UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q
(Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2013
For the quarterly period ended December 31, 2013
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission file number:	000-53609
Davi Luxury Brand Group, Inc.
(Exact name of registrant as specified in its charter)
NEVADA		26-2463412
(State or other jurisdiction of incorporation or organization) (IRS Employer Identification No.) 9426 Dayton Way Beverly Hills, CA 90210
(Address of principal executive offices) (310) 288-8393
(Registrant’s telephone number)
(Former Name or Former Address, if Changed Since Last Report
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 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 [_]
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes [X] No [_]
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. Large accelerated filer [_] Accelerated Filer [_] Non-accelerated filer [_] Smaller reporting company [X]
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: As of August 9, 2013 the issuer had 13,195,917 shares of common stock issued and outstanding.
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: As of February 7, 2014 the issuer had 14,145,917 shares of common stock issued and outstanding.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [_] No [X]

Table of Contents

DAVI LUXURY BRAND GROUP, INC.

For the quarter ended ~~June~~December 3031, 2013

FORM 10-Q

TABLE OF CONTENTS

TABLE OF CONTENTS			Page
	PART I		2
		ITEM 1. FINANCIAL STATEMENTS.	32
		ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.	9
		ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.	1614
		ITEM 4. CONTROLS AND PROCEDURES.	1614
	PART II		1614
		ITEM 1. LEGAL PROCEEDINGS.	1614
		ITEM 1A. RISK FACTORS.	1614
		ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.	1614
		ITEM 3. DEFAULTS UPON SENIOR SECURITIES.	1614
		ITEM 4. MINE SAFETY DISCLOSURES.	1614
		ITEM 5. OTHER INFORMATION	16
		ITEM 5. OTHER INFORMATION.	14
		ITEM 6. EXHIBITS	17
		ITEM 6. EXHIBITS.	15
		SIGNATURES	18
		SIGNATURES.	16

Table of Contents

PART I

ITEM 1. FINANCIAL STATEMENTS.

DAVI LUXURY BRAND GROUP, INC.
BALANCE SHEETS
	June 30, 2013			September 30, 2012
		December 31, 2013				September 30, 2013
	~~(Unaudited)~~	(Unaudited)
ASSETS
Current assets:
Cash	$	~~696,173~~$	529,526	$	~~346,699~~	$	654,346
Accounts receivable, net		~~116,792~~	70,450		~~207,376~~		76,234
Inventory, net		~~6,160~~	39,980		~~74,534~~		5,952
Other assets		~~6,698~~	2,566		~~2,192~~		3,585
Total current assets		~~825,823~~	642,522		~~630,801~~		740,117
Property and equipment, net		~~51,689~~	57,047		~~18,442~~		51,809
Security deposit		10,810			21,600
Intangible assets, net			68,301				69,447
Trademarks		50,000			50,000
Security deposit			10,596				10,596
Total assets	$	~~938,322~~$	778,466	$	~~720,843~~	$	871,969
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable and accrued expenses	$	~~49,985~~$	89,694	$	~~72,394~~	$	26,876
Accounts payable - related party		~~97,300~~	127,900		~~138,000~~		119,500
Deferred revenue		208,750			235,640
Common stock payable			—				95,010
Convertible debt, net		-			5,000
Deferred revenue			173,797				183,250
Total current liabilities		~~356,035~~	391,391		~~451,034~~		424,636
Deferred lease		~~1,910~~	2,750		~~2,190~~		2,330
Total liabilities		~~357,945~~	394,141		~~453,224~~		426,966
Commitments
Stockholders’ equity:
Common stock, $0.001 par value; 75,000,000 shares authorized; 13,195,917 and 9,284,117 shares issued and outstanding at June 30, 2013 and September 30, 2012, respectively		13,196			9,284
Common stock, $0.001 par value; 75,000,000 shares authorized; 14,145,917 and 13,195,917 shares issued and outstanding at December 31, 2013 and September 30, 2013, respectively			14,146				13,196
Additional paid-in capital		~~1,596,860~~	1,913,942		~~1,034,148~~		1,791,315
Accumulated deficit		~~(1,029,679)~~	(1,543,763	)	~~(775,813)~~		(1,359,508	)
Total stockholders’ equity		~~580,377~~	384,325		~~267,619~~		445,003
Total liabilities and stockholders’ equity	$	~~938,322~~$	778,466	$	~~720,843~~	$	871,969
See accompanying notes to financial statements.
See accompanying notes to financial statements

DAVI LUXURY BRAND GROUP, INC.
STATEMENTS OF OPERATIONS
(Unaudited)

	Three months ended December 31,
	2013			2012

Sales
Royalty revenues	$	79,453		$	127,183
Product sales		3,658			27,478
Total sales		83,111			154,661

Cost of goods sold		1,087			6,886

Gross profit		82,024			147,775

Operating expenses:
Wages and professional fees		203,675			104,818
Product development		—			1,640
General and administrative		62,604			68,931
Total operating expenses		266,279			175,389

Loss from operations		(184,255	)		(27,614	)

Other expense
Interest expense		—			5,403
Total other expense		—			5,403

Net loss	$	(184,255	)	$	(33,017	)

Weighted average number of common shares outstanding - basic and diluted		13,443,200			9,284,117

Net loss per share - basic and diluted	$	(0.01	)	$	(0.00	)


See accompanying notes to financial statements

Table of Contents

DAVI LUXURY BRAND GROUP, INC.
STATEMENTS OF CASH FLOWS
(Unaudited)

	Three months ended December 31,
	2013			2012
Cash flows from operating activities
Net loss	$	(184,255	)	$	(33,017	)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities
Depreciation and amortization		8,438			4,699
Stock based compensation		28,567			—
Amortization of debt discount		—			5,000
Changes in operating assets and liabilities
Accounts receivable		5,784			50,943
Inventory		(34,028	)		1,565
Other assets		1,019			(4,940	)
Accounts payable and accrued expenses		62,818			9,931
Accounts payable - related parties		8,400			4,000
Deferred revenue		(9,453	)		6,968
Deferred lease		420			(663	)

Net cash (used in) provided by operating activities		(112,290	)		44,486

Cash flows from investing activities
Purchase of fixed assets		(12,530	)		(8,825	)

Net cash used in investing activities		(12,530	)		(8,825	)

Net change in cash		(124,820	)		35,661

Cash, beginning of period		654,346			346,699

Cash, end of period	$	529,526		$	382,360

Supplemental disclosure of cash flow information:
Income taxes paid	$	—		$	—
Interest paid	$	—		$	—

Supplemental disclosure of non-cash flow investing and financing activities:
Common stock issued for common stock payable	$	95,010		$	—

See accompanying notes to financial statements

DAVI LUXURY BRAND GROUP, INC.
STATEMENTS OF OPERATIONS
(Unaudited)
		Three months ended June 30,				Nine months ended June 30,
		2013		2012		2013		2012
Sales
	Royalty revenues	$	108,735	$	81,617	$	337,668	$	247,402
	Product sales		12,470		21,531		63,995		45,586
Total sales			121,205		103,148		401,663		292,988
Cost of goods sold			838		14,760		8,903		19,315
Gross profit			120,367		88,388		392,760		273,673
Operating expenses:
	Wages and professional fees		108,248		96,582		384,445		315,049
	General and administrative		43,980		63,660		246,351		173,018
Total operating expenses			152,228		160,242		630,796		488,067
Loss from operations			(31,861)		(71,854)		(238,036)		(214,394)
Other income (expense)
	Interest expense		-		-		(15,829)		-
	Derivative income		-		7,345		-		7,275
Total other income (expense)			-		7,345		(15,829)		7,275
Net loss		$	(31,861)	$	(64,509)	$	(253,865)	$	(207,119)
Weighted average number of common shares outstanding - basic and diluted			12,705,697		7,604,041		10,488,080		7,560,218
Net loss per share - basic and diluted		$	(0.00)	$	(0.01)	$	(0.02)	$	(0.03)
See accompanying notes to financial statements.

Table of Contents

DAVI LUXURY BRAND GROUP, INC.
STATEMENTS OF CASH FLOWS
(Unaudited)
		Nine Months Ended June 30,
		2013		2012
Cash flows from operating activities
Net loss		$	(253,865)	$	(207,119)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities
	Depreciation		14,444		12,548
	Stock based compensation		175,444		1,350
	Amortization of debt discount		15,000		-
	Derivative income		-		(7,275)
Changes in operating assets and liabilities
	Accounts receivable		90,584		57,632
	Inventory		68,374		(61,776)
	Other current assets		(4,507)		38,921
	Accounts payable and accrued expenses		(21,229)		7,753
	Accounts payable - related parties		(20,700)		43,000
	Deferred revenue		(26,890)		33,349
	Deferred lease		(280)		(5,724)
Net cash provided by (used in) operating activities			36,375		(87,341)
Cash flows from investing activities
	Return of security deposit		10,790		-
	Purchase of fixed assets		(47,691)		(2,331)
Net cash used in investing activities			(36,901)		(2,331)
Cash flows from financing activities
	Proceeds from sale of stock		350,000		-
Net cash provided by financing activities			350,000		-
Net change in cash			349,474		(89,672)
Cash, beginning of period			346,699		121,193
Cash, end of period		$	696,173	$	31,521
Supplemental disclosure of cash flow information:
Income taxes paid		$	-	$	-
Interest paid		$	-	$	-
Supplemental disclosure of non-cash flow investing and financing activities:
Common stock issued for accrued bonus		$	20,000	$	-
Common stock issued for accrued wages		$	72,000	$	-
Common stock cancelled for accrued wages		$	(72,000)	$	-
Conversion of note payable into common stock		$	21,180	$	-
Stock issued in connection with reclassification of derivative liability to permanent equity		$	-	$	32,625
See accompanying notes to financial statements.

Table of Contents

DAVI LUXURY BRAND GROUP, INC.

NOTES TO THE FINANCIAL STATEMENTS

~~June~~December 3031, 2013

(Unaudited)

Note 1 ORGANIZATION AND NATURE OF OPERATIONS

Davi Luxury Brand Group, Inc. (“we,” “us,” “our,” “DAVI”, or the “Company”) was incorporated in the State of Nevada on July 26, 2007. ~~The Company~~ We ishave adeveloped and are expanding our skin care line/cosmetics business based ~~that~~on ~~offers~~ a series of ~~all-natural~~ grape and botanical-based luxury branded skin care products marketed under the “~~Davi Skin~~DAVI”, “~~Davi~~DAVI SKIN” and “~~Davi~~DAVI ~~Napa~~NAPA” brand names. ~~The~~Directly, or through our licensees, we have developed and currently market ~~Company~~a isline of high quality skin care products that are sold as prestige products principally through high-end distribution channels to complement the prestige images associated with the DAVI, DAVI SKIN and DAVI NAPA brands. We are currently targeting high-end retail ~~department~~ stores, luxury hotels, and in-flight and duty-free shops of global, luxury airlines in order to establish our brand as a luxury product used in first class locations. ~~The~~Our ~~Company’s~~ goal is to expand the targeted scope of our sales efforts with respect to upscale department stores and specialty retailers. ~~The Company receives royalty revenues through the licensing of its products.~~ In addition, our Le Grand Cru collection of products are available for sale through our www.daviskin.com website, and we expect to offer additional products online ~~during~~through ~~the~~out ~~remainder of the current~~ fiscal ~~year~~2014.

