NOTE
7 – SUBSEQUENT EVENTS
The
Company has evaluated subsequent events through the date of this filing and determined the following events should be disclosed.
On
March 18, 2013, the Company entered into an acquisition agreement and plan of merger to acquire Dolce Bevuto, Inc., an entity
that is controlled by the officer of the Company. Upon closing, the Company cancelled a total of 19,760,000 shares of common stock
and issued 12,713,763 shares of common stock in exchange for 100% of the Dolce Bevuto, Inc. The closing occurred on April 1, 2013.
During
April 2013, the Company issued a total of 82,000 shares of common stock for $164,000 in cash. The cash was received in February
and March 2013 and was recorded to common stock subscription receivable. Additionally, the Company issued 5,000 shares of common
stock as part of the sale of the debentures. See Note 4.
During
April 2013, the Company received $75,000 from a shareholder of the Company, the terms of the transaction are being negotiated
between the Company and the shareholder.
During
April 2013, the Company loaned a total of $85,500 to Dolce Bevuto, Inc. as part of the line of credit. See Note 6.
NOHO,
INC.
(FORMERLY
REALESTATE PATHWAYS, INC.)
(A
Development Stage Enterprise)
Notes
to Unaudited Financial Statements
For
the Five Months Ended March 31, 2013 and 2012 and the
Period
of September 30, 2011 (Inception) to March 31, 2013
NOTE
7 – SUBSEQUENT EVENTS (CONTINUED)
On
April 17, 2013, the United States District Court for the Eastern District of North Carolina entered an Order Entering Default
Judgment against Dolce Bevuto, Inc., a wholly owned subsidiary of the Company (“DB”), in favor of The Pantry, Inc.
(the “Plaintiff”) in the matter of
The Pantry, Inc. v. Dolce Bevuto, Inc
, Civil Action No, 5:12-CV-00764. Plaintiff
alleged that DB owed Plaintiff a total of $92,325 for accounts to be paid under a funding agreement entered into by and between
DB and the Plaintiff. The Company intends to pursue all available remedies, at law and in equity, to appropriately respond to
the Court’s order.
On
May 10, 2013, the Company and Dolce Bevuto, Inc. agreed to increase the revolving line of credit to $1,000,000. See Note 6.
End
of Notes to Financial Statements.
Item
2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
This
Quarterly Report contains “forward-looking statements”. All statements other than statements of historical
fact are “forward-looking statements” for purposes of federal and state securities laws, including, but not limited
to, any projections of earnings, revenue or other financial items; any statements of the plans, strategies and objections of management
for future operations; any statements concerning proposed new services or developments; any statements regarding future economic
conditions or performance; any statements or belief; and any statements of assumptions underlying any of the foregoing.
Forward-looking
statements may include the words “may,” “could,” “estimate,” “intend,” “continue,”
“believe,” “expect” or “anticipate” or other similar words. These forward-looking
statements present our estimates and assumptions only as of the date of this report. Accordingly, readers are cautioned
not to place undue reliance on forward-looking statements, which speak only as of the dates on which they are made. Except
for our ongoing securities laws, we do not intend, and undertake no obligation, to update any forward-looking statement. You
should, however, consult further disclosures we make in future filings of our Annual Report on Form 10-K, Quarterly Reports on
Form 10-Q and Current Reports on Form 8-K.
Although
we believe the expectations reflected in any of our forward-looking statements are reasonable, actual results could differ materially
from those projected or assumed in any of our forward-looking statements. Our future financial condition and results
of operations, as well as any forward-looking statements, are subject to change and inherent risks and uncertainties. The
factors impacting these risks and uncertainties include, but are not limited to:
-
our current lack
of working capital;
-
inability to raise
additional financing;
-
the fact that
our accounting policies and methods are fundamental to how we report our financial condition and results of operations, and
they may require our management to make estimates about matters that are inherently uncertain;
-
deterioration
in general or regional economic conditions;
-
adverse state
or federal legislation or regulation that increases the costs of compliance, or adverse findings by a regulator with respect
to existing operations;
-
inability to efficiently
manage our operations;
-
inability to achieve
future sales levels or other operating results; and
-
the unavailability
of funds for capital expenditures.
