UNITED STATES


SECURITIES AND EXCHANGE COMMISSION


Washington, D.C. 20549





FORM 10-Q


(Mark One)





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





For the quarterly period ended
September 30, 2015


or


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





For the transition period from

to





Commission File No.
000-52297





FBEC Worldwide, Inc.(Exact name of registrant as specified in its charter)





Wyoming

06-1678089(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification No.)





1621 Central Ave, Cheyenne, WY
82001(Address of principal executive offices)
(Zip Code)800-785-4089(Registrant’s telephone number, including area code)





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





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





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





Large accelerated filer   ̈                                                                                     Accelerated filer   ̈


Non-accelerated filer  ̈                                                                           Smaller reporting company x





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





The number of shares outstanding of the Registrant’s Common Stock as of December 21, 2015 was 254,747,666.






1




FBEC Worldwide Inc.
 Consolidated Balance Sheets
  September 30,


December 31,2015


2014(Unaudited)ASSETSCurrent assets:Cash

$
6,616


$
-Total current assets


6,616



-Intangible Asset


50,000



-Total Assets

$
56,616


$
-LIABILITIES AND STOCKHOLDERS' EQUITYCurrent liabilities:Accounts payables


14,322



15,281Accrued expenses


94,349



46,175Convertible notes payable (net)


297,500



131,439Notes payable to related parties






26,625Notes payable (net)


631,052Derivative liabilities


560,837



902,551Total current liabilities


1,598,060



1,122,071Total liabilities

$
1,598,060


$
1,122,071Stockholders' equity:Preferred stock, $0.001 par value, 20,000,000 shares authorized1,000 and 10,000 shares issued and outstanding as ofSeptember 30, 2015 and December 31, 2014 respectively


1



10Common stock, $0.001 par value, 5,000,000,000 shares authorized;254,747,666 and 2,244,413 shares respectively issued and outstanding


254,748



2,244Additional paid-in capital


3,660,339



132,567Retained earnings


(5,456,532
)


(1,256,892
)Total stockholders' equity:


(1,541,444
)


(1,122,071
)TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

$
56,616


$
-






The accompanying notes are integral part of these financials statements.








2







FBEC Worldwide Inc
 Consolidated Statements of Operations




Three Months Ended September 30,


Nine Months

ended

September, 30


January 13, 2014 (inception)

through

September 30,2015


2014


2015


2014Net revenues:Revenue from Cable/Internet sales

$
-


$
-



-


$
-Total net revenues


-



-



-



-Cost of Goods Sold


-



-



-



-Gross Income


-



-



-



-Operating expenses:General, selling and administrative expenses


2,672,930



17,687



3,428,852



175,123Total operating expenses


2,672,930



17,687



3,428,852



175,123Income (loss) from operations


(2,672,930
)


(17,687
)


(3,428,852
)


(175,123
)Other income (expense)Interest income (expense)


(47,625
)


(29,837
)


(59,909
)


(151,975
)Gain (loss) on derivative liability


(44,956
)


(661,171
)


(692,728
)


(806,310
)Loss on extinguishment of liability


-



-



(18,151
)


(14,600
)Gain on sale of assets


-



-



-



53,329Total other income (expense)


(92,581
)


(691,008
)


(770,788
)


(919,556
)Income (loss) before income tax


(2,765,511
)


(708,695
)


(4,199,640
)


(1,094,679
)Provision for income taxes


-



-



-



-Net Loss

$
(2,765,511
)

$
(708,695
)


(4,199,640
)

$
(1,094,679
)Basic income (loss) per share

$
(0.01
)

$
(1.74
)


(0.03
)

$
(4.42
)Diluted income (loss) per share

$
(0.01
)

$
(1.74
)


(0.03
)

$
(4.42
)Weighted average shares - Basic


238,167,286



406,325



127,965,782



247,836Weighted average shares - Diluted


238,167,286



406,325



127,965,782



247,836






The accompanying notes are integral part of these financials statements.
   3




FBEC Worldwide Inc
 Consolidated Statements of Cash Flows
  For Nine

Months Ended September 30,


January 13,

2014

(inception)

through

September 30,2015


2014CASH FLOWS FROM OPERATING ACTIVITIESNet income ( loss)

$
(4,199,640
)

$
(1,094,679
)Adjustments to reconcile net income to net cashprovided by operating activitiesLoss on Derivative Liabilities


692,728



806,310Ammortization of debt discount


53,394



132,761Equipment expensed as wages in Sand settlement


48,314



-Loss on extinguishment of liabilities


18,151



14,600Gain on sale of asset






(53,329
)Changes in operating Assets and Liabilities:Increase (decrease) in:Accounts Payable


(959
)


114,237Accrued Expenses


48,174



16,000Net Cash Provided (Used) in Operating Activities


(3,339,838
)


(64,100
)CASH FLOWS FROM INVESTING ACTIVITIESPurchase of Property & Equipment


(63,314
)


-Net Cash Provided (Used) by Investing Activities


(63,314
)


-CASH FLOWS FROM FINANCING ACTIVITIESDecrese of debt


(30,000
)


-Note payable issued for services


200,000Stock issued for Service


2,588,018



54,100Proceeds from convertible Notes Payable


75,000



10,000Proceeds from Notes Payable


576,750



-Net Cash Provided by Financing Activities


3,409,768



64,100NET INCREASE IN CASH


6,616



-CASH AT BEGINNING OF PERIOD


-



-CASH AT END OF PERIOD

$
6,616


$
-The accompanying notes are an integral part of these consolidated financial statements.