~~Going~~On ~~concern~~September 4, 2012, we entered into a Brand and Trademark License Agreement (the “LGHH License Agreement”) with LG Household and Health Care, Ltd. (“LGHH”). Under the LGHH License Agreement, we granted LGHH an exclusive license to manufacture, sell, market and distribute in Korea, Japan, China and other Asian markets DAVI branded skin care, cosmetics, hair care and other products including the right to develop retail outlets and other commercial ventures in the Asian-Pacific region. LGHH commenced sales of DAVI products in fiscal 2013 with the opening of four new DAVI retail stores in Seoul, Korea that are dedicated to the sale of DAVI branded skincare and cosmetic products. Under the 10-year LGHH License Agreement, LGHH has agreed to pay us a royalty based on the DAVI branded products that it sells in the licensed territory. During fiscal 2013, we collaborated with LGHH's research and development team to create a new skincare product line utilizing LGHH's advanced technology along with our exclusive Meritage™ Blend and the patented Phytosphere technology - "Phyto-Meritage™" that we use for our products. A full line of these skin care products has now been developed and commercially released in Asia, as well as, in the U.S. on our www.daviskin.com website.

~~These~~The ~~financial~~LGHH ~~statements~~License ~~have been prepared~~Agreement ingrants ~~accordance~~LGHH ~~with generally accepted accounting principles applicable to a going concern, which assumes that~~ the ~~Company~~right ~~will be able~~ to ~~meet~~commercialize ~~its~~DAVI ~~obligations~~branded ~~and~~women's ~~continue its operations for its next fiscal year. Realization values may be substantially different from carrying values as shown~~ and ~~these~~men's ~~financial~~skincare ~~statements do not give effect to adjustments that would be necessary to the carrying values~~ and ~~classification of assets and liabilities should the Company be unable to continue as a going concern. At June 30~~cosmetics, ~~2013,~~including the ~~Company~~development ~~had not yet achieved profitable operations, has an accumulated deficit~~ of ~~$1,029,679 since its inception,~~retail outlets and ~~expects~~other tocommercial ~~incur~~ventures, ~~further losses~~ in the ~~deployment~~Asian-Pacific ofregion. LGHH ~~its~~commenced ~~business~~sales ~~plan, all~~ of ~~which~~DAVI ~~raise~~products ~~substantial~~in ~~doubt~~fiscal ~~about the Company's~~2013 ~~ability~~with ~~to continue as a going concern. The Company's ability to continue as a going concern is dependent upon its ability to generate future profitable operations and/or to obtain~~ the ~~necessary~~opening ~~financing~~of tofour ~~meet~~new ~~its~~DAVI ~~obligations~~retail ~~and~~stores ~~repay its liabilities arising from normal business operations when they come due. Management has no formal plan~~ in ~~place~~Seoul, toSouth ~~address~~Korea ~~this concern but considers~~ that ~~the~~are ~~Company will be able~~ dedicated to ~~obtain~~the ~~additional~~sale ~~funds~~of byDAVI ~~continuing~~branded skincare ~~to receive royalty revenues~~ and bycosmetic ~~additional equity financing and/or related party advances~~products. ~~However, there is no assurance of additional funding being available.~~

Note 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

In the opinion of management, the accompanying unaudited interim financial statements contain all adjustments necessary to present fairly the Company’s financial position as of ~~June~~December 3031, 2013, and the results of operations and cash flows for the three ~~and nine~~ months ended ~~June~~December 3031, 2013 and 2012. The adjustments made are of a normal recurring nature. The accompanying unaudited financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10-Q. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. The operating results for the three ~~and nine~~ months ended ~~June 30~~December 31, 2013 are not necessarily indicative of the results that may be expected for the year ending September 30, ~~2013~~2014. The accompanying unaudited financial statements should be read in conjunction with the audited financial statements for the year ended September 30, ~~2012~~2013, which are included in our Annual Report on Form 10-K ~~filed with the SEC on December 28~~, ~~2012,~~ and the "risk factors" described therein.

Reclassifications

For comparability, certain prior period amounts have been reclassified, where appropriate, to conform to the financial statement presentation used in ~~2013~~fiscal 2014. These reclassifications have no impact on net loss.

~~Recent Accounting Pronouncements~~5

In April 2013, the FASB ASU 2013-07, “Presentation of Financial Statements: Topic Liquidation Basis of Accounting”. ASU 2013-07 requires an entity to prepare its financial statements using the liquidation basis of accounting when liquidation is imminent. Liquidation is considered imminent when the likelihood is remote that the organization will return from liquidation and either: (a) a plan for liquidation is approved by the person or persons with the authority to make such a plan effective and the likelihood is remote that the execution of the plan will be blocked by other parties; or (b) a plan for liquidation is being imposed by other forces. ASU 2013-07 will be effective for the Company beginning on January 1, 2014. The Company does not expect the adoption of ASU 2013-07 to have a material impact on its financial position, results of operations nor cash flows.

There were other updates recently issued, most of which represented technical corrections to the accounting literature or application to specific industries and are not expected to have a material impact on the Company’s financial position, results of operations or cash flows.

Note 3 RELATED PARTY TRANSACTIONS

In order to preserve cash for other working capital needs, Parrish Medley, the Company’s Chief Executive Officer, agreed to accrue a portion of the amounts owed to him under his employment agreement. As of ~~June~~December 3031, 2013, the Company owed $97127,~~300~~900 for such accrued wages. Additionally, effective March 1, 2013, Mr. Medley's salary was increased from $96,000 per annum to $144,000 per annum. See Note 6 for a discussion of additional transactions between the Company and Mr. Medley during the nine months ended June 30, 2013.

On March 11, 2013, the Company entered into a new consulting agreement with Carlo Mondavi, a shareholder and former Chairman of the Board, to provide various services for the Company related to the development and marketing of its products, the Company’s public image, its brand recognition and other public relation matters (the “Agreement”). The Agreement supersedes all prior and existing negotiations and agreements between the Company and Mr. Mondavi and both parties agreed that Mr. Mondavi’s previous consulting agreement with the Company has been terminated and that neither party has any financial obligation to the other party under the previous agreement. In accordance with the Agreement, Mr. Mondavi is to be paid $5,000 per month, plus reasonable out-of-pocket expenses. The Agreement expires on March 11, 2015 unless terminated earlier by either party upon 30 days written notice.

Table of Contents

Note 4 CUSTOMER CONCENTRATIONS

During the three ~~and nine~~ months ended ~~June~~December 3031, 2013 and 2012, 7884% and 7271%, respectively, of our sales were generated from royalty revenues under a license ~~agreement~~ agreement to provide DAVI branded products to passengers of Korean Air. ~~During the three and nine months ended June 30, 2012, 62% and 67%, respectively, of our sales were generated from these royalty revenues.~~ The Company’s reliance on this licensing agreement makes us vulnerable to the risk of a near-term severe impact. Should the licensee terminate the license agreement, our financial condition could be materially and adversely affected, and our on-going operations could be severely hampered. Included in accounts receivable at December 31, 2013 was approximately $70,000 owed under this license agreement.

Note 5 ~~CONVERTIBLE DEBT~~EQUITY

On July 12, 2012, the Company issued a Convertible Promissory Note in the principal amount of $20,000 (the “Convertible Note”) to an accredited investor (the “Holder”). The Convertible Note bears interest at 8% per annum and was due in full on June 30, 2013. On March 25, 2013 the Holder converted the note and all accrued and unpaid interest into 211,800 shares of common stock at a conversion price of $0.10 per share.

Upon conversion of the Convertible Note the remaining note discount was expensed resulting in $15,000 charged to interest expense for the nine months ended June 30, 2013.

Note 6 EQUITY

Common Stock

OnDuring ~~June 24, 2013,~~ the ~~Company~~fiscal ~~and~~year ~~Mr. Medley~~ended ~~mutually rescinded the Company's issuance to Mr. Medley of 720,000 shares of common stock, valued at $72,000. The shares~~September ~~had originally been issued to Mr. Medley on February 28~~30, 2013, ~~in lieu and in payment in full of $72,000 of accrued but unpaid salary that~~ the Company ~~owed Mr. Medley under his employment agreement with the Company. The Company and Mr. Medley instead determined on June 24, 2013 to~~ (i) ~~permit~~received ~~the~~proceeds ~~Company,~~of ~~at its option~~$75,010 tofrom ~~pay~~accredited ~~the~~investors ~~foregoing,~~for ~~unpaid salary in cash at any time and (ii) give Mr. Medley~~ the ~~right~~purchase ~~and~~of ~~option to convert the $72~~750,000 ~~of accrued salary into~~ shares of ~~our~~ common stock ~~(at a price~~, ofand ~~$0.10 per share~~(ii). ~~Mr.~~granted ~~Medley’s right to convert the unpaid salary (up to $72~~200,000) ~~into~~ shares of common stock, ~~shall~~as ~~remain in~~payment ~~effect until the unpaid salary is paid~~ in full, ~~which payment must occur by no later than September 30, 2015. See further discussion regarding this option~~ to ~~convert~~a ~~accrued~~consultant ~~salary~~for ~~in the “Stock Options” discussion below. Additionally, in recognition of Mr. Medley's~~ services ~~during fiscal 2012, on February 28, 2013, the Company issued to Mr. Medley 200,000 shares of our common stock as a performance bonus,~~ valued at $020,000.10 ~~per share (i.e.~~However, ~~the price per share of our common stock~~these asshares ~~reported~~were onnot ~~the~~issued ~~OTC~~until ~~Bulletin Board on~~ the ~~issuance~~first ~~date)~~quarter orof ~~$20,000~~fiscal 2014.

On June 11, 2013, the Company entered into a stock purchase agreement with a single accredited investor for the sale of 250,000 shares of common stock, resulting in proceeds of $25,000.

