Current Status
We began distribution of our product in the first calendar quarter of 2013, distributing 21 pallets. Currently we have two flavors of one product and will distribute in California to convenience stores, gas stations, grocery stores and gyms. We currently work with a beverage manufacturer in Florida and several companies for packaging materials. Our initial purchase required payment upfront. Thereafter we will get net 30 day payment terms. We will ship product to two distributors with net 30 day terms.
During the third calendar quarter of 2014 the company retained Allen Flavors to create two new additional flavors to be launched during the first calendar quarter of 2015. The Company will also use a newly developed look for their bottling and labeling as part of the new launch. In addition to a new product launch, the Company launched its first sweepstakes contest to be held from December 15, 2014 through January 31, 2015 to help market the new product launch.
We have also entered into contracts with several professional sports personalities (Jonathan Quick, Aldon Smith, Haloti Nagata, Taj Gibson, Matt Moulson, Brian Braham, Kenneth Draun, and Andrew Depaula) to represent us by endorsing our products. All contracts cover three years and require us to issue an aggregate of 8,220,000 restricted shares of common stock over the lives of the contracts plus up to an additional 1,652,500 contingent shares based on performance criteria. During the three and six months r ended January 31, 2015, we have recorded an aggregate Marketing Expense of $2,701 and $4,640, respectively, relating to the shares that are issuable.
Three months ended January 31, 2015
The company had no sales during the quarter ended October 31, 2014. Shipments were insignificant during the quarter ending October 31, 2013 and generated sales of $373.
The company did not incur any cost of goods sold due to no saleable products being made during the quarter ended October 31, 2014. This was due to the Company’s focus on redeveloping and redesigning the products for a new launch in the first calendar quarter of 2015. Cost of goods sold during the three months ended October 31, 2013 were $1,392, which exceeded of sales by $1,019, resulting in a gross profit $(1,019). This was due to the high cost of the initial product runs due to start up tooling costs and a lack of economies of scale in the manufacturing process.
General and administrative expenses increased by $45,375, from $77,610 during the three months ended October 31, 2013 to $147,144 during the three months ended October 31, 2014. The increase was due to higher professional fees for legal and accounting services.
Marketing expense increased by $45,375, from $10,846 during the three months ended October 31, 2013 to $56,221 during the three months ended October 31, 2014. The increase was due to increased marketing costs.
Compensation decreased by $655,773, from $983,292 during the three months ended October 31, 2013 to $327,520 during the three months ended October 31, 2014. The decrease was primarily due to a reduction in share based compensation expense, from $676,292 in connection with professional athlete endorsement contracts recognized in the quarter ended October 31, 2013, compared to $28,093 connection with these endorsement contracts during the quarter ended October 31, 2014.
Other income (expense) increased ($229,660) from ($1,107,335) during the three months ended October 31, 2013 compared to ($1,336,995) during the three months ended October 31, 2014. The increase is due to a decrease in interest expense of $33,585 and the derivatives expense and change in derivative liability of $263,243.
Net loss for the three months ended October 31, 2014 decreased by $312,223, from ($2,180,102) during the three months ended October 31, 2013 to ($1,867,879), primarily due to share based compensation expense.
Three months ended January 31, 2014
The company began shipping products to distributors in February 2013. Shipments were insignificant during the quarter ending October 31, 2013 and generated sales of $373. There were no sales in the quarter ending October 31, 2012.
Cost of goods sold during the three months ended October 31, 2013 were $1,392, which exceeded of sales by $1,019, resulting in a gross profit $(1,019). This was due to the high cost of the initial product runs due to start up tooling costs and a lack of economies of scale in the manufacturing process.
General and administrative expenses increased by $24,226, from $53,820 during the three months ended October 31, 2012 to $77,606 during the three months ended October 31, 2013. The increase was due to higher professional fees for legal and accounting services.
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