4






FBEC WORLDWIDE, INC.
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 
 NOTE 1 – BASIS OF PRESENTATION, GOING CONCERN AND CORRECTION OF PRIOR YEAR INFORMATION
 
 Interim Financial Reporting
 
 While the information presented in the accompanying interim financial statements is unaudited, it includes all adjustments, which are, in the opinion of management, necessary to present fairly the financial position, results of operations and cash flows for the interim periods presented in accordance with generally accepted accounting principles in the United States of America ("GAAP"). All adjustments are of a normal, recurring nature.  Interim financial statements and the notes thereto do not contain all of the disclosures normally found in year-end audited financial statements and these Notes to Financial Statements are abbreviated and contain only certain disclosures related to the three and nine month period ended September 30, 2015. Notes to the financial statements which would substantially duplicate the disclosure contained in the audited financial statements for fiscal 2014 as reported in the Form 10-K have been omitted.  It is suggested that these interim financial statements be read in conjunction with our audited financial statements and related notes for the year ended December 31, 2014 included in our Form 10-K filed with the Securities Exchange Commission on September 23, 2015.  Operating results for the three and nine months ended September  30, 2015 are not necessarily indicative of the results that can be expected for the period from January 1, 2015 through December 31, 2015.
 
 Earnings Per Share
 
 We present both basic and diluted earnings per share (“EPS”) amounts in our financial reporting.  Basic EPS excludes dilution and is computed by dividing income available to Common Stock holders by the weighted-average number of Common Stock outstanding for the period.  Diluted EPS reflects the maximum potential dilution that could occur from our convertible debt.  Potential dilutive shares are excluded from the calculation if they have an anti-dilutive effect in the period. During the three and nine months ended September 30, 2015 and 2014, the shares underlying the outstanding convertible debt were excluded as their effect would have been anti-dilutive.
 
 Going Concern
 
 The accompanying unaudited consolidated financial statements have been prepared in conformity with GAAP, which contemplates continuation of the Company as a going concern, which is dependent upon the Company's ability to establish itself as a profitable business.  At September 30, 2015, the Company has an accumulated deficit of $5,456,532 and has  a working capital deficit of $1,541,444. These matters raise substantial doubt about the Company's ability to continue as a going concern.  These unaudited consolidated financial statements do not include any adjustments that might result from the outcome of these uncertainties, nor do they include adjustments relating to the recoverability and realization of assets and classification of liabilities that might be necessary should the Company be unable to continue in operation. The Company’s ability to continue in business is dependent upon obtaining sufficient financing or attaining profitable operations.  However, there can be no assurance that management will be successful in obtaining additional funding or in attaining profitable operations.
 
 Correction of Prior Year Information
 
 During the audit of the year ended December 31, 2014, we identified errors in previously reported financial statements for the interim quarters of 2014. These errors were in the valuation and accounting for stock issued for services and the the valuation and accounting for derivative liabilities. This resulted in adjustments to the previously reported amounts in the consolidated financial statements for the three and nine months ended September 30, 2014.
   5
  In accordance with the SEC’s Staff Accounting Bulletin Nos. 99 and 108 (SAB 99 and SAB 108), the Company evaluated these errors and, based upon an analysis of quantitative and qualitative factors, determined that the error was immaterial to each of the prior reporting periods affected. However, if the adjustments to correct  the cumulative effect of the above error had been recorded in the tyhree and nine months ended September30, 2014, the Company believes that the impact would have been significant and would impact comparisons to prior periods. Therefore, as permitted by SAB 108, the Company corrected, in the current filing, previously reported results as of and for the three and nine months ended September 30, 2014.
 
 The following table presents the comparative effect of the correction to the three and nine month information and the impact on the Company’s consolidated financial statements as of and for the three and nine months ended September 30, 2014:
 
 
 
 
 Consolidated Statement of OperationsOperating Expenses:Selling, general and administrative

$
21,016


$
(3,329
)

$
17,687Bad debt expense


-



-



-Other Income (Expenses):Interest expense


(61,251
)


31,414



(29,837
)Gain on sale of assets


-



-



-Gain (Loss) on conversion of debt


46,187



-



46,187Derivative gain (loss)


(561,296
)


(99,875
)


(661,171
)Net loss


(597,376
)


(93,632
)


(691,008
)Loss per share, basic

$
(1.48
)

$
(0.26
)

$
(1.74
)Loss per share, diluted

$
(1.48
)

$
(0.26
)

$
(1.74
)
 
 
 