On April 30, 2013, the Company sold 1,000,000 shares of common stock to an accredited investor for proceeds of $100,000, and on May 1, 2013, the Company sold an additional 1,000,000 shares of common stock to a second accredited investor for proceeds of $100,000. Our subscription agreement in this offering provides that any investor who purchases $100,000 or more of shares of common stock also receives a warrant to purchase 25% of the number of shares of common stock purchased by such investor. Accordingly, the Company also issued to each investor, for no additional consideration, a one-year warrant to purchase up to an aggregate of 250,000 shares of common stock at an exercise price of $0.10 per share (for a total of 500,000 shares of common stock available for purchase). The relative fair value of the warrants at the date of grant was estimated at approximately $100,800 using the Black-Scholes option pricing model based on the following assumptions: expected dividend yield 0%, expected volatility 306%, risk-free interest rate 0.11%, and expected life of 1.0 year. The warrants are exercisable at any time.

On April 12, 2013, the Company entered into a stock purchase agreement with a single accredited investor for the sale of 1,000,000 shares of common stock, resulting in proceeds of $100,000.

On March 6, 2013, the Company entered into a stock purchase agreement with a single accredited investor for the sale of 250,000 shares of common stock, resulting in proceeds of $25,000.

Stock Options

On February 28, 2013, the Company granted Mr. Medley a three-year non-qualified stock option to purchase up to 1,600,000 shares of the Company’s common stock at an exercise price of $0.10 per share. The option will vest and become exercisable only if, and to the extent, the Company achieves the following milestones related to the Company’s trademark products (“Davi Products”): (i) 400,000 shares of the option vested on the date that a recent licensee commercially released a Davi Product in Asia; (ii) 400,000 shares of the option will vest when certain licensed sales of Davi Products exceed $2,000,000; (iii) 400,000 shares of the option will vest when certain licensed sales of Davi Products exceed $5,000,000; and (iv) 400,000 shares of the option will vest on the date that we commercially launch any Davi Product in the U.S., other than on our website; provided, in each case, that Mr. Medley remains in our continuous employ through such vesting date, and the option is on the other terms set forth in our stock option agreement with Mr. Medley.

The relative fair value of the option at the date of grant was estimated using the Black-Scholes option pricing model based on the following assumptions: expected dividend yield 0%, expected volatility 333%, risk-free interest rate 0.69%, and expected life of 3 years and is included in stock based compensation in the accompanying statement of operations.

As discussed above, on June 24, 2013, Mr. Medley was granted the right to convert up to $72,000 of his accrued but unpaid salary (the “Accrued Salary Option”) into up to 720,000 shares of our common stock (at a price of $0.10 per share). Mr. Medley’s right to convert the unpaid salary (up to $72,000) into shares of common stock, shall remain in effect until the unpaid salary is paid in full, which payment must occur by no later than September 30, 2015. The Accrued Salary Option was accounted for as a stock option and vests over its term.

The relative fair value of the Accrued Salary Option at the date of grant was estimated at approximately $66,000 using the Black-Scholes option pricing model based on the following assumptions: expected dividend yield 0%, expected volatility 229%, risk-free interest rate 0.73%, and expected life of 2.25 years and is included in stock based compensation in the accompanying statement of operations.

The Company recognizes option expense ratably over the vesting periods. For the three and nine months ended June 30, 2013, the Company recorded compensation expense related to options of $18,607 and $67,942, respectively. As of June 30, 2013, there was $157,336 of unrecognized compensation cost related to unvested stock options.

Table of Contents

A summary of the Company’s option activity and related information for the nine months ended June 30, 2013 is provided below:

Stock Option Activity Table:

	Number of
	Options
Outstanding at September 30, 2012		-
Options exercised		-
Options granted		2,320,000
Options expired		-
Outstanding at June 30, 2013		2,320,000

Options Outstanding Table:

Stock Options as of June 30, 2013

Exercise

Options

Remaining

Options

Price

Granted

Life (Years)

Exercisable

$0.10

2,320,000

2.53

1,120,000

Common Stock Warrants

Since inception, the Company has issued warrants to purchase shares of the Company’s common stock to accredited investors ~~and consultants as compensation for services rendered~~. A summary of the Company’s warrants activity and related information for the ~~nine~~three months ended ~~June~~December 3031, 2013 is provided below:

On March 26, 2013, the Company issued to a consultant a thirteen-month warrant to purchase up to an aggregate of 650,000 shares of common stock at an exercise price of $0.10 per share. The Company issued the warrant as consideration for business development services provided. The fair value of the warrant was estimated to be $56,798 using the Black-Scholes option pricing model based on the following assumptions: expected dividend yield 0%, expected volatility 306%, risk-free interest rate 0.14%, and expected life of 13 months and is included in stock based compensation in the accompanying statement of operations.

On April 12, 2013, we issued to two consultants two-year warrants to purchase up to an aggregate of 300,000 shares of common stock at an exercise price of $0.10 per share. On April 26, 2013, we issued to a consultant a two-year warrant to purchase up to an aggregate of 50,000 shares of common stock at an exercise price of $0.10 per share. The Company issued the warrants to the consultants for business development services provided. The warrants are exercisable at any time. The fair value of the warrants was estimated to be $50,704 using the Black-Scholes option pricing model based on the following assumptions: expected dividend yield 0%, expected volatility 306%, risk-free interest rate 0.2%, and expected life of 2 years and is included in stock based compensation in the accompanying statement of operations. See discussion regarding additional warrants issued as of April 30, 2013 and May 1, 2013 in the “Common Stock” section above.

Warrant Activity Table:

	Number of
	Warrants
Outstanding and exercisable at September 30, 2012		365,000
Outstanding at September 30, 2013		1,875,000
Warrants exercised		-
Warrants granted		~~1,500,000~~-
Warrants expired		~~(365,000~~-	)
Outstanding at June 30, 2013		1,500,000
Outstanding at December 31, 2013		1,875,000

Warrants Outstanding Table:

Stock Warrants as of June 30, 2013

Stock Warrants as of December 31, 2013

Exercise

Warrants

~~Warrants~~

~~Remaining~~

Remaining

~~Warrants~~

Warrants

Price

Granted

~~Granted~~

~~Life (Years)~~

Life (Years)

~~Exercisable~~

Exercisable

$0.10

~~1,500,000~~

1,875,000

~~1.07~~

0.54

~~1,500,000~~

1,500,000

Common Stock Options

Since inception, the Company has issued options to purchase shares of the Company’s common stock to employees and consultants as compensation for services rendered. A summary of the Company’s options activity for the three months ended December 31, 2013 is provided below.

Option awards with performance and service conditions

On February 28, 2013, we granted to Mr. Medley a three-year non-qualified stock option to purchase up to 1,600,000 shares of our common stock at an exercise price equal to $0.10 per share, which was the closing market price of our common stock on February 28, 2013 (i.e., the date of grant). The option will vest and become exercisable only if, and to the extent, the Company achieves the following milestones related to the Company’s trademark products (“Davi Products”): (i) 400,000 shares of the option vested on the date that a recent licensee commercially releases Davi Products in Asia; (ii) 400,000 shares of the option will vest when certain licensed sales of Davi Products exceed $2,000,000; (iii) 400,000 shares of the option will vest when certain licensed sales of Davi Products exceed $5,000,000; and (iv) 400,000 shares of the option will vest on the date that we commercially launch any Davi Product in the U.S., other than on our website; provided, in each case, that Mr. Medley remains in our continuous employ through such vesting date.

Option awards with no performance or service requirements

On June 24, 2013, we granted to Mr. Medley a fully vested, non-qualified stock option to purchase up to 720,000 shares of our common stock any time before September 30, 2015 at an exercise price equal to $0.10 per share, which was the closing market price of our common stock on June 24, 2013 (i.e., the date of grant).

On August 8, 2013, we granted to a consultant a fully vested, five-year non-qualified stock option to purchase up to 1,000,000 shares of our common stock at an exercise price equal to $0.10 per share, which was the closing market price of our common stock on August 8, 2013 (i.e., the date of grant).

The fair value of these 3,320,000 options was estimated using the Black-Scholes option pricing model based on the following assumptions: expected dividend yield 0%, expected volatility 229% - 338%, risk-free interest rate 0.69% - 1.36% and expected life of 27 – 60 months.

	Shares	Weighted Average Exercise Price	Weighted Average Remaining Contractual Life (in years)	Grant Date Fair Value
Outstanding at September 30, 2013	3,320,000	$0.10	3.06	$325,260
Options granted	-	-	-	-
Options exercised	-	-	-	-
Options cancelled/ forfeited/ expired	-	-	-	-
Outstanding at December 31, 2013	3,320,000	$0.10	2.80	$325,260

Exercisable at December 31, 2013	2,520,000	$0.10	3.01	$290,964

Compensation expense recognized for the above noted awards for the three months ended December 31, 2013 amounted to $28,567 and is included in stock based compensation in the accompanying statement of operations. Unamortized compensation cost for these awards amounted to $34,296 and will be amortized over the remaining vesting term of the option awards.

Note 6 COMMITMENTS

As of January 18, 2011, the Company entered into a lease with Resco LP, a California limited partnership for the office that the Company is leasing. Under the lease, the Company occupies approximately 1,500 square feet of office space at 9426-9428 Dayton Way, Beverly Hills, California. The lease term expires on January 31, 2016, unless terminated earlier in accordance with the lease. The Company’s monthly rent expense under the lease is approximately $5,700 per month, plus payments of approximately $1,000 per month for common area operating expenses. The Company has the option to extend the term of the lease by two additional years.

At December 31, 2013, aggregate future minimum payments under the lease (including common area operating expense) is as follows:

Fiscal year 2014	$	62,463
Fiscal year 2015		85,225
Fiscal year 2016		28,687
Total	$	176,375

Lease expense for the three months ended December 31, 2013 and 2012 were approximately $21,000 and $18,000, respectively.

From time to time, we may be involved in routine legal proceedings, as well as demands, claims and threatened litigation that arise in the normal course of our business. The ultimate amount of liability, if any, for any claims of any type (either alone or in the aggregate) may materially and adversely affect our financial condition, results of operations and liquidity. In addition, the ultimate outcome of any litigation is uncertain. Any outcome, whether favorable or unfavorable, may materially and adversely affect us due to legal costs and expenses, diversion of management attention and other factors. We expense legal costs in the period incurred. We cannot assure you that additional contingencies of a legal nature or contingencies having legal aspects will not be asserted against us in the future, and these matters could relate to prior, current or future transactions or events. We are not currently a party to any litigation.

Note 7 SUBSEQUENT EVENTS

From January 2011 until September 30, 2013, we provided the chain of Peninsula Hotels with our Davi branded in-room skin care and related amenities. The Peninsula Hotel chain purchased our Davi branded products directly from our manufacturer and paid us a fee for each product purchased. Effective October 1, 2013, the agreement to provide such products to the Peninsula Hotels was terminated.