For
a detailed description of these and other factors that could cause actual results to differ materially from those expressed in
any forward-looking statement, please see “Item 1A. Risk Factors” in this Quarterly Report.
Throughout
this Quarterly Report references to “we”, “our”, “us”, “NOHO”, “the Company”,
and similar terms refer to NOHO, Inc.
OVERVIEW AND OUTLOOK
The
Company was incorporated in the State of Wyoming on September 30, 2011 under the name RealEstate Pathways, Inc. On March 9, 2012
our registration statement filed on Form S-1 was deemed effective, registering 3,000,000 common shares at a fixed price of $0.04
per share.
On
December 17, 2012, Eric K. Lindberg submitted his letter of resignation from his position as President and Director of the Company.
The resignation was accepted by the Company on December 17, 2012.
On
December 17, 2012, in connection with resignation of Eric K. Linberg, the Board of Directors unanimously appointed Mr. John “Jay”
Grdina to serve as the President, CEO, and Director of the Company.
On
December 17, 2012, in connection with resignation of Karin du Plooy the Board of Directors unanimously appointed Mr. Sean Stephenson
to serve as the Secretary and Treasurer of the Registrant.
On
December 17, 2012, Karin du Plooy submitted her letter of resignation from her position as Secretary of the Company. The resignation
was accepted by the Company on December 17, 2012.
On
December 31, 2012, the Company effectuated a 15.2 to 1 forward split of the Company’s common stock issued and unissued common
stock as of January 16, 2013, the record date. Immediately after the forward split, the number of shares issued and outstanding
increased to 22,861,676. The number of authorized shares increased from 50,000,000 to 760,000,000 common shares.
On
January 4, 2013, the Company entered into a Distributor Agreement (the “Agreement”) with Dolce Bevuto, Inc., a Nevada
corporation (formerly Dolce Bevuto, LLC, a California limited liability company). Pursuant to the Agreement, the Company obtained
the non-exclusive right to distribute a product named “NOHO®” – The Hangover Defense®. The term of the
Agreement is for one year and allows the Company to use the NOHO® trademarks solely in connection advertising, distribution,
marketing, and sale of the product throughout certain territories.
On
January 9, 2013, the Company changed its name from RealEstate Pathways, Inc. to NOHO, Inc. The amendment occurred as a result
of our stockholders approving the amendment at the 2012 Annual Meeting of Stockholders and a subsequent vote by the Board of Directors.
On
January 31, 2013, the trading symbol for the Company’s common stock, which is quoted on the OTC:QB, was changed from REPW
to HANG. Subsequently, on February 21, 2013, the trading symbol for the Company’s common stock was changed from HANG to
DRNK.
On
March 18, 2013, the Company entered into an Acquisition Agreement and Plan of Merger by and among, Dolce Sub Co, a Nevada corporation
and wholly owned subsidiary of Company, (“Sub Co”) and Dolce Bevuto, Inc., a Nevada corporation (“DB”);
DB and Sub Co being the constituent entities in the Merger. The Company issued 12,713,763 shares of its Rule 144 restricted common
stock in exchange for 100% of DB’s issued and outstanding stock. Pursuant to the terms of the Merger, Sub co merged with
DB and Sub Co ceased to exist; DB become a wholly owned-subsidiary of the Company. The Merger, which closed on April 1, 2013,
provided the Company with the ownership of 100% of DB.
The Business
of the Company
Pursuant
to the Distributor Agreement executed on January 4, 2013 with DB, the Company has the non-exclusive right to distribute “NOHO®”
– The Hangover Defense® for one year. The Company intends to begin generating revenues by marketing and selling the
product in certain territories. However, the Company can make no guarantees of such.