 Nine months ended September 30, 2014Consolidated Balance SheetLiabilities and Stockholders’ DeficitCurrent Liabilities:Derivative liabilities

$
967,301


$
106,066


$
1,073,367Convertible notes payable


196,944



14,416



211,360Stockholders’ DeficitCommon stock


741,392



(740,581
)


811Additional paid-in capital


204,490



37,209



241,699Accumulated deficit


(2,160,967
)


825,410



(1,335,557
)Consolidated Statement of OperationsOperating Expenses:Selling, general and administrative

$
225,080


$
(49,957
)

$
175,123Bad debt expense


100,613



(100,613
)


-Other Income (Expenses):Interest expense


(249,426
)


97,451



(151,975
)Derivative gain (loss)


(290,137
)


(516,173
)


(806,310
)Gain on sale of asset


-



(53,329
)


(53,329
)
   6
  Debt settlement loss


(59,776
)


45,176



(14,600
)Net loss


(879,240
)


(215,439
)


(1,094,679
)Loss per share, basic

$
(3.38
)

$
(0.83
)

$
(4.21
)Loss share, diluted

$
(3.38
)

$
(0.83
)

$
(4.21
)Consolidated Statement of Cash FlowsCash flows from operating activities:Net loss

$
(879,240
)

$
(215,439
)

$
(1,094,679
)Adjustments to reconcile net loss to net cash used in operating activities:(Gain) loss on change in fair value

of derivative liabilities


290,138



516,172



806,310(Gain) on conversion of debt


(45,792
)


(395
)


(45,792
)Amortization of debt discounts


111,587



55,915



110,844Bad debt expense


100,613



(100,613
)


-Stock issued for services


61,700



(7,600
)


54,100Non-cash interest


147,586



(147,586
)


-Loss on settlement of debt


59,776



(45,176
)


14,600Gain on sale of asset


-



(53,329
)


(53,329
)Changes in operating assets and

liabilities:Accounts payable


94,276



(71,820
)


22,456Accrued expenses and current

liabilities


9,356



(3,657
)


5,699Cash flows from financing activities:Proceeds from convertible notes payable


50,000



(40,000
)


10,000NON CASH INVESTING AND FINANCING ACTIVITIES:Common stock issued in reverse

merger

$
1,281,727


$
(188,395
)

$
1,093,332Resolution of derivative liabilities


260,689



133,695



185,800Debt discount due to derivative

liabilities


-



153,344



153,344Founders shares


-



10



10Common shares issued and held in

escrow


15,000



(14,985
)


15Common stock issued for

conversion of debt


420,566



(7,000
)


82,500Common stock issued for settlement

of liabilities


129,001



(127,501
)


1,500Common stock issued for settlement

of liabilities to related parties


-



93,500



93,500Accounts payable settled by debt


103,344



40,000



143,344Sale of Subsidiary


143,942



(143,942
)


-Services to be received as consideration for sale of subsidiary


10,000



(10,000
)


-Derivative liability at inception


281,871



(281,871
)


-
 
 
 
 7
  NOTE 2 – STOCKHOLDERS’ DEFICIT
 
 The Company is authorized to issue up to 5,000,000,000 shares of common stock at $0.001 par value per share and 20,000,000 shares of preferred stock at $0.001 par value per share.  As of September 30, 2015 and December 31, 2014, the Company had 254,747,666 and 2,244,413 shares of common stock plus 1,000 and 10,000 shares of Series A preferred stock  issued and outstanding, respectively (see Note 10).
 
 NOTE 3 – Separation of Prior Management
 
 On September 14, 2015, Robert Sand‘s resignation was accepted by the Company per his resignation letter dated September 13, 2015. He resigned as Chief Executive Officer and as Chairman of the Board of Directors. These positions represented all positions then held by Mr. Sand.
 
 Mr. Sand and his company S&L Capital LLC were allowed to retain the shares in their possession totaling 203,406,528 restricted common shares.  Neither the Company, Mr. Spatafora or Mr.  Heimann will take any action to restrict these shares by any method.
 
 One share of the Series A Preferred  Stock was returned to the Company and canceled. The remaining 1,000 Series A Preferred shares remain with  Vinyl Groove Productions, Inc.
 
 The Company will continue to pay for the prior Company headquarters in California for the remaining term of the lease expiring in June 2016. Mr. San will use the facility for business unrelated to the Company.
 The Company ceased investigation into Mr. Sand activities per the separation agreement.
 
 The Company has located several expenses  and asset purchases that are now  unrelated to Company activities and have converted the value of these items to wages totaling $62,693.15. The value of Mr. Sand shares received for a signing bonus have also been recorded as wages totaling $486,907 for accounting purposes. These amounts may increase for tax purposes based on future valuation dates and after amounts have been audited.
 
 Mr. Adam Heimann is a 50% owner of Midam Ventures, that has a contract with the Company to provide consulting and other services. Mr. Heimann was instrumental in and is an individual party to the Sand Separation Agreement. Mr. Heimann intended to be the President of the Company and a member of the Board of Director. While he signed a contract to take such positions he resigned before the next business day on the advice of counsel subject to the functions in the Midam Ventures contract with the Company. No actions were taken on behalf of the Company between September 11 and September  14, 2015 by Mr. Heimann.
 