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Note 7 COMMITMENTS

As of January 18, 2011, the Company entered into a lease with Resco LP, a California limited partnership, the landlord of the office that the Company is leasing. Under the lease, the Company occupies approximately 1,500 square feet of office space at 9426-9428 Dayton Way, Beverly Hills, California. The lease term expires on January 31, 2016, unless earlier terminated in accordance with the lease. The Company has the option to extend the term of the lease by two additional years. The Company’s monthly rent expense under the lease is approximately $5,600 per month, plus payments of 10% of common area operating expenses.

Note 8 SUBSEQUENT EVENTS

The Company has evaluated subsequent events from the balance sheet date through the date the financial statements were issued and determined there are no items to disclose.

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

Forward-looking statements

This Quarterly Report, including any documents which may be incorporated by reference into this Quarterly Report, contains “Forward-Looking Statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements other than statements of historical fact are “Forward-Looking Statements” for purposes of these provisions, including our plans to develop, market and sell new skincare products, and implement our growth strategy, any projections of revenues or other financial items, any statements of the plans and objectives of management for future operations, any statements concerning proposed new products or services, any statements regarding future economic conditions or performance, and any statements of assumptions underlying any of the foregoing. All Forward-Looking Statements included in this document are made as of the date hereof and are based on information available to us as of such date. We assume no obligation to update any Forward-Looking Statement. In some cases, Forward-Looking Statements can be identified by the use of terminology such as “may,” “will,” “expects,” “plans,” “anticipates,” “intends,” “believes,” “estimates,” “potential,” or “continue,” or the negative thereof or other comparable terminology. These statements by their nature involve substantial risks and uncertainties, such as our ability to establish our business and develop, market and sell new skincare products, and implement our growth strategy, certain of which are beyond our control. Although we believe that the expectations reflected in the Forward-Looking Statements contained herein are reasonable, should one or more of these risks or uncertainties materialize or should the underlying assumptions prove incorrect, actual outcomes and results could differ materially from those indicated in the Forward-Looking Statements. Future financial condition and results of operations, as well as any Forward-Looking Statements are subject to inherent risks and uncertainties, including any other factors referred to in our press releases and reports filed with the Securities and Exchange Commission (the "SEC"). All subsequent Forward-Looking Statements attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by these cautionary statements. Additional factors that may have a direct bearing on our operating results are included in our Annual Report on Form 10-K, and the "risk factors" described therein, and elsewhere in this Quarterly Report.

Introductory Comment

Throughout this Quarterly Report on Form 10-Q, the terms “we,” “us,” “our,” “the Company,” and “our Company” refer to Davi Luxury Brand Group, Inc., a Nevada corporation.

Organizational History

Davi Luxury Brand Group, Inc. was incorporated in the State of Nevada on July 26, 2007 under the name “Dafoe Corp.” ~~The Company~~ isIn a skin care/cosmetics business that offers a series of all-natural grape-based luxury branded skin care products marketed under the “Davi Skin”, “Davi” and “Davi Napa” brand names. We own all of the rights to the “Davi Skin” brand, logo, website address and other marketing rights. The Company receives sales and royalty revenues through the sale and licensing of our products. During January 2011, we changed our name to “Davi Luxury Brand Group, Inc.” and moved our executive offices from Carson City, Nevada, to Beverly Hills, California., and commenced our skin care business.

On May 10, 2012, we effected a reverse stock split of our outstanding shares of common stock on a 1-for-10 basis (the "Reverse Split") and a corresponding decrease in the number of shares of our common stock that we are authorized to issue. All common stock and per share information (other than par value) contained in this Quarterly Report has been adjusted to reflected the foregoing stock split.

~~Plan of Operation and~~ Current Business

We ~~have developed and~~ are ~~expanding~~in ~~our~~the prestige skin care line/cosmetics business. ~~based~~We ongenerate revenues from a ~~series~~full line of grape-vineyard, ~~and~~ botanical- based luxury branded skin ~~care~~ care products marketed under the “DAVI®”, “DAVI ~~SKIN~~NAPA®” and “DAVI ~~NAPA~~SKIN®” brand names. Directly, or through our licensees, we have developed and are currently ~~market~~marketing a line of high quality skin care products that are sold as prestige products principally through ~~limited~~high-end distribution channels to complement the ~~images~~prestige images associated with the DAVI, DAVI ~~SKIN~~NAPA and DAVI ~~NAPA~~SKIN brands. We are currently targeting high-end ~~department~~retail stores, luxury hotels, and in-flight and duty-free shops of global, luxury airlines in order to establish our brand as a luxury product used in first class locations. Our goal is to expand the targeted scope of our sales efforts with respect to upscale department stores and specialty retailers. In addition, we are currently developing our Lefirst ~~Grand~~retail ~~Cru~~store ~~collection~~in ofBeverly Hills, California. We currently have more ~~products~~than ~~are~~20 products available for sale ~~through~~on our www.daviskin.com website, including our Le Grand Cru collection of products, and we expect to offer additional products online ~~during the~~through ~~remainder~~out ~~of the current~~ fiscal ~~year~~2014.

~~Table~~Current ofOperations ~~Contents~~and Business Arrangements

~~Current~~Since ~~Operations~~having begun our skin care business in January 2011, and ~~Business~~in ~~Arrangements.~~accordance with our business plan, we have been selling DAVI branded luxury skin care products through the following arrangements:

~~Since~~LGHH ~~having~~License Agreement. ~~begun~~On September 4, 2012, we entered into a Brand and Trademark License Agreement (the “LGHH License Agreement”) ~~our~~with ~~new~~LG ~~business~~Household and Health Care, Ltd. (“LGHH”). Korea-based LGHH is a global leader in ~~January~~the ~~2011~~manufacture and distribution of skin care products, cosmetics, personal care product, health products and inrelated ~~accordance~~goods. ~~with~~Under ~~our~~the ~~business~~LGHH ~~plan~~License Agreement, we granted ~~have~~LGHH ~~commenced~~an ~~selling~~exclusive license to manufacture, sell, market and distribute in Korea, Japan, China and certain other Asian markets DAVI branded ~~luxury~~ skin care, cosmetics, hair care and other products, ~~through~~including the ~~following~~right ~~arrangements:~~to develop retail outlets and other commercial ventures in the Asian-Pacific region. Under the 10-year LGHH License Agreement, LGHH has agreed to pay us a royalty based on the DAVI branded products that it sells in the licensed territory. During the past year, we have collaborated with LGHH's research and development team to create a new skincare product line utilizing LGHH's advanced technology along with our exclusive Meritage™ Blend and the patented Phytosphere technology - "Phyto-Meritage™" that we use for our products. A full line of these skin care products, consisting of over 30 SKUs, has now been developed and commercially released in Asia.

~~Peninsula~~LGHH ~~Hotels.~~commenced sales Inof ~~January~~DAVI ~~2011,~~products wein ~~entered~~the ~~into~~third anquarter ~~agreement~~of 2013 with ~~Gilchrist~~the &opening ~~Soames~~of tofour ~~provide~~new ~~Peninsula~~DAVI ~~Hotels~~retail ~~with~~stores ~~our~~in ~~DAVI~~Seoul, ~~DAVI~~Korea ~~SKIN and~~that ~~DAVI~~are ~~NAPA~~dedicated to the ~~branded~~sale ~~in-room~~of ~~skin~~DAVI ~~care~~branded skincare and ~~related~~cosmetic ~~amenities~~products. These ~~The~~DAVI ~~Peninsula~~retail ~~Hotel~~stores are ~~chain~~currently ~~purchases~~operating ~~our~~in ~~DAVI,~~two ~~DAVI~~of Seoul's ~~SKIN~~most ~~and~~prestigious ~~DAVI NAPA~~Luxury ~~branded~~Department ~~products~~store ~~directly~~chains, ~~from~~the ~~our~~Lotte ~~manufacturer~~ and ~~pays~~Galleria usdepartment ~~a fee for each product purchased~~stores. Additional ~~The~~new DAVI, ~~DAVI~~stores in ~~SKIN~~high-level ~~and~~luxury ~~DAVI NAPA~~department ~~products~~stores are ~~provided~~expected byto ~~all~~open ofin ~~the~~Korea ~~Peninsula~~in ~~Hotels~~2014. toLGHH ~~their~~also ~~hotel~~plans ~~clients~~to aslaunch ~~in-room~~additional ~~amenities.~~DAVI ~~The~~branded stores ~~Peninsula~~through ~~Hotel~~high-level ~~chain currently~~department ~~uses~~stores ~~these~~in ~~products~~other atAsian-Pacific ~~all~~territories ofsuch ~~its~~as ~~nine~~Japan, ~~existing~~China, ~~Peninsula~~Hong ~~Hotels~~Kong ~~worldwide~~and Singapore in 2014.

Korean Air--In Flight Amenities. In January 2011, we ~~also~~ entered into aan ~~multi-year~~ agreement to be the exclusive First Class and Business Class in-flight amenity provider for all Korean Air flights worldwide. Korean Air commenced providing DAVI and DAVI NAPA branded amenity travel bags that contain DAVI skin care products to its First and Business Class passengers in May 2011. These products are currently available on all Korean Air flights. Korean Air purchases the DAVI and DAVI NAPA amenity products directly from our ~~manufacturer~~ manufacturer and we receive a royalty fee for those products.

Korean Air--Direct Product Sales. In November 2011, we launched a sales program to sell our Le Grand Cru face cream directly to Korean Air’s passengers. Korean Air has added our Davi Le Grand Cru luxury face cream to the products that it offers for sale on board its flights. In addition, Korean Air has also included our Davi Le Grand Cru luxury face cream in the SKY SHOP Magazine that is distributed to all passengers on its flights, and now offers our Davi Le Grand Cru face cream for sale on Korean Air’s on-line shop (www.cyberskyshop.com). Korean Air has ~~been~~previously ~~purchasing~~purchased these products directly from us. ~~Beginning~~However, beginning July 1, 2013, Korean Air ~~will~~began ~~purchase~~ purchasing the Davi Le Grand Cru face creams from ~~LG Household and Health Care~~LGHH, ~~Ltd. (“LGHH”)~~ and ~~Davi~~we ~~will~~ receive royalties from ~~the~~these purchases in accordance with the LGHH License Agreement ~~described below~~.