Upon
Closing of the Merger, we changed our business focus to distributing the NOHO product. NOHO develops, markets, sells and distributes
a functional lifestyle beverage category product named “NOHO®” – The Hangover Defense®.
Additionally,
we recently launched NoHo® Gold an 8.4 oz premium lifestyle beverage.
Our
flagship product “NOHO®” – The Hangover Defense® (“NOHO”) is a dietary supplement, taken
before or during the consumption of alcohol that may help to prevent the symptoms associated with a hangover. NOHO was formulated
by a Doctor of Pharmacy and comes in a 2 ounce “shot” that can be consumed on a stand-alone basis or as a mixer available
in an 8.4 ounce that can be consumed by itself or mixed with an alcoholic drink. It is recommended that the 2 ounce shot be taken
as the first and last shot of the night, while the mixer can be consumed alone or mixed with subsequent drinks. NOHO has a refreshing
flavor, containing no caffeine or stimulants. Although the method by which NOHO works has not been confirmed through clinical
testing, field tests conducted throughout the country have demonstrated NOHO’s effectiveness. NOHO is intended to replenish
common electrolytes and trace elements lost by alcohol consumption.
NoHo
Hangover Defense is a functional lifestyle beverage. “Functional lifestyle” beverages are beverages that have a specific
function. Functions include relaxation, health, weight management, digestion aid, alertness, detoxification, and joint health.
The functional lifestyle beverage category includes relaxation drinks, and ready-to-drink (RTD) teas and coffees. Functional beverages
play an important role in our everyday lives. They help keep us hydrated, prevent and help address health conditions, or simply
contribute to our overall nutritional well-being. These beverages include functional ingredients such as nutrients (vitamins,
minerals, amino acids, nutraceuticals, etc.), zero-calories sweeteners and stabilizers. The functional beverage market has steadily
increased over the past decade and is predicted to continue to increase in growth.
The
NoHo Gold Premium Lifestyle Beverage is currently being developed and marketed as a refreshingly healthy beverage that can be
enjoyed day and night. NoHo Gold is currently offered to and sold in some of the most exclusive “On Premise” bar and
club venues in the United States including the Fontainebleau Hotel, LIV nightclub, Story Nightclub, Day Light, Light, Fluxx, Heist,
The Mid, Greenhouse, The Opium Group properties, and many others. NoHo Gold is a healthy mixer alternative to be consumed in the
vast social day and night lives of America and around the world.
We
believe that our products will change the way we think about alcoholic beverage consumption. Our NoHo Gold Premium Lifestyle Beverage
fills a unique niche in the market and, coupled with our relationships with major bar and club venues in the United States, has
the potential to revolutionize the industry. We are in the early stages of expanding our customer base and maximizing the breadth
of our distribution. We believe there is a significant opportunity to further enhance the value we deliver to clients and users.
Key elements of our strategy are based on developing a high quality product and attaining high volume distribution through an
aggressive marketing campaign. By raising funds through this private offering, we plan to enhance the reach of our current offerings,
branch out into the public sector, and form strategic alliances to grow our Company and enhance our market share.
To
date, NOHO is in over 20,000 retail outlets in America and available in 6 countries.
Going
Concern
The
Company’s financial statements are prepared using generally accepted accounting principles in the United States of America
applicable to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course
of business. The Company has not yet established an ongoing source of revenues sufficient to cover its operating costs and allow
it to continue as a going concern. The ability of the Company to continue as a going concern is dependent on the Company obtaining
adequate capital to fund operating losses until it becomes profitable. If the Company is unable to obtain adequate capital, it
could be forced to cease operations.
The
Company is currently contemplating an offering of its equity or debt securities to finance continuing operations. There are no
agreements or arrangements currently in place or under negotiation to obtain such financing, and there are no assurances that
the Company will be successful and without sufficient financing it would be unlikely for the Company to continue as a going concern.