 NOTE 4 – RELATED PARTIES
 
 During 2014, the Company liabilities owed to Mr. Birmingham, of $9,767 and to Sweet Challenge, Inc., an entity controlled by Mr. Birmingham, of $16,858 were converted to notes payable totaling $26,625. The notes are unsecured, due on demand and bear no interest. The outstanding balance under the notes was $26,625 as of September 30, 2015 and December 31, 2014. These notes were settled and converted to 4,437,499 common shares in September 2015 by the purchaser.
 
 As of September 30, 2015 and December 31, 2014, the Company has outstanding advances to former officers and directors aggregating $22,675. The advances are unsecured, due on demand and bear no interest.
 
 In April 2015, the Company entered into a consulting agreement with Yorkshire Capital LLC. A retainer of $225,000 plus a management fee of $30,000 per month and 10% of any acquisition closed with the assistance of Yorkshire Capital LLC will be paid. During nine months ended September30, 2015, the Company paid $105,000 in total for consulting services, of which $90,000 was recognized as consulting expense and $15,000 was recognized as prepaid expenses. This contract was terminated in August 2015 with no additional amounts due.
   8
 
 In May 2015, the Company issued 150,000,000 shares of restricted common stock to the Company’s President. These shares have a one year vesting period and were valued using the estimated enterprise value of the Company. The aggregate fair value of the award was determined to be $498,421. The Company entered in to Separation agreement with this President on September 14, 2015, the total of $498,421 are recognized as wages expense as of September 30, 2015.
 
 In May 2015, the Company converted 8,999 shares of Series A Preferred stock into 53,406,528 shares of the Company’s common stock. These shares are owned by S&L Capital LLC, Robert Sand, then majority owner and President of the Company.
 
 On July 2, 2015, the Company amend the Employment Contract with its CEO & Chairman, Robert Sand, whereas he will receive a salary increase from an annual salary of $175,000 to $295,000. The Company entered in to Separation agreement with this President on September 14, 2015.
 
 On July 30, 2015, Jason Spatafora was appointed as the Chief Marketing Officer (“CMO”) and as a member of the Board of Directors of FBEC Worldwide Inc. for a term of one year, under an Employment Agreement. Mr. Spatafora will receive an annual salary of One Hundred Eighty Thousand Dollars ($180,000) to be paid in monthly increments of $15,000. Mr. Spatafora will receive a signing bonus of Ten Million (10,000,000) shares of restricted common stock of FBEC.  This contract was amended in Septemebr 2015 to make Mr. Spatafora the President of the Company with the same remuneration and the issuance of 2,000,000 rstricted common shares as a signing bonus. As of the date of filing those shares have not nbeen issued.
 
 The Board of Directors has received the resignation of Darren Hamans on July 30, 2015 as a member of the Board of Directors. Mr. Hamans was appointed on May 8, 2015. The Board of Directors had authorized the Employment Contract for Darren Hamans, inclusive of Salary and Stock. This Employment agreement has been terminated with no further obligations of any considerations. Mr. Hamans has entered into a new consulting agreement as an Independent Sales Representative for the HEMP Energy product.
 
 The Board of Directors has received the resignation of Michael Wilcox in September 2015.
 
 On September 30, 2015, the Company entered into a contract with Midam Ventures LLC replacing the contract originally signed June17, 2015. The contract expires on September 30, 2016 or earlier depending on certain conditions. The Consultant will be paid $10, 000 per month for their services. Midam Ventiures LLC will provide IR/PR, product development and marketing, fund raising, vendor relations and other services as may be required. An officer and partial owner of Midam Ventures LLC is the sole owner of our controlling shareholder.
 At the time the original contract was signed, this Midam Ventures LLC officer did not own the limited liability company with controlling interest in our company.
 
 NOTE 5 – PROPERTY AND EQUIPMENT
 
 Property and equipment are carried at cost less accumulated depreciation. Expenditures for maintenance and repairs are charged to operations when incurred, while additions and improvements are capitalized. The Company depreciates the costs of these assets over their estimated useful lives. When assets are retired or disposed, the asset's original cost and related accumulated depreciation are eliminated from accounts and any gain or loss is reflected in income. Depreciation and amortization are generally accounted for using the straight line method over the estimated useful lives of the assets as follows:
 
 Office, protective and demonstration, and computer equipment                                4 Years
 Manufacturing equipment                                                                                                10 Years
 Leasehold improvements                                                                                                  lease term
 
 
  9
 
 Long-lived Assets
 
 Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the book value of the asset may not be recoverable. The Company periodically evaluates whether events and circumstances have occurred that indicate possible impairment. When impairment indicators exist, the Company uses market quotes, if available or an estimate of the future undiscounted net cash flows of the related asset or asset group over the remaining life in measuring whether or notthe asset values are recoverable.
 
