Company and ~~Douglas~~Thomas ~~Joint Venture, Empire Joint Venture and V-3 Joint Venture, LLC~~Smith. *
10.2		$3,500,000 Promissory Note, dated August 22, 2013, payable to Douglas Joint Venture, Empire Joint Venture and V-3 Joint Venture, LLC.
10.4		Purchase Money Mortgage and Security Agreement and Assignment of Rents and Leases and Fixture Filing, dated August 23, 2013 by and between the Company and Douglas Joint Venture, Empire Joint Venture and V-3 Joint Venture, LLC.
21		List of Subsidiaries of the Registrant
31.1		Certification of Chief Executive Officer
31.2		Certification of Acting Principal Accounting Officer
32.1		Statement required by 18 U.S.C. Section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002.
32.2		Statement required by 18 U.S.C. Section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002

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

_______________

*	Management contract or compensatory plan or arrangement.

31 17

Filing Compare · Panache Beverage, Inc.