~~On-Line~~Peninsula ~~Sales.~~Hotels—In WeRoom ~~currently~~Amenities. ~~maintain~~From ~~our~~January ~~corporate~~2011 ~~website~~until atSeptember ~~www.daviskin.com.~~30, ~~During~~2013, ~~July~~we ~~2011~~provided wethe ~~launched~~chain ~~our~~of ~~e-commerce~~Peninsula ~~initiative~~Hotels onwith ~~that~~our DAVI, DAVI ~~website~~SKIN byand ~~offering~~DAVI ~~for~~NAPA ~~sale~~branded ~~our~~in-room ~~Davi~~skin ~~products~~care and related amenities. WeThe ~~currently~~Peninsula ~~offer~~Hotel chain purchased our LeDAVI, ~~Grand~~DAVI ~~Cru~~SKIN ~~collection~~and DAVI ofNAPA branded products directly from our manufacturer and paid us a fee for ~~sale~~each onproduct ~~our~~purchased. ~~website~~The DAVI, DAVI SKIN and DAVI ~~expect~~NAPA ~~that~~products wewere ~~will~~provided ~~include~~by ~~other~~all ~~products~~of onthe ~~our~~Peninsula ~~website~~Hotels ~~during~~to their hotel clients as in-room amenities. Effective October 1, 2013, the ~~remainder~~agreement ofto provide such products to the ~~current~~Peninsula ~~fiscal~~Hotels ~~year~~was terminated.

~~LGHH License Agreement.~~ On-Line ~~September 4, 2012, we entered into a Brand and Trademark License Agreement (the “LGHH License Agreement”) with LGHH~~Sales. ~~Under the LGHH License Agreement, we granted LGHH an exclusive license to manufacture, sell, market and distribute in~~ ~~Korea,~~Our ~~Japan,~~products ~~China~~are ~~and~~also ~~other~~available ~~Asian~~for ~~markets~~purchase ~~DAVI~~on ~~branded~~our ~~women's~~corporate ~~and~~website ~~men's~~at ~~skin~~www.daviskin.com. ~~care,~~We ~~cosmetics,~~currently ~~hair~~offer ~~care~~more ~~and~~than ~~other~~20 products. ~~Under~~for ~~the~~sale ~~10-year LGHH License Agreement, LGHH has agreed to pay us a royalty based~~ on ~~the~~our ~~DAVI~~website ~~branded products that it sells in the licensed territory. DAVI, in conjunction with LGHH, has developed a line of DAVI products,~~ and ~~LGHH~~expect ~~has begun~~ to ~~commercially release~~offer ~~such~~additional products online in ~~Seoul, Korea~~2014. ~~The DAVI products that have been developed consist of the following:~~

LeU.S. ~~Grand~~and ~~Cru~~Retail ~~Cream;~~Sales LeInitiatives. ~~Grand~~Now ~~Cru~~that ~~Eye~~we ~~Cream;~~have Lea ~~Grand~~full ~~Cru~~line ~~Concentrate~~of ~~Repair;~~high ~~Gel~~quality ~~Oil~~skin ~~Cleanser; Cream~~care ~~Cleanser; Moist~~products ~~Foam~~available, ~~Cleanser;~~our ~~Bright~~goal ~~Exfoliating~~is ~~Peel;~~to ~~Fresh~~launch ~~Clear~~the ~~Toner; Moisturizing Toner;~~DAVI ~~Blanc~~branded ~~Luminous~~products ~~Toner;~~in ~~Anti-Oxidant~~the ~~Active~~North ~~Essence;~~American retail market ~~Age~~in ~~Rejuvenating~~2014 ~~Serum;~~through ~~Moisture~~the ~~Revitalizing Serum;~~sale ~~Blanc~~of ~~Luminous Serum;~~DAVI ~~Enhancing~~branded ~~Moist~~products ~~Emulsion;~~in ~~Age~~U.S. ~~Rejuvenating~~specialty and ~~Cream;~~high-end ~~Moisture Revitalizing~~luxury ~~Gel~~department ~~Cream;~~stores. ~~Moisture~~We ~~Revitalizing~~also ~~Cream;~~are ~~Age Rejuvenating~~developing ~~Eye~~our ~~Cream;~~own ~~Blanc~~boutique ~~Luminous Spot~~retail ~~Source;~~store ~~Overnight~~in ~~Nutritive~~Beverly ~~Essence;~~Hills, ~~Massage Treatment; and Blemish Balm Prime~~California.

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Results of Operations

Three Months Ended ~~June~~December 3031, 2013 (~~"Q3~~“Q1 ~~2013"~~2014”) vs. Three Months Ended ~~June~~December 3031, 2012 (~~"Q3~~“Q1 ~~2012"~~2013”)

The following table represents our statements of operations for the three months ended ~~June~~December 3031, 2013 and 2012:

		Three Months Ended June 30,
		Three months ended December 31,
		2013			2012
		$		% of Revenues	$		% of Revenues
Sales:
	Royalty revenues	$	~~108~~79,~~735~~453	9096%	$	81127,~~617~~183	7982%
	Product sales		123,~~470~~658	104%		2127,~~531~~478	2118%
Total sales			~~121~~83,~~205~~111	100%		~~103~~154,~~148~~661	100%
Cost of goods sold			~~838~~1,087	1%		146,~~760~~886	144%
Gross profit			~~120~~82,~~367~~024	99%		88147,~~388~~775	8696%
Operating expenses:
Costs and expenses:
	Wages and professional fees		~~108~~203,~~248~~675	89245%		96104,~~582~~818	9468%
	General and administrative		43,980	36%		63,660	62%
	Product development		-	-%		1,640	1%
Total operating expenses			152,228	125%		160,242	156%
	General and administrative		62,604	75%		68,931	45%
Loss from operations			(31,861)	(26%)		(71,854)	(70%)
Total costs and expenses			266,279	320%		175,389	113%
Other income:
Loss from operations			(184,255)	(222)%		(27,614)	(18)%
	Derivative income		-	-%		7,345	7%
Other expense:
Total other income			-	-%		7,345	7%
	Interest expense		-	-%		5,403	3%
Net loss		$	(31,861)	(26%)	$	(64,509)	(63%)
Total other expense			-	-%		5,403	3%
Net loss		$	(184,255)	(222)%	$	(33,017)	(21)%

Sales

Royalty revenues generated during Q3Q1 ~~2013~~2014 and Q32013 ~~2012~~ were ~~the~~primarily ~~result~~from ~~of royalty agreements we entered into during early 2011 for~~ the sale of DAVI branded skin care products to ~~Peninsula Hotels for use by their hotel clients as in-room amenities, and to~~ Korean Air as on-board ~~amenities~~ amenities for use by Korean Air’s First Class and Business Class passengers. ~~During~~In Q3addition, ~~2013~~in weQ1 ~~generated~~2014 ~~approximately~~we ~~$109,000 of~~recognized royalty revenues from DAVI branded products sold toby ~~the~~LGHH ~~Peninsula~~under ~~Hotels~~the ~~and~~LGHH ~~Korean~~License ~~Air,~~Agreement. asThese ~~compared~~sales towere ~~approximately~~made ~~$82,000 of~~primarily ~~royalty~~at ~~revenues~~the ~~during~~four Q3retail ~~2012.~~locations in ~~Additionally,~~Asia ~~we recognized approximately $12~~and,~~000~~ ofto ~~revenues~~a ~~during~~lesser ~~Q3 2013~~extent, ~~which~~by ~~had~~LGHH’s ~~previously been~~sale ~~deferred, related to sales~~ of ~~our~~Davi Lebranded ~~Grand~~products ~~Cru face cream on consignment~~ to Korean Air for re-sale on-board Korean Air flights and through its ~~SKY~~ ~~SHOP~~Skyshop Magazine,. ~~compared~~Royalty torevenues ~~$18,000~~ in Q3Q1 ~~2012.~~2013 ~~Beginning~~also ~~July~~included 1,approximately ~~2013~~$18,000 ~~Korean~~of ~~Air~~revenues ~~will~~from ~~purchase~~ the Lesale ~~Grand~~of DAVI ~~Cru~~branded ~~face~~skin ~~creams for~~care ~~its~~products ~~on-board~~to ~~sales~~Peninsula ~~and~~Hotels for ~~the~~use ~~Skyshop~~by ~~Magazine~~their ~~sales~~hotel ~~directly~~guests ~~from~~as ~~LGHH~~in room amenities. ~~Accordingly,~~Since our ~~future~~agreement ~~product~~with the ~~sales~~Peninsula ~~may~~Hotels ~~decrease~~was no longer in effect in Q1 2014, ~~and~~ we ~~will~~did not receive any royalties from ~~these~~the ~~purchases~~Peninsula inHotels ~~accordance~~during ~~with~~this period. ~~the~~We ~~LGHH~~also ~~License~~earned ~~Agreement.~~a ~~During~~royalty Q3on ~~2013~~all wesales ~~ceased~~of ~~offering any~~DAVI branded products ~~for~~sold ~~sale~~by ~~through~~LGHH ~~our~~under ~~on-line~~the ~~store,~~LGHH ~~www.daviskin.com,~~License Agreement as weLGHH ~~were~~commercially released inthe ~~transition~~first toDAVI ~~our~~products ~~refreshed,~~during ~~optimized~~the ~~Davi~~third ~~line~~ quarter of ~~newly~~fiscal ~~developed~~2013. Because the LGHH DAVI products. ~~During~~were ~~July~~only ~~2013~~recently released, weroyalties ~~reintroduced~~earned ~~our~~under ~~new~~the LeLGHH ~~Grand~~License ~~Cru~~Agreement ~~product~~have onbeen ~~our~~minimal ~~website~~to ~~for~~date. ~~sale~~Additionally, toduring ~~the~~Q1 ~~public.~~2013 we were informed ~~During~~that Q3we ~~2012~~were ~~sales~~underpaid ofapproximately ~~our~~$29,000 ~~DAVI~~for ~~NAPA~~royalty revenues related to our skin care products ~~through~~provided ~~our~~as ~~website~~in-flight ~~totaled~~amenities on ~~approximately~~Korean ~~$4,000~~Air flights. ~~Lastly,~~Such asroyalty ~~LGHH~~revenues ~~has begun~~should ~~releasing~~have ~~DAVI~~been ~~licensed~~received ~~products~~during inthe ~~Korea,~~previous intwo ~~future~~years. ~~periods,~~This wepayment ~~expect~~of toapproximately $29,000 ~~recognize~~of additional royalty revenue ~~from~~was ~~LGHH's~~recognized ~~sales~~in of Q1 2013 and increased our ~~products~~revenues compared to Q1 2014.

Product sales in Q1 2013 consisted primarily of sales of our Le Grand Cru face creams for re-sale on-board Korean Air flights and through its Skyshop Magazine. On July 1, 2013, Korean Air began purchasing the Le Grand Cru face creams and other Davi branded products for its on-board sales and for its Skyshop Magazine sales directly from LGHH. Accordingly, no such revenues were earned in Q1 2014, resulting in a 87% decrease in product sales when comparing Q1 2014 to Q1 2013. However, since Korean Air now purchases DAVI products from LGHH, our licensee, we will receive royalties from LGHH as a result of these purchases in accordance with the LGHH License Agreement. We expect that our royalty revenue will increase in future periods as LGHH continues to roll out DAVI branded products in other retail stores in Seoul, Korea, and in retail stores expected to open in other Asian-Pacific territories in 2014. The remaining amount of product sales in both Q1 2013 and Q1 2014 represents sales made through our corporate website. Now that we have increased the number of products we have available for sale on our website, we expect our product sales to increase in future periods as we sell these newly developed DAVI products through our website.

