FORM
10-K




x ANNUAL REPORT PURSUANT
TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGEACT OF 1934




For the
fiscal year ended April 30, 2009




o TRANSITION REPORT UNDER
SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGEACT OF 1934




For the
transition period from __________ to __________




Commission File Number
33-55254-10




Drinks
Americas Holdings, Ltd.


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





Delaware
              87-0438825(State
      or other jurisdiction of
              (I.R.S.
      Employerincorporation
      or organization)
              Identification
      No.)




372
Danbury Road


Wilton,
CT 06897


(Address
of principal executive offices)





(203)
762-7000


(Issuer's
telephone number)




Securities
registered under Section 12(b) of the Exchange Act: (none)




Securities
registered under Section 12(g) of the Exchange Act: Common


Stock,
$.001 par value per share




Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in
Rule 405 of the Securities Act. Yeso  No x





Indicate
by check mark if the registrant is not required to file reports pursuant to
Section 13 or Section 15(d) of the Act. Yeso  No x





Indicate
by check mark whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 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 (§232.405 of this
chapter) during the preceding 12 months (or for such shorter period that the
registrant was required to submit and post such files). Yeso  No x





Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K is not contained herein, and will not be contained, to the best
of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.  ̈





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





Large
      accelerated filer o
            Accelerated
      filer oNon-accelerated
      filer o
            Smaller
      reporting companyx





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





The
aggregate market value held by non-affiliates of the registrant
based  on the October 31, 2008 closing price was approximately
$14,827,622 . The registrant had 94,016,716 shares of common stock outstanding
at July 31, 2009.





DOCUMENTS
INCORPORPORATED BY REFERENCE





None








DRINKS
AMERICAS HOLDINGS, LTD.





FORM
10-K





Table of
Contents





PART
      IItem
      1.
                              Business
                              4Item
      1A.
                              Risk
      Factors
                              11Item
      1B.
                              Unresolved
      Staff Comments
                              16Item
      2.
                              Properties
                              16Item
      3.
                              Legal
      Proceedings
                              16Item
      4.
                              Submission
      of Matters to a Vote of Security Holders
                              17PART
      IIItem
      5.
                              Market
      for Registrant's Common Equity, Related Stockholder Matters and Issuer
      Purchases of Equity Securities
                              18Item
      6.
                              Selected  Financial
      Data
                              22Item
      7.
                              Management's
      Discussion and Analysis of Financial Condition and Results of
      Operations
                              22Item
      7A.
                              Quantitative
      and Qualitative Disclosures About Market Risk
                              27Item
      8.
                              Financial
      Statements and Supplementary Data
                              28Item
      9.
                              Changes
      in and Disagreements with Accountants on Accounting and Financial
      Disclosure
                              28Item
      9A (T).
                              Controls
      and Procedures
                              28Item
      9B.
                              Other
      Information
                              29PART
      IIIItem
      10.
                              Directors,
      Executive Officers, Promoters and Control Persons and Corporate
      Governance, Compliance with Section 16(a) of the Exchange
    Act
                              29Item
      11.
                              Executive
      Compensation
                              32Item
      12.
                              Security
      Ownership of Certain Beneficial Owners and Management and Related
      Shareholder Matters
                              36Item
      13.
                              Certain
      Relationships and Related Transactions, and Director
      Independence
                              38Item
      14.
                              Principal
      Accountant Fees and Services
                              39PART
      IVItem
      15.
                              Exhibits,
      Financial Statement Schedules
                              39SIGNATURES
                              44


2




Explanatory
Note




Unless
otherwise indicated or the context otherwise requires, all references below in
this Report on Form 10-K to the "Company", "us", "our" and "we" refer to (i)
Drinks Americas Holdings, Ltd. (ii) our 100% owned Delaware subsidiary, Drinks
Americas, Inc., (iii) our 100% owned Delaware limited liability company,
Maxmillian Mixers, LLC, (iv) our 90% owned New York limited liability company,
Drinks Global Imports, LLC,  (v) our 100% owned New York Limited
Liability Company, DT Drinks, LLC. and 90% owned Connecticut subsidiary, Olifant
U.S.A, Inc. (which we acquired on January 15, 2009)




Cautionary
Notice Regarding Forward Looking Statements




Our
disclosure and analysis in this Report contain some forward-looking statements.
Certain of the matters discussed concerning our operations, cash flows,
financial position, economic performance and financial condition, including, in
particular, future sales, product demand, competition and the effect of economic
conditions include forward-looking statements within the meaning of section 27A
of the Securities Act of 1933, referred to herein as the Securities Act, and
Section 21E of the Securities Exchange Act of 1934, referred to herein as the
Exchange Act.




Statements
that are predictive in nature, that depend upon or refer to future events or
conditions or that include words such as "expects," "anticipates," "intends,"
"plans," "believes," "estimates" and similar expressions are forward-looking
statements. Although we believe that these statements are based upon reasonable
assumptions, including projections of orders, sales, operating margins,
earnings, cash flow, research and development costs, working capital, capital
expenditures, distribution channels, profitability, new products, adequacy of
funds from operations and other projections, and statements expressing general
optimism about future operating results, and non-historical information, they
are subject to several risks and uncertainties, and therefore, we can give no
assurance that these statements will be achieved.




Readers
are cautioned that our forward-looking statements are not guarantees of future
performance and the actual results or developments may differ materially from
the expectations expressed in the forward-looking statements.




As for
the forward-looking statements that relate to future financial results and other
projections, actual results will be different due to the inherent uncertainty of
estimates, forecasts and projections and may be better or worse than projected.
Given these uncertainties, you should not place any reliance on these
forward-looking statements. These forward-looking statements also represent our
estimates and assumptions only as of the date that they were made. We expressly
disclaim a duty to provide updates to these forward-looking statements, and the
estimates and assumptions associated with them, after the date of this filing to
reflect events or changes in circumstances or changes in expectations or the
occurrence of anticipated events




We
undertake no obligation to publicly update any forward-looking statement,
whether as a result of new information, future events or otherwise. You are
advised, however, to consult any additional disclosures we make in our Form
10-K, Forms 10-Q and Forms 8-K reports to the SEC. Also note that we provide a
cautionary discussion of risk and uncertainties under the caption "Risk Factors"
in this report. These are factors that we think could cause our actual results
to differ materially from expected results. Other factors besides those listed
here could also adversely affect us. This discussion is provided as permitted by
the Private Securities Litigation Reform Act of 1995.


3




PART
1




ITEM
1.  BUSINESS





HISTORY
OF COMPANY





As of
March 9, 2005, the shareholders of Drinks America, Inc. ("DA"), acquired control
of Gourmet Group, which had become a Delaware corporation and changed its name
to Drinks Americas Holdings, Ltd. Prior to entering into this share exchange, as
Gourmet Group, Inc. ("Gourmet Group"), we were a company pursuing the
acquisition of various operating businesses since our sale of Jardine Foods,
Inc., our previous operating entity, in May 2002. As described below, as of
March 9, 2005, DA’s  shareholders acquired approximately 87% of
Gourmet Group's common stock in exchange for all of DA's outstanding common
shares and DA’s business.





As of
March 9, 2005, we, as Gourmet Group, issued an aggregate of approximately
42,963,792 shares of our common stock (or approximately 87.28% of the
outstanding common stock on a fully-diluted basis) to DA's shareholders, an
additional 1,800,000 total shares of our common stock (or approximately 3.66%)
to two advisors to DA and a total of 400,000 shares of our common stock (or
approximately .8%) to the four members of Maxmillian Mixers, LLC, a Delaware
limited liability company affiliated with DA ("Mixers"). Immediately prior to
issuing such shares, the Company (which had previously been a Nevada
corporation), by way of merger into a newly formed Delaware corporation, became
a Delaware corporation, changed its name to Drinks Americas Holdings, Ltd.,
effectively reverse split its outstanding shares one-for-ten, and authorized up
to 1,000,000 shares of "blank check" preferred stock in its new certificate of
incorporation. In return for such issuances of shares, we, as Gourmet Group,
received all of the outstanding shares of capital stock of DA and all of the
membership interests in Mixers. Thus, DA and Mixers became our wholly-owned
subsidiaries and the business of those subsidiaries constitutes substantially
all of our operations at that time. Prior to the share exchange transaction
described above, Maxmillian Partners, LLC ("Partners") owned approximately 99%
of the outstanding capital stock of DA and immediately after the share exchange
became our majority shareholder. Subsequently, Partners distributed its shares
pro rata to its 21 members as part of a plan of liquidation. For financial
accounting purposes, this share exchange has been recognized as a reverse
merger, and accordingly we changed our fiscal year end from June 30 to DA's year
end of April 30th, and all of our historical financial statements prior to the
share exchange are those of DA.





OVERVIEW





Based in
Wilton, Connecticut, we were founded in 2002 by an experienced team of beverage,
entertainment, retail and consumer product industry professionals, led by J.
Patrick Kenny, a former executive at  Joseph E. Seagram & Sons. We
specialize in the marketing and distribution of premium alcoholic and
nonalcoholic beverages with icon entertainers and celebrities.





We
develop, produce (primarily through contracts with independent contractors
called co-packers), market and/or distribute alcoholic and non-alcoholic
beverages for sale primarily in the continental United States and have recently
expanded our distribution network to certain international and duty free
markets. While in certain cases we own the trademarks or have developed the
formula for a product that we distribute, in other cases we only have the right
to distribute the products and have been granted licenses of the trademark to
allow us to do so.





We own
certain of our products jointly with celebrities, or their affiliates. We refer
to all of the products we distribute as "our products" throughout this
report.





Over the
past 12 months we have acquired and developed additional brands and distributed
existing products, and reallocated marketing support for certain of these
brands. Our production capacity is primarily through third party independent
contract packers known as "co-packers". The expansion of our business has been
negatively affected by insufficient working capital. As a result, we have
regularly made judgments as to inventory levels in general and whether to
maintain inventory for any particular product based on available working
capital, rather than maintaining the optimum levels required to grow our
business. We have tried to focus on the most efficient growth opportunities. We
will continue to carefully manage our working capital and focus on brand and
business opportunities that we believe offer the most strategic sense and most
efficient return on investment. We expect that business decisions will continue
to be influenced by the availability of working capital.





Our
strategy is to take advantage of icon celebrity brands and the strategic
relationships our management team has developed throughout their careers. We
distribute our products through established distributors, virtually all of which
are well known to our management team from prior business dealings with them in
the beverage industry. We have expanded the number of distributors we do
business with in certain markets where we believe it is appropriate. Our
distributors buy our products from us for resale. Our products are produced by
independent co-packers, typically, pursuant to our specifications. Our
management's relationships with manufacturers, distillers, development/research
companies, bottling concerns and certain customers provide the foundation
through which we expect to grow our business in the future.


4





We have
assembled, and will attempt to continue to assemble, our premium brands, on a
"low cost" basis. We believe acquisition of mid-sized brands and single
trademark companies can be accomplished at extremely efficient "price multiples"
in relation to their existing volume. We are willing to develop these brands
with their original owners on a cooperative economic basis and share with them
marketing, production, distribution contacts and other relationships and the
sophistication of our management team. We believe that the "skill-set" of our
management team is a primary asset in the development of our acquired brands and
trademarks. We have acquired products or trademarks from, or entered into
ventures with, partners such as Trump Marks LLC, Kid Rock, Willie Nelson, Bo
Dietl, Dr. Dre, Wynn Starr Flavors, Inc., Old Whiskey River, LLC, DAS
Communications, Interscope Geffen A&M, Rheingold Beer, Newman's Own, Inc.,
Paul Newman's Beverages, Marvin Traub Associates,. and Damiana S.A. Several of
the brands that we have acquired have the strategic advantage of association
with "icon" entertainers which provide us efficient promotion and marketing
opportunities. We believe the public relations impact of our association with
these icons and the resulting media opportunities cuts across electronic, social
media and print media formats and delivers an exponential impact in building
brand awareness and consumer excitement. Moreover, our focus is primarily on
premium high margin, unique premium priced goods.





We
believe that our organizational approach will also minimize the need to invest
heavily in fixed assets or factories and will allow us to operate with modest
overhead because of the historic relationship between members of our management
team and co-packers, distilling and bottling and production firms and other
industry participants.





We also
rely on distributors who handle direct store delivery sales, which also allows
us to control our overhead. We have formed an independent network of contract
sales and regional managers, a promotional support team and several market
segment specialists who are paid on a variable basis.





We
currently market and distribute, and in most cases also produce (through
co-packers), 8 unique beverage brands.





Our major
alcoholic beverages are:





Olifant Vodka, which is manufactured at
the Wenneker Distillery in Holland where it has been manufactured since 1841,
was rated by the New York Times as the second best Vodka in the world; Trump
Super Premium Vodka, produced in Holland, a product developed by master
distiller Jacques de Lat which was awarded a Four Star Highly Recommended Rating
from Paul Pacult in a respected spirits journal and received a “90-95”, “Superb
Highly Recommended” rating from the respected Wine Enthusiast Magazine in its
March 2008 Buying Guide issue; Trump Flavored Vodka, , crafted at the Wanders
Distillery in Holland, is comprised of Trump Premium Citron, Grape, Orange, and
Raspberry, distilled with all natural fruit flavors combined with the
award-winning Trump Super Premium Vodka with Trump Grape Vodka receiving Best in
Show Platinum Medal at the prestigious World Spirits and Beverage
Competition  in Geneva Switzerland; Old Whiskey River Bourbon (R), an
award winning small batch 6 year old bourbon (sometimes referred to in this
Report as "Old Whiskey River "); Aguila Tequila, a 100% tequiliana weber blue
agave reposado tequila (sometimes referred to in this Report as "Aguila");
Damiana, a Mexican liqueur made from the Damiana root and at times given in
Mexican culture as a wedding gift because of its perceived aphrodisiac
characteristics; In addition, the Company imports Leyrat Estate Bottled Cognac
from the 200 year old distillery in Cognac in association with Grammy Award
winning artist and producer Dr Dre and Interscope Records , As part of our joint
venture with Kid Rock the Company has formed “American Badass Beer Company” and
will soon launch Kid Rock’s Badass American Lager.






Our
Company is a Delaware corporation, our principal place of business is located at
372 Danbury Road, Suite 163, Wilton, Connecticut 06897 and our telephone number
is (203) 762-7000.





STRATEGY





Our
long-term business strategy is to expand the sales and distribution of our
celebrity and icon alcoholic and non-alcoholic beverage portfolio and to add
branded beverage products into the largest and most profitable beverage
categories. Our business model takes into account the limited working capital
available for expansion of our business by leveraging the impact celebrities
have in generating public relations and consumer awareness for our brands across
all media platforms at comparatively low cost and investment. We often refer to
entertainers and celebrities as “icons” in this report.


5





Key
elements of our business strategy include: creating consumer awareness and
demand for our brands utilizing our icon brand strategy and the demonstrated
ability of celebrities to generate public relations and promotional brand
marketing activity at low cost; promoting our relationships
with Interscope Records. Donald Trump and Willie Nelson as well as additional
entertainers introduced to us through the relationships we have developed with
Interscope Geffen A&M, of Universal Music Group including Dr. Dre and Kid
Rock; capitalizing on our distribution relationships with key distributors such
as Phoenix Beehive, which distributes Heineken beer in metro New York and
targeting other key distribution relationships such as Charmer Florida, Johnson
Brothers nationally and other key relationships.





Since we
were founded in 2002, the implementation of our business plan has been
negatively effected by the limited amount of working capital available to us Our
working capital position improved as a result of our June 2009 Debt Financing
and October 2008 Warrant Re-Pricing. We will continue to carefully manage our
working capital and focus on our celebrity and icon brand strategy relying on
public relations and strategically leveraging our marketing and production
partners’ resources and notoriety in order to implement our growth strategy
while also focusing on our current brand portfolio.





ALCOHOLIC
BEVERAGE DISTRIBUTION





We have a
network of approximately 50 alcohol beverage distributors covering substantially
all of the states within the United States. Our distributors buy our products
from us for resale. We believe our most important distribution relationships
include Phoenix Beehive the metro New York Heineken Beer distributor, Republic
Beverage Co. and  F.P. Winner . We believe our products are given
greater priority by many of our  distributors than they would be given
by larger spirits and wine distributors which sell a substantially larger number
of premium spirits. Phoenix Beverages, Republic Beverage Co and F.P. Winner.,
alcohol distributors, including affiliates, accounted for approximately 15.6% ,
6.8% and 8.9%, respectively, of our sales in fiscal 2009.




BEER,
WINE AND SPIRITS INDUSTRY OVERVIEW





The
United States beverage alcohol market consists of three distinct
segments:





Beer,
wine and distilled spirits. Distilled spirits consist of three primary
categories: white goods, whiskey and specialties. White goods, consisting of
vodka, rum, gin and tequila, represents the largest category. Vodka is the
largest product within the distilled spirits. Despite a slowing economy, the
distilled spirits industry chartered its ninth  consecutive year of
growth in 2008, with sales increasing 2.8 percent, totaling $18.7 billion , and
volume rising 1.6  percent. While the segment’s growth slowed
considerable from  last year’s 5.6 percent revenue gain, the spirits
industry has proven its resilience in the face of challenging economic times.
Spirits also managed to hold onto its 33 percent market  share of the
total beverage alcoholic category.  Significant consolidation in the
global spirits industry has produced five primary large competitors: Diageo,
Allied Domecq, Pernod Ricard, Brown-Forman and Bacardi & Company,
Ltd.





The
overall beer category’s growth slowed in 2008 most likely due to the faltering
economy which may have bolstered the lower-price beer segments. Light beers and
economy beers, which had been taking a hit, saw improvement in 2008. The
domestic beer market was up 0.5 percent by volume, down from 2007’s 1.5 percent
growth and 2006’s 2.2 percent gain.  Total domestic beer was up 1.1
percent. Imports continued to decline dropping 3 percent, due to pricing and the
weak economy.  The past year  the segment saw massive change
due to global consolidation lead by Belgium based InBev’s acquisition of US
brewing giant Anheuser-Busch,  as well as SABMiller and Coors Brewing
also forming a joint venture.





PRODUCTS,
ACQUISTIONS AND ALLIANCES





CELEBRITY
AND ICON BASED BRANDS





We are
executing a "celebrity and icon" based brand strategy, which we believe will
enhance consumer acceptance, lower ongoing marketing costs and strengthen our
access to distribution channels. We have entered into
several  ventures with icon entertainers. Our business model leverages
consumer identification with these iconic personalities, leveraging social media
platforms to quickly and effectively communicating  a brand message.
We believe the public relations impact of our association with these icons and
the resulting media opportunities cuts across electronic and print media formats
and delivers an exponential impact in building brand awareness and consumer
excitement.


6





ALCOHOLIC
BEVERAGE PRODUCTS





The
alcoholic products distributed by the Company are Olifant Vodka, Trump Super
Premium Vodka, Trump flavored vodka, Old Whiskey River Bourbon, Aguila Tequila,
Damiana, Leyrat Cognac,  and  the most recently introduced,
Kid Rock’s American BadAss Beer.





In June
2009, in partnership with Kid Rock, the Company formed a
limited  liability company (LLC) in which it is has a 50% interest and
is the managing member. The LLC has the license rights to distribute Kid Rock’s
BadAss Beer on a worldwide basis for a term of five years commencing the earlier
of,  90 days from the date of  the agreement or when the
product is first sold,  with an option to renew for an additional five
years.





On
January 15, 2009, the Company acquired 90% of the capital stock  of
Olifant U.S.A, Inc. (“Olifant”) , Olifant has the worldwide distribution rights
(other than Europe)  to Olifant Vodka and Olifant Gin which are both
produced in Holland. Olifant Vodka made purely from hand selected Dutch grains,
is triple distilled in small batches in the distillery’s original copper
potstills and aged for a smooth refreshing finish that is world
class.  It is an award-winning spirit with great quality and taste at
a price point that is economically attractive in today’s retail environment This
summer, the Company launched the “Blazed and Confused Olifant Vodka
Tour”  with Snoop Dog and Slightly Stoopid which sold out in 32 cities
nationwide and exposed over 100,000 consumers to Olifant Vodka’s “Summer
Party”





In
February 2008 we entered into a joint venture with Grammy Award-winning producer
and artist, Dr. Dre. The Company and Dr. Dre have formed the joint venture to
identify, develop, and market premium alcoholic beverages, The deal is under the
umbrella of the agreement between the Company and Interscope Geffen A&M
Records.  Our Leyrat Cognac is the joint ventures’ first beverage. In
January 2009 the Company launched its Leyrat Estate Bottled Cognac which it
imports from a 200 year old distillery in Cognac France. The Company granted 10%
of its 50% interest in the brand to the producer of the product , leaving us
with a 45% interest, in return for the rights to distribute the product in the
United States. The Company has 5% of the rights for the brand in
Europe.





In
December 2002, we purchased 25% interest in Old Whiskey River Distilling
Company, LLC which owns or licenses the related trademarks and trade names
associated with the Old Whiskey River products. We hold the exclusive worldwide
distribution rights, through December 31, 2017, subject to an indefinite number
of five-year renewals, for Old Whiskey River Bourbon which is marketed in
association with Willie Nelson, a renowned country western entertainer. Our
distribution agreement is subject to certain minimum sales requirements. Old
Whiskey River Bourbon has been featured on Food Channel's Emeril Live as well as
Celebrity Food Finds and other television programs. This line of products is
available nationally at the Texas Roadhouse Restaurant chain as well as other
outlets with specific Willie Nelson promotions. Old Whiskey River is a featured
item at Specs chain of liquor stores in Texas . We have developed a marketing
plan that focuses on Florida, North and South Carolina and Texas where Willie
Nelsons’ brand image is high and bourbon consumption is
significant.





We own a
55% interest in the trademark for Aguila Tequila, a premium 100% Blue Agave
Tequila, produced by El Viejito distillery in Mexico, which is marketed with its
icon label, the North American Eagle. We have the exclusive distribution rights
for this product throughout the world except for Mexico. We began distributing
this product in November, 2003. We distribute Aquila Tequila on a national basis
in approximately 40 states. We have expanded the selections of Aguila from one
sku of Repasado to Silver, Repasado and Anejo selections with distinctive bottle
designs for each price selection.





In fiscal
year 2005 we entered into a U.S. distribution contract giving us the exclusive
sales and marketing rights to Damiana a Hispanic liquor for the United States
market. We distribute this product on a national basis in approximately 35
states. We are pleased with the market reception to this product. We have
introduced point of sale marketing material aimed at expanding consumer brand
awareness for Damiana.





In
October 2005, we acquired ownership of a long-term license for (188 years) for
the Rheingold trademark and other assets related to the Rheingold brand. We
believe Rheingold has a significant brand identity and awareness level within
the Metro New York and east coast markets. We believe this brand has the
potential to be an integral component of our Metro New York distribution base
and  with the commencement of our Kid Rock beer, more cost
effective  to produce and distribute.  At this time, we have
no specific launch date and the roll-out of this product will depend on our
working capital position and the projected return on the marketing investment
required to launch this product.





In fiscal
2005, we formed Drinks Global Imports, LLC ("DGI"), in which we own 90% of the
outstanding membership units. This company imports premium wines from around the
world, and has to date focused on wines from France and Italy. DGI commenced
operations in September, 2005. As a result of the Company’s strategy to focus on
our more profitable sprits brands and beer  business with the
impending launch of Kid Rock’s Beer the Company expects to have only a very
limited business in wine on an opportunistic basis.





In
November 2005, we signed a license agreement with Trump Mark, LLC to utilize the
name Trump, until November 15, 2013, in connection with super premium vodka. The
formula for this product was developed by master distiller Jacq DeLac. Bruni
Glass, Italy, designed a proprietary bottle for Trump Super Premium Vodka and
Milton Glaser designed a bottle decoration. The product was unveiled at the 2006
Wine and Spirits Wholesalers convention. We launched Trump Super Premium Vodka
on October 28, 2006 in the metro New York market. We subsequently expanded
distribution to 46 states. The product has been sold through several key
distributors including Phoenix Distribution.
Trump Super Premium Vodka was  awarded a Four Star Highly Recommended
Rating from Paul Pacult in a respected spirits journal and received a “90-95”,
“Superb Highly Recommended” rating from the respected Wine Enthusiast Magazine
in its March 2008 Buying Guide issue; Trump Flavored Vodka, which we began
selling in February 2008, are crafted at the Wanders Distillery in Holland, is
comprised of Trump Premium Citron, Grape, Orange, and Raspberry, distilled with
all natural fruit flavors combined with the award-winning Trump Super Premium
Vodka with Trump Grape Vodka receiving Best in Show Platinum Medal at the
prestigious World Spirits and Beverage Competition  in Geneva
Switzerland.


7





FLAVORS, RESEARCH AND DEVELOPMENT
RELATIONSHIP





We have a
requirements contract with Wynn Starr Flavors, Inc. ("Wynn Starr"), a leading
supplier of flavors and similar product components through which, with certain
exceptions, we are required to acquire the flavors we require for our products.
Wynn Starr performs research and development for us with respect to the flavors
we need for new and/or proposed products. Wynn Starr became a DA shareholder by
investing $250,000 in DA in 2002, and, under its agreement with us, has provided
research and development services for us thereby lessening the expenses we would
otherwise incur. The relationship has been essential to us, and provides a
significant research resource at relatively low cost, e.g. developing drinks for
targeted markets. We expect that certain of our new products will utilize
patents developed and licensed by Wynn Starr. Wynn Starr has also assisted us in
evaluating the product quality of various brands which we have considered
acquiring and/or distributing. Our incremental product development expenses to
date have not been material.





CELEBRITY
MARKETING RESOURCES





We intend
to continue to utilize our access to icon celebrity-based product endorsers,
through the contacts of our management and various advisors, to further promote
the branded identity of certain of the beverages we will develop or
acquire.





We have
entered into agreements with DAS Communications, Ltd. and Shep Gordon of Alive
Enterprises. Both David Sonenberg, who controls DAS Communications, Ltd., and
Shep Gordon are our shareholders. We have also entered into a joint venture (50%
each) with Interscope Geffen A&M, of Universal Music Group, to commercialize
and market jointly owned alcoholic and non alcoholic beverage products in
collaboration with artists under contract with Interscope Geffen A&M. The
collaboration with Interscope has resulted in our agreement with the Grammy
award winning producer and artist, Dr. Dre . We believe that these persons can
provide access to entertainment personalities and will help us to develop and
access unique marketing and promotional opportunities in spirits and beverages.
Our relationship with Shep Gordon has resulted in agreements with country music
"icon" Willie Nelson and access to various culinary icons and introductions to
other promotional resources.  Although   our agreement
with Mr. Gordon, which we entered into in December
2002,   terminated in June 2009 we believe he will continue to be
an advisor to the Company.





TRADEMARK
DEVELOPMENT RESOURCES





In March
2002, we entered into a consulting agreement with Marvin Traub, former Chief
Executive Officer of the Bloomingdales' department store chain, and an expert in
trademark development. Mr. Traub provides ongoing advice and marketing expertise
to us pursuant to us under this agreement. He also serves on our Board of
Directors.





MARKETING,
SALES AND DISTRIBUTION





MARKETING





Our
marketing plan is based upon our strategy of icon branding. We successfully
launched Trump Super Premium Vodka by using the public relations activity across
numerous media platforms to generate a high level of brand awareness and
consumer interest. This model has also been used for Old Whiskey River Bourbon
and Paul Newmans Sparkling Fruit Beverages and now for our Olifant Vodka and Kid
Rock’s BadAss Beer. Our marketing and pricing policies and programs take into
consideration competitors' prices and our perception of what a consumer is
willing to pay for the particular brand and product in the retail environment.
Our goal is to competitively price our products with the other comparable
premium brands and provide a higher quality product at the selected price
points. We believe our Icon strategy supports category premium
pricing.





Our
marketing for our alcoholic brands focuses on building brand recognition with
our distributors with the goal of a regional and, if demand warrants, a national
roll-out of most of our products, focusing on population centers. Our marketing
of our non-alcoholic brands has been focused on building the brands recognition
initially in the New York metropolitan area at the retail level and generally
developing market profile through promotion tasting at retail distribution
locations. Our marketing plan contemplates expanding distribution to the east
and west coast regions, focusing on population centers. Newman's Own has been
promoted with consumer tastings, tee-shirt promotions and consumer trials. Our
marketing efforts in support of our non-alcoholic brands focuses largely on
promotion at key distribution points prior to the peak summer demand
period.





SALES





Our
products are sold predominantly in the continental United States primarily in
the beverage sections of liquor stores, grocery stores, drug stores, convenience
stores, delicatessens, sandwich shops and supermarkets. Many of our beverage
products are sold nationally and our distribution model, depending on the
product, includes several national and regional chains, for example, Trump Super
Premium Vodka is sold at Ralphs in California, and Walgreen's, ABC Liquor,
Albertsons and various other retail chains. Old Whiskey River is sold nationally
at Texas Roadhouse and at Specs in Texas. Newmans sparkling fruit beverages and
waters are currently sold at several hundred grocery and retail chain stores
including Raley’s Food Stores, Shaws, ShopRite, Price Choppers, and Key
Food.


8





DISTRIBUTION





We sell
the majority of our products through our distribution network, and we currently
have relationships with approximately 75 independent distributors throughout
North America. Our policy is to grant our distributors rights to sell particular
brands within a defined territory. Our distributors buy our products from us for
resale. We believe that substantially all of our distributors also carry
beverage products of our competitors. Our agreements with our distributors vary;
we have entered into written agreements with a number of our top distributors
for varying terms; most of our other distribution relationships are oral (based
solely on purchase orders) and are terminable by either party at
will.





We
generally require our independent distributors to place purchase orders for our
products at least 14 days in advance of requested shipping dates. To the extent
we have product available in inventory, we will fulfill other purchase orders
when and as received. We and our distributors typically contract with
independent companies to have product shipped from our contract packers to
independent warehouses, and then on to our distributors. Distributors then sell
and deliver our products either to sub-distributors or directly to retail
outlets, and such distributors or sub-distributors stock the retailers' shelves
with our products. We recognize revenue upon shipment to our distributors and
customers of our products, net of anticipated discounts and allowances. All
sales are final and we have a "no return" policy, although we occasionally
accept returned products.





PRODUCTION





CONTRACT
PACKING ARRANGEMENTS





We
currently use independent contract packers known as "co-packers" to prepare,
bottle and package our products. Currently, our primary contract packers are WV
Wanders in Holland, Wenneker Distilleries  also in Holland, Francis
Abecassis in Cognac France, Heaven Hill Distilleries in Kentucky, Cold Spring
Brewing Company in Minnesota,  Tequila El Viejito S.A. in Guadalajara,
Mexico, and Damiana S.A. Mexico. We have an option to acquire WV Wanders
production facility in Holland. WV Wanders produces Trump Super Premium Vodka
and Trump Flavors. In the event our relationship with any of our co-packers is
terminated, we believe we could replace the co-packer with another of comparable
quality. However, in such, case our business would be disrupted until a
replacement co-packer was identified and commenced production.





We
continually review our contract packing needs in light of regulatory compliance
and logistical requirements and may add or change co-packers based on those
needs. We rely on and believe our co-packers comply with applicable
environmental laws.





As is
customary in the contract packing industry, we are expected to arrange for our
contract packing needs sufficiently in advance of anticipated requirements.
Accordingly, it is our business practice to require our independent distributors
to place their purchase orders for our products at least 14 days in advance of
shipping. Other than minimum case volume requirements per production run, we do
not have any minimum production requirements.





RAW
MATERIALS





Substantially
all of the raw materials used in the preparation, bottling and packaging of our
products are purchased by us or by our contract packers in accordance with our
specifications. Typically, we rely on our contract packers to secure raw
materials that are not unique to us. The raw
materials used in the preparation and packaging of our products consist
primarily of spirits, flavorings, concentrate, glass, labels, caps and
packaging. These raw materials are purchased from suppliers selected by us or in
concert with our co-packers or by the respective supplier companies. Bottle
production for Trump Super Premium Vodka and Trump flavored vodka transferred to
China at the end of  fiscal 2008. We consider World Enterprises Sino,
Ltd, which now supplies the bottles for Trump Super Premium Vodka to be a
significant suppliers of raw materials, because they supply specialty products.
We believe that we have adequate sources of raw materials, which are available
from multiple suppliers.





QUALITY
CONTROL





We
attempt to use quality ingredients for our products. We seek to ensure that all
of our products satisfy our quality standards. Contract packers are selected and
monitored by our Chief Operating Officer in an effort to assure adherence to our
production procedures and quality standards. Samples of our products from each
production run undertaken by each of our contract packers are analyzed and
categorized in a reference library.





For every
run of product, our contract packers undertake extensive on-line testing of
product quality and packaging. For our non-alcoholic products this includes
testing levels of sweetness, carbonation, taste, product integrity, packaging
and various regulatory cross checks. Similar product testing is done on our
wines and spirits. For each product, the contract packer must transmit all
quality control test results to us upon request.
We believe that, working in concert with our internal management, the food
scientist resources of Newman's Own and Wynn Starr Flavors, and the in-house
quality control mechanisms of our winery and distillery partners assure that our
standards are at least equal to those established in the
industry.