 NOTE 6 – INTANGIBLE ASSET
 
 In June 2015. the Company purchased a hemp based drink formula for $50,000, paying $15,000 in cash and issuing a note for $35,000 (See Note-7 Notes Payable).
 
 The Company's intangible assets comprise a drink formula accounted for at cost. The license is amortized over 17 years  which is the life of the agreement and is expected to be the life of the product. Should the Company determine that there is permanent impairment in the value of the unamortized portion of an intangible asset an appropriate amount of the unamortized balance of the intangible asset would be charged to income at that time.
 
 The Company has produced sample products for pre-market taste testing and improved formulation. Amortization for the quarter ended September 30, 2015 was $0 as the Company is determining the expected useful life of the product. It is expected that the amount would be a deminimis amount.
 
 NOTE 7 – NOTES PAYABLE
 
 In April 2015, the Company entered into a debt agreement for $45,250. The notes will become convertible on or after the maturity date at a 40% discount to the lowest market price in the 20 days prior to conversion. The note is due April 28, 2016. For the nine months ended September 30, 2015, the amortization of the debt discount due to original issuance discount was $833.
 
 In May 2015, the Company entered into two debt agreements with total principal amount of $52,500 with 10% interest per annum. The notes will become convertible on or after the maturity date  at a 38% discount to the lowest market price of the 20 days preceding the conversion request. The notes are due November 14, 2015.
 In June 2015, the Company entered into two debt agreements with total principal amount of $150,000 with 10% interest per annum. The notes will become convertible on or after the maturity date at a 37.5% discount to the lowest market price of the 15 days preceding the conversion request. The notes are due December 11 and 17, 2015.
 
 In June 2015, the Company entered into a note with a principle of $200,000 due for legal services. The expense for legal services was recognized during the nine months ended September 30, 2015. The note will become convertible on or after the maturity date January 14, 2016 at 75% of the average closing price for the 20 days prior to conversion.
 
 In June 2015, the Company issued an 8% Note with the principal amount of $35,000 due on January 30, 2016 for purchase of intangible asset. The holder may convert to shares of common stock on or after the maturity date at 75% of the average closing price for the 20 days prior to the conversion notice.
 
 In July 2015, the Company entered into three convertible debt agreements with total principal amount of $169,000 with 10% interest per annum. $114,000 of these notes are convertible at a 35% discount to the lowest market price of the 15 days preceding the conversion request. $55,000 of these note are convertible at a 37.5% discount to the lowest market price of 15 days preceding the conversion requestThe notes are due January 3, 9 and 17, 2016. These notes become convertible at or after maturity.
   10
 
 On August 4, 2015, the Company issued a 10% interest bearing Convertible Promissory Note in the principal amount of $75,000 to Beaufort Capital Partners LLC, a New York Limited Liability Company("BCP").  Pursuant to the terms of the convertible promissory note, the 6 month maturity date is February 5, 2016 and the holders have the right to convert any portion of the principal amount after maturity date thereof at a 35%
 
 discount to the lowest intra-day trading price within the twenty (20) trading days prior to a Conversion Notice submitted to the Issuer’s Transfer Agent.
 
 On August 6, 2015, the Company issued a 10% interest bearing Convertible Promissory Note in the principal amount of $45,000 to Beaufort Capital Partners LLC, a New York Limited Liability Company("BCP"). Pursuant to the terms of the convertible promissory note, the 6 month maturity date is February 7, 2016 and the holders have the right to convert any portion of the principal amount after maturity date thereof at a 35% discount to the lowest intra-day trading price within the twenty (20) trading days prior to a Conversion Notice submitted to the Issuer’s Transfer Agent.
 
 In August 2015, the Company converted $557 of debt into 5,570,000 common shares.
 
 On August 26, 2015, the Company converted $26,625  into 4,437,499 common shares.
 
 On August 26, 2015, the Company issued a 8% interest bearing Convertible Promissory Note in the principal amount of $30,000 to Asten Wyman LLC. ursuant to the terms of the convertible promissory note, the 6 month maturity date is February 26, 2016 and the holders have the right to convert any portion of the principal amount at any time at a 50% discount to the lowest intra-day trading price within the ten (10) trading days prior to a Conversion Notice submitted to the Issuer’s Transfer Agent.
 
 On September 14, 2015, the Company issued a Convertible Promissory Note in the principal amount of $40,000 to Beaufort Capital Partners LLC, a New York Limited Liability Company("BCP").. Pursuant to the terms of the convertible promissory note, the 6 month maturity date is March 14, 2016 and the holders have the right to convert any portion of the principal amount after maturity date thereof at a 30% discount to the lowest intra-day trading price within the fifteen (15) trading days prior to a Conversion Notice submitted to the Issuer’s Transfer Agent.
 
 On September 29, 2015, the Company issued a 10% interest bearing Convertible Promissory Note in the principal amount of $20,000 to Asten Wyman LLC. Pursuant to the terms of the convertible promissory note, the 6 month maturity date is March 29, 2016 and the holders have the right to convert any portion of the principal amount at any time at a 50% discount to the lowest intra-day trading price within the twenty(20) trading days prior to a Conversion Notice submitted to the Issuer’s Transfer Agent.
 