The
ability of the Company to continue as a going concern is dependent upon its ability to successfully accomplish the plans described
in the preceding paragraph and eventually secure other sources of financing and attain profitable operations.
RESULTS
OF OPERATIONS
In
the five months ended March 31, 2013 and March 31, 2012, we did not generate any revenues.
Operating
expenses during the five months ended March 31, 2013 were $44,562. $41,865 of which was professional fees associated with legal
and accounting expenses and the remaining $2,697 was related to general and administrative costs. In comparison, operating expenses
for the five months ended March 31, 2012 were $7,606, of which $7,513 was in professional fees and the remaining $93 was related
to general and administrative costs. The increase in professional fees is due to increased legal work.
Liquidity
and Capital Resources
As
of March 31, 2013, we had $12,332 in cash and did not have any other cash equivalents. The following table provides detailed information
about our net cash flow for all financial statement periods presented in this Quarterly Report. To date, we have financed our
operations through the issuance of stock, unsecured lines of credit and limited revenues.
The
following table summarizes total current assets, total current liabilities and working capital at March 31, 2013 compared to March
31, 2012.
|
|
|
March 31, 2013
|
|
October 31, 2012
|
|
Increase / (Decrease)
$
|
|
Current Assets
|
|
$
|
229,932
|
|
|
$
|
853
|
|
|
$
|
229,079
|
|
|
Current Liabilities
|
|
$
|
98,753
|
|
|
$
|
3,375
|
|
|
$
|
95,378
|
|
|
Working Capital (deficit)
|
|
$
|
131,179
|
|
|
$
|
(2,522
|
)
|
|
$
|
133,701
|
|
Liquidity
is a measure of a company’s ability to meet potential cash requirements. We have historically met our capital requirements
through the issuance of stock and by borrowings. In the future, we anticipate we will be able to provide the necessary liquidity
needed from the revenues generated from operations but there is no assurance that this will happen.
Since
inception, we have financed our cash flow requirements through issuance of common stock, and lines of credit. As we expand our
activities, we may, and most likely will, continue to experience net negative cash flows from operations. Additionally we anticipate
obtaining additional financing to fund operations through additional common stock offerings, to the extent available, or to obtain
additional financing to the extent necessary to augment our working capital.
We
anticipate that we will incur operating losses in the next twelve months. Our limited operating history makes predictions of future
operating results difficult to ascertain. Our prospects must be considered in light of the risks, expenses and difficulties frequently
encountered by companies in their early stage of development, particularly companies in new and rapidly evolving markets. Such
risks for us include, but are not limited to, an evolving and unpredictable business model and the management of growth. To address
these risks, we must, among other things, develop a customer base, develop our marketing strategy, continually develop and upgrade
our website, provide, respond to competitive developments, and attract, retain and motivate qualified personnel. There can be
no assurance that we will be successful in addressing such risks, and the failure to do so can have a material adverse effect
on our business prospects, financial condition and results of operations.
Operating
activities
Net
cash used in operating activities was $41,381 for the five months ended March 31, 2013, as compared to $7,343 used in operating
activities from for the five months ended March 31, 2012. The increase in net cash used in operating activities was primarily
due to an increase in professional fees, as a result of increased legal work.
Investing
activities
Net
cash used in investing activities was $0 for the five months ended March 31, 2013 as compared to $0 used in investing activities
for the same period in 2012.
Financing
activities
Net
cash provided by financing activities for the five months ended March 31, 2013 was $52,986, as compared to $3,145 for the same period
of 2012. The increase of net cash provided by financing activities was mainly attributable to capital provided through previously
executed line of credit and related party loans.