9





Testing
at each of our co-packers generally includes microbiological checks and other
tests to ensure the production facilities for our products meet the standards
and specifications of our quality assurance program. We believe the production
facilities inspection programs are at least equal to industry standards. We
request that water quality be monitored during production and at scheduled
testing times to ensure compliance with applicable government regulatory
requirements. Flavors are sourced from only qualified manufacturers. We are
committed to an on-going program of product improvement with a view toward
ensuring high quality of our products.





We
believe we select only those suppliers that use only quality components. We have
a full-time senior executive who oversees all production processes with respect
to product distilling. We also inspect packaging suppliers' production
facilities and monitor their product quality.





GOVERNMENT
REGULATION





The
production and marketing of our licensed and proprietary alcoholic and non
alcoholic beverages are subject to the rules and regulations of various Federal,
provincial, state and local health agencies, including in particular the U.S.
Food and Drug Administration ("FDA") and the U.S. Alcohol and Tobacco Tax and
Trade Bureau ("TTB"). The FDA and TTB also regulate labeling of our products.
From time   to time, we may receive notification of various
technical labeling or ingredient reviews with respect to our products. We
believe that we have a compliance program in place to ensure compliance with
production, marketing and labeling regulations on a going-forward basis. There
are no regulatory notifications or actions currently outstanding. We have a
specific manager with direct responsibility to insure regulatory compliance and
retain a regulatory law firm that oversees our submissions to various
agencies.





TRADEMARKS,
FLAVOR CONCENTRATE TRADE SECRETS AND PATENTS





We own a
number of trademarks, including, in the United States, "Drinks Americas" (TM),
“Olifant “(TM), "Cohete" (TM), "Swiss T"(TM), " "Screaming Monkey" (TM) and
"Aguila" (TM), Casa BoMargo (TM). Trademarks have been filed and pending with no
opposition for Drinks Americas (TM), "Monte Verde"(TM) and "Corcovado"(TM). In
addition, we have trademark protection in the United States for a number of
other trademarks for slogans and product designs, including "The Rooster Has
Landed"(R), "Party Harder"(TM), Success Distilled (TM) and The World's Finest
Super Premium Vodka (TM).





We also
own, indirectly as a member of a limited liability company, an interest in the
"Old Whiskey River" trademark. We also license the Rheingold trademark. We have
a license from Newman's Own to use the Newman's Own trademark in the marketing
and selling of Newman's Own Lightly Sparkling Fruit Juices. We also have a
license from Trump Mark, LLC to use the Trump trademark in the marketing and
sale of Trump Super Premium Vodka and Trump flavors.





In
November 2005 the Company entered into an eight-year license agreement for sales
of Trump Super Premium Vodka. Under the agreement the Company is required to pay
royalties on sales of the licensed product. The agreement requires minimal
royalty payments through November 2012 which if not paid could result in
termination of the license. The Company is currently in default under the terms
of its license agreement with  Trump Marks LLC. The licensor has the
right to terminate the license, but at present has not formally asserted that
right. The Company under a non documented arrangement with the licensor is
continuing to sell the product. The Copany and licensor are currently in
discussion to amend the agreement under mutually beneficial terms.





Under our
license agreement for Old Whiskey River, we are obligated to pay royalties of
between $10 and $33 per case, depending on the size of the bottle. Our Rheingold
license requires us to pay the licensor $3 per barrel for domestic sales and
$10.33 for foreign sales. Under our license agreement for Damaina





Liqueur
we are obligated to pay  $3 per case thereafter. Under our license
agreement with Aguila Tequila we are obligated to pay $3 per case.




Under our
joint ventures  agreement with Dr. Dre  and Interscope
Records,  which includes  our  Leyrat Cognac, we
are obligated to pay a percentage of gross profits, less certain direct selling
expenses.





We
license our Kid Rock related trademarks, indirectly as a member of a limited
liability company (the “LLC”). The license  requires the LLC
to  pay the licensor a per case royalty (or equivalent liquid volume),
with certain minimum royalties for years 2 through 5 of the agreement payable on
the first day of the applicable year.





We
consider our trademarks, patent and trade secrets to be of considerable value
and importance to our business. No successful challenges to our registered
trademarks have arisen and we have no reason to believe that any such challenges
will arise in the future.


10





COMPETITION





The
beverage industry is highly competitive. We compete with other beverage
companies, most of which have significantly more sales, significantly more
resources and which have been in business for much longer than we have. We
compete with national and regional beverage producers and "private label"
suppliers. Some of our alcohol competitors are Diageo, Pernod Ricard,
Brown-Forman, Castle Brands, Allied Biomes and Bacardi & Company, Ltd. On
the non-alcoholic front, some of our direct competitors include Cadbury
Schweppes (which produces Snapple and Mystic among other brands) Camper,
Boylands and Hansens. We believe it is a costly and difficult for large
companies to create new brands. As a result, we believe opportunities exist for
smaller companies to develop high-quality, high-margin brands, which can grow to
be very attractive acquisition candidates for the larger companies.





EMPLOYEES





As of
July 31, 2009, we had eight  full-time employees and an additional
one  persons, who is an  independent contractors working for
us. No employee is represented by a labor union. The independent contractor and
one of our employees  have executed contracts with us.




ITEM
1A. RISK FACTORS




Investment
in the Company involves a high degree of risk. Before you invest you should
carefully consider the risks and uncertainties described below and other
information and our consolidated financial statements and related notes included
elsewhere in this report. If any of the events described below actually occur,
our operating results would be dramatically adversely affected, which in turn
could cause the price of our common stock to decline, perhaps significantly.
Further, we may not be able to continue our operations. This means you could
lose all or a part of your investment.




CERTAIN
FACTORS THAT MAY AFFECT FUTURE RESULTS




FACTORS
RELATING TO OUR COMPANY AND OUR BUSINESS




WE ARE A
DEVELOPING COMPANY AND OUR PROSPECTS MUST BE CONSIDERED IN LIGHT OF OUR SHORT
OPERATING HISTORY AND SHORTAGE OF WORKING CAPITAL.





We are a
developing company with a very short operating history, having been incorporated
in September 2002. Our prospects must be considered
in light of the risks, expenses and difficulties frequently encountered by
developing companies, including dealing with a shortage of necessary
funds in the very competitive marketplace in which the alcoholic and
non-alcoholic beverage business is carried on, as well as the many risks
commonly anticipated or experienced by mature companies. Our ability to operate
as a going concern and to achieve profitable operations will be dependent on
such factors as the success of our business model and marketing strategy, market
penetration of existing products, competition, future brand additions, continued
development of distribution relationships and the availability of financing. No
assurance can be given that we will be able successfully to develop our business
under the foregoing conditions.





WE RELY
HEAVILY ON OUR INDEPENDENT DISTRIBUTORS, AND THIS COULD AFFECT OUR ABILITY TO
EFFICIENTLY AND PROFITABLY DISTRIBUTE AND MARKET OUR PRODUCTS, AND MAINTAIN OUR
EXISTING MARKETS AND EXPAND OUR BUSINESS INTO OTHER GEOGRAPHIC
MARKETS.





Our
ability to establish a market for our brands and products in new geographic
distribution areas, as well as maintain and expand our existing markets, is
dependent on our ability to establish and maintain successful relationships with
reliable independent distributors strategically positioned to serve those areas.
Many of our larger distributors sell and distribute competing products,
including non-alcoholic and alcoholic beverages, and our products may represent
a small portion of their business. To the extent that our distributors are
distracted from selling our products or do not expend sufficient efforts in
managing and selling our products, our sales will be adversely affected. Our
ability to maintain our
distribution network and attract additional distributors will depend on a number
of factors, many of which are outside our control. Some of these
factors include: (i) the level of demand for our brands and products in a
particular distribution area; (ii) our ability to price our products at levels
competitive with those offered by competing products and (iii) our ability to
deliver products in the quantity and at the time requested by
distributors.





There can
be no assurance that we will be able to meet all or any of these factors in any
of our current or prospective geographic areas of distribution. Further,
shortage of adequate working capital may make it impossible for us to do so. Our
inability to achieve any of these factors in a geographic distribution area will
have a material adverse effect on our relationships with our distributors in
that particular geographic area, thus limiting our ability to maintain and
expand our market, which will likely adversely effect our revenues and financial
results.




11




WE
GENERALLY DO NOT HAVE LONG-TERM AGREEMENTS WITH OUR DISTRIBUTORS, AND WE EXPEND
SIGNIFICANT TIME AND MAY NEED TO INCUR SIGNIFICANT EXPENSE IN ATTRACTING AND
MAINTAINING KEY DISTRIBUTORS.





Our
marketing and sales strategy presently, and in the future, will rely on the
performance of our independent distributors and our ability to attract
additional distributors. We have entered into written agreements with certain of
our distributors for varying terms and duration; however,
most of our distribution relationships are informal (based solely on purchase
orders) and are terminable by either party at will. We currently do not have,
nor do we anticipate in the future that we will be able to establish, long-term
contractual commitments from many of our distributors. In addition, despite the
terms of the written agreements with certain of our significant distributors, we
have no assurance as to the level of performance under those agreements, or that
those agreements will not be terminated. There is also no assurance that we will
be able to maintain our current distribution relationships or establish and
maintain successful relationships with distributors in new geographic
distribution areas. Moreover, there is the additional possibility that we will
have to incur significant expenses to attract and maintain key distributors in
one or more of our geographic distribution areas in order to profitably exploit
our geographic markets. We may not have sufficient working capital to allow us
to do so.





BECAUSE
OUR DISTRIBUTORS ARE NOT REQUIRED TO PLACE MINIMUM ORDERS WITH US, WE NEED TO
CAREFULLY MANAGE OUR INVENTORY LEVELS, AND IT IS DIFFICULT TO PREDICT THE TIMING
AND AMOUNT OF OUR SALES.





Our
independent distributors are not required to place minimum monthly, quarterly or
annual orders for our products. In order to reduce their inventory costs, our
independent distributors maintain low levels of inventory which, depending on
the product and the distributor, range from 15 to 45 days of typical sales
volume in the distribution area. We believe that our independent distributors
endeavor to order products from us in such quantities, at such times, as will
allow them to satisfy the demand for our products in the distribution area.
Accordingly, there is no assurance as to the timing or quantity of purchases by
any of our independent distributors or that any of our distributors will
continue to purchase products from us in the same frequencies and volumes as
they may have done in the past. Our goal is to maintain inventory levels for
each of our products sufficient to satisfy anticipated purchase orders for our
products from our distributors, which is difficult to estimate. This places
burdens on our working capital which has been limited since we began operations.
As a result, we have not consistently been able to maintain sufficient inventory
levels and may not be able to do so in the future.





As is
customary in the contract packing industry for small companies, we are expected
to arrange for the production of our products sufficiently in advance of
anticipated requirements. To the extent demand for our products exceeds
available inventory and the capacities available under our contract packing
arrangements, or orders are not submitted on a timely basis, we will be unable
to fulfill distributor orders on a timely basis. Conversely, we may produce more
products than warranted by actual demand, resulting in higher storage costs and
the potential risk of inventory
spoilage. Our failure to accurately predict and manage our contract packaging
requirements may impair relationships with our independent distributors, which,
in turn, would likely have a material adverse effect on our ability to maintain
relationships with those distributors.





THE
BANKRUPTCY, CESSATION OF OPERATIONS, OR DECLINE IN BUSINESS OF A SIGNIFICANT
DISTRIBUTOR COULD ADVERSELY AFFECT OUR REVENUES, AND COULD RESULT IN INCREASED
COSTS IN OBTAINING A REPLACEMENT.





If any of
our primary distributors were to stop selling our products or decrease the
number of cases purchased, our revenues and financial results could be adversely
affected. There can be no assurance that, in the future, we will be successful
in finding new or replacement distributors if any of our existing significant
distributors discontinue our brands, cease operations, file for bankruptcy or
terminate their relationship with us.





WE HAVE
NOT SATISFIED CERTAIN OF OUR COMMITMENTS UNDER DISTRIBUTION AGREEMENTS, WHICH
ENTITLE US TO DISTRIBUTE CERTAIN OF OUR PRODUCTS. IF ANY OF THESE AGREEMENTS
WERE CANCELLED IT WOULD HAVE A MATERIAL ADVERSE EFFECT ON OUR
BUSINESS.





Our
rights to distribute certain of our products are generally governed by
distribution agreements which contain minimum sales targets and other
requirements some of which we have not satisfied to date. Therefore virtually
all of our distribution contracts can be cancelled. We rely on our relationships
with the parties who have granted us distribution rights rather than contractual
protection. Cancellation of one or more of our distribution contracts would have
a material adverse effect on our business.





WE NEED
TO EFFECTIVELY MANAGE OUR GROWTH AND THE EXECUTION OF OUR BUSINESS PLAN. ANY
FAILURE TO DO SO WOULD NEGATIVELY IMPACT OUR RESULTS.





To manage
operations effectively, we must improve our operational, financial and other
management processes and systems. We have a small staff and our success also
depends on our ability to maintain high levels of employee efficiency, to manage
our costs in general and administrative expense in particular, and otherwise to
efficiently execute our business plan. We need to cost-efficiently add new
brands and products, develop and expand our distribution channels, and
efficiently implement our business strategies. There are no assurances that we
will be able to effectively and efficiently manage our growth. Any inability to
do so, could increase our expenses and negatively impact the results of our
operations.


12





THE LOSS
OF KEY PERSONNEL WOULD DIRECTLY AFFECT OUR EFFICIENCY AND ECONOMIC
RESULTS.





We are
dependent upon the creative skills and leadership of our founder, J. Patrick
Kenny, who serves as our President and Chief Executive Officer and upon the
management, financial and operational skills of Jason Lazo, our Chief Operating
Officer. The loss of the services of either Mr. Kenny, or Mr. Lazo could have a
material adverse affect on our business and operations, including our ability to
develop and execute a long-term, profitable business plan. Due to inadequate
working capital, we have often not paid agreed upon compensation to our
employees and independent contractors.. We expect to timely pay our employees
and independent contractors in the future. However, if we fail to do so, there
can be no assurance they will continue to render services to us.





Our
management team consists of several key distribution, sales and financial
personnel who have been recruited within the past several years. Many of these
individuals provide services to us as independent contractors. In order to
manage and operate our business successfully in the future, it will be necessary
to further strengthen our management team. The hiring of any additional
executives will increase our compensation expense. We may not have sufficient
working capital to be able to do so.





OUR
STRATEGY REQUIRES US TO DEVELOP AND MAINTAIN RELATIONSHIPS WITH OTHER
FIRMS.





Our
strategy depends on various relationships with other firms for product
development, research facilities, distilling facilities, bottling, distribution
and low-cost marketing. Because of these relationships, we do not expect to
invest heavily in fixed assets or factories. Of particular importance to us is
our relationship with independent producers who manufacture our products,
typically, pursuant to our specifications. We do not have our own production
capacity and rely on independent contractors to produce our products. We will
need to maintain and develop relationships with additional manufactures as we
add products to our product mix. It is vital to our success that our producers
deliver high quality products to us with favorable pricing terms. There can be
no assurance, however, that we will be able to develop and maintain
relationships which provide us the services and facilities we require. If we
fail to develop and maintain such relationships, we may be forced to change our
strategy, which could have a material adverse effect on the results of our
operations. Further, if our relationship with a producer of any of our products
is terminated, it is likely our business will be disrupted until a replacement
producer is identified and production commences.





OUR
BUSINESS AND FINANCIAL RESULTS DEPEND ON MAINTAINING A CONSISTENT AND
COST-EFFECTIVE SUPPLY OF RAW MATERIALS.





Raw
materials for our products include concentrate, glass, labels, flavoring, caps
and packaging materials. Currently, we purchase our flavor concentrate from two
flavor concentrate suppliers. We believe that we have adequate sources of raw
materials, which are available from multiple suppliers, and that in general we
maintain good supplier relationships. The price of our concentrates is
determined through negotiation with our flavor houses, and may be subject to
change. Prices for the remaining raw materials are generally determined by the
market, and may change at any time. Increases in prices for any of these raw
materials could have a material adverse impact on our ability to achieve
profitability. If we are unable to continue to find adequate suppliers for our
raw materials on economic terms acceptable to us, it will adversely affect our
results of operations.





WE MAY
NOT BE ABLE TO ACQUIRE AND SUCCESSFULLY INTEGRATE ADDITIONAL PRODUCTS IN THE
FUTURE.





We have
grown our business primarily through acquisitions of brands and, if we have the
working capital necessary to do so, we expect to acquire additional brands in
the future. There can be no assurance that we will be able to acquire additional
products or assimilate all of the products we do acquire into our business or
product mix. Acquisitions can be accompanied by risks such as potential exposure
to unknown liabilities relating to the acquired product or business. We have
entered into, and may continue to enter into, joint ventures, which may also
carry risks of liability to third parties.





OUR
INABILITY TO PROTECT OUR TRADEMARKS, PATENT AND TRADE SECRETS MAY PREVENT US
FROM SUCCESSFULLY MARKETING OUR PRODUCTS AND COMPETING EFFECTIVELY.





Failure
to protect our intellectual property could harm our brand and our reputation,
and adversely affect our ability to compete effectively. Further, enforcing or
defending our intellectual property rights, including our trademarks, patents,
copyrights and trade secrets, could result in the expenditure of significant
financial and managerial resources. We regard our intellectual property,
particularly our trademarks and trade secrets to be of considerable value and
importance to our business and our success. We rely on a combination of
trademark, patent, and trade secrecy laws, and contractual provisions to protect
our intellectual property rights. There can be no assurance that the steps taken
by us to protect these proprietary rights will be adequate or that third parties
will not infringe or misappropriate our trademarks, trade secrets (including our
flavor concentrate trade secrets) or similar proprietary rights. In addition,
there can be no assurance that other parties will not assert infringement claims
against us, and we may have to pursue litigation against other parties to assert
our rights. Any such claim or litigation could be costly and we may lack the
resources required to defend against such claims. In addition, any event that
would jeopardize our proprietary rights or any claims of infringement by third
parties could have a material adverse affect on our ability to market or sell
our brands, and profitably exploit our products.


13





WE HAVE
LIMITED WORKING CAPITAL AND WILL NEED ADDITIONAL FINANCING IN THE
FUTURE.





Our
working capital needs in the future will depend upon factors such as market
acceptance of our existing products and of any new products we launch, the
success of our independent distributors and our production, marketing and sales
costs. None of these factors can be predicted with certainty.





We have
sustained substantial operating losses since our organization. We will need
additional debt or equity financing in the future to fully implement our
business plan. We may not be able to obtain any additional financing on
acceptable terms or at all. As a result, we may not have adequate working
capital to implement future expansions, maintain sufficient levels of inventory,
and maintain our current levels of operation or to pursue strategic
acquisitions. Our failure to obtain sufficient financing would likely result in
the delay or abandonment of some or all of our development plans, any one of
which would likely harm our business and the value of our common
stock.





CERTAIN
OF OUR PRODUCTS ARE CLOSELY IDENTIFIED WITH CELEBRITIES AND OUR BRAND
RECOGNITION IS SIGNIFICANTLY AFFECTED BY THEIR SUCCESS IN THEIR
PROFESSION.





Certain
of our products, including products for which we have acquired distribution
rights, adopt the name of a single personality or celebrity, or is associated
with a single personality or celebrity, such as Willie Nelson,  the
late Paul Newman,  Donald Trump, Kid Rock and Dr. Dre. Therefore, any
reduction of notoriety or any damage to the reputation of any such personality
will correspondingly damage the associated product and could have a material
adverse effect on the results of our operations.





CERTAIN
FACTORS RELATING TO OUR INDUSTRY





WE
COMPETE IN AN INDUSTRY THAT IS BRAND-CONSCIOUS, SO BRAND NAME RECOGNITION AND
ACCEPTANCE OF OUR PRODUCTS ARE CRITICAL TO OUR SUCCESS.





Our
business is substantially dependent upon awareness and market acceptance of our
products and brands by our targeted consumers. In addition, our business depends
on acceptance by our independent distributors of our brands as beverage brands
that have the potential to provide incremental sales growth rather than reduce
distributors' existing beverage sales. Although we believe that we have made
progress towards establishing market recognition for certain of our brands in
both the alcoholic and non alcoholic beverage industry, it is too early in the
product life cycle of these brands to determine whether our products and brands
will achieve and maintain satisfactory levels of acceptance by independent
distributors and retail consumers.





COMPETITION
FROM TRADITIONAL ALCOHOLIC AND NON-ALCOHOLIC BEVERAGE MANUFACTURERS MAY
ADVERSELY AFFECT OUR DISTRIBUTION RELATIONSHIPS AND MAY HINDER DEVELOPMENT OF
OUR EXISTING MARKETS, AS WELL AS PREVENT US FROM EXPANDING OUR
MARKETS.





The
beverage industry is highly competitive. We compete with other beverage
companies, most of which have significantly more sales and significantly more
resources, which gives them significant advantages in gaining consumer
acceptance for their products, access to shelf space in retail outlets and
marketing focus by our distributors, all of whom also distribute other beverage
brands. Our products compete with all beverages, most of which are marketed by
companies with greater financial resources than what we have. Some of these
competitors are or will likely in the future, place severe pressure on our
independent distributors not to carry competitive alternative brands such as
ours. We also compete with regional beverage producers and "private label"
suppliers. Some of our alcoholic competitors are Diageo, Pernod Ricard, Castle
Brands, Brown-Furman and Bacardi & Company, Ltd. Some of our direct
competitors in the alternative beverage industry include Cadbury


Schweppes
(Snapple, Stewart, Nantucket Nectar, Mystic), Thomas Kemper, Boylans and
Hansens. Competitor consolidations, market place competition, particularly among
branded beverage products, and competitive product and pricing pressures could
impact our earnings, market share and volume growth. If, due to such pressure or
other competitive phenomena, we are unable to sufficiently maintain or develop
our distribution channels, or develop alternative distribution channels, we may
be unable to achieve our financial targets. As a means of maintaining and
expanding our distribution network, we intend to expand the market for our
products, and introduce additional brands. However, we will require financing to
do so. There can be no assurance that we will be able to secure additional
financing or that other companies will not be more successful in this regard
over the long term. Competition, particularly from companies with greater
financial and marketing resources than those available to us, could have a
material adverse effect on our existing markets, as well as our ability to
expand the market for our products.


14





WE
COMPETE IN AN INDUSTRY CHARACTERIZED BY RAPID CHANGES IN CONSUMER PREFERENCES,
SO OUR ABILITY TO CONTINUE DEVELOPING NEW PRODUCTS TO SATISFY OUR CONSUMERS'
CHANGING PREFERENCES WILL DETERMINE OUR LONG-TERM SUCCESS.





Our
current market distribution and penetration is limited as compared with the
potential market and so our initial views as to customer acceptance of a
particular brand can be erroneous, and there can be no assurance that true
market acceptance will ultimately be achieved. In addition, customer preferences
are also affected by factors other than taste, such as the recent media focus on
obesity in youth. If we do not adjust to respond to these and other changes in
customer preferences, our sales may be adversely affected.





A DECLINE
IN THE CONSUMPTION OF ALCOHOL COULD ADVERSELY AFFECT OUR BUSINESS.





There
have been periods in American history during which alcohol consumption declined
substantially. A decline in alcohol consumption could occur in the future due to
a variety of factors including: (i) a general decline in economic conditions,
(ii) increased concern about health consequences and concerns about drinking and
driving, (iii) a trend toward other beverages such as juices and water, (iv)
increased activity of anti-alcohol consumer groups, and (v) increases in
federal, state or foreign excise taxes. A decline in the consumption of alcohol
would likely negatively affect our business.





WE COULD
BE EXPOSED TO PRODUCT LIABILITY CLAIMS FOR PERSONAL INJURY OR POSSIBLY
DEATH.





Although
we have product liability insurance in amounts we believe are adequate, we
cannot assure you that the coverage will be sufficient to cover any or all
product liability claims. To the extent our product liability coverage is
insufficient; a product liability claim would likely have a material adverse
affect upon our financial condition. In addition, any product liability claim
successfully brought against us may materially damage the reputation of our
products; thus adversely affecting our ability to continue to market and sell
that or other products.





OUR
BUSINESS IS SUBJECT TO MANY REGULATIONS AND NONCOMPLIANCE IS
COSTLY.





The
production, marketing and sale of our alcoholic and non alcoholic beverages,
including contents, labels, caps and containers, are subject to the rules and
regulations of various federal, state and local health agencies. If a regulatory
authority finds that a current or future product or production run is not in
compliance with any of these regulations, we may be fined, or production may be
stopped, thus adversely affecting our financial conditions and operations.
Similarly, any adverse publicity associated with any noncompliance may damage
our reputation and our ability to successfully market our products. Furthermore,
rules and regulations are subject to change from time to time and while we
monitor developments in this area, the fact that we have limited staff makes it
difficult for us to keep up to date and we have no way of anticipating whether
changes in these rules and regulations will impact our business adversely.
Additional or revised regulatory requirements, whether regarding labeling, the
environment, taxes or otherwise, could have a material adverse effect on our
financial condition and results of operations.





THE
CURRENT INTERNATIONAL CONFLICTS, AND TERRORISM EVENTS ALL OR INDIVIDUALLY MAY
HAVE AN ADVERSE IMPACT ON OUR SALES AND EARNINGS, AND OUR SHIPPING COSTS HAVE
INCREASED.





We cannot
predict the impact of the current economic climate in the United States, or the
current international situation, on current and future consumer demand for and
sales of our products. In addition, recent volatility in the global oil markets
has resulted in rising fuel and freight prices, which many shipping companies
are passing on to their customers. Our shipping costs have increased, and these
costs may continue to increase. Due to the price sensitivity of our products, we
do not anticipate that we will be able to pass these increased costs on to our
customers.





CERTAIN
FACTORS RELATED TO OUR COMMON STOCK





BECAUSE
OUR COMMON STOCK IS CONSIDERED A "PENNY STOCK," A SHAREHOLDER MAY HAVE
DIFFICULTY SELLING SHARES IN THE SECONDARY TRADING MARKET.





Our
common stock is subject to certain rules and regulations relating to "penny
stock" (generally defined as any equity security that has a price less than
$5.00 per share, subject to certain exemptions). Broker-dealers who sell penny
stocks are subject to certain "sales practice requirements" for sales in certain
nonexempt transactions (i.e., sales to persons other than established customers
and institutional "accredited investors"), including requiring delivery of a
risk disclosure document relating to the penny stock market and monthly
statements disclosing recent price information for the penny stocks held in the
account, and certain other restrictions. For as long as our common stock is
subject to the rules on penny stocks, the market liquidity for such securities
could be significantly limited. This lack of liquidity may also make it more
difficult for us to raise capital in the future through sales of equity in the
public or private markets.


15





THE PRICE
OF OUR COMMON STOCK MAY BE VOLATILE, AND A SHAREHOLDER'S INVESTMENT IN OUR
COMMON STOCK COULD SUFFER A DECLINE IN VALUE.





There
could be significant volatility in the volume and market price of our common
stock, and this volatility may continue in the future. Our common stock is
listed on the over-the-counter Bulletin Board and there is a greater chance for
market volatility for securities that trade on the OTC Bulletin Board as opposed
to a national exchange or quotation system. This volatility may be caused by a
variety of factors, including the lack of readily available quotations, the
absence of consistent administrative supervision of "bid" and "ask" quotations
and generally lower trading volume. In addition, factors such as quarterly
variations in our operating results, changes in financial estimates by
securities analysts or our failure to meet our or their projected financial and
operating results, litigation involving us, general trends relating to the
beverage industry, actions by governmental agencies, national economic and stock
market considerations as well as other events and circumstances beyond our
control could have a significant impact on the future market price of our common
stock and the relative volatility of such market price.




A LARGE
NUMBER OF SHARES OF COMMON STOCK WILL BE ELIGIBLE FOR FUTURE SALE AND MAY
DEPRESS OUR STOCK PRICE.





Our
shares that are eligible for future sale may have an adverse effect on the price
of our stock. As of July 31, 2009, there were approximately 94 million
shares  of our common stock outstanding. Also, we have issued
approximately over 45,000,000 shares of our common stock since March 2005.
Furthermore, in connection with our December Private Placement, we issued
5,000,000 shares of common stock, 11,000 shares of our Series A Preferred Stock,
which is convertible into 31,428,571 shares of our common stock and warrants to
acquire 600,000 shares of our common stock. A significant percent of these
shares either are eligible to be traded. Our average daily trading volume for
the previous three months ended July 31, 2009 was approximately 220,000 shares
of our common stock. Sales of substantial amounts of common stock, or a
perception that such sales could occur, and the existence of options or warrants
to purchase shares of common stock at prices that may be below the then current
market price of the common stock, could adversely affect the market price of our
common stock and could impair our ability to raise capital through the sale of
our equity securities.





YOUR
OWNERSHIP INTEREST, VOTING POWER AND THE MARKET PRICE OF OUR COMMON STOCK MAY
DECREASE BECAUSE WE HAVE ISSUED, AND MAY CONTINUE TO ISSUE, A SUBSTANTIAL NUMBER
OF SECURITIES CONVERTIBLE OR EXERCISABLE INTO OUR COMMON STOCK.





We have
issued common stock , warrants, options and convertible notes to purchase our
common stock to satisfy our obligations and fund our operations and reward our
employees. In the future we may issue additional shares of common stock,
options, warrants, preferred stock or other securities exercisable for or
convertible into our common stock to raise money for our continued operations.
We continue to seek additional investors. If additional sales of equity occur,
your ownership interest and voting power in us will be diluted and the market
price of our common stock may decrease.




ITEM
1B. UNRESOLVED STAFF COMMENTS


None.





ITEM
2. DESCRIPTION OF PROPERTY





We lease
2,739 square feet of office in Wilton, Connecticut under an operating sublease
which will expire September 30, 2009, with base annual rent payments of
approximately $50,000 through September 30, 2009.  Under our lease, we
are also responsible for our pro rata share of real estate tax increases. We
have negotiated  a new two year lease with the landlord commencing in
October 2009 with annual base  rent payments of $36,000.  In
addition we have a number of agreements with independent warehousing companies
providing for the stocking, storage and shipping of a significant amount of our
products at their various locations We believe our leased premise and our
independent warehouse facilities are suitable and adequate for our use and
adequately covered by insurance.





ITEM
3. LEGAL PROCEEDINGS





In June
2009, Richard Shiekman, a former employee of the Company, filed a claim against
the Company and our chief Executive Officer  in Superior Court of
Connecticut, Fairfield County (CV 09 4028895 S). The plaintiff seeks $127,250 of
unpaid wages and commissions and, $1,500 for reimbursement of expenses. The
maximum exposure to the Company and our CEO is $387,000 for treble damages plus
attorneys’ fees and costs. The Company believes that the claims made by the
plaintiff are false and plans to vigorously defend this suit,. In addition, the
Company plans to commence a countersuit for damage and theft of
services.  We pledged 2,325,000 shares of Company stock in lieu of a
prejudgment remedy.




In
February 2009, Vetrerie Bruni S.p.A the company which has the patent to the
Trump Vodka bottle design filed a complaint against us in the U.S. District
Court, Southern District of New York for alleged breach of contract and seeking
$225,000 for alleged past due invoices and royalties. The Company is currently
engaged in settlement negotiations and if a settlement is not reached the case
will be defended.


16





In June
2009, Liquor Group Wholesale, Inc. (“Liquor Group”) a company which provided
distribution services for us in several states filed a claim for damages against
us in Duval County Florida for alleged damages including breach of contract and
is seeking approximately $2 million in damages. It is the
Company’s  strong opinion that the claim arose out of our termination
of the agreements we had with them for their nonperformance, failure of the
plaintiff  to accurately report sales to the Company and their
withholding of information required by the agreements. The Company filed a
counterclaim of $500,000 for damages against Liquor Group and has denied their
claimed breach of contract claim previously made against it. The Company
contends that it is owed money by Liquor Group under the
agreements.





Other
than the above we believe that the Company  is currently not subject
to litigation, which, in the opinion of our management, is likely to have a
material adverse effect on us.





We may,
however, become involved in litigation from time to time relating to claims
arising in the ordinary course of our business. These claims, even if not
meritorious, could result in the expenditure of significant financial and
managerial resources.




ITEM
4. SUBMISSION OF MATTERS TO A VOTE OF SHAREHOLDERS




We held
our annual stockholders’ meeting on January 15, 2009.





The
following nominees were re- elected to serve as directors, each to hold office
until his or her successor is elected and qualified, by the following
vote:





Nominee
                        
                        For
                        
                        
                        AgainstJ.
      Patrick Kenny
                        
                        
                        70,056,833
                        
                        
                        
                        461,537Bruce
      Klein
                        
                        
                        70,054,161
                        
                        
                        
                        464,272Marvin
      Traub
                        
                        
                        70,238,893
                        
                        
                        
                        369,540Fred
      Schulman
                        
                        
                        69,882,693
                        
                        
                        
                        500,267Thomas
      Schwalm
                        
                        
                        70,155,616
                        
                        
                        
                        365,466Hubert
      Millet
                        
                        
                        70,044,727
                        
                        
                        
                        476,353




The
previous board of the Company was re-elected in its entirety.