 NOTE 8 – CONVERTIBLE NOTES PAYABLE
 
 At September 30, 2015 and December 31, 2014, convertible notes payable consisted of the following:
   December 31, 2014


September 30, 2015Convertible notes payable

$
131,439


$
318,334Unamortized debt discounts


-



(20,834
)Total

$
131,439


$
297,500
 
 Certain of the Company’s outstanding convertible notes are secured by 15,000 common shares of the Company which were issued and held in escrow as of September 30, 2015 and December 31, 2014.
   11
 
 The outstanding convertible notes bear no interest, are due on demand and are convertible into common stock at variable rates based upon discounts to the market price of the common stock. The Company identified embedded derivatives related to the outstanding convertible notes. These embedded derivatives included certain conversion features. The accounting treatment of derivative financial instruments requires that the Company record the fair value of the derivatives as of the inception date of the convertible notes and to adjust the fair value as of each subsequent balance sheet date. At December 31, 2014, the aggregate fair value of the outstanding derivative liabilities was determined to be $902,551.  The fair value of the embedded derivatives was determined using the Black Scholes Option Pricing Model based on the following assumptions:
 
 Dividend yield:


-0-
%Market price of common stock:


$0.0103Expected volatility:


MaximumRisk free rate:


0.05
%
 
 The fair value of the derivative liability, $560, 837 as of September 30, 2015, was determined using a multi-nominal lattice model as of issuance, exercise, and the financial reporting periods with the following assumptions:
 
 The notes convert with a conversion price equal to the lower of $0.0001 or 50 of the lowest trading price in the 20 days prior to conversion;
 
 An event of default would occur 0% of the time, increasing to 0% per month with a maximum of 0%;
 
 The projected annual volatility curve for each valuation period was based on the historical annual volatility of the company in the range of 382% -405%;
 
 The company would not redeem the notes prior to maturity in 2035 (20 year period required to convert out this volume of stock; and
 
 The holder would automatically convert the note on a monthly basis based on ownership and trading volume limitations (10% of the two year market average).
  Based on the valuation, an initial loss on the derivative of $470,361 was realized with change in fair value of derivative liabilities causing a loss of an additional $ 222,367 in our statement of operations for the nine months ended September 30, 2015.
 
 At September 30, 2015, the Company adjusted the recorded fair value of the derivative liability to market resulting in non-cash, non-operating loss of $692,728 for the nine months ended September 30, 2015.
 
 In June 2015, the Company repurchased the remaining outstanding debt owed IBC Funds LLC of $11,849 with a cash payment of $30,000 that resuled in a loss on the settlement of debt of $18,151.
 
 During nine months ended September 30, 2015, $39,125 convertible note was converted into 10,687,499 shares of common stock, which results a total resoluation of derivative liabilities of $1,136,067.
 
 NOTE  9 - FAIR VALUE OF FINANCIAL INSTRUMENTS
 
 ASC 825-10 defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required or permitted to be recorded at fair value, the Company considers the principal or most advantageous market in which it would transact and considers assumptions that market participants would use when pricing the asset or liability, such as inherent risk, transfer restrictions, and risk of nonperformance. ASC 825-10 establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 825-10 establishes three levels of inputs that may be used to measure fair value:
   12
 
 Level 1 - Quoted prices in active markets for identical assets or liabilities.
 
 Level 2 - Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which all significant inputs are observable or can be derived principally from or corroborated by observable market data for substantially the full term of the assets or liabilities.
 
 Level 3 - Unobservable inputs to the valuation methodology that are significant to the measurement of fair value of assets or liabilities.
 
 To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the level in the fair value hierarchy within which the fair value measurement is disclosed is determined based on the lowest level input that is significant to the fair value measurement.
 
 Items recorded or measured at fair value on a recurring basis in the accompanying consolidated financial statements consisted of the following items as of September30, 2015 and December 31, 2014:
 
 Total


Quoted Prices

in Active

Markets for

Identical

Assets

(Level 1)


Significant

Other

Observable

Inputs (Level 2)


Significant

Unobservable

Inputs

(Level 3)September 30, 2015Liabilities:Derivative liabilities

$
560,837


$
-


$
-


$
560,837December 31, 2014Liabilities:Derivative liabilities

$
902,551


$
-


$
-


$
902,551
 
 The derivative liabilities are measured at fair value using the Black Scholes Option Pricing Model including quoted market prices and estimated volatility factors based on historical prices for the Company’s common stock and are classified within Level 3 of the valuation hierarchy.
 
 The following table provides a summary of changes in fair value of the Company’s Level 3 financial liabilities for the nine months ended September 30, 2015:
 
 Derivative

LiabilitiesBalance, December 31, 2014

$
902,551Additions recognized as debt discounts


101,625Additions recognized as loss on derivative liabilities


470,361Resolution of derivative liabilities


(1,136,067
)Change in fair value


(222,367
)Balance, September 30, 2015

$
560,837
 
 
 13
 
 NOTE  10– ISSUANCE OF UNREGISTERED SECURITIES
 
 In May 2015, the Company issued 15,500,000 common shares for the conversion of $16,500 of debt.
 