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Cost of Goods Sold

Cost of goods sold during Q3Q1 ~~2013~~2014 ~~decreased~~consists ~~approximately~~primarily ~~94%~~of inthe ~~comparison~~cost toof Q3selling ~~2012~~our ~~due~~luxury toskin ~~$13~~care products directly through our website,~~000~~ www.daviskin.com. Cost of ~~sales~~goods sold during Q1 2013 included commissions paid on the sale of our Le Grand Cru ~~face~~Face cream, toas ~~Korean~~well ~~Air~~as, inthe Q3cost ~~2012.~~of our Noskin ~~such~~care ~~sales~~products ~~commissions~~sold ~~were~~by ~~paid~~Korean ~~during~~Air Q3to ~~2013.~~its ~~Cost~~passengers ofthrough ~~goods~~the ~~sold~~Skyshop ~~during~~Magazine ~~Q3 2013~~and ~~relates~~its toon-line shop. Korean Air began purchasing the ~~cost~~Le ofGrand ~~our~~Cru ~~skin~~face ~~care~~creams ~~products~~for ~~sold~~its byon-board ~~Korean~~sales ~~Air~~and tofor its ~~passengers~~Skyshop ~~through~~Magazine ~~the~~sales ~~SKY~~directly ~~SHOP~~from ~~Magazine~~LGHH ~~and~~on ~~its~~July 1, 2013. Accordingly, we no longer incur costs associated with such on-~~line shop~~board and Skyshop Magazine sales. Since both Peninsula Hotels and Korean Air ~~purchase~~purchased the DAVI branded hotel room amenities and skin care products directly from our manufacturer, we did not have any cost of goods sold relating to royalty payments made to us under our Peninsula Hotel and Korean Air agreements. Likewise, since we are paid a royalty from sales made by LGHH under the LGHH License Agreement, we do not incur any cost of goods sold as a result of those sales.

Wages and Professional Fees

Wages and professional fees increased ~~approximately 12~~94% in Q3Q1 ~~2013~~2014 in comparison to Q3Q1 ~~2012~~2013 due inprimarily ~~part~~ to the ~~grant~~retention toof ~~our~~a ~~Chief~~consultant ~~Executive~~for ~~Officer,~~business ~~Mr.~~development, ~~Parrish~~the ~~Medley,~~hiring ~~during Q3 2013~~ of a ~~stock~~public ~~option~~relations ~~to purchase up to 1~~firm,~~600,000~~ ~~shares~~an ofincrease ~~our~~in ~~common~~accounting ~~stock~~and atlegal anfees ~~exercise~~due ~~price equal~~ to ~~$0.10~~new ~~per share~~agreements, ~~resulting~~the inhiring ~~an additional $19,000~~ of ~~stock~~two ~~based~~part-time contractors ~~compensation~~performing ~~expense~~administrative ~~during~~services ~~the~~in ~~quarter.~~our ~~Additionally,~~offices ~~effective March~~and ~~1, 2013, Mr. Medley received~~ an increase toin ~~his~~executive ~~salary~~compensation. ofThese increases totaled approximately $470,000 ~~per~~which ~~month~~had ~~and~~not onbeen ~~March~~incurred ~~11,~~in ~~2013,~~Q1 ~~the Company entered into a new consulting agreement with Mr~~2013. ~~Carlo Mondavi~~Additionally, awe ~~shareholder~~recognized ~~and~~stock ~~former~~based ~~Chairman~~compensation ofexpense ~~the Board, to provide various services for the Company~~ related to ~~the~~stock ~~development~~options ~~and~~totaling ~~marketing~~approximately ~~of its products, the Company’s public image, its brand recognition and other public relation matters for compensation of~~ $529,000 ~~per month~~. ~~These~~We ~~two~~anticipate ~~events~~that ~~resulted in an additional $27,000 of expenses included in~~ wages and professional fees ~~during~~will Q3continue ~~2013.~~to ~~Such~~increase ~~increases~~as ~~were offset by reductions in advertising in the Korean Air~~our ~~SKY~~company ~~SHOP magazine during Q3 2013~~grows.

Product Development

Product development costs incurred during Q1 2013 totaled approximately $2,000 and related to formulation costs associated with our luxury skin care line. In fiscal 2013, we redirected our focus on establishing our product line and, in collaboration with LGHH's research and development team, created a new DAVI skincare product line. However, all product development costs associated with the development of the new skincare product line were incurred by LGHH under the LGHH License Agreement.

General and Administrative Expenses

General and administrative expenses ~~decreased~~remained ~~approximately~~relatively ~~$20,000~~consistent ~~or 31%~~ in Q3Q1 ~~2013~~2014 inwhen ~~comparison~~compared to Q3Q1 ~~2012~~2013. ~~due~~Such ~~primarily~~costs toconsist aprimarily ~~refund received from a chemical manufacture for approximately $16,000 worth~~ of ~~product which was intended to be used in the production of~~ our Leoffice ~~Grand~~rent ~~Cru collection.~~expense, ~~The~~depreciation, ~~product~~insurance, ~~was~~travel ~~originally purchased in fiscal year 2012~~ and ~~subsequently~~various ~~found~~corporate ~~to be defective. During Q3 2013, we were able to secure a refund for the defective product. The remaining decrease results from reductions in storage costs~~ and ~~decreases~~general inoffice ~~depreciation~~expenses.

Other ~~Income~~Expenses

Other ~~income~~expenses ~~during~~for Q3Q1 ~~2012~~2013 istotaled ~~the~~approximately ~~result~~$5,400 ofand ~~price~~consist ~~protection~~primarily ~~features~~of ~~included~~the onamortization ~~70,000 shares~~ of ~~common~~the ~~stock~~beneficial ~~sold~~conversion ~~pursuant~~feature ~~to a stock purchase~~recognized ~~agreement~~on ~~for~~ $5220,~~500~~000 ~~during~~of ~~August~~convertible ~~2011.~~debt ~~The~~and ~~price~~related ~~protection~~warrants ~~features~~of ~~attached to~~ the ~~shares are accounted for as derivative liabilities at the date of sale and adjusted to fair value through earnings at each reporting date~~Company. AtOn March ~~31,~~25 ~~2012~~2013, the ~~approximate fair~~debt ~~value~~and ofall ~~this~~accrued ~~derivative~~interest ~~was~~were ~~$39,970. In connection with the May 16, 2012 amendment to the stock purchase agreement~~converted ~~that~~into ~~removed all of these price protection provisions~~211,800 ~~the~~shares ~~derivative was re-valued to an approximate fair value~~ of ~~$32,625,~~common ~~resulting in derivative income of $7,345 during Q3 2012~~stock.

Net Loss

Our net loss ~~for~~in Q3Q1 ~~2013~~2014 and Q3Q1 ~~2012~~2013 totaled approximately $32184,000 and $6533,000, respectively. The increase in our net loss was primarily the result of a decrease in royalty revenues as well as an increase in professional fees. We expect our royalty revenues to ~~continue~~increase ~~incurring~~in ~~losses~~the near ~~through~~term ~~2013~~as LGHH continues to promote and sell the DAVI branded skin care products throughout Asia. Additionally, professional fees are expected to remain at or above their current levels as we continue ~~refining~~to develop the Company’s business and ~~expanding~~promote the DAVI, DAVI NAPA and DAVI SKIN luxury skin care products. Accordingly, we expect to continue to incur losses throughout the remainder of 2014 as we expand our business operations in the U.S. and increase our marketing activities.

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Nine Months Ended June 30, 2013 vs. Nine Months Ended June 30, 2012

Our revenues for the nine months ended June 30, 2013 increased by 30% compared with our revenues for the nine months ended June 30, 2012.

The following table represents our statements of operations for the nine months ended June 30, 2013 and 2012:

		Nine Months Ended June 30,
		2013			2012
		$		% of Revenues	$		% of Revenues
Sales:
	Royalty revenues	$	337,668	84%	$	247,402	84%
	Product sales		63,995	16%		45,586	16%
Total sales			401,663	100%		292,988	100%
Cost of goods sold			8,903	2%		19,315	7%
Gross profit			392,760	98%		273,673	93%
Operating expenses:
	Wages and professional fees		384,445	96%		315,049	108%
	General and administrative		246,351	61%		173,018	59%
Total operating expenses			630,796	157%		488,067	167%
Loss from operations			(238,036)	(59%)		(214,394)	(74%)
Other income (expenses):
	Interest expense		(15,829)	(4%)		-	-%
	Derivative income		-	-%		7,275	2%
Total other income (expenses)			(15,829)	(4%)		7,525	2%
Net loss		$	(253,865)	(63%)	$	(207,119)	(72%)

Sales

Royalty revenues generated during the nine months ended June 30, 2013 and 2012 were the result of royalty agreements we entered into during early 2011 for the sale of DAVI branded skin care products to Peninsula Hotels for use by their hotel clients as in-room amenities, and to Korean Air as on-board amenities for use by Korean Air’s First Class and Business Class passengers. During the nine months ended June 30, 2013 we generated approximately $338,000 of royalty revenues from DAVI branded products sold to the Peninsula Hotels and Korean Air, as compared to approximately $247,000 of royalty revenues during the nine months ended June 30, 2012. Additionally, sales to Korean Air of our products for re-sale on-board its flights to its passengers and through its Skyshop Magazine have increased during the nine months ended June 30, 2013. We recognized approximately $52,000 of revenues during the nine months ended June 30, 2013, which had previously been deferred, related to sales of our Le Grand Cru face cream on consignment to Korean Air for re-sale on-board and through its SKY SHOP Magazine, compared to $38,000 during the nine months ended June 30, 2012. Beginning July 1, 2013, Korean Air will purchase the Le Grand Cru face creams for its on-board sales and for its Skyshop Magazine sales directly from LGHH. Accordingly, our product sales may decrease, but we will receive royalties from these purchases in accordance with the LGHH License Agreement. Sales of our DAVI NAPA skin care products through our on-line store, www.daviskin.com, totaled approximately $11,000 during the nine months ended June 30, 2013, compared to approximately $8,000 during the nine months ended June 30, 2012. As noted above, during Q3 2013 we ceased offering any products for sale on our website and reintroduced our new Le Grand Cru collection in July 2013. Additionally, since LGHH has begun releasing DAVI licensed products in Korea, in future periods, we expect to recognize royalty revenue from LGHH's sales of our products.