The
selection by the Audit Committee of our Board of Directors of Bernstein &
Pinchuk, LLP as the independent registered public accounting firm for the year
ending April 30, 2009 was approved by the following vote:





Votes:For
                        
                        
                        69,093,827Against
                        
                        
                        400,146Abstain
                        
                        
                        975,413




The
approval of an amendment to our certificate of incorporation to increase the
number of shares of our common stock which we have the authority to issue from
100,000,000 to 500,000,000 was approved by the following vote:





Votes:For
                        
                        
                        67,168,908Against
                        
                        
                        2,413,893Abstain
                        
                        
                        886,982





The
approval of the Company’s 2008 Stock Incentive Plan  was approved by
the following vote:





Votes:For
                        
                        
                        47,504,889Against
                        
                        
                        433,877Abstain
                        
                        
                        278,802




17





ITEM
5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDERS MATTERS AND


ISSUER PURCHASERS
OF EQUITY SERCURITIES AND SMALL ISSUER PURCHASE
OF


EQUITY
SECURITIES





MARKET
FOR OUR COMMON STOCK


AND
RELATED


STOCKHOLDER
MATTERS





Our
common stock was authorized to trade on June 2, 2005 on the over-the-counter
market with quotations available on the OTC Electronic Bulletin Board under the
symbol "DKAM" on the Over-the-Counter Bulletin Board Electronic Quotation System
maintained by the National Association of Securities Dealers, Inc. Trading
commenced on June 3, 2005. Prior to June 3, 2005, there was no public trading
market for our Common Stock.





The
following table sets forth the range of high and low bid quotations of our
common stock for the periods indicated. The information contained in the table
was obtained from Bloomberg Financial Services. The prices represent
inter-dealer quotations, which do not include retail markups, markdowns or
commissions, and may not represent actual transactions.




Year Ending, April 30, 2008
                    
                    High
                    
                    
                    LowFirst
      Quarter, July 31, 2007
                    
                    $
                    1.59
                    
                    
                    $
                    0.95Second
      Quarter, October 31, 2007
                    
                    $
                    1.00
                    
                    
                    $
                    0.38Third
      Quarter, January 31, 2008
                    
                    $
                    0.56
                    
                    
                    $
                    0.14Fourth
      Quarter, April 30, 2008
                    
                    $
                    0.58
                    
                    
                    $
                    0.21Year Ending, April 30, 2009
                    
                    High
                    
                    
                    LowFirst
      Quarter, July, 31, 2008
                    
                    $
                    0.31
                    
                    
                    $
                    0.22Second
      Quarter, October 31, 2008
                    
                    $
                    0.35
                    
                    
                    $
                    0.21Third
      Quarter, January 31, 2009
                    
                    $
                    0.26
                    
                    
                    $
                    0.15Fourth
      Quarter, April 30, 2009
                    
                    $
                    0.26
                    
                    
                    $
                    0.14





SECURITY
HOLDERS





At July
31, 2009, there were approximately 94,000,000 shares of our common stock
outstanding, which were held of record by approximately 670 stockholders, not
including persons or entities that hold the stock in nominee or "street" name
through various brokerage firms. On such date there were five stockholders of
record of our Preferred Stock.




DIVIDENDS





The
payment of dividends, if any, is to be within the discretion of our Board of
Directors. We presently intend to retain all earnings, if any, for use in our
business operations and accordingly, the Board of Directors does not anticipate
declaring any dividends in the near future. In addition, the terms of our Series
A Preferred Stock limit our ability to pay cash dividends to our
stockholders.





Dividends,
if any, will be contingent upon our revenues and earnings, capital requirements
and financial condition.




EQUITY
COMPENSATION PLAN INFORMATION




In
January 2009, the Company’s shareholders approved the 2008 Stock Incentive Plan
(the” Plan”) which provides for awards of incentives of non-qualified stock
options, stock, restricted stock and stock appreciation rights for its officers,
employees, consultants and directors in order to attract
and retain such individuals and to enable them  to participate in the
long-term success and growth of the Company. There are





10,000,000  common
shares reserved for distribution under the Plan, of which 3,050,000 remain
available. Stock options granted under the Plan are granted with an exercise
price at or above the fair market value of the underlying common stock at the
date of grant, generally vest over a four year period and expire 5 years after
the grant date.





Subject
to the terms of the Plan, the plan administrator, which may be the Company's
Board of Directors, shall determine the provisions, terms, and conditions of
each award including, but not limited to, the vesting schedules, repurchase
provisions, rights of first refusal, forfeiture provisions, form of payment
(cash, shares, or other consideration) upon settlement, payment contingencies,
performance criteria for vesting and other matters.


18





On March
12, 2009 the Company granted  an aggregate of 5,775,000 options
under  the   Plan to various employees, the directors of the
Company, and to two consultants  to the Company.  The
exercise price of the options granted to employees , directors and on of
the consultants  was at the fair market value of the underlying common
stock at the date of grant (other than those issued to our CEO which was at a
10% premium to the market value). The exercise price of the options granted to
the other consultant, $0.35, was above the fair market value of the underlying
common stock at the date of grant.





The
Company issued an aggregate of 4,175,000 options to purchase shares of its
common stock to its employees including 2,500,000 to its CEO, 500,000 to its COO
and 300,000 to its CFO.  The options  granted  to
employees of the Company vest over a four year period and expire five years
after the grant date.   The options awarded to the directors
(1,000,000) of the Company and the consultants (600,000) vested immediately upon
grant.





Also on
March 12, 2009, the Company granted 1,175,000 shares of  its common
stock under the Plan  to several of  its employees as
consideration for past services they have performed for the Company.
Of  these an aggregate of 750,000 shares were issued in June
2009.




A summary of the options outstanding
under the Plan are  as of April 30, 2009 is as
follows:





2009Shares
                          
                          
                          Weighted
                            Average
                            Exercise
                            PriceOutstanding
      at beginning of period
                          
                          
                          -
                          
                          
                          $
                          -Granted
                          
                          
                          5,775,000
                          
                          
                          
                          0.18Forfeited
                          
                          
                          -
                          
                          
                          
                          -Outstanding
      at end of period
                          
                          
                          5,775,000
                          
                          
                          $
                          0.18Exercisable
      at end of period
                          
                          
                          1,600,000
                          
                          
                          $
                          0.22Weighted
      average fair value of grants during the period
                          
                          
                          
                          
                          
                          $
                          0.09




RECENT
SALE OF UNREGISTERED SECURITIES





On March
12, 2009 the Company granted  an aggregate of 5,775,000 options
under  the   Plan to various employees, the directors of the
Company, and to two consultants  to the Company.  The
exercise price of the options granted to employees , directors and on of
the consultants  was at the fair market value of the underlying common
stock at the date of grant (other than those issued to our CEO which was at a
10% premium to the market value). The exercise price of the options granted to
the other consultant, $0.35, was above the fair market value of the underlying
common stock at the date of grant. The Company issued an aggregate of 4,175,000
options to purchase shares of its common stock to its employees including
2,500,000 to its CEO, 500,000 to its COO and 300,000 to its CFO.  The
options  granted  to employees of the Company vest over a
four year period and expire five years after the grant
date.   The options awarded to the directors (1,000,000) of the
Company and the consultants (600,000) vested immediately upon grant. Also on
March 12, 2009, the Company granted 1,175,000 shares of  its common
stock under the Plan  to several of  its employees as
consideration for past services they have performed for the Company.
Of  these an aggregate of 750,000 shares were issued in June
2009.





In April
2009 the Company entered into a two year sponsorship  agreement with
concert producer and promoter to promote Olifant Vodka  in
its  concert tour  which  runs from
July  10, thru August 8, 2009.  In consideration for their
services the Company has granted the promoter the following: 1,500,000 shares
of  its stocks which were issued in May 2009; 3% of the net profits of
Olifant for each fiscal year beginning  following the third
anniversary of the agreement (years  beginning May 2012) and
ending  the earlier of Olifant’s fiscal year ending in 2018 or when
Olifant is sold.  If  Olifant is sold prior to expiration
the promoter will receive 3% of the consideration received from the sale. The
Company has agreed to grant an additional 2% (of Olifant or  a
future  brand)  for promotion in the 2010 concert tour; and
warrants to purchase 200,000 shares of Company stock at an exercise price of
200,000 shares which shall be issued at the end of the
2009  tour.





In
accordance with the agreement, in May 2009,  the Company issued a
promissory note to the promoter  for a loan in the same
amount  to cover expenses relating to the tour. The note, which bears
no interest, was to be paid in four equal installments beginning in June 2009 is
secured by 500,000 shares of Company stock.  The promoter has deferred
the requirement of payment under the note pending  the completion of a
future financing  for the Company at which time they will elect
payment or take the 500,000 shares of stock.


19





On June
19, 2009 (the "Closing Date") we sold to one investor (the “Investor”) a
$4,000,000 non interest bearing debenture with a 25% ($1,000,000) original issue
discount, that matures in 48 months from the Closing Date (the Drink’s
Debenture) for $3,000,000, consisting of $375,000 paid in cash at closing and
eleven secured promissory notes, aggregating $2,625,000, bearing interest at the
rate of 5% per annum , each
maturing 50 months after the Closing Date(the “Investor Notes”).  The
Investor Notes, the first ten of which are in the principal amount of $250,000
and the last of which is in the principal amount of $125,000, are mandatorily
pre-payable, in sequence, at the rate of one note per month commencing on the
seven month anniversary of the Closing Date.  If the prepayment
occurs, the entire aggregate principal balance of the
Investor Notes in the amount of $2,625,000, together with the interest
outstanding thereon, will be paid in eleven monthly installments (ten in the
amount of $250,000 and one the amount of $125,000)such that the entire amount
would be paid to us by November 26, 2010.  As a practical matter, the
interest rate on the Investor Notes serves to lessen the interest cost inherent
in the original issue discount element of the Drinks Debenture. For the
mandatory prepayment to occur, no Event of Default or Triggering Event as
defined under the Drinks Debenture shall have occurred and be continuing and the
outstanding balance due under the Drinks Debenture must have been reduced to
$3,500,000 on the seventh month anniversary of the Closing Date and be reduced
at the rate of $333,334 per month thereafter.





One of
the Triggering Events includes the failure of the Company to maintain an average
daily dollar volume of common stock traded per day for any consecutive 10-day
period of at least $10,000 or if the average value of the shares are pledge to
secure our obligation under the Drinks Debenture (as subsequently described
)fall below $1,600,000.





Under the
Drinks Debenture, commencing six months after the Closing Date, the Investor may
request the Company to repay all or a portion of the Drinks Debenture by issuing
the Company’s common stock, $0.001 par value, in satisfaction of all or part of
the Drinks Debenture, valued at the Market Price,(as defined in the Drinks
Debenture), of Drink’s common stock at the time the request is made
(collectively, the “Share Repayment Requests”).  The Investor’s may
not request repayment in common stock if, at the time of the request, the amount
requested would be higher than the difference between the outstanding balance
owed under the Drinks Debenture and 125% of the aggregate amount owed under the
Investor Note.





We may prepay all or part of the Drinks
Debenture upon 10-days prior written notice and are entitled to satisfy a
portion of the amount outstanding under the debenture by offset of an amount
equal to 125% of the amount owed under the Investor Notes, which amount will
satisfy a corresponding portion of the Drinks Debenture.  For example,
subsequent to receipt of the $375,000 and prior to the receipt of any payments
under the Investor Notes, we can satisfy the Drinks Debenture by paying $718,750
to the Investor.





Also as
part of this financing, the Investor acquired warrants to purchase 2,500,000
shares of our common stock at an exercise price of $0.35 per share (the
“Investor Warrants”).  The Investor Warrants contain full ratchet
anti-dilution provisions, as to the exercise price and are exercisable for a
five year period.





Out of
the gross proceeds of this Offering, we paid the placement agent $37,500 in
commissions and we are obligated to pay the placement agent 10% of the principal
balance of the Investor Notes when each note is paid. We will also issue to the
Placement Agent, warrants to acquire 5% of the shares of our Common Stock which
we deliver in response to Share Repayment Requests, at an exercise price equal
to the Market Price related to the shares delivered in response to the Share
Repayment Request (the "Placement Agent Warrants"), which warrants are
exercisable for a five year period, will contain cashless exercise provisions as
well as anti-dilution provisions in the case of stock splits and similar
matters





Our CEO
has  guaranteed our obligations under the Drinks Debenture in an
amount not to exceed the lesser of (i) $375,000 or (ii) the outstanding balance
owed under the Drinks Debenture.  In addition our CEO, COO, and two
other members of our Board of Directors have, pledged an aggregate of 9,000,000
shares of our common stock to secure our obligations under the Drinks Debenture
(the “Pledged Shares”). The Company has pledged an additional 3,000,000 shares
of its common stock. The Company has agreed in principle to issue to those
individuals who pledged their shares,  0.5 shares of Company stock for
each share pledged.





On July
14, 2009 the value of the Pledged Shares fell below the required amount and
consequently the  Investor delivered  a notice of default to
the Company. On the
receipt of the notice the Company requested, and the Investor orally agreed,
that the penalties the Company would have incurred would not apply. The
agreement was subsequently documented and the Investor also waived the
application of this provision through October 31, 2009


In order
to secure waivers which the investors in our December 2007 financing claimed
were required for the Company to consummate this financing




In
October 2006, the Company borrowed $250,000 and issued a convertible promissory
note in like amount. The due date of the loan was originally extended by the
Company to October 2008 from October 2007 in accordance with the terms of the
original note agreement. On March 1, 2009 the note was amended to extend the due
date to October 18, 2009. As consideration for extending the note n March 1,
2009 the


20





In April
2009 the Company entered into a  sponsorship  agreement with
concert producer and promoter to promote Olifant Vodka  in
its  concert tour  which  runs from
July  10, thru August 8, 2009.  In consideration for their
services the Company has given the promoter the following: 1,500,000 shares
of  its stocks which were issued in May 2009; 3% of the net profits of
Olifant for each fiscal year beginning  following the third
anniversary of the agreement (years  beginning May 2012) and
ending  the earlier of Olifant’s fiscal year ending in 2018 or when
Olifant is sold.  If  Olifant is sold prior to expiration
the promoter will receive 3% of the consideration received from the sale. The
Company has agreed to grant an additional 2% (of Olifant or  a
future  brand)  for promotion in the 2010 concert tour; and
warrants to purchase 200,000 shares of Company stock at an exercise price of
200,000 shares which shall be issued at the end of the 2009  tour. The
value of  the 1,500,000 shares issued
aggregating  $225,000,  based on the market price of the
Company’s stock on the date of the agreement, and the warrants granted , $8,000
, will be amortized over the life of the tour. In accordance with the agreement
the amount of cash and stock based consideration issued by the Company shall not
be less than $400,000.





In
accordance with the agreement, in May 2009,  the Company issued a
promissory note to the promoter  for a loan in the same
amount  to cover expenses relating to the tour. The note, which bears
no interest, was to be paid in four equal installments beginning in June 2009 is
secured by 500,000 shares of Company stock.  The promoter has deferred
the requirement of payment under the note pending  the completion of a
future financing  for the Company at which time they will elect
payment or take the 500,000 shares of stock.





Company
issued the lender 286,623 shares of Company common stock .As of July , 2009 the
Company had not made any payments under the amended note and has reached an
informal agreement with the note-holder, to issue 50,000 shares
of  the Company’s common stock for each week of
nonpayment. As of  July 31, 2009 the Company  has issued the
note-holder 400,000 shares of its stock  to remain in compliance with
the amended note.





In May 9,
2009 we issued a sales consultant 85,000 shares of our common stock with an
aggregate value of $11,900 for past due fees owed to him.





On July
1, 2009 we issued an aggregate of 333,333 shares of our common stock having an
aggregate value of $50,000 to a member of our board of directors for an advance
he made to a third, unrelated,  entity for services they provided the
Company. The amount the Company was invoiced for these services by the third
party was equal to the value of the stock issued to the director.





On July
1, 2009 we issued 28,000 shares of our common stock having an aggregate value
of   $3,6000 to a company which provides freight services to the
company.





On July
1, 2009 we issued  100,000 shares of our common stock having an
aggregate value of $13,000 to a sales consultant for the Company for services he
has provided to us.





On July
29, 2009 we issued 71,500 shares of our common stock having an aggregate value
of  $10,000 to a consultant  for the Company for
services  he has performed.





On August
5, 2009 we issued 350,000 shares of our common stock having an aggregate value
of $49,000 to an attorney for the Company for services he has
performed.




ISSUER
PURCHASES OF EQUITY SECURITIES





None





Transfer
Agent




National
Stock Transfer, Inc. with offices at 1512 South 1100 East, Suite B, Salt Lake
City, UT 84105-2455, is the registrar and transfer agent for our common
stock.





Penny
Stock Regulations




The SEC
has adopted regulations which generally define "penny stock" to be an equity
security that has a market price of less than $5.00 per share. The Company's
common stock falls within the definition of penny stock and is subject to rules
that impose additional sales practice requirements on broker-dealers who sell
such securities to persons other than established customers and accredited
investors (generally those with assets in excess of $1,000,000, or annual
incomes exceeding $200,000 or $300,000, together with their
spouse).




21




ITEM
6. SELECTED FINANCIAL DATA





As a
smaller reporting company, we are not required to provide the information
required by this Item.




ITEM 7. MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS





The
following discussion and analysis of the consolidated financial condition and
results of operations should be read with "Selected Financial Data" and our
consolidated financial statements and related notes appearing elsewhere in this
report. This discussion and analysis contains forward-looking statements that
involve risks, uncertainties and assumptions. The actual results may differ
materially from those anticipated in these forward-looking statements as a
result of certain factors, including, but not limited to, those set forth under
"Risk Factors" and elsewhere in this report.





RESULTS
OF OPERATIONS





Year
ended April 30, 2009 compared to year ended April 30, 2008





Net
Sales: Net sales were $2,478,000 for the year ended April 30, 2009 compared to
net sales of $4,509,000 for the year ended April 30, 2008, a decrease
of  45%. The decrease is predominantly due to inventory shortfalls as
a result of insufficient working capital and the resulting delay of certain
shipments. Trump Super Premium Vodka sales aggregated $1,100,000 which accounted
for 44% of total dollar sales for the year ended April 30, 2009. For the year
ended April 30, 2008, Trump Super Premium Vodka sales aggregated $2,652,000
which accounted for 59% of total dollar sales. We believe that the recent
economic downturn has hurt the sales of  this  premium
product. Interruption of access to production financing resulted
in  temporary inventory disruption. In addition  sales of
Trump for the year ended April 30, 2009 were effected by  issues
relating to  our California , Chicago distributors as with Liquor
Group, who represented us in several “controlled state”  which have
been corrected with new distributors being appointed.  The
launch of Trump Super Premium Vodka in Texas in July 2007 also contributed
to greater sales of Trump Super Premium Vodka for the year ended April 30, 2008
compared to the year ended April 30, 2009.   Sales of all wine and
spirits products aggregated $2,042,000 for the year ended April 30, 2009
compared to $3,842,000 for the year ended April 30, 2008. Net sales of Old
Whiskey River Bourbon totaled $231,000 on 1,864 cases sold for the year ended
April 30, 2009 compared to net sales of $452,000 on  3,806 cases sold
for the year ended April 30, 2008. Net sales of our Aguila Tequila aggregated
$74,600 on 895 cases sold for the year ended April 30, 2009 compared to $133,000
on 1,418 cases sold for the year ended April 30, 2008. This represents a dollar
decrease of  44% and a case increase of  37%. Net sales of
our Damiana Liqueur aggregated   $145,400 on 1,094 cases sold for
the year ended April 30, 2009 compared to net sales of $196,700 on 1555 cases
sold for the year ended April 30, 2008  Net sales of our premium
imported wines totaled $269,000 on 2,769 cases sold for the year ended April 30,
2009 compared to net sales of $392,000 on 3,396 cases sold for the year ended
April 30, 2008. Net sales of our non alcoholic product, Newman’s Own sparkling
fruit beverages and sparkling waters decreased to $443,990  on 53,265
cases sold for the year ended April 30, 2009 compared to $666,620 on 75,300
cases sold for the year ended April 30, 2008. Sales of our Newmans Own products
were affected the Company’s decision to exit this business. We have made the
strategic decision to discontinue selling  the Newman’s  Own
products  in light of the fact our contract ends in October 2009. The
Newman’s Own organization and the Company have agreed that the Newman’s Own
organization will assume the selling of the product. The Company’s decision was
based on enhancing profitability and our inability to have equity in the brand.
In January 2009 the Company acquired a  90% interest in Olifant USA,
Inc,  which has the worldwide rights (excluding Europe) to Olifant
Vodka and gin.  Olifant Vodka and Gin is, produced in Holland is sold
at an economy  price. The Company’s management believes, and customer
demand indicates,  that with national distribution already in place
sales of these products  will be very successful in this economic
environment. In January 2009 the Company commenced sales of its Leyrat Cognac
recognizing $145,000 in revenue on 773 cases sold.





Gross
margin:  Exclusive of our allowance for slow moving inventory
($120,000), gross profit was $628,000 (25% of net sales) for the year ended
April 30, 2009 a decrease of $1,057,000 compared to gross profit of $1,685,000
(37% of net sales) for the year ended April 30, 2008. Gross
margin for our wine and spirits business was 30% percent for the year ended
April 30, 2009, exclusive of allowances for slow moving
inventory,  compared to 41 % for the prior year. Gross margin for our
non alcoholic business was 17% for the year ended April 30, 2009 compared to 22%
for the year ended April 30, 2008.   The inherent low margins for the
Newmans’ Own products, the increased costs in production together with the
inability to sustain its growth    has lead to our decision
to discontinue to sell the products.  . Gross margin of Trump Super
Premium Vodka, decreased to 35% for the year ended April 30, 2009 compared to 40
% for the year ended April 30, 2008. The gross margin decrease is largely due to
a decrease in the percentage of direct sales which leads to increased direct
costs such as excise taxes and freight, price competition, and a greater amount
of sales to our distributor in “controlled” states for which we generally
recognize lower margins.  For the year ended April 30, 2009 the
Company recorded a loss  for Cohete Rum as  the Company has
liquidated the inventory and terminate the brand.


22





Selling,
general and administrative: Selling, general and administrative expenses totaled
$5,720,000 for the year ended April 30, 2009, compared to $7,838,000 for the
year ended April 30, 2008, a decrease of  27%. Total selling and
marketing costs aggregated $2,200,000 for the year ended April 30, 2009 compared
to $3,900,000 for the year ended April 30, 2008. The decrease in selling and
marketing expenses is due to the overall decreased marketing spend to a
normalized level as sales promotions for Trump Vodka have become more
targeted.  General and administrative expenses aggregated $3,520,000
for the year ended April 30, 2009 compared to $3,938,000 for the year ended
April 30, 2008.  Professional fees, including legal fees have decreased
from the prior year and travel related expenses have also decreased for the year
ended April 30, 2009 compared to the year ended April 30, 2008. For the year
ended April 30, 2009 we recognized a non-cash charge of $220,000 relating to
stock bonuses to certain employees of the Company for services they have
provided.





Other
Income (expense): Interest expense
totaled   $151,000  for the year ended April 30, 2009
compared to expense of $164,000 for the year ended April 30, 2008. For the year
ended April 30, 2009 other income aggregated $409,000 which is the result of the
Company’s settlement with RBCI Holdings, Inc. For the year ended April 30,
2009  the Company recognized an imparment loss  on its
Rheingold license based on additional investment to eventually bring the product
to market. The Company issued 350,000 shares of Company stock full consideration
of a note payable to RBCI for $500,000. The value of the shares on the
settlement date was $91,000.





Income
Taxes: We have incurred substantial net losses from our inception and as a
result, have not incurred any income tax liabilities. Our federal net operating
loss carry forward is approximately $28,000,000, which we can use to reduce
taxable earnings in the future. No income tax benefits were recognized in fiscal
2008 and 2007 as we have provided valuation reserves against the full amount of
the future carry forward tax loss benefit. We will evaluate the reserve every
reporting period and recognize the benefits when realization is reasonably
assured.





IMPACT
OF INFLATION





Although
management expects that our operations will be influenced by general economic
conditions we do not believe that inflation has had a material effect on our
results of operations.





SEASONALITY





As a
general rule, the second and third quarters of our fiscal year (August-January)
are the periods that we realize our greatest sales as a result of sales of
alcoholic beverages during the holiday season. During the fourth quarter of our
fiscal year (February-April) we generally realize our lowest sales volume as a
result of our distributors working off inventory which remained on hand after
the holiday season. As we increase our beer  sales, as a result
of  the launch of Kid Rock’s beer, we would expect sales in first
quarter of our fiscal year (May-July), to increase since the spring and summer
tends to be the strongest periods for sales
of  this  beverage.





FINANCIAL
LIQUIDITY AND CAPITAL RESOURCES





Although
our working capital position was initially improved as a result
of  the exercise of warrants to acquire our common
stock  pursuant to our October 2008 warrant re-pricing and our
December 2007 Private Placement of our preferred stock, our business continues
to be effected by insufficient working capital. We will need to continue to
carefully manage our working capital and our business decisions will continue to
be influenced by our working capital requirements. Lack of liquidity continues
to negatively affect our business and curtail the execution of our business
plan.




We have
experienced net losses and negative cash flows from operations and investing
activities since our inception in 2003. Net losses for the
year  ended  April 30, 2009 and 2008 were $5,041,000 and
$6,311,000 , respectively. Cash used in operating activities for the years
ended April 30,  2009 and 2008 was $630,000 and $3,848,000,
respectively. We have to date funded our operations predominantly through bank borrowings,
loans from shareholders and investors, and proceeds from the sale of our common
stock, preferred stock, and warrants. For the year  ended April 30,
2009 and 2008 net cash provided by financing activities totaled $509,000 and
$2,987,000, respectively.





As
described in Item 5 (under Unregistered Sale of Equity Securities) in June, 2009
(the "Closing Date") we sold to one investor (the “Investor”) a $4,000,000 non
interest bearing debenture with a 25% ($1,000,000) original issue discount, that
matures in 48 months from the Closing Date (the Drink’s Debenture) for
$3,000,000, consisting of $375,000 paid in cash at closing and eleven secured
promissory notes, aggregating $2,625,000, bearing interest at the rate of 5% per
annum, each maturing 50 months after the Closing Date(the “Investor
Notes”).  The Investor Notes, the first ten of which are in the
principal amount of $250,000 and the last of which is in the principal amount of
$125,000, are mandatorily pre-payable, in sequence, at the rate of one note per
month commencing on the seven month anniversary of the Closing
Date.  If the prepayment occurs, the entire aggregate principal
balance of the Investor Notes in the amount of $2,625,000, together with the
interest outstanding thereon, will be paid in eleven monthly installments (ten
in the amount of $250,000 and one the amount of $125,000)such that the entire
amount would be paid to us by November 26, 2010. These
monthly  payments will help fund operations over
their  eleven month period.





The
Company has an agreement with a factor  through  September
2009 ,with automatic six month renewals which can  be terminated by
either parties  at their discretion,  to which a substantial
portion of Olifant’s accounts receivable are sold to the factor without recourse
as to bad debts but with recourse as to all customer claims. Immediately upon
assigning  a customer invoice the Company receives a cash advance
equal to 70% of the invoice amount and is paid the balance of the invoice less
fees incurred at the time the factor receives the final payment from the
customer. The facility has a maximum account limit of $200,000. The factor fee
is 1% of the factored receivable for every ten days the related
invoice  remains unpaid and is subject to a monthly administrative
charge based on monthly volume. The factor has first security interest in the
factored receivable of Olifant and a security interest in the related
inventory.


23





The
Company also has an agreement with a  different factor pursuant to
which a substantial portion of the Company’s accounts receivable, other than
Olifant’s, is sold to the factor with recourse to bad debts and  other
customer claims.  The Company receives a cash advance equal to 80% of
the invoice amount and is paid the balance of the invoice less fees incurred at
the time the factor receives the final payment from the customer. The factor fee
is 1.75% for the first 30 days the invoice remains unpaid and 0.07% for each day
thereafter. The facility shall remain open until a 30 day notice by either party
of termination of the agreement The facility is secured by all assets of the
Company other than Olifants’.




In
October 2006, the Company borrowed $250,000 and issued a convertible promissory
note in like amount. The due date of the loan was originally extended by the
Company to October 2008 from October 2007 in accordance with the terms of the
original note agreement. On March 1, 2009 the note was amended to extend the due
date to October 18, 2009. As consideration for extending the note in March 1,
2009 the Company issued the lender 286,623 shares of Company common stock
..  As of July , 2009 the Company had not made any payments under the
amended note and has reached an informal agreement with the note-holder, to
issue 50,000 shares of  the Company’s common stock for each week of
nonpayment. As of  July, 2009 the Company  has issued the
note-holder 400,000 shares of its stock  to remain in compliance with
the amended note.





On
October 27, 2005, the Company acquired certain assets of Rheingold Beer
(“Rheingold”) and assumed certain obligations from Rheingold Brewing Company,
Inc. (“RBCI”). Holdings issued 724,638 shares of common stock with a fair value
of approximately $650,000 to RBCI and assumed approximately $142,000 of their
liabilities and are contractually obligated to RBCI to issue an additional
$500,000; payable in Holdings common stock with a value of $350,000 and $150,000
cash, accruing no interest. The obligation due RBCI was originally due on
October 27, 2006. Due to nonpayment of the balance as a result of disagreements
over certain of the acquired assets and liabilities, the Company was sued by
RBCI. On January 15, 2009 the Company reached a settlement with RBCI in which it
will issue 350,000 shares of common stock in satisfaction of the note. The
Company recorded a gain of $409,000 on the settlement.




On
October 27, 2008, in order to encourage holders of warrants which we issued in
our January Financing (described below) to exercise their warrants, and enabling
us to decrease the number of unexercised warrants and raise short-term working
capital at low cost, the Company reduced the exercise price from $.50 to $0.20
per share of common stock for a period of 5 trading days.. Each of the investors
who participated in the January Financing exercised all of the warrants issued
in the private placement representing a total of 3,777,778 newly issued shares
of common stock, resulting in proceeds to the Company of $755,556 less a due
diligence fee paid of $70,693. We also agreed to reduce the conversion price of
the preferred stock acquired by these investors in our December Financing
(described below) from $0.50 per share of common stock to $0.35 per
share.  There were a total of 11,000 shares of preferred shares
outstanding with a redemption value of $11,000,000 at April 30, 2009. which if
all the preferred stock was converted would result in the issuance of 31,428,571
shares of our common stock. One other investor, Greenwich Beverage Group LLC,
who is controlled by a member of our board of directors, elected to exercise
warrants for a total of 166,667 shares of common stock at $0.20 per share, which
the Company reduced from $1.25, for an aggregate exercise price of
$33,333.  As a provision of the  June 2009 sale of our
debentures, , in order to satisfy  the ratcheting
provisions  of the  preferred stock financing we allowed,
and the three December Investors (see below) elected, to  convert an
aggregate of $335,800(335.8 shares) of our preferred stock into 3,358,000 shares
of our common stock.





On
December 18, 2007 (the "Closing Date") the Company sold to three related
investors (the "December Investors") an aggregate of 3,000 shares of our Series
A Preferred Stock, $.001 par value (the "Preferred Stock"), at a cash purchase
price of $1,000 per share, generating gross proceeds of $3,000,000 (the
“December Financing”). The Preferred Stock has no voting or dividend rights. Out
of the gross proceeds of the December Financing, we paid Midtown Partners &
Co., LLC (the "Placement Agent") $180,000 in commissions and $30,000 for
non-accountable expenses. We also issued, to the Placement Agent, warrants to
acquire 600,000 shares of our Common Stock for a purchase price of $.50 per
share (the "Placement Agent Warrants"), which warrants are exercisable for a
five year period and contain anti-dilution provisions in the events of stock
splits and similar matters. Both the commissions and expenses were accounted for
as a reduction of Additional Paid in Capital.





The
financing that we consummated in January 2007 (the “January Financing”) provided
participating investors (the “January Investors”) rights to exchange the common
stock they acquired for securities issued in subsequent financings which were
consummated at a common stock equivalent of $2.00 per share or less. Under this
provision, the January Investors have exchanged 4,444,445 shares of common stock
for 8,000 shares of Preferred Stock. The 4,444,445 shares returned were
accounted for as a reduction of Additional Paid in Capital and a reduction of
Common Stock since the shares have been cancelled. Also in the January
Financing, the January Investors acquired warrants to purchase 3,777,778 shares
of our common stock at an exercise price of $3.00 per share (the “January
Warrants”).  These warrants were exercised at $.20 per share of common
stock.




Each of
our December Investors participated in the January Financing but not all of our
January Investors participated in the December Financing.




24





The
December Investors may allege that certain penalties are owed to them by the
Company based on certain time requirements in the documentation relating to the
December Financing. If such claim is successfully made, we may lack the
liquidity to satisfy such claim.





On
January 15, 2009 (the “Closing”), the Company acquired 90% of the capital stock
of Olifant U.S.A, Inc. (“Olifant”) , pursuant to a Stock Purchase Agreement (the
“Agreement. The Company has agreed to pay the sellers $1,200,000 for its 90%
interest: $300,000 in cash and common stock valued at $100,000 to be paid 90
days from the Closing date The initial cash payment of $300,000 which was due 90
days from Closing , was initially reduced by $138,000 at
Closing  because Olifant’s liabilities exceeded the amount provided
for in the Purchase Agreement.  In accordance with the Agreement, the
initial cash payment was subject to additional  offsets to be mutually
agreed upon by both parties. As of July 31, 2009 the parties have agreed to
additional offsets aggregating $4,702 with potential offsets
of  $37,030 which are to be determined by August 20, 2009 in
accordance with a supplementary agreement entered into by the
parties,  Settlement Agreement and General Release, on July 31, 2009.
The initial payment in accordance with the supplementary agreement  is
due August 31, 2009.  The Company issued a promissory note for the
$800,000 balance. The promissory note is payable in four annual installments,
the first payment is due one year from Closing. Each $200,000 installment is
payable $100,000 in cash and Company stock valued at $100,000with the stock
value based on the 30 trading days immediately prior to the installment date.
The cash portion of the note accrues interest at a rate of 5% per
annum.