 In May 2015, the Company entered into an employment contract with Robert Sand to become the CEO and President of the Company. 150,000,000 restricted common shares were issued as an inducement for signing and will be vested at the one year anniversary of the contract. The contract is available as referenced in an Form 8-K filed with the Securities and Exchange Commission on May 8, 2015. These shares have a one year vesting period and were valued using the enterprise value of the Company. The aggregate fair value of the warad was determined to be $498,421 of which $83,070 was recognized during the nine months ended September30, 2015 and $415,351 will be recognized over the remaining vesting period.
 
 In May 2015, the Company entered into agreement with Lamnia Advisory wherein Lamnia Advisory will perform an investor relations program for twelve months. Lamnia will receive $4,000 per month in cash and 1,339,226 restricted common shares which were issued on September1, 2015 with a fair value that was expensed of $74,998. On July 6, 2015, the Company has agreed to suspend the contract with Lamnia International, Inc effective immediately (see Note 10). Both the Company and Lamnia International, Inc. have agreed that the issued shares and July payment of $4,000 are in effect. Further consideration will be terminated.
 
 In May 2015,  the Company converted 8,999 shares of Series A Preferred stock into 53,406,528 shares of the Company’s common stock. These shares are owned by S&L Capital LLC, Robert Sand, Managing Member and President of the Company.
  On June 17, 2015, the Company entered into a consulting contract with a fee of 10,000,000 shares of restricted common shares. They are earned over the ten month life of the contract. 1,000,000 shares were earned immediately and the remaining are earned in equal monthly tranches. The fair value of the entire award was determined to be $1,050,000 of which 1,000,000 shares were issued and $193,273 was recognized as expense during the nine months ended September 30, 2015. $856,727 will be expensed over the remaining vesting period.
 
 The Company agreed to accelerate the vesting and issue the total remaining 9 million shares of common stock to MidamVentures LLC regarding of the consulting agreement signed on June 17, 2015. The vesting period ended on 9/30/15 with a total expense of $   incurred
 
 NOTE 11- CHANGE OF CONTROL
 
 On April 28, 2015 Vinyl Groove Productions sold controlling interest of the Company to S & L Capital LLC. Payment was defaulted and Vinyl Groove Productions remains the owner of 1,000 Series A Preferred shares with the other outstanding share canceled.
 
 NOTE 12 – COMMITMENTS
 
 In June 2015, the Company entered into a one year building lease expiring on September30, 2016. The office is located at 204 W Main St. Suite 106, Grass Valley, CA. The monthly rent is $1,235 for 1,200 square feet of space. The Company ceased to occupy this space on September 14, 2015.
 
 In June 2015, the Company entered into a Royalty Agreement whereby G. Randall and Sons, Inc. will be due a royalty of 2.5% of net sales due and payable quarterly.
   14
  
 NOTE 13- SUBSEQUENT EVENTS
 
 On October 2, 2015, the Company received $20,000 of the Promissory Note issued on September 29, 2015.
 
 On October  6, 2015, the Company received $35,000 of t the Promissory Note issued on September 29, 2015.
 
 On October 16, 2015, the Company issued 3,100,000 common shares for the conversion $310 of debt.
 
 On October 28, 2015,  the Company fulfilled payment of consulting contracts issued September 23, 2015 and October 8, 2015 by issuing 4,000,000 restricted common shares for each contract.
 
 On November 6, 2015, the Company entered into a consulting agreement for marketing assistance and issued 2,000,000 restricted common shares.
 
 On November 9, 2015, the Company entered into a Joint Venture Agreement with CBD Globe Distributors Ltd (“CBD”). Pursuant to the JV Agreement FBEC and CBD will form a limited liability company (the “LLC”), which shall be owned as follows: 50.1% by FBEC and 49.9% by CBD. The LLC shall create a strategic alliance between the brands currently held by the parties, respectively in an effort to lend support in a multitude of areas and consolidate businesses in the cannabis and hemp industry. FBEC will take on the role of online digital marketer in a wide variety of online spaces as well as provide fulfilment support for the distribution of all brands at FBEC’s expense. To the extent set forth in this Agreement, each of the Parties shall own an undivided fractional part in the LLC. Jason Spatafora and Patrick Folkes shall be the managing members of the LLC (the “Managing Members”). (See Form 8-K filed November 12, 2015)
 
 On November 16, 2015, the Company issued a 10% interest bearing Convertible Promissory Note in the principal amount of $35,000 to Asten Wyman LLC. Pursuant to the terms of the convertible promissory note, the 6 month maturity date is April 16, 2016 and the holders have the right to convert any portion of the principal amount at any time at a 50% discount to the lowest intra-day trading price within the twenty(20) trading days prior to a Conversion Notice submitted to the Issuer’s Transfer Agent.
 