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Cost of Goods Sold

Cost of goods sold during the nine months ended June 30, 2013 decreased approximately 54% in comparison to the nine months ended June 30, 2012. The decrease is due to $13,000 of sales commissions paid on the sale of Le Grand Cru face cream to Korean Air during the nine months ended June 30, 2012 compared to only $4,500 expensed during the same period of 2013. The remainder of cost of goods sold during the nine months ended June 30, 2013 and 2012 relates to the cost of our skin care products sold by Korean Air to its passengers through the SKY SHOP Magazine and its on-line shop. Since both Peninsula Hotels and Korean Air purchase the DAVI branded hotel room amenities and skin care products directly from our manufacturer, we did not have any cost of goods sold relating to royalty payments made to us under our Peninsula Hotel and Korean Air agreements.

Wages and Professional Fees

Wages and professional fees increased 22% in the nine months ended June 30, 2013 in comparison to the nine months ended June 30, 2012 due in part to 1,600,000 stock options granted to our CEO during the period, as well as the $4,000 per month salary increase for Mr. Medley and the entry into a $5,000 per month consulting agreement with Mr. Mondavi discussed previously. Additionally, nonrecurring services valued at approximately $108,000 were recognized for distributor relations and business development services primarily in connection with the LGHH License Agreement for which warrants were issued in March and April 2013. These increases were offset by decreases in advertising and marketing during the current period.

General and Administrative Expenses

General and administrative expenses totaled approximately $246,000 and $173,000 during the nine months ended June 30, 2013 and 2012, respectively. Such costs consist primarily of our office rent expense, travel costs primarily for marketing and business development trips to Asia, inventory storage costs, depreciation and various corporate and office expenses. The increase during the nine months ended June 30, 2013 is principally the result of approximately $65,000 of inventory containers and product written off during the period because of branding improvements, as well as an increase in travel expenses of approximately $38,000 resulting from trips to Asia related to the LGHH License Agreement and Korean Air. These decreases were offset by a refund received from a chemical manufacture for approximately $16,000 worth of product which was intended to be used in the production of our Le Grand Cru collection. The product was originally purchased in fiscal year 2012 and subsequently found to be defective. During Q3 2013, we were able to secure a refund for the defective product.

Other Income (Expenses)

Other expenses for the nine months ended June 30, 2013 totaled approximately $16,000 and consists of, the write-off of the debt discount associated with the beneficial conversion feature on $20,000 of convertible debt and related warrants of the Company, as well as interest expense associated with the convertible debt. On March 25 2013, the debt and all accrued interest were converted into 211,800 shares of common stock. Accordingly, the related debt discount was eliminated. Other income during the nine months ended June 30, 2012 primarily resulted from price protection features included on 70,000 shares of common stock sold pursuant to a stock purchase agreement for $52,500 during August 2011. The price protection features attached to the shares are accounted for as derivative liabilities at the date of sale and adjusted to fair value through earnings at each reporting date. At March 31, 2012, the approximate fair value of this derivative was $39,970. In connection with the May 16, 2012 amendment to the stock purchase agreement that removed all of these price protection provisions, the derivative was re-valued to an approximate fair value of $32,625, resulting in derivative income of $7,345 during the nine months ended June 30, 2012.

Net Loss

Our net loss for the nine months ended June 30, 2013 and 2012 totaled approximately $254,000 and $207,000, respectively. We expect to continue incurring losses through 2013 as we continue refining and expanding our business operations.

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Liquidity and Capital Resources

As of ~~June~~December 3031, 2013, we had approximately $~~696~~530,000 in cash, $~~130~~113,000 of other current assets and working capital of $~~470~~251,000, compared to approximately $~~347~~654,000 in cash, $~~284~~86,000 of other current assets and working capital of $~~178~~315,000 as of September 30, ~~2012. Since June 30,~~ 2013~~, we have received an additional $25,000 from the sale of our shares of common stock to one investor~~. To date, our operating ~~activities~~ activities have been primarily financed from the sales of our securities and royalty payments received (i) ~~as advances against future sales, and (ii)~~ from sales of our skin care products to anKorean ~~international~~Air ~~airline~~ and athe ~~luxury~~Peninsula ~~hotel~~Hotel chain, and (ii) as an advance against future royalties under the LGHH License Agreement.

Our net loss during ~~the~~Q1 ~~nine~~2014 ~~months~~and ~~ended~~Q1 ~~June 30,~~ 2013 ~~and 2012~~ was approximately $~~254~~184,000 and $~~207~~33,000, respectively. We had ~~net~~negative cash ~~provided~~flow byfrom our operating ~~activities~~ activities of approximately $36112,000 during ~~the~~Q1 ~~nine months ended June 30~~2014, ~~2013~~ compared to net cash ~~used~~provided inby operating activities of approximately $8744,000 during Q1 ~~the~~2013. ~~nine~~A ~~months~~significant ~~ended~~reason ~~June~~for ~~30,~~the ~~2012.~~fluctuation ~~The increase~~ in ~~the net~~ cash used/provided byin operating activities ~~resulted~~ ~~primarily~~relates ~~from~~to ~~increases~~the intiming ~~proceeds~~of ~~received from~~ our ~~royalty agreement with Korean Air, a non-refundable advance against~~collections ~~future royalties~~ of ~~$250,000~~accounts ~~(less~~receivable ~~foreign~~and ~~taxes~~our ~~withheld)~~payments ~~received~~of ~~from~~accounts ~~LGHH~~payable. Also, asthe ~~well~~decrease asin ~~decreases~~the innet ~~amounts~~cash ~~for~~provided ~~wages~~by ~~and~~operating ~~consulting~~activities ~~fees~~resulted ~~due~~primarily tofrom the ~~resignations~~increase ~~of our former Chief Financial Officer~~ in ~~February~~cash ~~2012~~payments ~~and~~we ~~our~~made ~~former Chairman of the Board~~ in ~~November 2012.~~fiscal ~~As of June 30,~~ 2013 werelating ~~had~~to ~~approximately~~expenses ~~$117,000~~incurred in ~~outstanding~~connection ~~accounts~~with ~~receivable~~our growing business.

Net cash used in investing activities ~~during~~in ~~the~~Q1 ~~nine~~2014 ~~months~~and ~~ended~~Q1 ~~June 30,~~ 2013 was approximately $3713,000 and ~~consisted of approximately~~ $489,000 of, ~~payments~~respectively ~~for leasehold improvements to our office space~~ and ~~computer~~consisted ~~equipment.~~primarily ~~These~~of payments ~~were offset by the refund of~~ ~~approximately~~for ~~$11~~computer equipment,~~000~~ ofoffice afurniture ~~security~~and ~~deposit~~leasehold onimprovements to our ~~leased~~ office space. ~~The Company had approximately $2,000 of cash used in investing activities during the nine months ended June 30, 2012 resulting from the purchase of computer equipment.~~

Net cash provided by financing activities during the nine months ended June 30, 2013 was $350,000 and resulted from the sale of 3,500,000 shares of common stock at $0.10 per share to several accredited investors. The Company had no ~~cash provided by~~ financing activities during ~~the~~ ~~nine~~Q1 ~~months~~2014 ~~ended~~or ~~June~~Q1 ~~30, 2012~~2013.

The amount of cash we currently have on hand, together with the royalty and product sales revenues we received and expect to receive from Korean Air, the Peninsula Hotel chain, LGHH, and other anticipated future revenues we expect to generate from sales of our skin care products through other channels are expected to be sufficient to fund our working capital needs for the next twelve months. However, additional sources of revenues may be needed to enable us to implement our business plan or to otherwise continue to grow. Accordingly, we may have to raise additional financing to fund additional product manufacturing costs and other anticipated expenditures related to the roll-out of our retail products. Our business plan also calls for us to market our products through other distribution channels, which will require us to incur additional marketing expenses. We may have to raise additional funds to fund our retail sales and online marketing initiatives and to be able to engage in other distribution activities.12

WeAs ~~presently do not have any available credit, bank financing or other external sources~~ of ~~liquidity.~~December ~~Currently~~31, ~~our only source of revenues is derived from the agreements that~~ 2013, we have ~~entered~~a ~~into~~working ~~with~~capital ~~Korean~~surplus ~~Air and the Peninsula Hotels. Sales~~ of ~~our~~approximately ~~skincare~~$251,000 ~~products to Korean Air~~ and the ~~Peninsula~~amount ~~Hotels since the inception~~ of ~~the~~cash ~~agreements~~we ~~through~~currently ~~June~~have 30on hand, ~~2013~~together ~~resulted~~with inthe ~~approximately $970,000 of~~ royalty ~~revenue~~ and ~~$110,000 of~~ product sales. ~~Both~~revenues ~~arrangements~~we ~~may~~received beand ~~terminated~~expect atto ~~any~~receive ~~time.~~from ~~Additionally, beginning July 1, 2013,~~ Korean Air, ~~will purchase the Le Grand Cru face creams from~~ LGHH, and ~~Davi~~other ~~will~~future ~~receive~~revenues ~~royalties~~we ~~from~~expect ~~the~~to ~~purchases in~~generate ~~accordance~~from ~~with~~sales ~~the~~of ~~LGHH~~our ~~License~~skin ~~Agreement.~~care ~~Further, although LGHH has begun selling Davi licensed~~ products ~~under~~through ~~the~~other ~~LGHH License Agreement~~channels, we are ~~uncertain~~expected as to ~~the~~be ~~extent~~sufficient ofto ~~royalty~~fund ~~income~~our ~~that~~anticipated weworking ~~may~~capital needs ~~recognize~~for inthe ~~future~~next ~~periods~~twelve ~~from~~months. ~~LGHH's~~However, ~~sales~~unless ofrevenues ~~our products.~~increase ~~Accordingly~~rapidly, ~~the~~we ~~amount~~expect ~~of revenue~~ that we will ~~receive~~need ~~from~~additional ~~our~~capital ~~current principal sources of revenues is uncertain.~~to ~~Should~~enable ~~any~~us orto ~~all~~further ofimplement ~~these revenue sources terminate their arrangements with us,~~ our ~~financial~~business ~~condition~~plan ~~could be materially~~ and ~~adversely~~ ~~affected,~~to ~~and~~otherwise ~~our~~continue ~~on-going~~to ~~operations could be severely hampered~~grow. ~~Additionally~~Accordingly, ~~our~~we ~~general~~may ~~and~~have ~~administrative expenses are expected~~ to ~~increase,~~raise ~~and~~additional financing ~~we may have~~ to ~~incur~~fund additional product ~~branding~~manufacturing costs and ~~marketing~~other ~~expenses~~anticipated expenditures related to ~~further~~the ~~promote~~roll-out of our ~~business~~retail ~~plan~~products. AsOur abusiness ~~result,~~plan ~~despite~~also ~~our~~calls ~~sale~~for ofus ~~approximately~~to ~~$1,132,000~~market ofour ~~common~~products ~~stock~~ through ~~June~~other 30distribution channels, ~~2013~~which wewill ~~may~~require ~~have~~ us to ~~obtain~~incur additional ~~capital~~ ~~from~~marketing ~~the~~expenses. ~~sale~~We ofmay ~~additional~~have ~~securities~~to orraise byadditional ~~borrowing~~ funds ~~from~~to ~~private~~fund ~~lenders~~our U. ~~There~~S. isretail nosales ~~assurance~~and ~~that~~online wemarketing ~~will~~initiatives and to be ~~successful~~able to engage in ~~obtaining~~other ~~additional~~distribution ~~funding~~activities.