From July
2007 through April 2009 the Company borrowed an aggregate of $654,435 from our
CEO for working capital purposes.   The borrowings bear interest at
12% per annum.. For  the years ended April 30, 2009 and 2008 interest
incurred on this loan aggregated $38,204 and $37,798,
respectively.  As of  April 30, 2009 and, 2008 amounts owed
to our CEO on these loans including accrued and unpaid interest aggregated
$305,935 and $232,547, respectively.





ROYALTIES/LICENSING
AGREEMENTS





In
November 2005, the Company entered into an eight-year license agreement for
sales of Trump Super Premium Vodka. Under the agreement the Company is required
to pay royalties on sales of the licensed product. The agreement provides for
certain minimum royalty payments through November 2012 which if not satisfied
could result in termination of the license.





Under our
license agreement for Old Whiskey River, we are obligated to pay royalties of
between $10 and $33 per case, depending on the size of the bottle.





Under our
license agreement for Damaina Liqueur we pay  $3 per
case.





Under our
license agreement with Aguila Tequila we are obligated to pay $3 per
case.





Under our
joint ventures  agreement with Dr. Dre  and Interscope
Records,  which includes  our  Leyrat Cognac, we
are obligated to pay a percentage of gross profits, less certain direct selling
expenses.





We
license our Kid Rock related trademarks, indirectly as a member of a limited
liability company (the “LLC”). The license  requires the LLC
to  pay the licensor  a per case royalty  (or
equivalent liquid volume), with certain minimum royalties for years 2 through 5
of the agreement payable on the first day of the applicable year.





OTHER
AGREEMENTS





The
Company has an agreement with a foreign distributor, through December 2023, to
distribute our products in their country. The agreement requires the distributor
to purchase  a set monthly amount of our products,
predominately  our Trump Super Premium Vodka for the term of the
agreement. The distributor is to pay the Company a monthly fee over the term of
the agreement for the rights to be the exclusive distributor in their country.
As of April 30, 2009 the distributor has not received its distribution license.
Once the distributor receives its license and begins purchasing our products the
Company will accrue the monthly “exclusivity”  fee to revenue based on
the intent of the agreement and such fee





In April
2009 the Company entered into a  sponsorship  agreement with
concert producer and promoter to promote Olifant Vodka  in
its  concert tour  which  runs from
July  10, thru August 8, 2009.  In consideration for their
services the Company has given the promoter the following: 1,500,000 shares
of  its stocks which were issued in May 2009; 3% of the net profits of
Olifant for each fiscal year beginning  following the third
anniversary of the agreement (years  beginning May 2012) and
ending  the earlier of Olifant’s fiscal year ending in 2018 or when
Olifant is sold.  If  Olifant is sold prior to expiration
the promoter will receive 3% of the consideration received from the sale. The
Company has agreed to grant an additional 2% (of Olifant or  a
future  brand)  for promotion in the 2010 concert tour; and
warrants to purchase 200,000 shares of Company stock at an exercise price of
200,000 shares which shall be issued at the end of the 2009  tour. The
value of  the 1,500,000 shares issued
aggregating  $225,000,  based on the market price of the
Company’s stock on the date of the agreement, and the warrants granted , $8,000
, will be amortized over the life of the tour. In accordance with the agreement
the amount of cash and stock based consideration issued by the Company shall not
be less than $400,000.  In accordance with the agreement, in May
2009,  the Company issued a promissory note to the
promoter  for a loan in the same amount  to cover expenses
relating to the tour. The note, which bears no interest, was to be paid in four
equal installments beginning in June 2009 is secured by 500,000 shares of
Company stock.  The promoter has deferred the requirement of payment
under the note pending  the completion of a future
financing  for the Company at which time they will elect payment or
take the 500,000 shares of stock.


25





In fiscal
2003 we entered into a consulting agreement with a company, Marvin Traub &
Associates (“MTA”), owned 100% by Marvin Traub, a member of the Board of
Directors. Under the agreement, MTA is being compensated at the rate of $100,000
per annum. As of April 30, 2009, we were indebted to MTA in the amount of
$256,248.





In
December 2002 the Company entered into a consulting agreement with one of its
shareholders which provides for $600,000 in fees payable in five fixed
increments over a period of 78 months. The agreement expired on  June
9, 2009. The Company has an informal agreement with the shareholder pursuant to
which he has the option of converting all or a portion of the consulting fees
owed him into shares of Holding's common stock at a conversion price to be
agreed upon. In March  2009 the consultant elected to convert
$120,000  due him for consulting fees into shares of Company stock at
a price of $0.35 per share resulting in the Company issuing
342,857  shares to him.  In February, 2008 the consultant
elected to convert $190,000 due him for consulting fees into shares of Company
common stock at a price of $0.50 per share resulting in the Company issuing
380,000 shares to him. Each of the conversions were  was at a premium
to the market price of the Company’s common on  the date of the
elections  to convert.  As of April 30, 2009 to this
shareholder aggregated $30,000.





Since we were founded in 2002, the
implementation of our business plan has been negatively affected by insufficient
working capital. Business judgments have been substantially affected by the
availability of working capital. Although our working capital position and our
cash balance was initially improved as a result of our  June
2009  sale  of our debentures , our October 2008 Warrant
Re-pricing Program and our December and January, 2007 private placement of our
common stock, preferred stock and warrants, our business continues to be
effected by insufficient working capital. We will need to continue to carefully
manage our working capital and our business decisions will continue to be
influenced by our working capital requirements. Therefore, our short term
business strategy will rely heavily on our cost efficient icon brand strategy
and the resources available to us from our media and entertainment partners We
will continue to focus on those of our products which we believe will provide
the greatest return per dollar of investment with the expectation that as a
result of increases in sales and the resulting improvement in our working
capital position, we will be able to focus on those products for which market
acceptance might require greater investments of time and resources. To 
that end, our short-term focus, for beer and spirits,  will be on
Trump Super Premium Vodka, Old Whiskey River Bourbon, Damiana, Aquila Tequila,
and in association with our recent joint venture with music icon  Dr.
Dre, our Leyrat Cognac and our recent joint venture with music icon Kid
Rock,  BadAss Beer. In order for us to continue and grow our business,
we will need additional financing which may take the form of equity or debt.
There can be no assurance we will be able to secure the financing we require,
and if we are unable to secure the financing we need, we may be unable to
continue our operations. We anticipate that increased sales revenues will help
to some extent, but we will need to obtain funds from equity or debt offerings,
and/or from a new or expanded credit facility. In the event we are not able to
increase our working capital, we will not be able to implement or may be
required to delay all or part of our business plan, and our ability to attain
profitable operations, generate positive cash flows from operating and investing
activities and materially expand the business will be materially adversely
affected.





OFF
BALANCE SHEET ARRANGEMENTS





Not
applicable.





CRITICAL
ACCOUNTING POLICIES





Our
significant accounting policies are more fully described in Note 2 to the
audited financial statements. The preparation of financial statements in
conformity with accounting principles generally accepted in the United States of
America requires management to make estimates and assumptions that affect the
reported amounts of assets, liabilities, revenues and expenses, and the related
disclosures of contingent assets and liabilities. Actual results could differ
from those estimates under different assumptions or conditions. We believe that
the following critical accounting policies are subject to estimates and
judgments used in the preparation of the financial statements.





Revenue
Recognition




The
Company recognizes revenues when title passes to the customer, which is
generally when products are shipped.




The
Company recognizes revenue dilution from items such as product returns,
inventory credits, discounts and other allowances in the period that such items
are first expected to occur. The Company does not offer its clients the
opportunity to return products for any reason other than manufacturing
defects. In addition, the Company does not offer incentives to its customers to
either acquire more products or maintain higher inventory levels of products
than they would in ordinary course of business. The Company assesses levels of
inventory maintained by its customers through communications with them.
Furthermore, it is the Company's policy to accrue for material post shipment
obligations and customer incentives in the period the related revenue is
recognized.


26




Accounts
Receivable




Accounts
receivable are recorded at original invoice amount less an allowance for
uncollectible accounts that management believes will be adequate to absorb
estimated losses on existing balances. Management estimates the allowance based
on collectability of accounts receivable and prior bad debt experience. Accounts
receivable balances are written off upon management's determination that such
accounts are uncollectible. Recoveries of accounts receivable previously written
off are recorded when received. Management believes that credit risks on
accounts receivable will not be material to the financial position of the
Company or results of operations at April 301, 2009 and  2008 the
allowance for doubtful accounts was $36,000  and
$24,000,  respectively.





Impairment
of Long-Lived Assets




In
accordance with Statement of Financial Accounting Standards No. 144 (SFAS No.
144), Accounting for the Impairment or Disposal of Long-lived Assets, we review
long-lived assets for impairment at least annually or whenever events or changes
in circumstances indicate the carrying amounts of such assets may not be
recoverable. The Company's policy is to record an impairment loss at each
balance sheet date when it is determined that the carrying amount may not be
recoverable. Recoverability of these assets is based on undiscounted future cash
flows of the related asset. The Company concluded that there was no impairment
during the  years ended April 30, 2009 and 2008,
respectively.




Deferred
Charges and Intangible Assets




The costs
of intangible assets with determinable useful lives are amortized over their
respectful useful lives and reviewed for impairment when circumstances warrant.
Intangible assets that have an indefinite useful life are not amortized until
such useful life is determined to be no longer indefinite. Evaluation of the
remaining useful life of an intangible asset that is not being amortized must be
completed each reporting period to determine whether events and circumstances
continue to support an indefinite useful life. Indefinite-lived intangible
assets must be tested for impairment at least annually, or more frequently if
warranted. Intangible assets with finite lives are generally amortized on a
straight line bases over the estimated period benefited. The costs of trademarks
and product distribution rights are amortized over their related useful lives of
between 15 to 40 years. We review our intangible assets for events or changes in
circumstances that may indicate that the carrying amount of the assets may not
be recoverable, in which case an impairment charge is recognized
currently.




Deferred
financing costs are amortized ratably over the life of the related debt. If debt
is retired early, the related unamortized deferred financing costs are written
off in the period debt is retired.





Stock
Based Compensation




The
Company accounts for stock-based compensation in accordance with Statement of
Financial Accounting Standard 123 (revised 2004), Share-Based Payment (SFAS
123R) using the modified prospective approach. The Company recognizes in the
statement of operations the grant-date fair value of stock options and other
equity based compensation issued to employees and non employees.




Earnings
Per Share




The
Company computes earnings per share under the provisions of SFAS No. 128,
Earnings per Share, whereby basic earnings per share is computed by dividing net
income (loss) attributable to all classes of common shareholders by the weighted
average number of shares of all classes of common stock outstanding during the
applicable period. Diluted earnings per share is determined in the same manner
as basic earnings per share except that the number of shares is increased to
assume exercise of potentially dilutive and contingently issuable shares using
the treasury stock method, unless the effect of such increase would be
anti-dilutive. For the nine and three months ended January 31, 2009 and 2008,
the diluted earnings per share amounts equal basic earnings per share because
the Company had net losses and the impact of the assumed exercise of
contingently issuable shares would have been anti-dilutive.





ITEM 7A. QUANTITATIVE AND
QUALITATIVE DISCLOSURE ABOUT MARKET RISK





We do
participate in certain transactions which are settled in foreign currencies.
Such transactions are short term in nature and any corresponding fluctuation in
foreign exchange rates have not been material. We do not hold instruments that
are sensitive to changes in interest rates or commodity prices. Therefore, we
believe that we are not materially exposed to market risks resulting from
fluctuations from such rates or prices.


27





ITEM
8. FINANCIAL STATEMENTS




Financial
Statements are listed in the Index to Financial Statements and filed and
included elsewhere herein as a part of this Annual Report on Form
10-K.




ITEM
9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE




None




ITEM
9A. CONTROLS AND PROCEDURES





DISCLOSURES
CONTROLS AND PROCEDURES





We have
adopted and maintain disclosure controls and procedures (as such term is defined
in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as
amended (the "Exchange Act")) that are designed to provide reasonable assurance
that information required to be disclosed in our reports under the Exchange Act,
is recorded, processed, summarized and reported within the time periods required
under the SEC's rules and forms and that the information is gathered and
communicated to our management, including our Chief Executive Officer (Principal
Executive Officer) and Chief Financial Officer (Principal Financial Officer), as
appropriate, to allow for timely decisions regarding required
disclosure.





Our Chief
Executive Officer and our Chief Financial Officer evaluated the effectiveness of
our disclosure controls and procedures as of April 30, 2009 as defined in Rules
13a-15(e) and 15d-15(e) under the Exchange Act. Our management recognizes that
any controls and procedures, no matter how well designed and operated, can
provide only reasonable assurance of achieving their objectives and management
necessarily applies its judgment in evaluating the cost-benefit relationship of
possible controls and procedures. Based on the evaluation of our disclosure
controls and procedures as of April 30, 2009, our Chief Executive Officer, who
also is our principal executive officer, and our Chief Financial Officer, who is
our principal financial officer, concluded that, as of such date, our disclosure
controls and procedures were effective to provide reasonable assurance that
information required to be declared by us in reports that we file with or submit
to the SEC is (1) recorded, processed, summarized, and reported within the
periods specified in the SEC’s rules and forms and (2) accumulated and
communicated to our management, including our Chief Executive Officer and our
Chief Financial Officer, to allow timely decisions regarding required
disclosure.




ITEM
9A(T). CONTROLS AND PROCEDURES




MANAGEMENT’S
ANNUAL REPORT ON INTERNAL CONTROL OVER FINICAL REPORTING





Our
management is responsible for establishing and maintaining adequate internal
control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f)
under the Exchange Act. Our internal control over financial reporting is
designed to provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles. Our internal control
over financial reporting includes those policies and procedures that are
intended to:





1.
            pertain
      to the maintenance of records that, in reasonable detail, accurately and
      fairly reflect the transactions and dispositions of our
      assets;





2.
            provide
      reasonable assurance that transactions are recorded as necessary to permit
      reparation of financial statements in accordance with generally accepted
      accounting principles, and that our receipts and expenditures are being
      made only in accordance with authorizations of our management and
      directors; and





3.
            provide
      reasonable assurance regarding prevention or timely detection of
      unauthorized acquisition, use, or disposition of our assets that could
      have a material effect on our financial
  statements.




Because
of its inherent limitations, internal control over financial reporting may not
prevent or detect misstatements. Also, projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance
with the policies or procedures may deteriorate.




Management's
assessment of the effectiveness of the small business issuer's internal control
over financial reporting is as of the year ended April 30, 2009. We believe that
internal control over financial reporting is effective. We have not identified
any, current material weaknesses considering the nature and extent of our
current operations and any risks or errors in financial reporting under current
operations.


28





This
annual report does not include an attestation report of the Company's registered
public accounting firm regarding internal control over financial reporting.
Management's report was not subject to attestation by the Company's registered
public accounting firm pursuant to temporary rules of the SEC that permit the
Company to provide only management's report in this annual report.




There was
no change in our internal control over financial reporting that occurred during
the fiscal quarter ended April 30, 2009, that has materially affected, or is
reasonably likely to materially affect, our internal control over financial
reporting.




ITEM
9B. OTHER INFORMATION




None.




ITEM
10.  DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS AND
CORPORATE GOVERNANCE; COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE
ACT





The
following are the executive officers and directors of the Company:





Name
                    
                    Age
                    
                    Positions
      and OfficesJ.
      Patrick Kenny
                    
                    53
                    
                    President
      and Chief Executive Officer and Chairman of the Board of
      DirectorsJason
      Lazo
                    
                    43
                    
                    Chief
      Operating OfficerJeffrey
      Daub
                    
                    43
                    
                    Chief
      Financial OfficerBruce
      Klein
                    
                    54
                    
                    Member,
      Board of DirectorsMarvin
      Traub
                    
                    84
                    
                    Member,
      Board of DirectorsThomas
      Schwalm
                    
                    *
                    
                    Member,
      Board of DirectorsFredrick
      Schulman
                    
                    57
                    
                    Member,
      Board of DirectorsHubert
      Millet
                    
                    73
                    
                    Member,
      Board of
Directors





* Mr.
Schwalm is recently deceased





J.
Patrick Kenny has served as the Chairman and Chief Executive Officer of Drinks
Americas, Ltd. (“DA”) since it was founded in September 2002 and as Chairman of
the Company since January 2009.  DA acquired control of the Company in
March 2005.  Mr. Kenny has been our President and Chief Executive
Officer, and a member of our Board of Directors, since March, 2005. He is a
former Senior Vice President and General Manager of Joseph E. Seagram & Sons
("Seagram"), for which he held a variety of senior management positions over 22
years, with increasing levels of responsibility in Seagram's wine, wine cooler,
alcoholic and non-alcoholic beverage divisions.





Mr. Kenny
managed Seagram's worldwide carbonated soft drink operations from 1992 through
March, 2000. He held the title of Senior Vice President and General Manager when
he left Seagram in March 2000, prior to its sale to Vivendi Universal. In April,
2000, he co-founded Sweet16 Intermedia, Inc., a trademark licensing and media
company which was sold to TEENTV Inc., a media company for chain retailers and
mall properties. He has also acted as adviser to several Fortune 500 beverage
marketing companies, and has participated in several beverage industry
transactions. Prior to joining Seagram, Mr. Kenny was employed in a range of
sales and sales management positions with Scott Paper Co. and then Coca Cola's
Wine Spectrum. Mr. Kenny initially attended West Point (U.S. Military Academy),
until an athletic injury required lengthy treatment. He later received a B.A. at
Georgetown University, and an M.A. at St. Johns University in New
York.





Bruce K.
Klein has served as the Vice Chairman of the Board of DA since it was founded in
September 2002 and had been our Chairman of the Board from March, 2005 to
January 2009. Since February, 1999, he has served as the Managing Partner of
Victory Partners LLC, a company created to fund private businesses in their
early stages. In the last five years, Victory has funded six businesses in
technology, vitamins and internet services areas, of which three have became
public companies and three remain private. From 1992 to 1997, Mr. Klein was a
registered representative of the Equitable Companies, responsible for sales and
services to high income clients, acting as investment advisor and estate planner
to an exclusive client base. From 1986 to 1991, Mr. Klein served as President of
Transatlantic Exports Corp., where his duties included purchasing and exporting
of finished and contract goods throughout Europe and Africa. From 1980 through
1991, Mr. Klein owned several retail businesses in lumber, hardware home centers
and decorating. He received a B.S. in Finance and an M.BA in Marketing from
Farleigh Dickinson University.





Marvin
Traub was an initial investor with Mr. Kenny in Maxmillian Partners, LLC, a
former affiliate of DA. He joined our Board of Directors in March, 2005. From
1969 to 1991, he served as the President and Chairman of Bloomingdales. His
background is in marketing, retail, home furnishings and apparel. Mr. Traub
serves as President of his own marketing and consulting firm, Marvin Traub
Associates ("MTA"), which he founded in 1992. MTA is a unique consulting firm
with great expertise in global retailing, marketing and consumer goods products.
Prior to that, Mr. Traub served as Chairman of Finance Global Consulting, the
consulting arm of Finance, Inc., where he was Senior Advisor.


29


Mr. Traub
is the author of "Like No Other Store..." a combination autobiography and
history of Bloomingdale's and American retailing. It was first published in 1993
by Random House and has since gone through three printings, two hardback and one
paperback. In the summer of 2008, Mr. Traub’s second book, “Like No Other
Career...” a sequel to “Like No Other Store...” was published by Assouline and
launched worldwide in October 2008 in Paris. Mr. Traub's consulting clients
include American Express, Ralph Lauren, Jones New York, Saks Fifth Avenue,
Macy’s Department Stores, Nautica Europe, Lanvin-France, Coin-Italy, Men's
Health Magazine, Yue Sai Kan-China, Aishti-Lebonon, Quarter
206-Berlin,  the Time Warner Center at Columbus Circle in New York,
Oscar de la Renta, Harvey Nichols – Dubai, The Tata Group – India, Attica
Department Store – Athens and Bloomingdales - Dubai. Along with two partners,
Mr. Traub created TSM Capital in 2007, a partnership that invests in midsize,
upscale apparel and accessory brands. The first two investments were Matthew
Williamson and Rachel Roy. In the Spring 2008, Mr. Traub, with other investors,
acquired Ellen Tracy form Liz Claiborne and serves as Chairman of Ellen Tracy in
the new enterprise.





Mr. Traub
graduated from Harvard College Magna Cum Laude in 1947 and Harvard Business
School with Distinction in 1949. Mr. Traub was the recipient of The Gold Medal
of the National Retail Federation in 1991 as well as the Legion d’ Honeur and
Order of Merit from France and was awarded the Commendatore de la Republic by
Italy.





Thomas H.
Schwalm is recently deceased,  was an initial investor in Maxmillian
Partners. He joined our Board of Directors in March, 2005. He is a 25 year
veteran of the beverage industry. In 1995, he co-founded the South Beach
Beverage Company, known as SoBe Beverage, which was acquired by PepsiCo, Inc. in
2001. From 1995 to January 2001, he served as managing member of SoBe Beverage.
Mr. Schwalm's career includes various managerial positions with the Joseph
Schlitz Brewing Company from 1968 to 1982 and as Group Marketing Director for
the Stroh Brewing Company from 1982 to 1984, where he managed a $100 million
marketing budget and introduced Stroh nationally in 1983. From 1985 to 1992 he
was Vice President of Sales and Marketing for Dribeck Importers, the US importer
for Becks Beer. In 1992, Mr. Schwalm became President of Barton Beers, in
Chicago. Barton Beers imported and marketed the Modelo brands - Corona, Corona
Light, Pacifico, Negro Modelo and Modelo Especiale. Barton Beers also imported
Tsingtao from China, Double Diamond from England, St. Pauli Girl from Germany,
Peroni from Italy and Point Beer from the Steven Point Brewing Company. Since
January, 2002, Mr. Schwalm had served as the Chief Executive Officer and
President of the Thousand Islands Country Club, an exclusive golfing resort, and
The Preserve, a luxury residential development, both located in upstate NY. Mr.
Schwalm graduated in 1968 from the University of Wisconsin.





Fredrick
Schulman served as the Chairman and President of Gourmet Group, Inc. (our
predecessor) from September 2000 until March of 2005 and he has been a member of
our Board of Directors since March, 2005. He has 25 years of experience in
corporate and commercial finance, venture capital, leveraged buy outs,
investment banking and corporate and commercial law. Mr. Schulman's career
includes key positions with RAS Securities in New York from 1994 to 1998 as
General Counsel and Investment Banker, eventually becoming Executive Vice
President and Director of Investment Banking. From 1999 to September, 2001, he
was President of Morgan Kent Group, Inc, a venture capital firm based in New
York and Austin, Texas. Since September, 2003, Mr. Schulman has served as
Chairman of Skyline Multimedia Entertainment, Inc., and, since September, 2002,
he has served as President and Director of East Coast Venture Capital, Inc., a
specialized small business investment company and community development entity
based in New York. Since September, 2006, Mr. Schulman also has served as
chairman of the board of directors of NewBank, a New York charted commercial
bank.





Hubert
Millet joined our Board of Directors in March, 2007. Mr. Millet has over 40
years experience in consumer products and has spent over 20 years in senior
management positions in the beverage industry. Since 2000, Mr. Millet has acted
as an international consultant to various clients in the beverage industry. From
1989 through 2000, Mr. Millet worked for The Seagram Company Ltd where he served
as a member of the Seagram Spirits & Wine Executive Council. From 1991
through 1997, he served as the President of Seagram Global Brands Division where
he was responsible for production and business development for Martell Cognacs,
Mumm and Perrier-Jouet Champagnex and Barton & Guestier wines, as well as
scotch whiskey operations (Chivas Brothers and Glenlivet). From 1989 through
2000 Mr. Millet was the Chief Executive Officer and Chairman of Seagram's Mumm
Martell Group. Mr. Millet has previously served as Chairman of Barton &
Guestier SA, a member of the Board of Directors of Martell Cognac, a member of
the Board of Directors and Chief Executive Officer of G.H. Mumm, a member of the
Board of Directors and Chief Executive Officer of Perrier-Jouet, a member of the
Board of Directors of Tropicana Europe, and Chairman of the Board of Directors
of Herve Leger (Fashion Co.). From 1977 through 1989, Mr. Millet worked for
Groupe Cointreau where he served in various roles, including the Chief Executive
Officer of the Cointreau Group and as Cointreau's Finance & Development
Director. From 1970 through 1977 Mr. Millet worked for the British American
Tobacco Company, Cosmetics and Beauty Products Division, where he served in
various roles including as a Vice President responsible for finance and
development with respect to the divisions of European operation.





Mr.
Millet has also served as a member of the Board of Directors of Parfums Hermes
(1982-2007), a member of the Hermes Group Strategic Committee (1982-2001), and
serves as a member of the Board of Directors of Hermes USA, and a member of the
Board of Directors of The Savannah College of Art and Design.  Mr.
Millet was the French consul in Savannah, Georgia from 2001 to 2006. Millet has
been the recipient of various rewards, including Officier de la Legion
d'honneur, Officer dans l'Ordre National du Merite and Medaille Commemorative
d'Algerie.





Jason
Lazo has served as our Chief Operating Officer since March, 2005 and the Chief
Operating Officer of DA since May, 2003. From December, 1997 to May, 2003, he
worked for Seagram as Director of Finance, during which he served in the Mixers
Group of Seagram working with Mr. Kenny. From January, 1990 to December, 1997,
Mr. Lazo worked at Kraft Foods as Manager of Business Analysis, with
responsibility for the Capri Sun and Kool-Aid Koolburst, and Ready to Drink
Country Time & Crystal Lite brands. He has also worked as a  Kraft
Foods Plant Controller, managing the start-up of Capri Sun and Lender's Bagels.
He has worked in logistics and procurement for Kraft Foods central manufacturing
organization and in corporate finance for Entenmann's Bakeries, Inc. He received
a B.S. in Finance and an M.S. in Accounting from Long Island
University.


30


Jeffrey
Daub has served as the Company's Chief Financial Officer since May 22, 2007 and
its controller since November, 2006. Prior to joining the Company, from 1992 to
November, 2006, he was employed by Rosen Seymour, Shapss Martin & Company
LLP ("RSSM"), a public accounting firm in New York City, where he most recently
served as an audit manager.. At RSSM, Mr. Daub provided services to clients,
both private and public, in various industries, including the supervision and
performance of financial audits. Mr. Daub, is a Certified Public Accountant as
well as an Accredited Business Valuator. He was awarded a B.S. in Applied
Mathematics and Statistics with a Minor in Business from SUNY Stony Brook and an
M.S. in Accounting from Long Island University.





Committees
of the Board





Our
Board of Directors has established an Audit Committee and a Compensation
Committee.





Audit
Committee





Our Audit
Committee consists of Fredrick Schulman as Chairman and Marvin Traub.Our Audit
Committee is responsible for preparing reports, statements and charters required
by the federal securities laws, as well as:





·
            overseeing
      and monitoring the integrity of our consolidated financial statements, our
      compliance with legal and regulatory requirements as they relate to
      financial statements or accounting  matters, and our internal
      accounting and financial controls;





·
            preparing
      the report that SEC rules require be included in our annual proxy
      statement;





·
            overseeing
      and monitoring our independent registered public accounting firm's
      qualifications, independence and
performance;





·
            providing
      the Board with the results of our monitoring
      and  recommendations; and





·
            providing
      to the Board additional information and materials as it deems necessary to
      make the Board aware of significant financial  matters that
      require the attention of the Board.





The Board
has determined that all current members of the Audit Committee have the ability
to read and understand fundamental financial statements. The Board has also
determined that Fredrick Schulman qualifies as "Audit Committee financial
expert" as defined under Item 407 of Regulation S-K of the Securities Exchange
Act of 1934 (the "Exchange Act"). Mr. Schulman, in his capacity as Chairman and
Chief Executive Officer of Gourmet Group, Inc. (our predecessor company) for
over four years, directly supervised the financial staff of the Company and
coordinated the preparation of the Company's financial statements with its
outside auditors. Neither Mr. Schulman nor Mr. Traub would be viewed as an
independent member of the Audit Committee under the NASDAQ corporate governance
rules.





Compensation
Committee





The
Compensation Committee consists of Bruce Klein as Chairman, Fredrick Schulman
and Marvin Traub. The Compensation Committee assists the Board in fulfilling its
oversight responsibilities relating to officer and director compensation and the
development and retention of senior management.





Nominating
Committee





The Board does not have a standing
nominating committee. The Company does not maintain a policy for considering
nominees.  Director nominees are recommended, reviewed and approved by
the entire Board.The Board believes that this process is
appropriate due to the relatively small number of directors on the Board and the
opportunity to benefit from a variety of opinions and perspectives in
determining director nominees by involving the full Board.





While the Board is solely responsible
for the selection and nomination of directors, the Board may consider nominees
recommended by Stockholders as it deems appropriate. Stockholders who wish to
recommend a nominee should send nominations to the Company's Chief Executive
Officer,J. Patrick Kenny,
372 Danbury Road, Wilton, CT 06897,that include all information relating
to such person that is required to be disclosed in solicitations of proxies for
the election of directors. The recommendation must be accompanied by a written
consent of the individual to stand for election if nominated by the Board and to
serve if elected by the Stockholders.


31




SECTION
16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE





Section
16(a) of the Securities Exchange Act of 1934 requires our directors, executive
officers and beneficial owners of more than 10% of our common stock to file with
the SEC reports of their holdings of and transactions in our common stock. Based
solely upon our review of copies of such reports and representations from
reporting persons that were provided to us, we believe that Bruce Klein did not
file a Form 5 with respect to our last fiscal year and we are unsure whether
such form was required to be filed.





CODE
OF ETHICS





The
Company has adopted a written code of ethics that applies to the Company's
principal executive officer, principal financial officer, principal accounting
officer and any persons performing similar functions. The Company will provide a
copy of its code of ethics to any person without charge upon written request
addressed to 372 Danbury Road, Wilton, CT 06897.





ITEM
11. EXECUTIVE COMPENSATION




COMPENSATION
OF EXECUTIVE OFFICERS




The
following table shows for fiscal years ended April 30, 2009 and 2008,
respectively, certain compensation awarded or paid to, or earned by, the
following persons (collectively, the "Named Executive Officers"): J. Patrick
Kenny, our President and Chief Executive Officer, Jason Lazo, our Chief
Operating Officer , and Jeffrey Daub our Chief Financial Officer and the Named
Executive Officers whose total compensation exceeded $100,000 in 2009 and 2008.
In addition the table includes compensation awarded or paid to, or earned by
Charles Davidson and Brian Kenny and Charles Davidson, employees of the Company
who earned more than $100,000 each in total compensation in 2009.