On
February 8, 2013, the Company executed a revolving line of credit with Dolce Bevuto, Inc., an entity that is controlled by an
officer of the Company. The Company agreed to loan to the related party up to $120,000. The loan is unsecured, due upon demand
and bears interest at 0%. During May 2013, the limit was increased to $1,000,000. During the five months ended March 31, 2013,
the Company loaned a total of $220,950 and received repayments totaling $3,350 to a related party. The related party is the entity
that the Company merged with in April 2013.
During
the five months ended March 31, 2013 the Company received loans from related parties totaling $8,726 to fund operations and repaid
$40. These loans are non-interest bearing, due on demand and as such are included in current liabilities. During the five months
ended March 31, 2013, the related parties agreed to forgive a total of $7,561 and were recorded to additional paid in capital.
As of March 31, 2013, the balance in related party loans was $4,500. Imputed interest has been considered, but was determined
to be immaterial to the financial statements as a whole.
We
believe that cash flow from operations will not meet our present and near-term cash needs and thus we will require additional
cash resources, including the sale of equity or debt securities, to meet our planned capital expenditures and working capital
requirements for the next 12 months. We will require additional cash resources due to changed business conditions, finalization
and launch of our website, implementation of our strategy to expand our sales and marketing initiatives, increase brand and services
awareness. If our own financial resources and then current cash-flows from operations are insufficient to satisfy our capital
requirements, we may seek to sell additional equity or debt securities or obtain additional credit facilities. The sale of additional
equity securities will result in dilution to our stockholders. The incurrence of indebtedness will result in increased debt service
obligations and could require us to agree to operating and financial covenants that could restrict our operations or modify our
plans to grow the business. Financing may not be available in amounts or on terms acceptable to us, if at all. Any failure by
us to raise additional funds on terms favorable to us, or at all, will limit our ability to expand our business operations and
could harm our overall business prospects.
Off-Balance Sheet Arrangements
We
did not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial
condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital
resources that is material to investors.
Item
3. Quantitative and Qualitative Disclosure About Market Risk
This
item is not applicable as we are currently considered a smaller reporting company.
Item
4T. Controls and Procedures
Evaluation
of Disclosure Controls and Procedures
Our
Principal Executive Officer and Chief Financial Officer, John Grdina, evaluated the effectiveness of our disclosure controls and
procedures (as defined in Rule 13a-15(e) under the Exchange Act) as of the period covered by this Report. Based on that evaluation,
it was concluded that our disclosure controls and procedures are designed to operate at a reasonable assurance level which
is effective in providing reasonable assurance that information we are required to disclose in the reports that we file or submit
under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules
and forms, and that such information is accumulated and communicated to our management, including our principal executive and
principal financial officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required
disclosure.
Changes
in Internal Control Over Financial Reporting
There
were no changes in our internal control over financial reporting that occurred during our most recent fiscal quarter that have
materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Limitations
on Effectiveness of Controls and Procedures
In
designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter
how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition,
the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management
is required to apply its judgment in evaluating the benefits of possible controls and procedures relative to their costs.
PART
II—OTHER INFORMATION
Item
1. Legal Proceedings.
On
April 17, 2013, the United States District Court for the Eastern District of North Carolina entered an Order Entering Default
Judgment against Dolce Bevuto, LLC, a wholly owned subsidiary of the Company (“DB”), in favor of The Pantry, Inc.
(the “Plaintiff”) in the matter of
The Pantry, Inc. v. Dolce Bevuto, LLC
, Civil Action No, 5:12-CV-00764. Plaintiff
alleged that DB owed Plaintiff a total of $92,325 for accounts to be paid under a funding agreement entered into by and between
DB and the Plaintiff. The Company intends to pursue all available remedies, at law and in equity, to appropriately respond to
the Court’s order.
Other
than stated herein, we know of no material, existing or pending legal proceedings against the Company or its subsidiaries, nor
are we involved as a plaintiff in any material proceeding or pending litigation. There are no proceedings in which our directors,
officers or any affiliates, or any registered or beneficial shareholders, is an adverse party or has a material interest adverse
to our interest.