~~Our~~We ~~current~~presently ~~status~~do asnot ahave ~~micro-cap~~any ~~company~~available ~~that~~credit, ~~has~~bank ~~limited~~financing ~~operations~~or other external sources of liquidity. Currently, our only source of cash is ~~expected~~derived from tothe ~~make~~agreements itthat ~~difficult~~we have entered into relating to ~~obtain~~Korean ~~financing~~Air ~~through~~in-flight amenities and the ~~issuance~~LGHH ofLicense Agreement, as well ~~equity~~as orfrom ~~debt~~sales ~~securities~~of our skin care products generated from our website. IfRoyalty werevenue ~~issue~~from ~~additional~~our ~~equity~~skin orcare ~~debt~~products ~~securities~~to Korean Air and the Peninsula Hotels since the inception of the agreements through December 31, ~~stockholders~~2013 ~~may~~resulted ~~experience~~in ~~additional~~approximately ~~dilution~~$1,136,000 orof revenue. The Peninsula Hotels agreement was terminated in Q1 2014 and the ~~new~~Korean ~~equity~~Air ~~securities~~arrangement may ~~have~~be ~~rights~~terminated at any time. Beginning July 1, ~~preferences~~2013, orKorean ~~privileges~~Air ~~senior~~began topurchasing ~~those~~the ofLe ~~existing~~Grand ~~holders~~Cru face creams for direct sale on board its flights and through its SKY SHOP magazine from LGHH. Accordingly, we receive royalty revenue from such purchases instead of ~~our~~revenue ~~common~~from ~~stock~~product sales in accordance with the LGHH License Agreement. If Product sales to Korean Air from November 2011 through September 30, 2013 resulted in approximately ~~additional~~$110,000 ~~financing~~of isrevenue. ~~not~~Although ~~available~~LGHH orhas isbegun ~~not~~selling ~~available~~Davi onlicensed ~~acceptable~~products ~~terms~~under the LGHH License Agreement through retail stores established in Korea, we ~~will~~are ~~have~~uncertain as to ~~curtail~~the oramount ~~cease~~of ~~our~~royalty ~~operations.~~income that we may recognize in future periods from LGHH's sales Noof ~~assurance~~DAVI-branded ~~can~~products. beAccordingly, ~~given~~the amount of revenue that we will bereceive ~~able~~from toour ~~obtain~~current ~~sufficient~~principal ~~capital~~sources toof ~~meet~~revenues is ~~our requirements~~uncertain.

Although we anticipate that sales by LGHH will be significant in 2014, we will not receive any cash royalty payments as a result of those sales until LGHH has recouped the $250,000 cash advance LGHH paid us in September 2012. As of December 31, 2013, approximately $35,000 of the cash advance had been recognized as royalty revenues. Should any or all of these revenue sources terminate their arrangements with us, our financial condition could be materially and adversely affected, and our on-going operations could be severely hampered. Additionally, our general and administrative expenses, and wages and professional fees are expected to increase in 2014 in connection with our growing business, and we may have to incur additional product branding and marketing expenses to further promote our current and any future products. As a result, we may have to obtain additional capital from the sale of additional securities or by borrowing funds from private lenders. There is no assurance that we will be successful in obtaining additional funding.

Our current status as a micro-cap company that has limited operations is expected to make it difficult to obtain financing through the issuance of equity or debt securities. If we issue additional equity or debt securities, stockholders may experience additional dilution or the new equity securities may have rights, preferences or privileges senior to those of existing holders of our common stock. No assurance can be given that we will be able to obtain sufficient capital to meet our future requirements.

Inflation and changing prices have had no effect on our continuing operations over our two most recent fiscal years.

Off-balance sheet arrangements

We have no off-balance sheet arrangements including arrangements that would affect our liquidity, capital resources, market risk support and credit risk support or other benefits.

Critical accounting policies and estimates

There are no material changes to the critical accounting policies and estimates described in the section entitled “Critical Accounting Policies and Estimates” under Item 7 in our Annual Report on Form 10-K for the year ended September 30, ~~2012~~2013.

1513

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

Not applicable.

ITEM 4. CONTROLS AND PROCEDURES.

WeOur ~~maintain~~management ~~disclosure~~(consisting of our Chief Executive Officer, who also serves as our interim Chief Financial Officer) is responsible for establishing and maintaining a system of disclosure controls and procedures (as defined in Rule 13a-15(e)) under the Exchange Act) that ~~are~~is designed to ensure that information required to be disclosed by the Company in the reports that we file ~~with,~~ or submit ~~to, the SEC~~ under the ~~Securities~~ Exchange Act ~~of 1934 (the “Exchange Act”)~~ is recorded, processed, summarized and reported, within the time ~~periods~~ specified in the SEC's rules and forms. ~~and~~Disclosure ~~that~~controls ~~such information is accumulated~~ and ~~communicated~~procedures toinclude, ~~our~~without ~~management~~limitation, ~~including~~controls ~~our chief executive~~ and ~~financial~~procedures ~~officers,~~designed ~~as appropriate,~~ to ~~allow~~ensure ~~timely~~that ~~decisions~~information ~~regarding~~ required ~~disclosure.~~ Asto ~~required~~be disclosed by ~~SEC~~an ~~Rule~~issuer in ~~13a-15(b),~~the wereports ~~carried~~that ~~out~~it anfiles ~~evaluation,~~or submits under the ~~supervision~~Exchange ~~and~~Act ~~with~~is ~~the~~accumulated ~~participation~~and ~~of our~~communicated ~~management~~to ~~(consisting~~the ofissuer's ~~our Chief Executive Officer~~management, ~~who~~including its ~~also~~principal ~~served~~executive asofficer ~~our~~or ~~interim~~officers ~~Chief~~and ~~Financial~~principal ~~Officer)~~financial ofofficer ~~the~~or ~~effectiveness of~~officers, ~~the~~or ~~design~~persons ~~and~~performing ~~operation~~similar ~~of our disclosure controls and procedures~~ functions, as ofappropriate ~~the~~to ~~end~~allow oftimely ~~the~~decisions ~~period~~regarding ~~covered~~required ~~by this report~~disclosure.

Pursuant to Rule 13a-15(b) under the Exchange Act, the Company carried out an evaluation with the participation of the Company's management and consultants of the effectiveness of the Company's disclosure controls and procedures (as defined under Rule 13a-15(e) under the Exchange Act). Based onupon that evaluation, ~~our~~ the Company's management concluded that ~~our~~the Company's disclosure controls and procedures ~~have~~were not ~~been~~ effective as a result of a weakness in the design of internal controls over financial reporting during the three months ended ~~June~~December 3031, 2013. Such internal control weaknesses, in the aggregate, represent material weaknesses, including: (i) lack of segregation of incompatible duties; (ii) inability to have multiple levels of transaction review and (iiiii) insufficient Board of Directors representation.

These weaknesses are due to our inadequate staffing during the period covered by this report. ~~Although~~and our lack of working capital to hire additional staff. Although management will periodically re-evaluate this situation, at this point it considers that the risk associated with such lack of segregation of duties and the potential benefits of adding employees to segregate such duties are not cost justified. We intend to hire additional accounting personnel to assist with financial reporting as soon as our finances will allow.

There have not been any changes in our internal controls over financial reporting during our most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

PART II

ITEM 1. LEGAL PROCEEDINGS.

Not applicable.

ITEM 1A. RISK FACTORS.

Information regarding risk factors appears under “Risk Factors” included in Item 1A, Part I, and under Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, of our Annual Report on Form 10-K for the year ended September 30, ~~2012~~2013.

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

OnNot ~~June 11, 2013, we sold 250,000 shares of common stock to an accredited investor for proceeds of $25,000~~applicable. ~~The foregoing shares were issued in reliance upon an exemption from the registration requirements pursuant to Section 4(2) of the Securities Act of 1933, as amended.~~

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

Not applicable.

ITEM 4. MINE SAFETY DISCLOSURES.

Not applicable.

ITEM 5. OTHER INFORMATION.

None.

1614

~~Table~~ITEM of6. ~~Contents~~EXHIBITS.

ITEM 6. EXHIBITS

31.1		Certificate of principal executive officer and principal financial officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.^**
32.1		Certificate of principal executive officer and principal financial officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.^**
101.INS⁽¹⁾		XBRL Instance Document
101.SCH⁽¹⁾		XBRL Taxonomy Extension Schema
101.CAL⁽¹⁾		XBRL Taxonomy Extension Calculation
101.LAB⁽¹⁾		XBRL Taxonomy Extension Label
101.LAB⁽¹⁾		XBRL Taxonomy Extension Label
101.PRE⁽¹⁾		XBRL Taxonomy Extension Presentation

10.1		Form of Davi Luxury Brand Group, Inc. Subscription Agreement.(1)
10.2		Salary Conversion Agreement, dated as of June 24, 2013, between Davi Luxury Brand Group, Inc. and Parrish Medley.* **
31.1		Certificate of Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.**
32.1		Certificate of Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.**
101.INS(2)		XBRL Instance Document
101.SCH(2)		XBRL Taxonomy Extension Schema
101.CAL(2)		XBRL Taxonomy Extension Calculation
101.LAB(2)		XBRL Taxonomy Extension Label
101.LAB(2)		XBRL Taxonomy Extension Label
101.PRE(2)		XBRL Taxonomy Extension Presentation

__________________________

* Indicates a management contract or compensatory plan or arrangement.

Filed herewith.

(1) ~~(2) Filed as an exhibit to our quarterly report on Form 10-Q filed May 15, 2013 and incorporated herein by this reference.~~ XBRL (eXtensible Business Reporting Language) information is furnished and not filed or 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 Act of 1934, as amended, and otherwise is not subject to liability under those sections.

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Table of Contents

SIGNATURES

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

Dated: ~~August~~February 97, ~~2013~~2014 DAVI LUXURY BRAND GROUP, INC. By: /s/ PARRISH MEDLEY Parrish Medley President, Chief Executive Officer and interim Chief Financial Officer (Principal Executive Officer and Principal Financial Officer)

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