SUMMARY
COMPENSATION TABLE


NAME
      AND PRINCIPAL
      POSITION
                                                    
                                                    FISCAL
                                                      YEAR
                                                    
                                                    SALARY
                                                      ($)
                                                    
                                                    
                                                    BONUS
                                                      ($)
                                                    
                                                    
                                                    STOCK
                                                      AWARDS
      (1)
                                                      ($)
                                                    
                                                    
                                                    Option
                                                      AWARDS(2)
                                                      ($)
                                                    
                                                    
                                                    ALL OTHER
                                                      COMPENSA
                                                      TION
                                                      ($)
                                                    
                                                    
                                                    TOTAL
                                                      ($)J.
      Patrick Kenny
                                                    
                                                    2009
                                                    
                                                    $
                                                    300,000
                                                    
                                                    
                                                    $
                                                    —
                                                    
                                                    
                                                    $
                                                    —
                                                    
                                                    
                                                    $
                                                    7,551
                                                    
                                                    
                                                    $
                                                    6,959
                                                    
                                                    
                                                    $
                                                    314,510Chief
      Executive
                                                    
                                                    2008
                                                    
                                                    
                                                    300,000
                                                    
                                                    
                                                    
                                                    —
                                                    
                                                    
                                                    
                                                    —
                                                    
                                                    
                                                    
                                                    —
                                                    
                                                    
                                                    
                                                    24,609
                                                    
                                                    
                                                    
                                                    324,609Officer
      (3)Jason
      Lazo
                                                    
                                                    2009
                                                    
                                                    
                                                    175,000
                                                    
                                                    
                                                    
                                                    —
                                                    
                                                    
                                                    
                                                    40,000
                                                    
                                                    
                                                    
                                                    1,510
                                                    
                                                    
                                                    
                                                    —
                                                    
                                                    
                                                    
                                                    216,510Chief
      Operating
                                                    
                                                    2008
                                                    
                                                    
                                                    175,000
                                                    
                                                    
                                                    
                                                    —
                                                    
                                                    
                                                    
                                                    —
                                                    
                                                    
                                                    
                                                    —
                                                    
                                                    
                                                    
                                                    —
                                                    
                                                    
                                                    
                                                    175,000OfficerJeffrey
      Daub
                                                    
                                                    2009
                                                    
                                                    
                                                    145,000
                                                    
                                                    
                                                    
                                                    —
                                                    
                                                    
                                                    
                                                    44,200
                                                    
                                                    
                                                    
                                                    906
                                                    
                                                    
                                                    
                                                    —
                                                    
                                                    
                                                    
                                                    190,106Chief
      Financial
                                                    
                                                    2008
                                                    
                                                    
                                                    125,000
                                                    
                                                    
                                                    
                                                    —
                                                    
                                                    
                                                    
                                                    —
                                                    
                                                    
                                                    
                                                    —
                                                    
                                                    
                                                    
                                                    2,161
                                                    
                                                    
                                                    
                                                    127,161Officer(4)Charles
      Davidson
                                                    
                                                    2009
                                                    
                                                    
                                                    72,000
                                                    
                                                    
                                                    
                                                    —
                                                    
                                                    
                                                    
                                                    40,000
                                                    
                                                    
                                                    
                                                    378
                                                    
                                                    
                                                    
                                                    —
                                                    
                                                    
                                                    
                                                    112,378Director
      of
                                                    
                                                    2008
                                                    
                                                    
                                                    90,000
                                                    
                                                    
                                                    
                                                    —
                                                    
                                                    
                                                    
                                                    —
                                                    
                                                    
                                                    
                                                    —
                                                    
                                                    
                                                    
                                                    —
                                                    
                                                    
                                                    
                                                    114,999OperationsBrian
      Kenny
                                                    
                                                    2009
                                                    
                                                    
                                                    69,003
                                                    
                                                    
                                                    
                                                    —
                                                    
                                                    
                                                    
                                                    40,000
                                                    
                                                    
                                                    
                                                    1,737
                                                    
                                                    
                                                    
                                                    —
                                                    
                                                    
                                                    
                                                    110,740V.P.
      Marketing
                                                    
                                                    2008
                                                    
                                                    
                                                    92,000
                                                    
                                                    
                                                    
                                                    7,667
                                                    
                                                    
                                                    
                                                    —
                                                    
                                                    
                                                    
                                                    —
                                                    
                                                    
                                                    
                                                    —
                                                    
                                                    
                                                    
                                                    102,473




(1)
Represents the dollar amount of expenses recognized for financial statement
purposes with respect to the 2009 fiscal year for the fair value of incentive
stock options issued under our  2008 Stock Incentive Plan (the”
Plan”)  which was approved by our shareholders in January 2009 which
provides for awards of incentives of non-qualified stock options, stock,
restricted stock and stock appreciation rights for its officers, employees,
consultants and directors in order to attract and retain such individuals and to
enable them  to participate in the long-term success and growth of the
Company. Under SEC rules, the  amounts shown exclude the impact of
estimated forfeitures relating to service-based vesting conditions. See note 13
to our consolidated financial statements for the year ended April 30, 2009
included in this 10-K regarding the assumptions underlying
the  valuation of these grants.




(2) Stock
Awards in fiscal 2009 represents the issuance of  shares
each  of our common stock to Mr. Lazo, Mr. Daub, Mr. Davidson and Mr.
Brian Kenny  under the Plan in our fourth quarter of fiscal 2009. Each
individual was awarded 250,000 shares  as a bonus
for  services they have provided the Company which are at fair market
value on the date of grant valued in accordance with FAS 123R at $0.16 per
share.


32


(3) In
fiscal 2009 and 2008 Mr. Kenny converted
$10,000  and  $25,000 of compensation, respectively
,  due him into 28,571 and 50,000, respectively,  shares of
the Company’s common stock which amount is included in salary in the above
table.  Other compensation of $6,959 in fiscal 2009 and $24,609 in
fiscal 2008 represents payments of personal major medical and life insurance
premiums. We implemented a corporate sponsored group life and health plan in
March 2008which does not discriminate in scope, terms of operation, in favor of
executive officers and is available to all salaried employees.




(4) In
addition to the value of stock granted to Mr. Daub ($40,000)
also  includes  the value of  warrants issued to
Mr. Daub to purchase 300,000 shares of our common stock  in our second
quarter fiscal 2009 for services he has provided the Company which are at fair
market value on the date of grant valued in accordance with FAS 123R at $0.014
per share. The warrants are exercisable for 5 years from the date of issuance
and have an exercise price of $0.50 per share.  Other compensation of
$2,161 in fiscal 2008 represents payments of personal major medical
premiums.





INCENTIVE
PLANS





In
January 2009, the Company’s shareholders approved the 2008 Stock Incentive Plan
(the” Plan”) which provides for awards of incentives of non-qualified stock
options, stock, restricted stock and stock appreciation rights for its officers,
employees, consultants and directors in order to attract and retain such
individuals and to enable them  to participate in the long-term
success and growth of the Company. Stock options granted under the Plan are
granted with an exercise price at or above the fair market value of the
underlying common stock at the date of grant, generally vest over a four year
period and expire 5 years after the grant date.





Also on
March 12, 2009, the Company granted 1,175,000 shares of  its common
stock under the Plan  to several of  its employees as
consideration for past services they have performed for the Company. The stock
awards vested immediately upon grant. The stock we issued to our Named Executive
Officers were valued based on the market price of the shares on the
over-the-counter Bulletin Board on the date  the shares were
granted.





GRANTS
OF PLAN-BASED AWARDS IN FISCAL 2009





The
following table sets forth information regarding grants of plan-based awards to
each of the Named Executive Officers during fiscal 2009.





All OtherAll Other
                        
                        
                        OptionStock
                        
                        
                        Awards:Estimated Future Payouts Under
                        
                        
                        Awards:
                        
                        
                        Number of
                        
                        
                        Exercise or
                        
                        
                        Grant DateNon-Equity Incentive Plan Awards
                        
                        
                        Shares of
                        
                        
                        Securities
                        
                        
                        Base Price
                        
                        
                        Fair Value ofStock or
                        
                        
                        Underlying
                        
                        
                        Of Option
                        
                        
                        Stock andGrant
                        
                        Threshold
                        
                        
                        Target
                        
                        
                        Maximum
                        
                        
                        Units
                        
                        
                        Options
                        
                        
                        Awards
                        
                        
                        Option awardsNAME
                        
                        Date
                        
                        ($)
                        
                        ($)
                        
                        ($)
                        
                        
                        
                        (#)(1)
                        
                        
                        
                        (#)(2)
                        
                        
                        ($/Sh) (3)
                        
                        
                        (S) (4)J.
      Patrick Kenny
                        
                        03/12/09
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        2,500,000
                        
                        
                        
                        0.176
                        
                        
                        
                        225,000Jason
      Lazo
                        
                        03/12/09
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        250,000
                        
                        
                        
                        500,000
                        
                        
                        
                        0.160
                        
                        
                        
                        85,000Jeffrey
      Daub (5)
                        
                        03/12/09
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        250,000
                        
                        
                        
                        300,000
                        
                        
                        
                        0.160
                        
                        
                        
                        67,000Brian
      Kenny
                        
                        03/12/09
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        250,000
                        
                        
                        
                        575,000
                        
                        
                        
                        0.160
                        
                        
                        
                        91,950Charles
      Davidson
                        
                        03/12/09
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        250,000
                        
                        
                        
                        125,000
                        
                        
                        
                        0.160
                        
                        
                        
                        51,250





(1) Stock
awards vested immediately upon grant.





(2)
Options vest and become exercisable in four annual installments over the course
of four years.





(3) The
exercise price for option awards for Mr. Lazo and Mr. Daub is the fair market
value  per share of our common stock and for Mr. Kenny the exercise
price is at a 10% premium to such value, which is defined under
the  Plan as the closing price per share on the grant
date.





(4) This
column represents the full grant date fair value of each individual equity award
calculated in accordance with SFAS 123R. For additional information on the
valuation assumptions used in the calculation of these amounts, refer to Note 13
to the consolidated financial statements included in our annual report on from
10-K for the year ended April 30, 2009, as filed with the SEC. These amounts
generally reflect the amount that we  will expense in our financial
statements over the award’s vesting schedule, and do not correspond to the
actual value that will be recognized by the Named Executive
Officers.


33





(5)
During our year ended April 30, 2009 the Company issued Mr. Daub warrants to
purchase 300,000 shares of our common stock at an exercise price of $0.50 per
shares. These warrants are not included in the above table as they were
not  granted   in accordance with


a company
plan. The fair value of the warrants were  calculated using the
Black-Scholes formula and market date of our common stock on the date of grant
aggregated $4,200.





OUTSTANDING
EQUITY AWARDS AT 2009 FISCAL 2009





The
following table lists all outstanding equity awards held by each f the Named
Executive Officers as of April 30, 2009.





Equity Awards
                          
                          Stock AwardsEquity
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          Equity
                          
                          
                          EquityIncentive
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          Incentive
                          
                          
                          IncentiveNumber of
                          
                          
                          Number of
                          
                          
                          Plan Awards:
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          Plan Awards:
                          
                          
                          Plan Awards:Unearned
                          
                          
                          Unearned
                          
                          
                          Number of
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          Market
                          
                          
                          Number of
                          
                          
                          Market Valuesecurities
                          
                          
                          securities
                          
                          
                          Securities
                          
                          
                          
                          
                          
                          
                          Number of
                          
                          
                          Value of
                          
                          
                          Unearned
                          
                          
                          Of UnearnedUnderlying
                          
                          
                          Underlying
                          
                          
                          Underlying
                          
                          
                          
                          
                          
                          
                          Shares or
                          
                          
                          Stock
                          
                          
                          Shares, Units
                          
                          
                          Shares, UnitsUnexercised
                          
                          
                          Unexercised
                          
                          
                          Unexercised
                          
                          
                          Option
                          
                          
                          
                          Units of Stock
                          
                          
                          that
                          
                          
                          or Other
                          
                          
                          or OtherOptions
                          
                          
                          Options
                          
                          
                          Unearned
                          
                          
                          Exercise
                          
                          Option
                          
                          That Have
                          
                          
                          Have Not
                          
                          
                          Rights That
                          
                          
                          Rights That(#)
                          
                          
                          (#)
                          
                          
                          Options
                          
                          
                          Price
                          
                          Expiration
                          
                          Not Vested
                          
                          
                          Vested
                          
                          
                          Have Not
                          
                          
                          Have NotNAME
                          
                          Exercisable (1)
                          
                          
                          Inextricable
                          
                          
                          
                          (#)
                          
                          
                          ($)
                          
                          Date (2)
                          
                          
                          (#)
                          
                          
                          ($)
                          
                          
                          Vested (#)
                          
                          
                          Vested (#)J.
      Patrick Kenny
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          2,500,000
                          
                          
                          
                          0.176
                          
                          03/11/14
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -Jason
      Lazo
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          500,000
                          
                          
                          
                          0.160
                          
                          03/11/14
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -Jeffrey
      Daub
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          300,000
                          
                          
                          
                          0.016
                          
                          03/11/14
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -Brian
      Kenny
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          575,000
                          
                          
                          
                          0.160
                          
                          03/11/14
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -Charles
      Davidson
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          125,000
                          
                          
                          
                          0.160
                          
                          03/11/14
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -





(1)
Options vest and become exercisable in four equal annual installments over the
course of four years.





(2) The
expiration date of each option occurs 5 years after the date of grant of each
option.





EMPLOYMENT
AGREEMENTS





We have
not entered into any employment agreements with our executive officers or other
employees to date. We may enter into employment agreements with them in the
future.





DIRECTOR
COMPENSATION





The
following table represents a summary of the compensation paid to our directors
for their services on our board of directors during the fiscal year ended April
30, 2009. Except as listed below, there were no bonuses, other annual
compensation, restricted stock awards or stock options/SARs, or any other
compensation paid to the directors listed for their services as a director of
the Company. Except as disclosed in the table below, no compensation was paid to
our directors for any of the last three fiscal years for their services as
directors of the Company.




Directors
Compensation for the Fiscal Year Ended April 30, 2009





Name
                    
                    Cash Fees
                      ($) (1)
                    
                    
                    Option
                      Awards
                      ($) (2)
                    
                    
                    Total
                      ($)Bruce
      Klein
                    
                    $
                    25,000
                    
                    
                    $
                    9,000
                    
                    
                    $
                    34,000Thomas
      Schwalm
                    
                    
                    25,000
                    
                    
                    
                    9,000
                    
                    
                    
                    34,000Marvin
      Traub
                    
                    
                    25,000
                    
                    
                    
                    9,000
                    
                    
                    
                    34,000Fredrick
      Schulman
                    
                    
                    25,000
                    
                    
                    
                    9,000
                    
                    
                    
                    34,000Hubert
      Millet
                    
                    
                    25,000
                    
                    
                    
                    9,000
                    
                    
                    
                    34,000


34





(1)
            Cash
      fees represent amounts earned but not paid in fiscal 2009 for services
      rendered as a director. The board has not made a determination whether
      such amounts will be paid in cash or common
  stock.





Option
awards represent the compensation cost recognized in the fiscal year ended April
30, 2009 as calculated in accordance with FAS 123R with respect to all option
awards granted to our directors in fiscal 2009. There were no such awards to our
directors prior to our fiscal 2009 year. In fiscal 2009 each director was
issued  options to purchase 100,000 shares of our common stock at an
exercise price of $0.16 which was the market value of our common stock on the
date of grant. Each of the options vested immediately upon grant and are
exercisable for  a period of 5 years from the date of grant. The
options were issued as consideration for cumulative services the directors have
provided us  and it is not the intention of the Company to issue stock
options to the directors for their services.





In fiscal
2009, our CEO was paid interest on loans he made to the Company (These payments
are described in the section of this report entitled “Certain Relationships and
Related Party Transactions”). In fiscal 2009, Companies wholly owned by Marvin
Traub and Bruce Klein earned consulting fees of $100,000 and $84,000,
respectively, for work not related to serving on our board. In addition, in
fiscal 2009,we issued a company  controlled by Fred Schulman options
to purchase 400,000 shares of our common stock which had an aggregate value of
$21,000 on the date of grant  for legal services rendered to our
Company (See “Certain Relationships and Related Party
Transactions”).





35





ITEM
12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS, DIRECTORS AND EXECUTIVE
OFFICERS AND RELATED SHAREHOLDER MATTERS




The
following table sets forth, as of July 31, 2009, certain information regarding
the ownership of our voting securities by each stockholder known to our
management to be (i) the beneficial owner of more than 5% of our outstanding
common stock, (ii) our directors, (iii) our named executive officers (iv) two
additional employees of the Company whose received total compensation of greater
than $100,000 in fiscal 2009 and (iv) all executive officers and directors as a
group. We believe that, except as otherwise indicated, the beneficial owners of
the Common Stock listed below, based on information furnished by such owners,
have sole investment and voting power with respect to such shares. Percentage of
ownership is based on 94,016,716 shares of Common Stock issued and outstanding
at July 31, 2009, plus, as to the holder thereof only and no other person, the
number of shares of Common Stock which may be acquired on conversion of our
preferred stock or are subject to options, warrants and convertible debentures
exercisable or convertible within 60 days of July 31, 2009 by that
person.







Number of Shares
                                                                              of
                                                                            
                                                                            
                                                                            Percentage ofCommon Stock
                                                                            
                                                                            
                                                                            OutstandingName
                                                                            
                                                                            Beneficially Owned
                                                                            
                                                                            
                                                                            SharesJ.
      Patrick Kenny
                                                                            
                                                                            
                                                                            14,621,154
                                                                            (1)
                                                                            
                                                                            
                                                                            15.55
                                                                            %30
      Old Wagon RoadWilton,
      CT 06877Bruce
      Klein
                                                                            
                                                                            
                                                                            9,372,691
                                                                            (2)
                                                                            
                                                                            
                                                                            9.97
                                                                            %123
      Elbert StreetRamsey,
      NJ 07446Kenneth
      Close
                                                                            
                                                                            
                                                                            9,014,758
                                                                            (3)
                                                                            
                                                                            
                                                                            9.57
                                                                            %3708
      Oliver Street NWWashington,
      DC 20015Thomas
      Schwalm
                                                                            
                                                                            
                                                                            3,868,073
                                                                            (4)
                                                                            
                                                                            
                                                                            4.10
                                                                            %5983
      SE Morning Dove WayHobe
      Sound, FL 33455Jason
      Lazo
                                                                            
                                                                            
                                                                            1,265,034
                                                                            (5)
                                                                            
                                                                            
                                                                            1.35
                                                                            %144
      Wire Mill Rd.Stamford,
      CT 06903Marvin
      Traub
                                                                            
                                                                            
                                                                            1,772,291
                                                                            (6)
                                                                            
                                                                            
                                                                            1.88
                                                                            %535
      Fifth AvenueNew
      York, NY 10022Fredrick
      Schulman
                                                                            
                                                                            
                                                                            1,907,105
                                                                            (7)
                                                                            
                                                                            
                                                                            2.02
                                                                            %241
      Fifth Ave, Suite 302New
      York, NY 10016Hubert
      Millet
                                                                            
                                                                            
                                                                            234,164
                                                                            (8)
                                                                            
                                                                            
                                                                            0.25
                                                                            %102
      Queens Garden DrThousand
      Oaks, CA 91361Jeffrey
      Daub
                                                                            
                                                                            
                                                                            550,000
                                                                            (9)
                                                                            
                                                                            
                                                                            0.58
                                                                            %21
      Richard RDMahopac,
      NY 10541Brian
      Kenny
                                                                            
                                                                            
                                                                            447,000
                                                                            (10)
                                                                            
                                                                            
                                                                            0.51
                                                                            %30
      Old Wagon RoadWilton,
      CT 06877Charles
      Davidson
                                                                            
                                                                            
                                                                            549,160
                                                                            (11)
                                                                            
                                                                            
                                                                            0.58
                                                                            %152
      Ridgedale Ave.Madison,
      NJ 07940Enable
      Growth Partners, LP
                                                                            
                                                                            
                                                                            9,575,572
                                                                            (12)
                                                                            
                                                                            
                                                                            9.99
                                                                            %1
      Ferry Bldg Ste 255San
      Francisco, CA 94111All
      Directors, Officers
                                                                            
                                                                            
                                                                            33,590,,512
                                                                            
                                                                            
                                                                            
                                                                            35.70
                                                                            %and
      Management as a group (8persons)


36





(1)
Includes 10,000,000 shares owned by Kenny LLC I, and 2,000,000 shares owned by
Kenny LLC II, entities controlled by Mr. Kenny. Does not include 447,000 shares
owned by Mr. Kenny's son and 191,263 shares owned by Mr. Kenny's brother, as to
which shares Mr. Kenny disclaims beneficial ownership, or options to purchase
2,500,000 shares of our common stock  which were granted to Mr. Kenny
which will not be exercisable within  60 days of  July 31,
2009. As of July 31, 2009 Mr. Kenny has pledged 6,000,000 of his shares as
security for a Company debt financing. which are included above.





(2)
Includes 6,700,000 shares owned by Peter Christian and Associates, LLC, and
1,500,633 shares owned by Victory Partners, LLC, entities controlled by Mr.
Klein, 55,556, shares owned by Vigilant Investors, of which Mr. Klein is a
partner, and 550,000 and 450,000 shares owned by the wife and sons of Mr. Klein
respectively and options to purchase 100,000 shares granted to Mr. Klein. Mr.
Klein disclaims beneficial ownership of the shares owned by his wife, his son,
and Vigilant Investors., As of July 31, 2009 Mr. Klein has pledged 1,200,000 of
his shares as security for a Company debt financing. which are included
above.





(3)
Includes 4,701,167 shares owned by Nexcomm International Beverage, LLC, an
entity controlled by Mr. Close, 211,136 shares in trusts for the benefit of Mr.
Close’s four children of which Mr. Close is a trustee, warrants to purchase
83,333 shares, and options to purchase 100,000 shares.





(4)
Includes 3,498,434 shares and warrants to purchase 155,556 shares owned by
Greenwich Beverage Group, LLC ("Greenwich"), an entity controlled by Mr.
Schwalm. Also includes 1,500 shares owned by a trust of which Mr. Schwalm is
co-trustee, as to which shares Mr. Schwalm disclaims beneficial ownership, and
options to purchase 100,000 shares granted to Mr. Schwalm.





(5)
Includes 907,434 shares owned by Lazo, LLC, an entity controlled by Mr. Lazo and
100,000 shares owned by Mr. Lazo’s daughters. ,Does not include options to
purchase ,500,000 shares of our common stock  which were granted to
Mr. Kenny which will not be exercisable within  60 days
of  July 31, 2009. As of July 31, 2009 Mr. Lazo  has pledged
907,434 of his shares as security for a Company debt financing. which are
included above.





(6)
Includes options to purchase 100,000 shares. Does not include 22,222 shares
owned by Mr. Traub's son, as to which shares Mr. Traub disclaims beneficial
ownership. As of July 31, 2009 Mr. Traub has pledged 896,286 of his shares as
security for a Company debt financing. which are included above.




(7)
Includes 219,970 shares owned by Mr. Schulman's wife, Lois Shapiro, to which
shares Mr. Schulman disclaims beneficial ownership and options to purchase
500,000 shares.





(8)
Includes options to purchase 100,000 shares.





(9)
Includes warrants to purchase 300,000 shares. Does not include options to
purchase  300,000 shares of our common stock  which were
granted to Mr. Daub which will not be exercisable within  60 days
of  July 31, 2009





(10) Does
not include options to purchase ,575,000 shares of our common
stock  which were granted to Mr.,. Kenny which will not be exercisable
within  60 days of  July 31, 2009.





(11)  Includes
299,160 shares owned by Crinj, an entity controlled by Mr.
Davidson.  Does not include options to purchase 100,000 shares of our
common stock  which were granted to Mr.,. Kenny which will not be
exercisable within  60 days of  July 31, 2009.





(12)
Includes 1,834,853 shares purchasable on conversion of convertible preferred
stock. Does not include an additional 16,778,204 shares purchasable upon
conversion of convertible preferred stock due to provisions of the Certificate
of Designation with respect to our Series A Preferred Stock, which generally
prevent conversion of the preferred stock if conversion would result in
beneficial ownership by the holder of greater than 9.99% of our
shares.


37





Equity
Compensation Plan Information





The
following table sets forth information at April  31, 2009 regarding
compensation plans under which our equity securities are authorized for
issuance.




Plan Category
                
                Number of securities to be
                  issued upon exercise
                  outstanding options,
                  warrants, restricted stock
                  and rights
                
                
                Weighted -average
                  exercise price of
                  outstanding options,
                  warrants, restricted
                  stock and rights
                
                
                Number of securities
                  remaining available for
                  future Issuances under
                  equity compensation plansEquity
      compensation plans approved by security holders
                
                
                5,775,000
                
                
                $
                0.22
                
                
                
                3,050,000Equity
      compensation plans not approved by security holders
                
                
                6,444,424
                
                
                
                0.85
                
                
                
                -12,219,424
                
                
                $
                0.55
                
                
                
                3,050,000




ITEM 13. CERTAIN RELATIONSHIPS AND
RELATED TRANSACTIONS





Consulting
and Marketing Fees





For each
of the years ended April 30, 2009 and 2009, the Company incurred fees for
services rendered related to sales and marketing payable to a limited liability
company which was controlled by Bruce Klein, a member of the Company’s board of
directors, and previous  chairman of the board aggregating $84,000. As
of April 30, 2009 and 2008  unpaid fees owed to the chairman's firm,
aggregated $174,550 and  $98,550, respectively.





In fiscal
2003 we entered into a consulting agreement with a company wholly owned by
Marvin Traub,  a member of the Company's board of directors. Under the
agreement the consulting company is being compensated at a rate of $100,000 per
annum. As of April 30, 2009 and 2008 we were indebted to the consulting company
in the amount of $256,248 and  $156,248, respectively.





Legal
Fees





For the
year ended the Company granted to Fredrick Schulman, a member of our board of
directors , options to purchase 400,000 shares of our Company stock, under our
Plan,  for legal services he provided the Company. The fair market
value of the options issued, which vested 100% upon grant, aggregated $45,000
based on the assumptions disclosed in Note 13 of our consolidated financial
statements for the 2009 fiscal year.   For the years ended April
30, 2008, the Company incurred legal fees payable to a company which was
controlled by  Mr. Schulman
aggregating.  $57,633.





Royalty
Fees





We
incurred  royalty expenses of approximately $30,000 and $62,000 in
fiscal 2009 and 2008, respectively, to Alive Sprits LLC which we own 25 percent
membership interest.





Loan
Payable





From July
2007 through April 2009 the Company borrowed an aggregate of $654,435
from  J. Patrick Kenny, our CEO,  for working capital
purposes.   The borrowings bear interest at 12% per annum..
For  the years ended April 30, 2009 and 2008 interest incurred on this
loan aggregated $38,204 and $37,798, respectively.  As
of  April 30, 2009 and, 2008 amounts owed to our CEO on these loans
including accrued and unpaid interest aggregated $305,935 and $232,547,
respectively.




Independence
of Directors
 The Board
of Directors has determined that each of our directors, except Mr. Kenny and Mr.
Klein, are independent “directors” within the meaning of the applicable rules
and regulations of the SEC and the director independence standards of NASDAQ.
Neither Mr. Schulman nor Mr. Traub would be viewed as an independent member of
the Audit Committee under NASDAQ corporate governance
rules.


38





ITEM
14. PRINCIPAL ACCOUNTANTS' FEES AND SERVICES




Set forth
below are the fees billed by the Company’s independent principal accountants for
the past two years for services provided to the Company.




Audit
fees: We engaged Bernstein & Pinchuk, LLP as our principal accountants to
perform the audit of our financial statements for the year ended April 30, 2009.
During the year ended April 30, 2008 we were billed $90,000 including amounts
billed for the audit of the Company for the year ended April 30, 2007 and fees
related to quarterly reviews during the year ended April 30, 2008. During the
year ended April 30, 2009 we were billed $107,000 including amounts billed for
the audit of the Company for the year ended April 30, 2008 and fees related to
quarterly reviews for the year ended April 30, 2009. These fees include required
audits and reviews of Olifant USA, Inc.  a Company which we acquired
90% of  the common stock during our 2009 fiscal year. We have not yet
been billed for the audit of the Company for the year ended April 30,
2009.




Tax fees:
None




All Other
Fees: For the year ended April 30, 2008 we were billed by our principal
accountants $38,000 for the services relating to a potential acquisition and
$3,000 relating to our Registration Statement which was declared effective on
June 5, 2009.





ITEM
15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES





(a)
            The
      following documents are filed as part of this
  report:





(1)
            Financial
      Statements.





See
“Index to Financial Statements” in item 8 on
page     of this Annual Report on form
10-K.





(2)
            Financial
      Statement Schedules.





All
financial statement schedules are omitted either because they are not required,
not applicable or the required information is included in the financial
statements or notes thereto.





(3)
            Exhibits.





(b)





ITEM
      13. EXHIBITS(A)
      Exhibit Index2.1
              
              Agreement
      and Plan of Share Exchange, dated as of June 9, 2004, among Gourmet Group,
      Inc., Drinks Americas, Inc. and the shareholders of Drinks Americas,
      Inc.3.1
              
              Certificate
      of Incorporation of Drinks Americas Holdings, Ltd.3.2
              
              By-Laws
      of Drinks Americas Holdings, Ltd.3.3**
              
              Certificate
      of Designation of Series A Convertible Preferred Stock.3.4*
              
              Certificate
      of Amendment of Certificate of Incorporation of Drinks Americas Holdings,
      Ltd. dated January 16, 20094.1
              
              Form
      of 10% Convertible Promissory Note issued by Gourmet Group, Inc.,
      including Registration Rights provisions.42****
              
              Form
      of 10% Senior Convertible Promissory Note, dated March 2005, issued by
      Drinks Americas Holdings, Ltd. issued by Drinks Americas Holdings, Ltd. to
      investors in its Bridge Notes financing.4.3****
              
              Form
      of Stock Purchase Warrant, dated March 2005, issued by Drinks Americas
      Holdings, Ltd to investors in its Bridge Note
financing.


39





4.4*****
              
              Form
      of Securities Purchase Agreement, dated as of January 30th, 2007 between
      Drinks Americas Holdings, Ltd. and certain investors.4.5*****
              
              Form
      of Registration Rights Agreement, dated as of January 30th, 2007 between
      Drinks Americas Holdings, Ltd. and certain investors.4.6*****
              
              Form
      of Common Stock Purchase Warrant, dated as of January 30th, 2007 between
      Drinks Americas Holdings, Ltd. and certain investors.4.7*****
              
              Form
      of Placement Agent Agreement between Drinks Americas Holdings,Ltd. and
      Midtown Partners Co., LLC dated as of October 25th,
  2006.4.8*****
              
              Form
      of Placement Agent Warrant, dated as of January 30th, 2007 between Drinks
      Americas Holdings, Ltd. and Midtown Partners Co., LLC.4.9*******
              
              Form
      of Securities Purchase Agreement dated as of December 18, 2007 Between
      Drinks Americas Holdings, Ltd. and certain Investors.4.10*******
              
              Form
      of Registration Rights Agreement, dated as of December 18, 2007 Between
      Drinks Americas Holdings, Ltd and certain Investors.4.11*******
              
              Form
      of Placement Agent Agreement between Drinks Americas Holdings, Ltd. and
      Midtown Partners Co., LLC.4.13*******
              
              Form
      of Placement Agent Warrant, dated as of December 18, 2007 between Drinks
      Americas Holdings, Ltd. and Midtown Partners Co., LLC.4.14*********
              
              Form
      of Notice  to Warrant Holders dated October 27,
    20084.15*********
              
              Form
      of Notice  to Other Warrant Holders dated October 28,
      20084.16**************
              
              Form
      of Securities Purchase Agreement, dated as of June 18, 2009 between Drinks
      Americas Holdings, Ltd., St. George Investments, LLC, J. Patrick Kenny and
      certain other parties thereto. (Inadvertently filed as Exhibit 4.14 in our
      8K filing on June 19, 2009)4.17**************
              
              Form
      of Debenture, dated June 18, 2009 issued by Drinks Americas Holdings,
      Ltd., to St. George Investments, LLC(Inadvertently filed as Exhibit 4.15
      in our 8K filing on June 19, 2009)4.18**************
              
              Form
      of Pledge Agreement, dated June 18, 2009 between Drinks Americas Holdings,
      Ltd., St. George Investments, LLC, J. Patrick Kenny and certain other
      parties thereto.(Inadvertently filed as Exhibit 4.16 in our 8K filing on
      June 19, 2009)10.1
              
              Form
      of 10% Promissory Note issued by Drinks Americas, Inc. to Gourmet Group,
      Inc. relating to the proceeds of the Private Placement.10.2
              
              Agreement,
      dated April 6, 2004, between Paul Newman, Newman's Own,Inc. and Drinks
      Americas, Inc. relating to the distribution of Newman's Own Lightly
      Sparkling Fruit Juices.10.3
              
              Letter,
      dated May 12, 2003, from Interamericana de Licores, S.A. to Drinks
      Americas, Inc. relating to the production of Cohete
Rum.10.4
              
              Purchase
      Agreement, dated July 29, 2003, between Drinks Americas, Inc. and Aguila
      Tequila Partners relating to Aguila Tequila.10.5
              
              Agreement,
      dated June 24, 2003, between Xanadu Wines Limited and Drinks Americas,
      Inc. relating to the distribution of Xanadu Normans
  Wines.10.6
              
              Interest
      Purchase Agreement, dated December 9, 2002, between Drinks Americas, Inc.
      and Shep Gordon.


40





10.7
                  
                  Assignment,
      dated December 9, 2002, from Shep Gordon to Drinks Americas,Inc. of the
      limited liability company interests in Old Whiskey River Distilling
      Company LLC.10.8
                  
                  Assignment,
      dated December 9, 2002, from Shep Gordon to Drinks Americas, Inc. of the
      limited liability company interests in Y Sake LLC.10.9
                  
                  Assignment,
      dated December 9, 2002, from Alive Enterprises, Inc. to Old Whiskey River
      Distilling Company LLC of Trademark rights to Old Whiskey
      River.10.1
                  
                  Assignment,
      dated December 9, 2002, from Alive Enterprises, Inc. to Y Sake LLC of
      Trademark rights to Y Sake.10.11
                  
                  Trademark
      License Agreement, dated December 9, 2002, between Drinks Americas, Inc.
      and Old Whiskey River Distilling Company LLC relating to Old Whiskey River
      and Willie Nelson.10.12
                  
                  Trademark
      License Agreement, dated December 9, 2002, between Drinks Americas, Inc.
      and Y Sake LLC relating to Y Sake and Roy Yamaguchi.10.13
                  
                  Distributor
      Rights Agreement, dated December 9, 2002, between Old Whiskey River
      Distilling Company LLC and Drinks Americas, Inc.10.14
                  
                  Distributor
      Rights Agreement, dated December 9, 2002, between Y Sake LLC and Drinks
      Americas, Inc.10.15
                  
                  Consulting
      and Exclusive Referral Agreement, dated December 9, 2002,by and among Shep
      Gordon, Drinks Americas, Inc. and Maxmillian Partners,
  LLC.10.16
                  
                  Sublease
      Agreement, dated August 12, 2002, by and between Blau Marketing
      Technologies, Inc. as Sublandlord and Maxmillian Partners,LLC as
      subtenant.10.17
                  
                  Amended
      and Restated License Agreement, dated December 10, 2002, between Old
      Whiskey River Distilling Company, LLC and Willie
Nelson.10.18
                  
                  Consulting
      Letter Agreement, dated March 28, 2002, between Marvin Traub Associates,
      Inc. and Maxmillian Partners, LLC.10.19
                  
                  Letter,
      dated October 28, 2002, from DAS Communications Ltd. (David Sonenberg) to
      Drinks Americas, Inc.10.2
                  
                  Restated
      (Demand) Promissory Note, dated as of July 9, 2004, in the amount of
      $290,000 from Drinks Americas, Inc. to Fredrick Schulman as agent for the
      payees.10.21
                  
                  Promissory
      Note, dated May 10, 2004, in the amount of $200,000 from Drinks Americas,
      Inc. to Bank Leumi USA.10.22
                  
                  Unlimited
      Guaranty, dated May 13, 2004, from Drinks Americas, Inc. to Bank Leumi
      USA.10.23
                  
                  Secured
      Convertible Note and Agreement, dated April 8, 2003, in the amount of
      $200,000 from Maxmillian Partners LLC to Nexcomm International Beverages,
      LLC.10.24
                  
                  Guaranty
      Agreement, dated April 8, 2003, between Drinks Americas, Inc.and Nexcomm
      International Beverages, LLC.10.25
                  
                  Security
      Agreement, dated April 8, 2003, by and between Drinks Americas, Inc. and
      Nexcomm International Beverages, LLC.


41





10.26
              
              Secured
      Convertible Note and Agreement, dated July 28, 2003, in the amount of
      $200,000 from Maxmillian Partners LLC to Nexcomm International Beverages,
      LLC.10.27
              
              Security
      Agreement, dated July 28, 2003, by and between Maxmillian Partners LLC and
      Kenneth H. Close.10.28
              
              Security
      Agreement, dated July 28, 2003, by and between Drinks Americas, Inc. and
      Kenneth H. Close.10.29
              
              Guaranty
      Agreement, dated July 28, 2003, between Maxmillian Mixers LLC and Kenneth
      H. Close.10.3
              
              Promissory
      Note, dated October 15, 2004, in the amount of 155,975 from Drinks
      Americas, Inc. to Nexcomm International Beverages, LLC.10.31
              
              Note,
      dated October 15, 2004, in the amount of $352,167 from Drinks Americas,
      Inc. to Kenneth H. Close.10.32
              
              Promissory
      Note, dated October 15, 2004, in the amount of $44,560 from Drinks
      Americas, Inc. to Kenneth H. Close.10.33
              
              Security
      Agreement, dated October 15, 2004, by and between Drinks Americas, Inc.
      and Nexcomm International Beverages, LLC.10.34****
              
              Form
      of Registration Rights Agreement between Drinks Americas Holdings, Ltd and
      the investors in its Bridge Notes financing.10.35***
              
              Amended
      and Restated Promissory Note, dated December 26, 2005, by and between
      Drinks Americas Holdings, Ltd. and Kenneth H. Close for
      $776,167.10.36***
              
              Asset
      Purchase Agreement, dated as of October, 2005, by and between Drinks
      Americas Holdings, ltd. and Rheingold Brewing Company,
  Inc.10.37***
              
              Loan
      Agreement, dated June 1, 2006, by and between D.T. Drinks, LLC and
      Production Finance International, LLC.10.38***
              
              Loan
      and Security Agreement, dated June 1, 2006, by and between Drinks
      Americas, Inc., Drinks Global Imports, LLC, D.T. Drinks, LLC and Business
      Alliance Capital Company.10.39******
              
              Licensee
      Agreement between Trump Marks, LLC and D.T. Drinks, LLC,dated November 15,
      2005.10.40******
              
              Agreement
      between D.T. Drinks, LLC and A.H. Wanders B.V., dated August 10,
      2006.10.41*******
              
              Exclusive
      Distribution Agreement between Damiana Importing, Inc. and Drinks
      Americas, Inc., dated May 25, 2005.10.42******
              
              Requirements
      Agreement between Wynn Starr Flavors, Inc. and Drinks Americas, Inc.,
      dated February 19, 2003.10.43**
              
              Registrant's
      Incentive 2007 Stock Plan.10.44**********
              
              Form
      of Stock Purchase Agreement dated as of January 15, 2009 by and
      among  Drinks Americas, Inc, Jack McKenzie and Paul
      Walraven10.45***********
              
              Form
      of Promissory Note of Drinks Americas, Inc. in the aggregate amount of
      $800,000 payable to Jack McKenzie and Paul Walraven.10.46************
              
              Form
      of Forbearance and Modification Agreement10.47*************
              
              Form
      of Account Purchase
Agreement


42





10.48**************
              
              Registrant's
      Incentive 2008 Stock Plan.14.0***
              
              Code
      of Ethics21.1(a)***
              
              List
      of Subsidiaries of Drinks Americas Holdings, Ltd.31.1*
              
              Certification
      by J. Patrick Kenny, Chief Executive Officer, pursuant to Rule 13a-14 (a),
      pursuant to Section 302 of the Sarbanes-Oxley Act of
  2002.31.2*
              
              Certification
      by Jeffery Daub, Chief Financial Officer, pursuant to Rule 13a-14(a),
      pursuant to Section 302 of the Sarbanes-Oxley Act of
  2002.32.1*
              
              Certification
      by J. Patrick Kenny, Chief Executive Officer, pursuant to Section 1350, as
      adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
      2002.32.2*
              
              Certification
      by Jeffery Daub, Chief Financial Officer, pursuant to Section 1350, as
      adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
      2002.14.0***
              
              Code
      of Ethics21.1(a)***
              
              List
      of Subsidiaries of Drinks Americas Holdings, Ltd.23.2*
              
              Consent
      of accountants for use of their report.31.1*
              
              Certification
      by J. Patrick Kenny, Chief Executive Officer, pursuant to Rule 13a-14 (a),
      pursuant to Section 302 of the Sarbanes-Oxley Act of
  2002.31.2*
              
              Certification
      by Jeffery Daub, Chief Financial Officer, pursuant to Rule 13a-14(a),
      pursuant to Section 302 of the Sarbanes-Oxley Act of
  2002.32.1*
              
              Certification
      by J. Patrick Kenny, Chief Executive Officer, pursuant to Section 1350, as
      adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
      2002.32.2*
              
              Certification
      by Jeffery Daub, Chief Financial Officer, pursuant to Section 1350, as
      adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
      2002.





Numbers
with (*) are filed herewith. Numbers with (**) have been incorporated by
reference to our Post-Effective Amendment No. 1 to Form SB-2 filed on January
22, 2008. Numbers with (***) have been incorporated by reference to our Form
10-KSB filed on August 14, 2006. Numbers with (****) have been incorporated by
reference to our Form 8-K filed on March 25, 2005. Numbers with (*****) have
been incorporated by reference to our Form 8-K filed January 31, 2007. Numbers
with (******) have been incorporated by reference to our Form SB-2 filed on
March 19, 2007. Numbers with (*******) have been incorporated by reference to
our 8-K filed on December 19, 2007. Numbers with (********) have been
incorporated by reference to our 8-K filed on December 19, 2007. Numbers with
(*********) have been incorporated by reference to our 8-K filed on October 27,
2008. Numbers with (**********) have been incorporated by reference to our 8-K
filed on January 15, 2009. Numbers with (***********) have been incorporated by
reference to our 8-K filed on February 4, 2009. Numbers with (************) have
been incorporated by reference to our 8-K filed on April 16, 2009. Numbers with
(*************) have been incorporated by reference to our 8-K filed on June
19,  2009. Numbers with (*************) have been incorporated by
reference to our Schedule 14a filed on December 22, 2009. All other exhibits
have been incorporated by reference to our Form 8-K filed on March 9,
2005.


43





SIGNATURES




In
accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused
this Form 10-K to be signed on its behalf by the undersigned, thereunto duly
authorized, on August  13, 2009.





Drinks
      Americas Holdings, Ltd.By:
      /s/ J. Patrick KennyJ.
      Patrick Kenny -Chief
      Executive Officer




In
accordance with the Exchange Act, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.





Signature
                                    
                                    Capacities
                                    
                                    Date/s/
      J. Patrick KennyJ. Patrick Kenny
                                    
                                    Chief Executive Officer, Chairman of the Board
                                    
                                    August
      13, 2009/s/ Jeffrey DaubJeffrey Daub
                                    
                                    Chief Financial Officer
                                    
                                    August
      13, 2009/s/ Jason LazoJason Lazo
                                    
                                    Chief Operating Officer
                                    
                                    August
      13, 2009/s/ Bruce KleinBruce Klein
                                    
                                    Director
                                    
                                    August
      13, 2009/s/
      Frederick SchulmanFrederick
      Schulman
                                    
                                    Director
                                    
                                    August
      13, 2009/s/
      Marvin TraubMarvin
      Traub
                                    
                                    Director
                                    
                                    August
      13, 2009/s/
      Hubert MilletHubert
      Millet
                                    
                                    Director
                                    
                                    August
      13, 2009


44


DRINKS
AMERICAS HOLDINGS, LTD. AND AFFILIATES




FINANCIAL
STATEMENTS





PageFINANCIAL
      STATEMENTS FOR THE YEARS ENDED APRIL 30, 2009 AND 2008REPORT
      OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FINANCIAL
      STATEMENTS
            2Consolidated
      Balance Sheets
            3Consolidated
      Statements of Operations
            4Consolidated
      Statements of Changes in the Shareholders' Equity(Deficiency)
            5Consolidated
      Statements of Cash Flows
            6-7Notes
      to Consolidated Financial Statements
            8-26







REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
  To
the Board of Directors and Shareholders of Drinks Americas Holdings,
Ltd.
  We have
audited the accompanying consolidated balance sheets of Drinks Americas
Holdings, Ltd. and Affiliates (the "Company") as of April 30, 2009 and 2008, and
the related consolidated statements of operations, changes in shareholders'
equity, and cash flows for the years ended April 30, 2009 and 2008. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
 
 We
conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. The Company is not required to
have, nor were we engaged to perform, an audit of its internal control over
financial reporting. Our audits included consideration of internal control over
financial reporting as a basis for designing audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the company's internal control over financial
reporting. Accordingly, we express no such opinion. An audit includes examining,
on a test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
  In our
opinion, the accompanying consolidated financial statements referred to above
present fairly, in all material respects, the financial position of the Company
as of April 30, 2009 and 2008 and the results of its operations, changes in
shareholders' equity and its cash flows for the years ended April 30, 2009
and 2008, in conformity with accounting principles generally accepted in the
United States of America.
  The
accompanying consolidated financial statements have been prepared assuming that
the Company will continue as a going concern. As discussed in Note 1, the
Company has incurred significant losses from operations since its inception.
This condition raises substantial doubt about the Company's ability to continue
as a going concern. Management's plans in regard to this matter are described in
Note 1. The consolidated financial statements do not include any adjustments
that might result from the outcome of this uncertainty.
  /s/
Bernstein & Pinchuk LLP
 
 New York,
NY
 August
13, 2009


F-2





DRINKS
AMERICAS HOLDINGS, LTD AND AFFILIATES CONSOLIDATED BALANCE SHEETS




April
      30,2009
                
                
                2008AssetsCurrent
      assets:Cash
      and cash equivalents
                
                $
                30,169
                
                
                $
                133,402Accounts
      receivable, net of allowances of  $128,751 and
      $24,000
                
                
                41,796
                
                
                
                583,949Due
      from factors
                
                
                31,786
                
                
                
                -Inventories,
      net of allowances
                
                
                1,204,266
                
                
                
                1,844,412Other
      current assets
                
                
                374,671
                
                
                
                445,278Total
      current assets
                
                
                1,682,688
                
                
                
                3,007,041Property
      and Equipment, at cost less accumulated depreciation
                
                
                58,900
                
                
                
                91,307Investment
      in Equity Investees
                
                
                73,916
                
                
                
                69,028Intangible
      assets, net of accumulated amortization of $245,678 and $416,749
                
                
                1,892,650
                
                
                
                735,559Deferred
      loan costs, net of accumulated amortization of $335,452 and
      $287,904
                
                
                -
                
                
                
                22,548Other
      assets
                
                
                467,912
                
                
                
                644,762Total
      Assets
                
                $
                4,176,066
                
                
                $
                4,570,245Liabilities
      and Shareholders’ Equity (Deficiency)Current
      Liabilities:Notes
      and loans payable
                
                $
                799,329
                
                
                $
                1,057,940Loans
      Payable-related party
                
                
                305,935
                
                
                
                232,547Accounts
      payable
                
                
                2,746,181
                
                
                
                1,866,477Accrued
      expenses
                
                
                2,900,425
                
                
                
                1,235,165Total
      current liabilities
                
                
                6,751,870
                
                
                
                4,392,129Long-term
      debt, less current maturities
                
                
                600,000
                
                
                
                -7,351,870
                
                
                
                4,392,129Minority
      interest130,944
                
                
                
                -Commitments
      and Contingencies (Note    )Shareholders’
      equity deficiencyPreferred
      Stock, $0.001 par value; 1,000,000 shares authorized; issued and
      outstanding 11,000 shares(redemption value $11,000,000)
                
                
                11
                
                
                
                11Common
      Stock, $0.001 par value; 500,000,000 and 100,000,000, respectively,
      authorized;  issued and outstanding 87,662,383 and 81,188,224
      shares, respectively
                
                
                87,662
                
                
                
                81,189Additional
      paid-in capital
                
                
                34,206,433
                
                
                
                32,656,684Accumulated
      deficit
                
                
                (37,600,854
                )
                
                
                (32,559,768
                )(3,306,748
                )
                
                
                -$
                4,176,066
                
                
                $
                4,570,245





See
notes to consolidated financial statements.


F-3


DRINKS
AMERICAS HOLDINGS, LTD AND AFFILIATE


CONSOLIDATED
STATEMENTS OF OPERATIONS YEARS ENDED APRIL 30, 2009 AND 2008









2009
              
              
              2008Net
      sales
              
              $
              2,477,617
              
              
              $
              4,509,070Cost
      of sales
              
              
              1,969,437
              
              
              
              2,824,237Gross
      profit
              
              
              508,180
              
              
              
              1,684,833Selling,
      general and administrative expenses
              
              
              5,720,024
              
              
              
              7,838,481Loss
      from Operations
              
              
              (5,211,844
              )
              
              
              (6,153,648
              )Other
      income  (expenses):Interest
      expense
              
              
              (150,631
              )
              
              
              (164,205
              )Minority
      interest
              
              
              2,389
              
              
              
              -Impairment
      of intangible asset
              
              
              (90,000
              )
              
              
              -Other
              
              
              409,000
              
              
              
              6,905Total
      other income (expenses)
              
              
              170,758
              
              
              
              (157,300
              )Net
      loss
              
              
              (5,041,086
              )
              
              
              (6,310,948
              )Net
      loss  per share (basic and diluted)
              
              $
              (0.06
              )
              
              $
              (0.08
              )Weighted
      average number of common shares (basic and diluted)
              
              
              83,947,221
              
              
              
              80,014,601





See
accompanying notes to the consolidated financial statements.


F-4




DRINKS
AMERICAS HOLDINGS, LTD AND AFFILIATES


CONSOLIDATED
STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (DEFICIENCY) YEARS ENDED APRIL 30,
2009 AND 2008









Preferred
      Stock
                      
                      
                      Common
      StockNumber of
                        Shares
                      
                      
                      Par
                        Value
                      
                      
                      Number of
                        Shares
                      
                      
                      Par
                        Value
                      
                      
                      Additional
                        Paid-In
                        Capital
                      
                      
                      Accumulated
                        Deficit
                      
                      
                      Total
                        Shareholders'
                        Accumulated
                        Equity (Deficit)Balance April
      30, 2007
                      
                      
                      -
                      
                      
                      $
                      -
                      
                      
                      
                      79,533,574
                      
                      
                      $
                      79,534
                      
                      
                      $
                      28,971,010
                      
                      
                      $
                      (26,248,820
                      )
                      
                      $
                      2,801,724Issuances
      of shares for cash
                      
                      
                      3,000
                      
                      
                      
                      3
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      2,759,997
                      
                      
                      
                      -
                      
                      
                      
                      2,760,000Exchange
      of common shares for preferred shares
                      
                      
                      8,000
                      
                      
                      
                      8
                      
                      
                      
                      (4,444,445
                      )
                      
                      
                      (4,444
                      )
                      
                      
                      4,436
                      
                      
                      
                      -
                      
                      
                      
                      -Exchange
      of warrants for common shares
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      5,000,000
                      
                      
                      
                      5,000
                      
                      
                      
                      (5,000
                      )
                      
                      
                      -
                      
                      
                      
                      -Issuance
      of shares and  warrants for services
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      1,099,095
                      
                      
                      
                      1,099
                      
                      
                      
                      926,241
                      
                      
                      
                      -
                      
                      
                      
                      927,340Net
      loss for the year
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      (6,310,948
                      )
                      
                      
                      (6,310,948
                      )Balance,
      April 30, 2008
                      
                      
                      11,000
                      
                      
                      
                      11
                      
                      
                      
                      81,188,224
                      
                      
                      
                      81,189
                      
                      
                      
                      32,656,684
                      
                      
                      
                      (32,559,768
                      )
                      
                      
                      178,116Issuances
      of shares for cash
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      3,944,445
                      
                      
                      
                      3,944
                      
                      
                      
                      713,981
                      
                      
                      
                      -
                      
                      
                      
                      717,925Issuance
      of shares, warrants and options  for services
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      1,893,092
                      
                      
                      
                      1,893
                      
                      
                      
                      702,412
                      
                      
                      
                      -
                      
                      
                      
                      704,305Issuance
      of shares in settlement of note payable
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      350,000
                      
                      
                      
                      350
                      
                      
                      
                      90,650
                      
                      
                      
                      -
                      
                      
                      
                      91,000Issuance
      of shares for loan extension
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      286,622
                      
                      
                      
                      286
                      
                      
                      
                      42,706
                      
                      
                      
                      -
                      
                      
                      
                      42,992Minority
      interest in net assets of acquired consolidated subsidiary
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -Minority
      interest in net loss  of consolidated subsidiary
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -Net
      loss for the year
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      (5,041,086
                      )
                      
                      
                      (5,041,086
                      )Balance,
      April 30, 2009
                      
                      
                      11,000
                      
                      
                      $
                      11
                      
                      
                      
                      87,662,383
                      
                      
                      $
                      87,662
                      
                      
                      $
                      34,206,433
                      
                      
                      $
                      (37,600,854
                      )
                      
                      $
                      (3,306,748
                      )





See notes
to consolidated financial statements.


F-5


DRINKS
AMERICAS HOLDINGS, LTD AND AFFILIATES


CONSOLIDATED
STATEMENTS OF CASH FLOWS


YEARS
ENDED APRIL 30, 2009 AND 2008








2009
                    
                    
                    2008Cash
      flows From Operating Activities:Net
      loss
                    
                    $
                    (5,041,086
                    )
                    
                    $
                    (6,310,948
                    )Adjustments
      to reconcile net loss to net cash used in operating
    activitiesDepreciation
      and amortization
                    
                    
                    167,610
                    
                    
                    
                    217,851Impairment
      of intangible asset
                    
                    
                    90,000Allowance
      for doubtful accounts
                    
                    
                    119,781
                    
                    
                    
                    4,600Stock
      and warrants issued for services of vendors
                    
                    
                    311,684
                    
                    
                    
                    149,741Gain
      on extinguishment of debt
                    
                    
                    (409,000
                    )
                    
                    
                    -Earnings
      in equity method investees
                    
                    
                    (4,888
                    )
                    
                    
                    (7,392
                    )Minority
      interest in net loss of consolidated subsidiary
                    
                    
                    (2,389
                    )
                    
                    
                    -Changes
      in operating assets and liabilities:Accounts
      receivable
                    
                    
                    510,313
                    
                    
                    
                    299,130Due
      from factor
                    
                    
                    (31,786
                    )
                    
                    
                    -Inventories
                    
                    
                    857,918
                    
                    
                    
                    407,962Other
      current assets
                    
                    
                    97,678
                    
                    
                    
                    601,594Other
      assets
                    
                    
                    338,047
                    
                    
                    
                    176,359Accounts
      payable
                    
                    
                    391,532
                    
                    
                    
                    372,301Accrued
      expenses
                    
                    
                    1,974,886
                    
                    
                    
                    240,536Net
      cash used in operating activities
                    
                    
                    (629,700
                    )
                    
                    
                    (3,848,266
                    )Cash
      Flows From Investing Activities:Cash
      assumed  of acquired business
                    
                    
                    17,150
                    
                    
                    
                    -Cash
      Flows From Financing Activities:Proceeds
      from issuance of common stock
                    
                    
                    717,926
                    
                    
                    
                    -Proceeds
      from issuance of preferred stock
                    
                    
                    -
                    
                    
                    
                    2,760,000Proceeds
      from debt
                    
                    
                    220,056
                    
                    
                    
                    604,453Repayment
      of debt
                    
                    
                    (96,948
                    )
                    
                    
                    (380,151
                    )Working
      capital revolvers
                    
                    
                    (306,717
                    )
                    
                    
                    52,598Payments
      for loan costs
                    
                    
                    (25,000
                    )
                    
                    
                    (50,000
                    )Net
      cash provided by financing activities
                    
                    
                    509,317
                    
                    
                    
                    2,986,900Net
      decrease in cash and equivalents
                    
                    
                    (103,233
                    )
                    
                    
                    (861,366
                    )Cash
      and equivalents - beginning
                    
                    
                    133,402
                    
                    
                    
                    994,768Cash
      and equivalents - ending
                    
                    $
                    30,169.000
                    
                    
                    $
                    133,402





See notes
to consolidated financial statements.


F-6





Supplemental
      disclosure of non-cash investing and financing
    transactions:Increase
      in other assets and additional paid in capital equal to the value of stock
      and warrants issued
                  
                  $
                  307,058
                  
                  
                  $
                  416,520Increase
      in other current assets equal to the value of  common stock
      issued
                  
                  $
                  -
                  
                  
                  $
                  80,000Payment
      of accrued expenses with shares of common stock
                  
                  $
                  273,000
                  
                  
                  
                  261,078Accrued
      interest capitalized to debt principal
                  
                  $
                  36,623
                  
                  
                  $
                  -Settlement
      of debt with issuance of common stock
                  
                  $
                  91,000
                  
                  
                  $
                  -Acquisition of businessCurrent
      assets less current liabilities
                  
                  
                  (138,237
                  )
                  
                  
                  -Intangible
      assets
                  
                  
                  1,333,333
                  
                  
                  
                  -Minority
      interest
                  
                  
                  (133,333
                  )
                  
                  
                  -Payable
      to sellers
                  
                  
                  (1,061,763
                  )
                  
                  
                  -$
                  -
                  
                  
                  $
                  -Supplemental
      disclosure of cash flow information:Interest
      paid
                  
                  $
                  107,880
                  
                  
                  $
                  76,343Income
      taxes paid
                  
                  $
                  -
                  
                  
                  $
                  -


F-7


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS





1. Basis
of Presentation and Nature of Business





On March
9, 2005 the shareholders of Drinks Americas, Inc. ("Drinks") a company engaged
in the business of importing and distributing unique, premium alcoholic and
non-alcoholic beverages associated with icon entertainers, sports figures,
celebrities and destinations, to beverage wholesalers throughout the United
States, acquired control of Drinks Americas Holdings, Ltd. ("Holdings").
Holdings and Drinks were incorporated in the state of Delaware on February
14,  2005 and September 24, 2002, respectively. On March 9, 2005
Holdings merged with Gourmet Group, Inc. ("Gourmet"), a publicly traded Nevada
corporation, which resulted in Gourmet shareholders acquiring 1 share of
Holdings' common stock in exchange for 10 shares of Gourmet's common stock. Both
Holdings and Gourmet were considered "shell" corporations, as Gourmet had no
operating business on the date of the share exchange, or for the previous three
years. Pursuant to the June 9, 2004 Agreement and Plan of Share Exchange among
Gourmet, Drinks and the Drinks' shareholders, Holdings, with approximately
4,058,000 shares of outstanding common stock, issued approximately 45,164,000 of
additional shares of its common stock on March 9, 2005 (the "Acquisition Date")
to the common shareholders of Drinks and to the members of its affiliate,
Maxmillian Mixers, LLC ("Mixers"), in exchange for all of the outstanding
Drinks' common shares and Mixers' membership units, respectively. As a result
Maxmillian Partners, LLC ("Partners") a holding company which owned 99% of
Drinks' outstanding common stock and approximately 55% of Mixers' outstanding
membership units, became Holdings' controlling shareholder with approximately
87% of Holdings' outstanding common stock. For financial accounting purposes
this business combination has been treated as a reverse acquisition, or a
recapitalization of Partners' subsidiaries (Drinks and Mixers).





Subsequent
to the Acquisition Date, Partners, which was organized as a Delaware limited
liability company on January 1, 2002 transferred all its shares of holdings to
its members as part of a plan of liquidation.





On March
11, 2005 Holdings and an individual organized Drinks Global, LLC ("DGI").
Holdings own 90% of the membership units and the individual, who is the
president of DGI, owns 10%. DGI's business is to import wines from various parts
of the world and sell them to distributors throughout the United States. In May
2006 Holdings organized D.T. Drinks, LLC ("DT Drinks") a New York limited
liability company for the purpose of selling certain alcoholic
beverages.





On
January 15, 2009 Drinks acquired 90% of Olifant U.S.A Inc. (“Olifant”), a
Connecticut corporation, which owns the trademark and brand names and holds the
worldwide distribution rights ( excluding Europe) to Olifant Vodka and
Gin.





The
accompanying consolidated balance sheets as of April 30, 2009 and
2008  and the consolidated results of operations, consolidated changes
in shareholders' equity (deficiency)and consolidated cash flows for the years
ended April 30, 2009 and 2008 reflect Holdings its majority-owned subsidiaries
and Partners (collectively, the "Company") with adjustments for income and loss
allocated based on percentage of ownership. The accounts of the subsidiaries
have been included as of the date of acquisition. All intercompany transactions
and balances in these financial statements have been eliminated in
consolidation. The amount of common and preferred shares authorized, issued and
outstanding as of April 30, 2009 and 2008 are those of Holdings.





The
accompanying consolidated financial statements have been prepared on a basis
that assumes the Company will continue as a going concern. As of April 30, 2009
the Company  has a shareholders’ deficiency of (3,306,748) and has
incurred significant  operating losses and negative cash flows since
inception. For the year ended April 30, 2009, the Company sustained a net loss
of $4,951,086 compared with a net loss of $6,310,948 for the year ended April
30, 2008, and used $629,700 in operating activities compared with $3,848,266 for
the year ended April 30, 2008. We have increased our working capital as a result
of  the exercise of warrants to acquire 3,944,445 shares of our common
stock pursuant to our October 2008 warrant re-pricing and our June 2009 debt
financing In addition we have improved our liquidity by extinguishing a
significant amount of debt by exchanging it for our common stock in previous
periods. We will need additional financing which may take the form of equity or
debt. We anticipate that increased sales revenues will help to some extent. In
the event we are not able to increase our working capital, we will not be able
to implement or may be required to delay all or part of our business plan, and
our ability to attain profitable operations, generate positive cash flows from
operating and investing activities and materially expand the business will be
materially adversely affected. The accompanying financial statements do not
include any adjustments relating to the classification of recorded asset amounts
or amounts and classification of liabilities that might be necessary should the
company be unable to continue in existence.





Nature
of Business





Through
our majority-owned subsidiaries, Drinks, DGI and DT Drinks, and Olifant we
import, distribute and market unique premium wine and spirits and alcoholic
beverages associated with icon entertainers, celebrities and destinations, to
beverage wholesalers throughout the United States.


F-8


2.
Summary of Significant Accounting Policies





Revenue
Recognition





The
Company recognizes revenues when title passes to the customer, which is
generally when products are shipped.





The
Company recognizes revenue dilution from items such as product returns,
inventory credits, discounts and other allowances in the period that such items
are first expected to occur. The Company does not offer its clients the
opportunity to return products for any reason other than manufacturing defects.
In addition, the Company does not offer incentives to its customers to either
acquire more products or maintain higher inventory levels of products than they
would in ordinary course of business. The Company assesses levels of inventory
maintained by its customers through communications with them. Furthermore, it is
the Company's policy to accrue for material post shipment obligations and
customer incentives in the period the related revenue is
recognized.





Cash
and Equivalents





The
Company considers all highly liquid investments with a maturity of three months
or less when purchased to be cash equivalents.





The
Company from time to time maintains balances in depository accounts in excess of
FDIC insured limits. The Company has not experienced any credit losses nor
anticipates any future losses in such accounts. At April 30,
2009  and  2008 amounts exceeding FDIC insured limits
aggregated approximately $0 and  $98,000, respectively.





Accounts
Receivable





Accounts
receivable are recorded at original invoice amount less an allowance for
uncollectible accounts that management believes will be adequate to absorb
estimated losses on existing balances. Management estimates the allowance based
on collectability of accounts receivable and prior bad debt experience. Accounts
receivable balances are written off upon management's determination that such
accounts are uncollectible. Recoveries of accounts receivable previously written
off are recorded when received.





Inventories





Inventories
are valued at the lower of cost or market, using the first-in first-out cost
method. The Company assesses the valuation of its inventories and reduces the
carrying value of those inventories that are obsolete or in excess of the
Company’s forecasted usage to their estimated net realizable value. The Company
estimates the net realizable value of such inventories based on analysis and
assumptions including, but not limited to, historical usage, expected future
demand and market requirements. A change to the carrying value of inventories is
recorded to cost of goods sold.





Property
and Equipment





Property
and equipment are stated at cost. Depreciation is provided on the straight-line
method over the estimated useful lives of furniture and equipment, and
amortization of leasehold improvements is provided on the straight-line method
over the term of the related lease. When assets are retired or otherwise
disposed of, the cost and related depreciation is removed from the accounts, and
any resulting gain or loss is recognized in the statement of
operations.





Impairment
of Long-Lived Assets





In
accordance with Statement of Financial Accounting Standards No. 144 (SFAS No.
144), Accounting for the Impairment or Disposal of Long-lived Assets, we review
long-lived assets for impairment whenever events or changes in circumstances
indicate the carrying amounts of such assets may not be recoverable. The
Company's policy is to record an impairment loss at each balance sheet date when
it is determined that the carrying amount may not be recoverable. Recoverability
of these assets is based on undiscounted future cash flows of the related asset.
The Company concluded that there was no impairment during the  years
ended April 30, 2009 and 2008, respectively.





Income
Taxes




Under the
asset and liability method of SFAS No. 109 “Accounting for Income Taxes,”
deferred tax assets and liabilities are recognized for the future tax
consequences attributable to the differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
basis. A valuation allowance is provided to the extent a deferred tax asset is
not considered recoverable.
 
 The
Company has adopted the provisions of the Financial Accounting Standards Board’s
(“FASB”) interpretation No. 48 (“FIN 48”), “Accounting for Uncertainty in Income
Taxes,” as interpretation of FASB Statement No. 109.” The
Company has recognized no adjustment for uncertain tax provisions.


Holdings,
Drinks and Olifant are C Corporations under the provisions of the Internal
Revenue Code (the "Code") and applicable state statutes. Partners, Mixers
and  DGI are  limited liability companies, taxed as
partnerships with no income tax liabilities under the provisions of the Code and
applicable state statutes.


F-9


Deferred
Charges and Intangible Assets





The costs
of intangible assets with determinable useful lives are amortized over their
respectful useful lives and reviewed for impairment when circumstances warrant.
Intangible assets that have an indefinite useful life are not amortized until
such useful life is determined to be no longer indefinite. Evaluation of the
remaining useful life of an intangible asset that is not being amortized must be
completed each reporting period to determine whether events and circumstances
continue to support an indefinite useful life. Indefinite-lived intangible
assets must be tested for impairment at least annually, or more frequently if
warranted. Intangible assets with finite lives are generally amortized on a
straight line bases over the estimated period benefited. The costs of trademarks
and product distribution rights are amortized over their related useful lives of
between 15 to 40 years. We review our intangible assets for events or changes in
circumstances that may indicate that the carrying amount of the assets may not
be recoverable, in which case an impairment charge is recognized
currently.





Deferred
financing costs are amortized ratably over the life of the related debt. If debt
is retired early, the related unamortized deferred financing costs are written
off in the period debt is retired.





Investments





The
investment of the Company in 25% ownership interests of Old Whiskey River
Distilling, LLC is accounted for under the equity method of
accounting.





Advertising
Costs





Advertising
costs are expensed as incurred. Advertising expense was approximately $11,000
and $325,000 for the years ended April 30, 2009 and 2009,
respectively.





Shipping
and Delivery





The
Company reflects as inventory costs freight-in and related external handling
charges relating to the purchase of raw materials and finished goods. These
costs are charged to cost of sales at the time the underlying product is sold.
The  Company also incurs shipping costs on the of shipping
of  product to its customers. These shipping delivery
costs  are included in selling, general and administrative expenses.
Shipping and delivery costs were approximately $107,000 and
$190,000  for the years ended April 30, 2009 and 2009,
respectively.





Repairs
and Maintenance





The
Company charges the cost of repairs and maintenance, including the cost of
replacing minor items not constituting substantial betterment, to selling,
general and administrative expenses as these costs are incurred.





Stock
Based Compensation





The
Company accounts for stock-based compensation in accordance with Statement of
Financial Accounting Standard 123 (revised 2004), Share-Based Payment (SFAS
123R) using the modified prospective approach. The Company recognizes in the
statement of operations the grant-date fair value of stock options and other
equity based compensation issued to employees and non employees.





Earnings
Per Share





The
Company computes earnings per share under the provisions of SFAS No. 128,
Earnings per Share, whereby basic earnings per share is computed by dividing net
income (loss) attributable to all classes of common shareholders by the weighted
average number of shares of all classes of common stock outstanding during the
applicable period. Diluted earnings per share is determined in the same manner
as basic earnings per share except that the number of shares is increased to
assume exercise of potentially dilutive and contingently issuable shares using
the treasury stock method, unless the effect of such increase would be
anti-dilutive. For the years ended April 30, 2009 and 2008, the diluted earnings
per share amounts equal basic earnings per share because the Company had net
losses and the impact of the assumed exercise of contingently issuable shares
would have been anti-dilutive.





Use
of Estimates





The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts in the financial
statements and accompanying notes. Actual results could differ from those
estimates.


F-10


Fair
Value of Financial Instruments





SFAS No.
107, ‘Disclosure About Fair Value of Financial Instruments,’ defines the fair
value of financial instruments as the amount at which the instrument could be
exchanged in a current transaction between willing participants and requires
disclosure of the fair value of certain financial instruments. The Company
believes that there is no material difference between the fair value and the
reported amounts of financial instruments in the balance sheet due to the short
term maturity of these instruments, or with respect to the debt, as compared to
the current borrowing rates available to the Company.





SFAS No.
157. “Fair Value
Measurements” defines fair value, establishes a framework for measuring
fair value in generally accepted accounting  principles, and expands
disclosures about fair value measurements. The Company adopted the provisions of
SFAS 157 for financial assets and liabilities on May 1, 2008; there was no
material impact on the Company’s financial position or results of operations at
adoption.





FASB
Staff Position (FSP) 157-2, “Effective Date of FASB Statement
No. 157,” permits a one-year deferral in applying the measurement
provisions of Statement No. 157 to non-financial assets and non-financial
liabilities (non-financial items) that are not recognized or disclosed at fair
value in an entity’s financial statements on a recurring basis (at least
annually). Therefore, if the change in fair value of a non-financial item is not
required to be recognized or disclosed in the financial statements on an annual
basis or more frequently, the effective date of application of Statement 157 to
that item is deferred until fiscal years beginning after November 15, 2008
and interim periods within those fiscal years. The Company elected to defer
adoption of the provisions of SFAS  157 that relate such items until
the beginning of our 2010 fiscal year. The Company is currently evaluating the
impact, if any, that the adoption of  SFAS 157, as it relates to
non-financial items, will have on the Company’s operating income or net
earnings.





Recent
Accounting Pronouncements





In May
2009, the FASB issued SFAS No. 165, Subsequent Events (“SFAS No. 165”). This
Statement establishes  general standards of accounting for and
disclosure of events that occur after the balance sheet date but before
financial statements are issued or available to be issued. It requires the
disclosure of the date through which an entity has evaluated subsequent events
and the basis for that date. This Statement is effective for interim and annual
periods ending after June 15, 2009 and such, the Company will adopt SFAS No. 165
concurrent with its report filed for the interim period ending July 31, 2009.
The Company does not anticipate that the adoption of SFAS No. 165 will have a
material impact on its results of operations, cash flows or financial
position.





In
October 2008, the FASB issued FSP FAS No. 157-3, “Determining the Fair Value of
a Financial Asset When the Market for That Asset is Not Active” (“FSP FAS No.
157-3”),  to provide guidance on determining the fair value of
financial instruments in  inactive markets. FSP FAS No. 157-3 became
effective for the Company upon issuance. This standard had no impact on the
Company’s results of operations, cash flows or financial position.





In June
2008, the FASB issued FASB Staff Position (“FSP”) No. EITF 03-6-1, "Determining
Whether Instruments Granted in Share-Based Payment Transactions Are
Participating Securities," which classifies unvested share-based payment awards
that contain non-forfeitable rights to dividends or dividend equivalents
(whether paid or unpaid) as participating securities and requires them to be
included in the computation of earnings per share pursuant to the two-class
method described in SFAS No. 128, "Earnings per Share.” This Staff Position is
effective for financial statements issued for fiscal years beginning after
December 15, 2008, and interim periods within those years. All prior-period
earnings per share data presented are to be adjusted retrospectively (including
interim financial statements, summaries of earnings, and selected financial
data) to conform to the provisions of this Staff Position, with early
application not permitted. The adoption of this Staff Position, which will
require us to allocate a portion of net income to these participating
securities, will not have an effect on our historical reported earnings due to
their anti-dilutive effect as a result of losses in all prior periods previously
presented. The Company is currently evaluating effect of. FSP EITF 03-6-1, but
does not expect the adoption of this pronouncement to have a material impact on
its earnings per share.





On
December 4, 2007, the FASB issued SFAS No. 141(R), “ Business Combinations ,” and
SFAS No. 160, “ Accounting and Reporting of
Noncontrolling Interests in Consolidated Financial Statements , an amendment of ARB
No. 51 .” Statement No. 141(R) is required to be adopted
concurrently with Statement No. 160 and is effective for business
combination transactions for which the acquisition date is on or after the
beginning of the first annual reporting period beginning on or after
December 15, 2008. Early adoption is prohibited. Application of Statement
No. 141(R) and Statement No. 160 is required to be adopted
prospectively, except for certain provisions of Statement No. 160, which
are required to be adopted retrospectively. Business combination transactions
accounted for before adoption of Statement No. 141(R) should be accounted
for in accordance with Statement No. 141 and that accounting previously
completed under Statement No. 141 should not be modified as of or after the
date of adoption of Statement No. 141(R). The Company is currently
evaluating the impact of Statement No. 141(R) and Statement No. 160,
but does not expect the adoption of these pronouncements to have a material
impact on the Company’s financial position or results of
operations.


F-11





In
February 2007, the FASB issued Statement of Financial Accounting Standards
(SFAS) No. 159, “ The
Fair Value Option for Financial Assets and Financial Liabilities ” (SFAS
159), which allows an entity the irrevocable option to elect fair value for the
initial and subsequent measurement for certain financial assets and liabilities
on a contract-by-contract basis. Subsequent changes in fair value of these
financial assets and liabilities would be recognized in earnings when they
occur. SFAS 159 further establishes certain additional disclosure requirements.
SFAS 159 is effective for fiscal years beginning after November 15, 2007,
with earlier adoption permitted. The adoption of this pronouncement did not have
a material impact on the Company’s consolidated financial position or results of
operations.





3. Due
From Factors





As
of  April 30, 2009 and 2008, Due From Factors consist of the
following:




2009Accounts
      receivable
                    
                    $
                    153,444Advances
                    
                    
                    (118,191
                    )Allowances
                    
                    
                    (3,467
                    )31,786




The
Company has an agreement with a factor expiring September 2009 pursuant to
which a substantial portion of Olifant’s accounts receivable are sold to the
factor without recourse as to bad debts but with recourse as to all customer
claims. Immediately upon assigning  a customer invoice the Company
receives a cash advance equal to 70% of the invoice amount and is paid the
balance of the invoice less fees incurred at the time the factor receives the
final payment from the customer. The facility has a maximum account limit of
$200,000. The factor fee is 1% of the factored receivable for every ten days the
related invoice remains unpaid and is subject to a monthly administrative charge
based on monthly volume. The factor has first security interest in the factored
receivable of Olifant and a security interest in the related
inventory.





The
Company also has an agreement with a second factor entered into April
2009, pursuant to which a substantial portion of the Company’s accounts
receivable, other than Olifant’s, is sold to the factor with recourse to bad
debts and  other customer claims.  The Company receives a
cash advance equal to 80% of the invoice amount and is paid the balance of the
invoice less fees incurred at the time the factor receives the final payment
from the customer. The factor fee is 1.75% for the first 30 days the invoice
remains unpaid and 0.07% for each day thereafter. The facility shall remain open
until a 30 day notice by either party of termination of the agreement The
facility is secured by all assets of the Company other than
Olifants’.





4.
Inventories





As
of  April 30, 2009 and 2008, Inventories consist of the
following:




2009
                  
                  
                  2008Finished
      goods
                  
                  $
                  518,489
                  
                  
                  $
                  1,012,656Raw
      materials
                  
                  
                  685,777
                  
                  
                  
                  831,756$
                  1,204,266
                  
                  
                  $
                  1,844,412





All raw
materials used in the production of the Company's inventories are purchased by
the Company and delivered to independent production contractors.





5. Other
Current Assets





As of
April 30, 2009 and 2008  Other Current Assets consist of the
following:




2009
                          
                          
                          2008Prepaid
      inventory purchases
                          
                          $
                          315,592
                          
                          
                          $
                          405,451Prepaid
      insurance
                          
                          
                          -
                          
                          
                          
                          14,994Other
                          
                          
                          59,079
                          
                          
                          
                          24,833$
                          374,671
                          
                          
                          $
                          445,278


F-12





6.
Property and Equipment





As of
April 30, 2009  and 2008 Property and Equipment consist of the
following:




AmountUseful Life
                                  
                                  2009
                                  
                                  
                                  2008Computer
      equipment
                                  
                                  5
      years
                                  
                                  $
                                  23,939
                                  
                                  
                                  $
                                  23,939Furniture
                                  
                                  5
      years
                                  
                                  
                                  10,654
                                  
                                  
                                  
                                  10,654Automobile
                                  
                                  5 years
                                  
                                  
                                  68,337
                                  
                                  
                                  
                                  68,337Leasehold
      improvements
                                  
                                  7 years
                                  
                                  
                                  66,259
                                  
                                  
                                  
                                  66,259Production
      costs
                                  
                                  2
      years
                                  
                                  
                                  122,449
                                  
                                  
                                  
                                  122,449291,638
                                  
                                  
                                  
                                  291,638Accumulated
      depreciation and amortization
                                  
                                  
                                  
                                  
                                  (232,738
                                  )
                                  
                                  
                                  (200,331$
                                  58,900
                                  
                                  
                                  $
                                  91,307





Depreciation
expense for the years ended April 30, 2009 and 2008 amounted to $32,407 and
$38,643 respectively.





7.
Intangible Assets/Deferred Loan Costs





Intangible
assets include the costs to acquire trademarks, license rights and distribution
rights for four of the Company's alcoholic products. As of April 30, 2009 and
2008 intangible assets consist of the following:




2009
                      
                      
                      2008Trademark/dist
      and license rights
                      
                      $
                      2,138,333
                      
                      
                      $
                      1,151,966Accumulated
      amortization
                      
                      
                      (245,683
                      )
                      
                      
                      (416,407
                      )$
                      1,892,650
                      
                      
                      $
                      735,559





As of
April 30, 2009  the gross carrying amount and accumulated amortization
(both $176,966) of one of the Company’s intangible assets pertaining to
distribution rights for a product the Company no longer sells has been removed.
In addition, the amount of our Rheingold license rights aggregating $400,000 of
which $80,076 has been amortized as of April 30, 2009. Management determined as
of April 30, 2009 that based on estimated future  cash flows, the
carrying amount exceeds its fair value by $90,000, therefore an impairment
loss  of that amount was recognized. Management’s estimations were
reached after determining that the product will require additional investment to
bring the product to market.





At April
30, 2009 trademarks distribution and license rights consist of the
following:





Trademarks
      and distribution rights of Olifant acquisition
                  
                  $
                  1,333,333Trademarks
      of Rheingold acquired in 2005
                  
                  
                  230,000Other
      intangibles
                  
                  
                  575,0002,138,333


F-13


Deferred
loan costs consist of costs relating to the Company's short term financing. As
of April 30, 2009 deferred loan costs consist of the following:




2009
                        
                        
                        2008Deferred
      loan costs
                        
                        $
                        63,915
                        
                        
                        $
                        63,915Accumulated  amortization
                        
                        
                        (63,915
                        )
                        
                        
                        (41,637
                        )$
                        -
                        
                        
                        $
                        22,548


Aggregate
amortization expense for the years ended April 30, 2009 and 2008 amounted to
$135,203 and $179,208 (including $25,000 for deferred financing costs which were
removed from gross carrying amount and accumulated amortization in both years),
respectively.


Estimated
annual amortization expense as of April 30, 2009 for the next five years are
approximately as follows:




Year Ended
                        
                        AmortizationApril 30,
                        
                        Expense2010
                        
                        $
                        149,7232011
                        
                        
                        149,7232012
                        
                        
                        149,7232013
                        
                        
                        149,7232014
                        
                        
                        149,723





8. Other
long term assets





In March
2009 in consideration for extending a note payable (see Note 9(b)) the Company
issued the lender 286,623 shares of Company common stock which had a value of
$42,993 on March 1, 2009. As of the April 30, 2009 the unamortized balance of
the 286,623 shares issued was $30,710 which is included in Other current assets
as of April 30, 2009.





In
January 2009, in accordance with an employment agreement resulting from
the  Olifant acquisition  the Company issued 100,000 shares
of its common stock (see Note 9). The value of the stock on the date of grant
aggregated $26,000 which is being amortized over the five year life of the
un-extended term of the agreement. At April 30, 2009 the unamortized balance of
the stock $24,505.





In August
2008 the Company entered into a three year agreement with an unrelated entity
which is to provide marketing and promotional services for the
Company.  Under the terms of the agreement, as consideration for the
services to be provided, the Company is to issue warrants to purchase an
aggregate of 350,000 shares of Company stock  at an exercise price
of  $.50. The Company determined, as of the grant date  the
warrants had an aggregate  value of $6,730 which is
being  amortized over the three year benefit period. At April 30, 2009
the unamortized balance of the warrants  was $5,666. As of April 30,
2009 a warrant to purchase an aggregate of 275,000 shares of Company stock has
been issued with 75,000 remaining to be issued.





In August
2006, in connection with an agreement with one of its sales consultants the
Company issued warrants to purchase 100,000 shares of Holdings common stock at
an exercise price of $0.60 per share. The agreement which was for three
years,  expiring in June 30, 2009, was
automatically  extended for two consecutive renewal
terms  of  one year each. The warrants may be exercised at
any time up to five years from the date of the agreement. The Company
determined, as of the grant date of the warrants, that the warrants had a value
of $18,000 which was amortized over the one year benefit period of such
warrants. In addition, under the terms of the agreement, the consultant received
175,000 shares of Holdings common stock which were valued at $107,000 based on
the market price of the stock at the date of the agreement. The value of stock
issued is being amortized over the five year life of the consulting agreement.
The consultant is to receive an additional 100,000 warrants for each contract
year with an exercise price to be determined by the Company’s board of
directors. On August 28, 2008, the Company  granted the consultant
warrants to purchase an additional 200,000 shares of the Company’s common stock
at an exercise price of $0.50 per share. This issuance satisfies the Company’s
requirements for the contract years ending June 30, 2008 and 2009. Management
has determined that the aggregate value of the warrants was $4,000 based on a
market price of $0.28 per share of the Company stock on the date of grant. The
warrants expire five years from the date of grant. The unamortized value of the
aggregate  stock and warrants issued to the consultant under the
agreement at April 30, 2009 and  2008 was $53,478
and  $47,682 respectively.  Also, on August 28, 2008 the
consultant and the Company agreed to convert $153,000 of past due consulting
fees into 306,000 shares of common stock at a value of  $0.50 per
share which was at a premium to the market price on date of
grant.


F-14


In
February 2007, the Company entered into a five year agreement with a consulting
company to provide certain financial advisory services. The Company prepaid
$300,000 for such services. This amount is carried as a long-term asset and is
being amortized over the five year life of the agreement. At April 30, 2009 and
2008 the unamortized balance of the agreement was $165,370 and $210,647
respectively. On August 21, 2008 the Company agreed to issue the principals of
the consulting company warrants to purchase 500,000 shares of the Company’s
common stock at an exercise price of $0.50 per share. The warrants were issued
to the principals for their role in the Company securing a strategic
relationship. The warrants expire five years from the date of grant. Management
has determined that the aggregate value of the warrants was $7,000, which is
included in Selling , general and administrative expenses  for the
year ended April 30, 2009,  based on a market price of $0.26 per share
of the Company stock on the date of grant





0n June
14, 2007, in connection with an endorsement agreement, the Company issued
warrants to purchase 801,000 shares of the Company’s common stock at a price of
$1.284 per share. The warrants may be exercised at any time up to June 14, 2017.
The Company determined that the warrants had a value of $416,500, as of the date
the warrants were granted, which is being amortized over the three year term of
the endorsement agreement. The warrants have cashless exercise provisions. At
April 30, 2009 and   2008, the unamortized balance of these
warrants was   $155,856 and $304,034 respectively.  In
addition, the Company has agreed to issue, as partial consideration for monthly
consulting services, to a principal of one of the entities involved in the
endorsement agreement, warrants to purchase 3,000 shares of the Company’s common
stock per month at the monthly average market price.  As
of  April 30, 2009 warrants to purchase 90,000 shares of the Company’s
stock have been earned under this agreement of which a warrant for 54,000 shares
has been issued at exercise prices ranging from $0.19 to $2.12 per share of
common stock. The aggregate value of the 90,000 warrants earned, which is
accounted for as consulting expense aggregate $13,440. Each warrant issuance has
an exercise period of 5 years.





9
.
Acquisition





On
January 15, 2009 (the “Closing”), the Company acquired 90% of the capital
stock  of Olifant U.S.A, Inc. (“Olifant”) , pursuant to a Stock
Purchase Agreement (the “Agreement”).   Olifant has the worldwide
distribution rights (other than Europe)  to Olifant Vodka and Olifant
Gin which are both produced in Holland.  The transaction was accounted
for as a business combination  using the purchase method of accounting
under the provisions of  SFAS 141.





The
Company agreed to pay the sellers $1,200,000 for its 90% interest: $300,000 in
cash and Company common stock valued at $100,000 to be paid 90 days from the
Closing date.  At Closing the initial cash payment of $300,000 was
reduced by $138,000 because Olifant’s liabilities exceeded the amount provided
for in the Purchase Agreement. . As of July 31, 2009 the parties have agreed to
additional offsets aggregating $4,702 with potential offsets
of  $37,030 which are to be determined by August 20, 2009 in
accordance with a supplementary agreement entered into by the
parties,  Settlement Agreement and General Release, on July 31,
2009.  In accordance with the supplementary agreement, the cash
portion of the  initial is due August 31, 2009 and the $100,000
(555,556 shares) of Company stock which were released from escrow and issued to
the sellers. At Closing, the Company issued a promissory note for the $800,000
balance. The promissory note is payable in four annual installments, the first
payment is due one year from Closing. Each $200,000 installment is payable
$100,000 in cash and Company common stock, with the stock value based on the 30
trading days immediately prior to the installment date. The cash portion of the
note accrues interest at a rate of 5% per annum. The Company will also pay
contingent consideration to the sellers based on the financial performance of
Olifant. The contingent consideration terminates at the later of (i) full
payment of the promissory note or (ii) second year following Closing. The
Agreement also provides for “piggyback” registration rights relating to the
shares issuable.





The
Company has tentatively assigned the excess of cost over investment to
trademark. We are in the process of completing our acquisition date fair value
allocations which shall be completed no later than January 15,
2010.





The cost
of the acquisition was allocated based on management’s estimates as
follows:





Cash
                        
                        $
                        17,150Accounts
      receivable
                        
                        
                        87,850Inventory
                        
                        
                        217,770Other
      current assets
                        
                        
                        27,070Trademarks  and
      brand names
                        
                        
                        1,333,333Total
      assets
                        
                        
                        1,683,173Accounts
      payable
                        
                        
                        483,173Net
      assets acquired
                        
                        $
                        1,200,000


F-15


The
operating results of Olifant are reflected in the accompanying consolidated
financial statements from the date of acquisition and were not
material.





In
connection with the acquisition the Company entered into an employment agreement
with one of the sellers. The agreement is for five years with two automatic
one year extensions. The annual base compensation under the employment agreement
is $132,000 with additional compensation due based on the financial performance
of Olifant.  In accordance with the employment agreement the Company
issued to the seller 100,000 shares of its common stock in May
2009.




The
following table presents unaudited pro forma information including sales and net
loss had the operations of the above described acquisition been combined with
the Company’s business as of the first day of the period shown. This information
has not been audited to reflect any changes in the operations subsequent to
acquisition by the Company. Changes in the operations of the acquired business
includes, but are not limited to, changes in trade practices, changes in
distribution network, changes in marketing and promotional programs and
personnel. Had any of these changes been implemented by the former management of
the business acquired prior to acquisition by the Company, the sales and net
income information might have been materially different than the actual results
achieved and from the pro forma information provided below.
 Year
      Ended April 30,2009
                        
                        
                        2008Net
      sales
                        
                        
                        $3,612,376
                        
                        
                        
                        $5,501,796Net
      loss
                        
                        
                        (5,106,956
                        )
                        
                        
                        (6,525,466
                        )Net
      loss per share (basic and diluted)
                        
                        
                        (0.06
                        )
                        
                        
                        (0.08
                        )Weighted
      average number of common shares (basic and diluted)
                        
                        
                        83,947,221
                        
                        
                        
                        80,014,601





10. Notes
and Loans Payable





As of
April 30, 2009 and 2008 Notes and loans payable consisted of the
following:




2009
                    
                    
                    2008Due
      to RBCI(a)
                    
                    $
                    -
                    
                    
                    $
                    500,000Convertible
      note(b)
                    
                    
                    286,623
                    
                    
                    
                    250,000Revolving
      finance facility(c)
                    
                    
                    -
                    
                    
                    
                    307,940Olifant
      note(d)
                    
                    
                    1,061,764
                    
                    
                    
                    -Purchase
      order  facility(e)
                    
                    
                    1,223
                    
                    
                    
                    -Other
      (f)
                    
                    
                    49,720
                    
                    
                    
                    -1,399,330
                    
                    
                    
                    1,057,940Less
      current portion
                    
                    
                    931,267
                    
                    
                    
                    -Long-term
      portion
                    
                    $
                    600,000
                    
                    
                    $
                    1,057,940





(a)
            On October 27, 2005, the Company
      acquired certain assets of Rheingold Beer (“Rheingold”) and assumed
      certain obligations from Rheingold Brewing Company, Inc. (“RBCI”). At
      closing Holdings issued 724,638 shares of common stock with a fair value
      of approximately $650,000 to RBCI and assumed approximately $142,000 of
      their liabilities and were contractually obligated to RBCI to issue an
      additional $500,000; payable in Holdings common stock with a value of
      $350,000 and $150,000 cash, accruing no interest. The obligation due RBCI
      was originally due on October 27, 2006. Due to nonpayment of the balance
      as a result of disagreements over certain of the acquired assets and
      liabilities, the Company was sued by RBCI. On January 15, 2009 the Company
      reached a settlement with RBCI in which the Company issued 350,000 shares
      of common stock in full satisfaction of the balance owed to RBCI. Based on
      the fair value of the 350,000 shares of $91,000 in the date the agreement
      was reached the Company has recognized a gain on such settlement of
      $409,000 which is included in Other income for the year ended April 30,
      2009.




(b)
            In October 2006, the Company
      borrowed $250,000 and issued a convertible promissory note in like amount.
      The due date of the loan was originally extended by the Company to October
      2008 from October 2007 in accordance with the terms of the original note
      agreement. On March 1, 2009 the note was amended to extend the due date to
      October 18, 2009. As of March 1, 2009, the principalamount of the amended
      note is $286,623, which includes the original $250,000 of principal plus
      accrued and unpaid interest of 36,623 as of March 1, 2009. The amended
      note is convertible into shares of our common stock at $0.35 per share, a
      decrease from the $0.60 price under the original note but at a premium to
      the market price on the date of the amended agreement, with certain
      anti-dilution provisions. The note bears interest at 12% per annum which
      is payable quarterly. At the option of the lender, interest can be paid in
      shares of Company common stock. Under the terms of the amended note
      monthly principal payments of $20,000 were to commence June 1, 2009 with
      the balance paid at maturity. As of July 2009 the Company had not made any
      payments under the amended note and has reached an informal agreement with
      the note-holder, to issue 50,000 shares of the Company’s common stock for
      each week of nonpayment. As of August 3, 2009 the Company has issued the
      note-holder 400,000 shares of its stock to remain in compliance with the
      amended note.  As consideration for extending the note the
      Company issued the lender 286,623 shares of Company common stock which had
      a value of $42,992 on March 1, 2009. As of the April 30, 2009 the
      unamortized balance of the 286,623 shares issued was $30,710 which is
      included in Other current assets as of April 30, 2009. During the year
      ended April 30, 2008 the Company issued the note holder an aggregate of
      49,307 shares of Company common stock to satisfy an aggregate of $29,583
      of unpaid interest accrued through October 10, 2007. In February 2008 the
      Company paid the note holder an additional $7,742 for interest accrued
      through January 10, 2008. At April 30, 2009 and 2008 accrued interest on
      this loan aggregated $5,760 and $9,283, respectively, which is included in
      accrued expenses on the accompanying balance sheets. In October 2006,
      connection with this borrowing, we issued warrants to purchase 250,000
      shares of our common stock for $0.60 per share. These warrants are
      exercisable for a five-year period from the date of issuance. The Company
      had determined, as of the date the notes were issued, the warrants had a
      value of $48,000 which was expensed over the original term of the
      note.


F-16





(c)
            In June 2006, the Company entered
      into a $10 million, three year, working capital revolving finance facility
      with Sovereign Business Capital (“Sovereign”) (formally BACC), a division
      of Sovereign Bank. Interest on the line of credit was prime rate plus
      1.5%. The facility was secured by a first security interest in the assets
      of the Company (other than those of Olifant). In early December 2008 the
      Company was notified by the lender, Sovereign, that the lender calculated
      interest on the working capital line incorrectly since the inception of
      the line in June 2006.  On December 17, 2008 the Company
      modified the terms of its credit facility with Sovereign Business Capital.
      Pursuant to this modification all amounts owed under the credit facility
      would be due April 3, 2009 rather than June 2, 2009 and in order to reduce
      our fees on the unutilized credit line, and to satisfy Sovereign's
      request, we reduced the amount we can borrow under the facility to
      $300,000. In consideration for the modifications the amount of the past
      due interest was reduced to $50,000 (from $100,000) and further reduced at
      termination on April 2, 2009 by an additional
    $10,000.





(d)
            On January 15, 2009 (the
      “Closing”), the Company acquired 90% of the capital stock of Olifant
      U.S.A, Inc. (“Olifant”) , pursuant to a Stock Purchase Agreement (the
      “Agreement. The Company has agreed to pay the sellers $1,200,000 for its
      90% interest: $300,000 in cash and common stock valued at $100,000 to be
      paid 90 days from the Closing date The initial cash payment of $300,000
      which was due 90 days from Closing, was initially reduced by $138,000 at
      Closing because Olifant’s liabilities exceeded the amount provided for in
      the Purchase Agreement.  In accordance with the Agreement, the
      initial cash payment was subject to additional offsets to be mutually
      agreed upon by both parties. As of July 31, 2009 the parties have agreed
      to additional offsets aggregating $4,702 with potential offsets of $37,030
      which are to be determined by August 20, 2009 in accordance with a
      supplementary agreement entered into by the parties, Settlement Agreement
      and General Release, on July 31, 2009. The initial payment in accordance
      with the supplementary agreement is due August 31, 2009.  The
      Company issued a promissory note for the $800,000 balance. The promissory
      note is payable in four annual installments, the first payment is due one
      year from Closing. Each $200,000 installment is payable $100,000 in cash
      and Company stock valued at $100,000 with the stock value based on the 30
      trading days immediately prior to the installment date. The cash portion
      of the note accrues interest at a rate of 5% per
    annum.


.


(e)
            Balance on borrowings under
      purchase order financing facility with Hartsko Financial Services, LLC
      (“Hartsko”). Advances under the facility are subject to a 3% fee for the
      first 30 days they remain outstanding and 1% for each 10 days they remain
      unpaid.  Hartsko has a first security interest in the assets of
      the Company to the extent of this
  advance.





(f)
            As
      of April 30, 2009, $40,000 is owed to a shareholder of the Company and
      $9,720 is owed to a member of the Company’s board of directors under an
      informal agreement s with the Company for amounts advanced to the Company
      for working capital purposes. Amounts owed to the shareholder accrues
      interest at a rate of 18%   per annum.  In June
      2009, the director was repaid $11,220 which includes interest of
      $1,500.




11.
Accrued Expenses





As of
April 30, 2009 and 2008 Accrued Expenses consist of the following:





2009
                  
                  
                  2008Payroll,
      board compensation, and consulting fees owed to officers, directors and
      shareholders
                  
                  $
                  1,565,964
                  
                  
                  $
                  742,567All
      other payroll and consulting fees
                  
                  
                  470,061
                  
                  
                  
                  218,413Interest
                  
                  
                  17,465
                  
                  
                  
                  11,339Others
                  
                  
                  846,935
                  
                  
                  
                  262,846$
                  2,900,425
                  
                  
                  $
                  1,235,165





12.
Shareholders' Equity (Deficiency)





In
addition to those referred to in Notes 8, 9, 10 and 13, additional transactions
affecting the Company's equity for the years ended April 30, 2009 and 2008 are
as follows:





On
January 15, 2009 our stockholder approved the number of shares of common stock
we are authorized to issue to 500,000,000 shares.





In March
2009 a consultant to the Company elected to convert $120,000 due him for
consulting fees into shares of Company stock at a price of $0.35 per share
resulting in the Company issuing 342,857 shares to him.  In February
25, 2008 the same consultant elected to convert $190,000 due him for consulting
fees into shares of Company common stock at a price of $0.50 per share resulting
in the Company issuing 380,000 shares to him. The conversions were at a premium
to the market price of the Company’s common on the date of the elections to
convert.


F-17


On
January 8, 2009 the Company issued 400,000 shares of its common stock in
consideration for legal fees. The aggregate value of the shares was $72,000
on the date of grant.





On December
12, 2008 the Company’s CEO converted $10,000 of deferred compensation into
28,571 shares of common stock at a price of $0.35 per share.





On December
11, 2008 the Company issued 50,000 shares valued at
$5,241 of common stock to an employee as a bonus for
services performed. The value of the stock issued aggregated
$8,000.





On
December 10, 2008 the Company issued 15,664 shares of its common stock to one of
its director for reimbursement of expenses.





In
November 2008 the Company issued warrants to purchase
275,000 shares of its common stock in connection with a promotional
agreement.  The warrants, which have an exercise price of $0.50 per
share of common stock, expire five years from the date of the agreement.
Management has determined that the aggregate value of the warrants was $6,740
based on the market price of the Company’s common stock on the date of
grant.





On
October 27, 2008, in order to encourage holders of warrants which we issued in
our January Financing (described below) to exercise their warrants, and enabling
us to decrease the number of unexercised warrants and raise short-term working
capital at low cost,  the Company reduced the exercise price from $.50
to $0.20 per share of common stock for a period of 5 trading days, subject to
adjustment in the event that the Company’s stock traded  for $1.50 or
higher (subject to adjustments for forward and reverse stock splits,
recapitalizations, stock dividends, and the like after the date
hereof)  for ten (10) consecutive trading days through February 28,
2009, which it did not, then the exercise price would have
 reverted  to the exercise price of $.50 per share and the
warrant holders would have been required to pay the Company the difference of
$.30 per share, as part of this re-pricing program. Each of the investors who
participated in the January Financing exercised all of the warrants issued in
the private placement  representing a total of 3,777,778 newly issued
shares of common stock, resulting in proceeds to the Company of $755,556 less a
due diligence fee paid of $70,693. We also agreed to reduce the conversion price
of the preferred stock acquired by these investors in our December Financing
(described below) from $0.50 per share of common stock to $0.35 per share. There
are a total of 11,000 shares of preferred shares outstanding with a redemption
value of $11,000,000 which if all the preferred stock was converted would result
in the issuance of 31,428,571 shares of our common stock. One other investor,
Greenwich Beverage Group LLC, who is controlled by a member of our board of
directors, elected to exercise warrants for a total of 166,667 shares of common
stock at $0.20 per share, which the Company reduced from $1.25, for an aggregate
exercise price of $33,333.





In
September 2008 as a bonus for work performed the Company granted its Chief
Financial Officer warrants to purchase 300,000 shares of its common stock at an
exercise price of $.50 per share.  The warrants expire five years from
the date of the agreement. Management has determined that the aggregate value of
the warrants was $4,200 based on the market price of $0.26 per share of the
Company’s common stock on the date of grant.





In July
2008 in connection with an extension of a licensing agreement for one of our
brands the Company issued 100,000 shares of common stock and warrants to
purchase an additional 300,000 shares of common stock to a charitable
organization supported by one of the icons with whom we have a relationship.
Company management has determined the value of such shares at the date of grant
was $25,000. Under the terms of the warrant agreement 100,000 shares of common
stock are exercisable September 1, 2009, 100,000 shares of common stock are
exercisable September 1, 2010, and 100,000 shares of common stock are
exercisable September 1, 2011. The exercise price of the warrants is $0.50 per
share. The warrants expire five years from the date they are first exercisable.
Management has determined that the aggregate value of the warrants was $3,000
based on the market price of $0.25 per share of the Company’s common stock on
the date of grant.





In June
2008, 50,000 shares of our common stock and warrants to purchase an additional
150,000 shares or shares of our common stock were issued to one of the Company’s
vendors as part of an agreement to sell their brand. The aggregate market value
of the stock issued was $12,500 based on the market price on the date of grant.
The exercise price of the warrants is $0.50 per share. The warrants expire five
years from the date of the agreement. Management has determined that the
aggregate value of the warrants was $1,700 based on the market price of $0.25
per share of the Company’s common stock on the date of grant.





In April
2008 the Company issued 300,000 shares of its stock to three consultants
(100,000 shares each) for their contributions relating to certain strategic
transactions which the Company entered. The aggregate value of the shares, based
on the date the shares were granted, aggregated $99,000 which is included in
selling, general and administrative expenses for the year ended April 30,
2008.





On March
28, 2008 a consultant elected to convert $16,818 due him for consulting fees
into shares of Company stock at a price of $0.37 per share, which was the market
price on the date of election (grant), resulting in the Company issuing 45,455
shares to him.





On
January 17, 2008 the Company’s Chief Executive Officer (CEO) elected to convert
$25,000 due him for compensation into shares of Company common stock at a price
of $0.50 per share, which was at a premium to the market price, resulting in the
Company issuing 50,000 shares to him.


F-18


On
December 18, 2007 (the "Closing Date") the Company sold to three related
investors (the "December Investors") an aggregate of 3,000 shares of our Series
A Preferred Stock, $.001 par value (the "Preferred Stock"), at a cash purchase
price of $1,000 per share, generating gross proceeds of $3,000,000 (the
“December Financing”). The Preferred Stock has no voting or dividend rights. Out
of the gross proceeds of the December Financing, we paid Midtown Partners &
Co., LLC (the "Placement Agent") $180,000 in commissions and $30,000 for
non-accountable expenses. We also issued, to the Placement Agent, warrants to
acquire 600,000 shares of our Common Stock for a purchase price of $.50 per
share (the "Placement Agent Warrants"), which warrants are exercisable for a
five year period and contain anti-dilution provisions in the events of stock
splits and similar matters. Both the commissions and expenses were accounted for
as a reduction of Additional Paid in Capital.





The
financing that we consummated in January 2007 (the “January Financing”) provided
participating investors (the “January Investors”) rights to exchange the common
stock they acquired for securities issued in subsequent financings which were
consummated at a common stock equivalent of $2.00 per share or less. Under this
provision, the January Investors have exchanged 4,444,445 shares of common stock
for 8,000 shares of Preferred Stock. The 4,444,445 shares returned were
accounted for as a reduction of Additional Paid in Capital and a reduction of
Common Stock since the shares have been cancelled. Also in the January
Financing, the January Investors acquired warrants to purchase 3,777,778 shares
of our common stock at an exercise price of $3.00 per share (the “January
Warrants”).  These warrants were exercised at $.20 per share of common
stock. In total we have issued $11,000,000 of our Series A Preferred Stock,
which under their original terms were convertible into our Common Stock at
$0.50 per share, are now convertible at $0.35 under the provisions
of our Warrant Repricing Program.





Each of
our December Investors participated in the January Financing but not all of our
January Investors participated in the December Financing.





In
October 2007 the Company issued 200,000 shares of our common stock with a value
of $80,000 for payments towards legal fees (RBCI and other matters.





In July
2007 the Company issued 1,000 shares of our common stock as a bonus for work
performed by an independent contractor.





In June
2007 a member of our Board of Directors was issued 40,000 shares of our common
stock as compensation for serving on the Board. The aggregate value of the stock
issued was $50,000 based on the market price on the date of grant.





As of
April 30, 2009, warrants to purchase 6,444,423 shares of Holdings common stock
were outstanding, in addition to warrants previously disclosed in Notes 8,9,10,
and this Note 12,  are as follows:





In
October and November 2006, the Company sold 1,750,000 shares of its common stock
for $1,050,000 to investors. Greenwich Beverage Group, LLC (“Greenwich”), an
entity controlled by a member of our board of directors acquired 333,333 shares
of common stock for $200,000. In addition, these investors were issued warrants,
exercisable for five years from the date of the investment, to purchase 875,000)
shares of common stock at a price of $1.25 per share. The Company has the option
to redeem up to 50% of the warrants at anytime prior to exercise at a price
of $0.50 per warrant. In October 2008, Greenwich elected to exercise their
warrants at $0.20 per share, with the Company receiving $33,333 in
proceeds.





Warrants
were issued in connection with convertible notes issued in July 2006 to purchase
an aggregate of 300,000 of Holding’s common stock at an exercise price of $0.50
per share. The warrants were issued in lieu of interest payments. The warrants
expire five years from the date of issuance.





In
February 2006, the Company issued warrants to purchase 250,000 shares of common
stock at a price of $0.56 per share to a consultant in connection with
consulting services rendered the Company. The warrants are exercisable through
February 2011.





Warrants
issued in connection with convertible notes issued between December 2005 and
February 2006 to purchase an aggregate of 445,646 shares of Holding’s common
stock at an exercise price of $0.45 per share. The warrants may be exercised at
any time up to five years from the date of the notes. Warrants to purchase
55,556 shares are owned by Greenwich and warrants to purchase 83,333 shares are
owned by a significant shareholder of the Company.





Warrants
were issued in connection with senior convertible notes which were issued
between March and May 2005 to purchase an aggregate of 1,350,000 shares of
Holdings common stock at a per share price of $0.45. These warrants also have
cashless exercise provisions. The warrants may be exercised at any time up to
five years from the date of the notes. Warrants to purchase 100,000 shares are
owned by Greenwich. In December 2006 three of the warrant holders exercised
their warrants under the cashless exercise provisions of the warrants receiving
an aggregate of 402,587 shares of the Company's common stock. Warrants to
purchase an aggregate 0f 820,000 shares of the Company’s stock remain
outstanding.


F-19


Warrants





The
following is a summary of the Company's outstanding warrants as of April 30,
2009




Warrants
                          
                          
                          Per WarrantWarrants
      outstanding May 1, 2007
                          
                          
                          7,262,868
                          
                          
                          $
                          2.05Granted
                          
                          
                          801,000
                          
                          
                          
                          1.28Granted
                          
                          
                          600,000
                          
                          
                          
                          0.50Re-price(a)
                          
                          
                          (3,777,778
                          )
                          
                          
                          3.00Re-price(a)
                          
                          
                          3,777,778
                          
                          
                          
                          0.50Exercised
                          
                          
                          —
                          
                          
                          
                          —Forfeited
                          
                          
                          —
                          
                          
                          
                          —Warrants
      outstanding April 30, 2008
                          
                          
                          8,663,868
                          
                          
                          
                          0.78Granted
                          
                          
                          1,725,000
                          
                          
                          
                          0.50Reprice(b)
                          
                          
                          (3,777,778
                          )
                          
                          
                          0.50Re-price(b)
                          
                          
                          (166,667
                          )
                          
                          
                          1.25Re-price(b)
                          
                          
                          3,944,445
                          
                          
                          
                          0.20Exercised(b)
                          
                          
                          (3,944,445
                          )
                          
                          
                          0.20Forfeited
                          
                          
                          —
                          
                          
                          
                          —Warrants
      outstanding April 30, 2009
                          
                          
                          6,444,423
                          
                          
                          $
                          0.85




The value
of the warrants on the date of grant was calculated using the Black-Scholes
formula with the following assumptions: risk free – rate 2-4%, expected life of
warrants –  5-10 years, expected stock volatility – 20-35%, expected
dividend yield – 0%.


(a)
            Reduction
      in the exercise price pursuant to the provisions of the
      January  Warrants which resulted in the reduction of the
      exercise price as a result of the December Financing. The exercise price
      of the January Warrants have been reduced to $.50 per share (as previously
      in this  Note 12)





(b)
            Reduction
      in the exercise price pursuant to the provisions of the October 2008
      warrant re-pricing. The warrants were exercised in accordance with the
      agreement (as previously disclosed in this Note
  12).





13.
            Stock
      Incentive Plan





In
January 2009, the Company’s shareholders approved the 2008 Stock Incentive Plan
(the” Plan”) which provides for awards of incentives of non-qualified stock
options, stock, restricted stock and stock appreciation rights for its officers,
employees, consultants and directors in order to attract and retain such
individuals and to enable them  to participate in the long-term
success and growth of the Company. There are 10,000,000  common shares
reserved for distribution under the Plan, of which 3,050,000 remain available.
Stock options granted under the Plan are granted with an exercise price at or
above the fair market value of the underlying common stock at the date of grant,
generally vest over a four year period and expire 5 years after the grant
date.





On March
12, 2009 the Company granted  an aggregate of 5,775,000 options
under  its 2008 Stock Incentive  Plan to various employees,
the directors of the Company, and to two consultants  to the
Company.  The exercise price of the options granted to employees 
and directors and one  of the consultants  was at the market
value (other than those issued to our CEO which was at a 10% premium to the
market value)  of the underlying common stock at the date of grant.
The exercise price of the options granted to the other consultant,
$0.35,  was above the fair market value of the underlying common stock
at the date of grant. The value of the options on the date of grant was
calculated using the Black-Scholes formula with the
following  assumptions: risk free frate-2%, expected life of options
–5 years, expected stock volatility -67%, expected dividend yield
-0%.


F-20


The
Company issued an aggregate of 4,175,000 options to purchase shares of its
common stock to its employees including 2,500,000 to its CEO, 500,000 to its COO
and 300,000 to its CFO.  The options  granted  to
employees of the Company vest over a four year period and expire five years
after the grant date. The cost of the options, $375,750,   is expected
to be recognized over the four year vesting period of the non-vested
options.  For the year ended April 30, 2009 the Company  has
recognized $12,611 of stock based compensation which is included in selling,
general and administrative expenses. At April 30, 2009. total unrecognized
compensation cost amounted to $363,139. The options awarded to the directors
(1,000,000) of the Company and the consultants (600,000) vested immediately upon
grant. The cost of these options aggregated $129,000 which is included in
selling, general and administrative expense for the year ended April 30,
2009.





The
Company did not issue options to purchase shares of its common stock prior to
the year ended April 30, 2009.





A summary of the options outstanding
under the Plan is as follows:





2009
                    
                    
                    2008Shares
                    
                    
                    Weighted
                      Average
                      Exercise
                      Price
                    
                    
                    Shares
                    
                    
                    Weighted
                      Average
                      Exercise
                      PriceOutstanding
      at beginning of period
                    
                    
                    -
                    
                    
                    $
                    -
                    
                    
                    
                    -
                    
                    
                    $
                    -Granted
                    
                    
                    5,775,000
                    
                    
                    
                    0.18
                    
                    
                    
                    -
                    
                    
                    
                    -Forfeited
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -Outstanding
      at end of period
                    
                    
                    5,775,000
                    
                    
                    $
                    0.18
                    
                    
                    
                    -
                    
                    
                    $
                    -Exercisable
      at end of period
                    
                    
                    1,600,000
                    
                    
                    $
                    0.22
                    
                    
                    
                    -
                    
                    
                    $
                    -Weighted
      average fair value of grants during the period
                    
                    
                    
                    
                    
                    $
                    0.09
                    
                    
                    
                    
                    
                    
                    $
                    -





The following table summarizes activity
pertaining  to options outstanding and exercisable at April 30,
2009:





Options Outstanding
                  
                  
                  Options ExercisableExercise price
                  
                  Shares
                  
                  
                  Weighted Average Remaining Life
                    in Years
                  
                  
                  Shares
                  
                  
                  Weighted Average Exercise
                    Price
                  
                  
                  Intrinsic
                    Value0.160
                  
                  
                  2,775,000
                  
                  
                  
                  4.87
                  
                  
                  
                  1,100,000
                  
                  
                  $
                  0.16
                  
                  
                  $
                  -0.176
                  
                  
                  2,500,000
                  
                  
                  
                  4.87
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -0.350
                  
                  
                  500,000
                  
                  
                  
                  4.87
                  
                  
                  
                  500,000
                  
                  
                  
                  0.35
                  
                  
                  
                  -5,775,000
                  
                  
                  
                  4.87
                  
                  
                  
                  1,600,000
                  
                  
                  $
                  0.22
                  
                  
                  $
                  -





The
following table summarizes activity pertaining to the Company’s non-vested
options for the years ended April 30, 2009 and 2008:





Shares
                  
                  
                  Weighted
                    Average
                    Exercise
                    PriceNonvested
      at April 30, 2007Granted
                  
                  
                  -
                  
                  
                  $
                  -Canceled
      or expired
                  
                  
                  -
                  
                  
                  
                  -Vested
                  
                  
                  -
                  
                  
                  
                  -Nonvested
      at April 30, 2008
                  
                  
                  -
                  
                  
                  
                  -Granted
                  
                  
                  5,775,000
                  
                  
                  $
                  0.18Canceled
      or expired
                  
                  
                  -
                  
                  
                  
                  -Vested
                  
                  
                  (1,600,000
                  )
                  
                  
                  0.22Nonvested
      at April 30, 2008
                  
                  
                  4,175,000
                  
                  
                  $
                  0.17




F-21




The fair
value of each option  award is estimated on the date of grant using
the Black-Scholes option pricing model and is affected by assumptions regarding
a number of highly complex and subjective variables  including
expected volatility, risk-free interest rate, expected
dividends and expected term. Expected volatility is based on the historic
volatility of the Company’s stock over the expected life of the option. The
expected term and vesting of the option represents the estimated period of time
until the exercise and is based on management’s estimates, giving consideration
to the contractual term, vesting schedules and expectations of future employee
behavior. The risk-free interest rate is based on the U.S . Treasury yield curve
in effect at the time of grant for the expected term of the option. The Company
has not paid dividends in the past and does not plan to pay any dividends in the
near future. SFAS 123R, “Share Based Payment,” also requires the Company to
estimate forfeitures at the time of grant and revise these estimates, if
necessary, in subsequent period if actual forfeitures differ from those
estimates. The Company estimates forfeitures of future experience while
considering its historical experience.





The fair
value of options at date of grant was estimated using the Black-Scholes option
pricing model utilizing  the following weighted average
assumptions:





Risk-free
      rate
                  
                  
                  2.0
                  %Expected
      option life in years
                  
                  
                  5.0Expected
      stock price volatility
                  
                  
                  67
                  %Expected
      dividend yield
                  
                  
                  0
                  %





Also on
March 12, 2009, the Company granted 1,175,000 shares of  its common
stock under the Plan  to several of  its employees as
consideration for past services they have performed for the Company. The value
of the stock on the date of grant aggregated $188,000 which
is  included in selling, general and administrative expenses
  for the year  ended April 30, 2009 and accrued expense as
of April 30, 2009 as  none of these shares were issued as
of  that date.





14.
Income Taxes





No
provision for taxes on income is included in the accompanying statements of
operations because of the net operating losses in both fiscal years and changes
in valuation allowance for the years. Holdings and Drinks previously filed
income tax returns on a June 30 and December 31 tax year, respectively; however,
both companies applied for and received a change in tax year to April 30 and
file a federal income tax return on a consolidated basis. The consolidated net
operating loss carry forward as of April 30, 2009 is approximately $28,500,000,
available to offset future years' taxable income expiring in various years
through 2029.




As of
April 30, 2009 and 2008, components of the deferred tax assets are as
follows:





2009
                          
                          
                          
                          2008Net
      operating loss
                          
                          $
                          10,800,000
                          
                          
                          $
                          9,600,000Compensation
                          
                          
                          496,000
                          
                          
                          
                          450,000Royalties
                          
                          
                          50,000
                          
                          
                          
                          -Accounts
      receivable
                          
                          
                          49,000
                          
                          
                          
                          -Inventory
                          
                          
                          38,000
                          
                          
                          
                          -Stock
      based compensation
                          
                          
                          54,000
                          
                          
                          
                          -11,487,000
                          
                          
                          
                          10,050,000Less
      valuation allowance
                          
                          
                          (11,487,000
                          )
                          
                          
                          (10,050,,000
                          )$
                          —
                          
                          
                          $
                          —





A
valuation allowance has been provided against the entire deferred tax asset due
to the uncertainty of future profitability of the Company.





Management's
position with respect to the likelihood of recoverability of these deferred tax
assets will be evaluated each reporting period.


F-22


Reconciliation
of the differences between the statutory tax rate and the effective income tax
rate is as follows for the year ended April 30, 2009 and 2008:




2009
                                
                                
                                2009Statutory
      federal tax (benefit) rate
                                
                                
                                (34.00
                                )%
                                
                                
                                (34.00
                                )%Statutory
      state tax (benefit) rate
                                
                                
                                (4.00
                                )%
                                
                                
                                (4.00
                                )%Valuation
      allowance
                                
                                
                                38.00
                                %
                                
                                
                                38.00
                                %Effective
      income tax rate
                                
                                
                                —
                                
                                
                                
                                —





15..
Related Party Transactions





Related
party transactions, in addition to those referred to in Notes 9 and 10 are as
follows:





Consulting
and Marketing Fees





For each
of the years ended April 30, 2009 and 2009, the Company incurred fees for
services rendered related to sales and marketing payable to a limited liability
company which was controlled by a member of the Company’s board of directors,
and previous  chairman of the board aggregating $84,000. As of April
30, 2009 and 2008  unpaid fees owed to the chairman's firm, aggregated
$174,550 and  $98,550, respectively.





In fiscal
2003 we entered into a consulting agreement with a company wholly owned by a
member of the Company's board of directors. Under the agreement the consulting
company is being compensated at a rate of $100,000 per annum. As of April 30,
2009 and 2008 we were indebted to the consulting company in the amount of
$256,248 and  $156,248, respectively.





In
December 2002 the Company entered into a consulting agreement with one of its
shareholders which provides for $600,000 in fees payable in five fixed
increments over a period of 78 months. The agreement expires on  June
9, 2009. The Company has an informal agreement with the shareholder pursuant to
which he has the option of converting all or a portion of the consulting fees
owed him into shares of Holding's common stock at a conversion price to be
agreed upon. For each of the years ended April 30, 2009 and 2008 consulting fees
incurred to this shareholder aggregated $120,000. In March  2009 the
consultant elected to convert $120,000  due him for consulting fees
into shares of Company stock at a price of $0.35 per share resulting in the
Company issuing 342,857  shares to him.  In February, 2008
the consultant elected to convert $190,000 due him for consulting fees into
shares of Company common stock at a price of $0.50 per share resulting in the
Company issuing 380,000 shares to him. Each of the conversions
were  was at a premium to the market price of the Company’s common
on  the date of the elections  to convert.  As of
April 30, 2009 and 2008 amounts owed to this shareholder aggregated
$30,000.





Legal
Fees





For the
year ended the Company granted to a member of our board of directors options to
purchase 400,000 shares of our Company stock, under our Plan,  for
legal services he provided the Company. The fair market value of the options
issued, which vested 100% upon grant, aggregated $45,000 based on the
assumptions disclosed in Note 13.  For the years ended April 30, 2008,
the Company incurred legal fees payable to a company which was controlled
by  this
director  aggregating.  $57,633.





Royalty
Fees





In
connection with the Company's distribution and licensing agreements with its
equity investee the Company incurred royalty expenses for the years ended
April 30, 2009 and 2008 of approximately $30,000 and $62,000, respectively.
The operations and the net assets are immaterial.





Loan
Payable





From July
2007 through April 2009 the Company borrowed an aggregate of $654,435 from our
CEO for working capital purposes.   The borrowings bear interest at
12% per annum.. For  the years ended April 30, 2009 and 2008 interest
incurred on this loan aggregated $38,204 and $37,798,
respectively.  As of  April 30, 2009 and, 2008 amounts owed
to our CEO on these loans including accrued and unpaid interest aggregated
$305,935 and $232,547, respectively.


F-23


16.
Customer Concentration





For the
years ended April 30, 2009 and 2009 our largest customer accounted for
approximately 16% and 12%, respectively of net sales. For the year ended April
30, 2008 another customer accounted for 10% of net sales.





17.
Commitments





Lease





The
Company leases office space under an operating sublease, with minimum annual
rentals of $50,000 through September , 2009. The Company leased additional
office under an operating lease, which expired in March 2009,  that
required minimal annual rental payments of $51,600.





Rent
expense for these leases aggregated approximately $101,000 and $99,000 for the
years  ended April 30, 2009 and 2008, respectively.





Future
minimum payments for all leases are approximately as follows:




Year EndingApril 30,
                      
                      Amount2010
                      
                      
                      20,833





License Agreement





In
November 2005 the Company entered into an eight-year license agreement for sales
of Trump Super Premium Vodka. Under the agreement the Company is required to pay
royalties on sales of the licensed product. The agreement requires minimal
royalty payments through November 2012 which if not paid could result in
termination of the license. The Company is currently in default under the terms
of its license agreement with  Trump Marks LLC. The licensor has the
right to terminate the license, but at present has not formally asserted that
right. The Company under a non documented arrangement with the licensor is
continuing to sell the product. The Company and licensor are currently in
discussion to amend the agreement under mutually beneficial terms.





In
2008  the Company entered into a licensing agreement with Vetrerie
Bruni S.p.A. (“Bruni”), which has  the patent to the Trump Vodka
bottle design. The agreement is retroactive to January 1, 2008 and calls for
annual minimum royalties of $150,000. Royalties are due on a per bottle basis on
bottles produced by another bottle supplier of approximately 18% of the cost of
such bottles.  The agreement terminates upon the expiration of the
patent or the expiration  of the Company’s license agreement
with  Trump Marks LLC. At  April 30, 2009 the Company has
accrued $200,00 in fees due Bruni. Due to nonpayment of the
outstanding  balance the  Company was sued by
Bruni  (see Note 14).





In
February 2008 we entered into a joint venture with Grammy Award-winning producer
and artist, Dr. Dre. The Company and Dr. Dre have formed the joint venture to
identify, develop, and market premium alcoholic beverages, The deal is under the
umbrella of the agreement between the Company and Interscope Geffen A&M
Records.  Our Leyrat Cognac is the joint ventures’ first
beverage.


In
January 2009 the Company launched its Leyrat Estate Bottled Cognac which it
imports from a 200 year old distillery in Cognac France. The Company
granted 10% of its 50% interest in the brand to the producer of the product ,
leaving us with a 45% interest, in return for the rights to distribute the
product in the United States. The Company has 5% of the rights for the brand in
Europe..





Litigation





In June
2009, Richard Shiekman, a former employee of the Company, filed a claim against
the Company and our chief Executive Officer  in Superior Court of
Connecticut, Fairfield County (CV 09 4028895 S). The plaintiff seeks $127,250 of
unpaid wages and commissions and, $1,500 for reimbursement of expenses. The
maximum exposure to the Company and our CEO is $387,000 for treble damages plus
attorneys’ fees and costs. The Company believes that the claims made by the
plaintiff are false and plans to vigorously defend this suit,. In addition, the
Company plans to commence a countersuit for damage and theft of
services.  We pledged 2,325,000 shares of Company stock in lieu of a
prejudgment remedy.





In
February 2009, Vetrerie Bruni S.p.A the company which has the patent to the
Trump Vodka bottle design filed a complaint against us in the U.S. District
Court, Southern District of New York for alleged breach of contract and seeking
$225,000 for alleged past due invoices and royalties. The Company is currently
engaged in settlement negotiations and if a settlement is not reached the case
will be defended.





In June
2009, Liquor Group Wholesale, Inc. (“Liquor Group”) a company which provided
distribution services for us in several states filed a claim for damages against
us in Duval County Florida for alleged damages including breach of contract and
is seeking approximately $2 million in damages. It is the
Company’s  strong opinion that the claim arose out of our termination
of the agreements we had with them for their nonperformance, failure of the
plaintiff  to accurately report sales to the Company and their
withholding of information required by the agreements. The Company filed a
counterclaim of $500,000 for damages against Liquor Group and has denied their
claimed breach of contract claim previously made against it. The Company
contends that it is owed money by Liquor Group under the
agreements.





Other
than the above we believe that the Company  is currently not subject
to litigation, which, in the opinion of our management, is likely to have a
material adverse effect on us.


F-24


We may,
however, become involved in litigation from time to time relating t claims
arising in the ordinary course of our business. These claims, even if not
meritorious, could result in the expenditure of significant financial and
managerial resources.





Other





In April
2009 the Company entered into a  sponsorship  agreement with
concert producer and promoter to promote Olifant Vodka  in
its  concert tour  which  runs from
July  10, thru August 8, 2009.  In consideration for their
services the Company has given the promoter the following: 1,500,000 shares
of  its stocks which were issued in May 2009; 3% of the net profits of
Olifant for each fiscal year beginning  following the third
anniversary of the agreement (years  beginning May 2012) and
ending  the earlier of Olifant’s fiscal year ending in 2018 or when
Olifant is sold.  If  Olifant is sold prior to expiration
the promoter will receive 3% of the consideration received from the sale. The
Company has agreed to grant an additional 2% (of Olifant or  a
future  brand)  for promotion in the 2010 concert tour; and
warrants to purchase 200,000 shares of Company stock at an exercise price of
200,000 shares which shall be issued at the end of the 2009  tour. The
value of  the 1,500,000 shares issued
aggregating  $225,000,  based on the market price of the
Company’s stock on the date of the agreement, and the warrants granted , $8,000
, will be amortized over the life of the tour. In accordance with the agreement
the amount of cash and stock based consideration issued by the Company shall not
be less than $400,000.





In
accordance with the agreement, in May 2009,  the Company issued a
promissory note to the promoter  for a loan in the same
amount  to cover expenses relating to the tour. The note, which bears
no interest, was to be paid in four equal installments beginning in June 2009 is
secured by 500,000 shares of Company stock.  The promoter has deferred
the requirement of payment under the note pending  the completion of a
future financing  for the Company at which time they will elect
payment or take the 500,000 shares of stock.





The
Company has an agreement with a foreign distributor, through December 2023, to
distribute our products in their country. The agreement provides  for
a set monthly amount of both product (primarily Trump Super Premium Vodka) to be
purchased by the distributor plus the payment to us of an exclusivity fee.
Presently the distributor has not received its distribution license. Once the
license is received performance under the contract will commence.





18.
Subsequent Events





On June
19, 2009 (the "Closing Date") we sold to one investor (the “Investor”) a
$4,000,000 non interest bearing debenture with a 25% ($1,000,000) original issue
discount, that matures in 48 months from the Closing Date (the Drink’s
Debenture) for $3,000,000, consisting of $375,000 paid in cash at closing and
eleven secured promissory notes, aggregating $2,625,000, bearing interest at the
rate of 5% per annum, each maturing 50 months after the Closing Date(the
“Investor Notes”).  The Investor Notes, the first ten of which are in
the principal amount of $250,000 and the last of which is in the principal
amount of $125,000, are mandatorily pre-payable, in sequence, at the rate of one
note per month commencing on the seven month anniversary of the Closing
Date.  If the prepayment occurs, the entire aggregate principal
balance of the Investor Notes in the amount of $2,625,000, together with the
interest outstanding thereon, will be paid in eleven monthly installments (ten
in the amount of $250,000 and one the amount of $125,000)such that the entire
amount would be paid to us by November 26, 2010.  As a practical
matter, the interest rate on the Investor Notes serves to lessen the interest
cost inherent in the original issue discount element of the Drinks Debenture.
For the mandatory prepayment to occur, no Event of Default or Triggering Event
as defined under the Drinks Debenture shall have occurred and be continuing and
the outstanding balance due under the Drinks Debenture must have been reduced to
$3,500,000 on the seventh month anniversary of the Closing Date and be reduced
at the rate of $333,334 per month thereafter.





One of
the Triggering Events includes the failure of the Company to maintain an average
daily dollar volume of common stock traded per day for any consecutive 10-day
period of at least $10,000 or if the average value of the shares are pledge to
secure our obligation under the Drinks Debenture (as subsequently described
)fall below $1,600,000.





Under the
Drinks Debenture, commencing six months after the Closing Date, the Investor may
request the Company to repay all or a portion of the Drinks Debenture by issuing
the Company’s common stock, $0.001 par value, in satisfaction of all or part of
the Drinks Debenture, valued at the Market Price,(as defined in the Drinks
Debenture), of Drink’s common stock at the time the request is made


(collectively,
the “Share Repayment Requests”).  The Investor’s may not request
repayment in common stock if, at the time of the request, the amount requested
would be higher than the difference between the outstanding balance owed under
the Drinks Debenture and 125% of the aggregate amount owed under the Investor
Note.


F-25


We may
prepay all or part of the Drinks Debenture upon 10-days prior written notice and
are entitled to satisfy a portion of the amount outstanding under the debenture
by offset of an amount equal to 125% of the amount owed under the Investor
Notes, which amount will satisfy a corresponding portion of the Drinks
Debenture.  For example, subsequent to receipt of the $375,000 and
prior to the receipt of any payments under the Investor Notes, we can satisfy
the Drinks Debenture by paying $718,750 to the Investor.





Also as
part of this financing, the Investor acquired warrants to purchase 2,500,000
shares of our common stock at an exercise price of $0.35 per share (the
“Investor Warrants”).  The Investor Warrants contain full ratchet
anti-dilution provisions, as to the exercise price and are exercisable for a
five year period.





Out of
the gross proceeds of this Offering, we paid the placement agent $37,500 in
commissions and we are obligated to pay the placement agent 10% of the principal
balance of the Investor Notes when each note is paid. We will also issue to the
Placement Agent, warrants to acquire 5% of the shares of our Common Stock which
we deliver in response to Share Repayment Requests, at an exercise price equal
to the Market Price related to the shares delivered in response to the Share
Repayment Request (the "Placement Agent Warrants"), which warrants are
exercisable for a five year period, will contain cashless exercise provisions as
well as anti-dilution provisions in the case of stock splits and similar
matters





Our CEO
has  guaranteed our obligations under the Drinks Debenture in an
amount not to exceed the lesser of (i) $375,000 or (ii) the outstanding balance
owed under the Drinks Debenture.  In addition our CEO, COO, and three
other members of our Board of Directors and another of our shareholders, have,
either directly, or through entities they control pledged an aggregate of
9,000,000 shares of our common stock to secure our obligations under the Drinks
Debenture (the “Pledged Shares”). The Company has pledged an additional
3,000,000 shares of its common stock. The Company has agreed in
principle to issue to those individuals who pledged their
shares,  0.5 shares of Company stock for each share
pledged.





On July
14, 2009 the value of the Pledged Shares fell below the required amount and
consequently the  Investor delivered  a notice of default to
the Company. On receipt of the notice the Company requested, and the Investor
orally agreed, that the penalties the Company would have incurred would not
apply. The agreement was subsequently documented and the Investor also waived
the application of this provision through October 31, 2009. In response to the
default  the Investor to transferred 5,523,645 shares of the Pledged
Shares into its own name in order  to commence sale
thereof  to satisfy payment of the Drinks Debenture. Accordingly and
upon the Company’s request,  Investor agreed to waive its right under
an Event of Default.





In order
to secure waivers which the investors in our December 2007 financing claimed
were required for the Company to consumate this financing (see Note 11), we
allowed, and the three December investors elected, to  convert an
aggregate of $335,800(335.8 shares) of our preferred stock into 3,358,000 shares
of our common stock.





In June
2009, in partnership with rock and roll personality,  Kid Rock, , the
Company formed a limited  liability company (LLC) in which it is has a
50% interest and is the managing member. The LLC has the license rights to
distribute Kid Rock’s BadAss Beer on a worldwide basis for a term of five years
with a option to renew for an additional five years. The
license  requires the LLC to  pay the licensor $0.35 per 24
can case (or equivalent liquid volume) with certain minimum royalties for years
2 through 5 of the agreement payable on the first day of the applicable year. In
accordance with the agreement the Company is required to issue an entity
controlled by Kid Rock warrants to purchase 100,000 shares of our common stock
at an exercise price of $.15 per share which was the market value of our common
stock at the closing of the agreement. The warrants  are exercisable
for a 5 year period. In addition, the Company is required to issue the entity
additional warrants based on the sales volume of the product up to additional
warrants to purchase 1,000,000 shares of our common stock at an exercise price
of $.35 per share. These warrants will also have an exercise period of 5
years.





In May 9,
2009 we issued a sales consultant 85,000 shares of our common stock with an
aggregate value of $11,900 for past due fees owed to him.





On July
1, 2009 we issued an aggregate of 333,333 shares of our common stock having an
aggregate value of $50,000 to a member of our board of directors for an advance
he made to a third, unrelated,  entity for services they provided the
Company. The amount the Company was invoiced for these services by the third
party was equal to the value of the stock issued to the director.





On July
1, 2009 we issued 28,000 shares of our common stock having an aggregate value
of   $3,600 to a company which provides freight services to the
company.





On July
1, 2009 we issued  100,000 shares of our common stock having an
aggregate value of $13,000 to a sales consultant for the Company for services he
has provided to us.





On July
29, 2009 we issued 71,500 shares of our common stock having an aggregate value
of  $10,000 to a consultant  for the Company for
services  he has performed.





On August
5, 2009 we issued 350,000 shares of our common stock having an aggregate value
of $49,000 to an attorney for the Company for services he has
performed.


F-26