 On November 17, 2015, the Company and Beaufort Capital amended the note agreement of May 14, 2015 and September 14, 2015. Beaufort Capital agreed to retire the May 14, 2015 note with a face amount balance of $20,000, The consideration for the retirement is adding a 7% per annume interest rate and increasing any late fee penalty interest rate by 7% on the September 14, 2015 promissory note.
 
 On November 30, 2015. The Company entered into a Joint Venture Agreement with DuBe Hemp Beverages Inc. (“DUBE”). Pursuant to the JV Agreement FBEC and DUBE will form a limited liability company (the “LLC”), which shall be owned as follows: 50.1% by FBEC and 49.9% by DUBE. The LLC shall create a strategic alliance between the brands currently held by the parties, respectively in an effort to lend support in a multitude of areas and consolidate businesses in the cannabis and hemp industry. FBEC will take on the role of online digital marketer in a wide variety of online spaces as well as provide fulfilment support for the distribution of all brands at FBEC’s expense. To the extent set forth in this Agreement, each of the Parties shall own an undivided fractional part in the LLC. Jason Spatafora and Phil Restifo shall be the managing members of the LLC (the “Managing Members”). (See Form 8-K filed November 30, 2015)
 
 As o f the date of this filing the limited liability companies required for both Joint Venture Agreements haven't been filed.
  15




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





We urge you to read the following discussion in conjunction with management’s discussion and analysis contained in our Annual Report on Form 10-K for the year ended December 31, 2014, as well as with our unaudited financial statements and the notes thereto included elsewhere herein.





CAUTION REGARDING FORWARD-LOOKING STATEMENTS





Our prospects are subject to uncertainties and risks. In this Quarterly Report on Form 10-Q, we make forward-looking statements in this Item 2 and elsewhere that also involve substantial uncertainties and risks. These forward-looking statements are based upon our current expectations, estimates and projections about our business and our industry, and reflect our beliefs and assumptions based upon information available to us at the date of this report. In some cases, you can identify these statements by words such as “if,” “may,” “might,” “will, “should,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “potential,” “continue,” and other similar terms. These forward-looking statements include, among other things, projections of our future financial performance and our anticipated growth, descriptions of our strategies, our product and market development plans, and other objectives, expectations and intentions, the trends we anticipate in our business and the markets in which we operate, and the competitive nature and anticipated growth of those markets.





We caution readers that forward-looking statements are predictions based on our current expectations about future events. These forward-looking statements are not guarantees of future performance and are subject to risks, uncertainties and assumptions that are difficult to predict. Our actual results, performance or achievements could differ materially from those expressed or implied by the forward-looking statements as a result of a number of factors, including but not limited to the risks and uncertainties discussed in our other filings with the SEC or our sales results or changes in costs associated with ingredients for our products, manufacture of our products, distribution and sales. We undertake no obligation to revise or update any forward-looking statement for any reason.





Overview





FBEC Worldwide, Inc. operates a retail marketing segment of an oil emulsification product, KruudKleenTM and retains the formulation of the beverage products.





In June 2014, the Company entered into a Marketing Agreement which has allowed the company to obtain the exclusive retail marketing rights to a chemical solution that increases the speed of separation of oil and solids from water in existing tanks.  The name of the separation product is Kruud KleenTM.  The Company will purchase the separation product for 83.33%  of the suggested retail price at which the product is customarily sold.   The Company plans to sell such separation product to oil production and storage facilities in the United States.  The Company will be required to issue 5,000 shares of Series C preferred stock as payment for the exclusive marketing rightswhen available, after filing a designation which will be earned upon issuance.   The Company’s gross profit margin is expected to be approximately $200 per barrel at manufacturers suggested reatail price. The material requires temperatures above 40 degrees Fahrenheit to work properly leaving the market during this current season fairly small through March. The Company is actively seeking more customers and retailers for the coming season. We will not continue wth this contract.





FBEC Worldwide, Inc. retains its formulas for its  New Age/Alternative Beverages. “New Age/Alternative Beverages” is an industry categorization for a group of products that include energy drinks/infused water, fruit juices and drinks, dairy and dairy substitutes, and bottled/canned teas. Our mission is to supply the highest quality New Age/Alternative Beverages and snack products at the most economical cost to distributors servicing the retail industry and directly to consumers through our website. We believe our service-oriented business model integrates the elements of research, development, product quality assurance, packaging/distribution efficiency, and advanced management systems to generate higher profit margins for our retailers.
   16
  In June 2015, the Company entered into an Intellectual Property Purchase Agreement, Consulting Agreement, and Royalty Agreement with G. Randall & Sons, Inc. These agreements provide for the asset purchase of the proprietary hemp-based formula used in the Company’s beverage energy shot. G. Randall and Sons will provide ongoing consulting services in blending new formula(s) and working directly with FBEC to improve and blend existing formulas. The Company purchased the asset for $50,000. The purchase includes a $15,000 cash payment and $35,000 8% Convertible Note with a 6 month maturity date and conversion features of 75% of the average closing price 20 days previous to conversion. This represents a 25% discount to the average closing price 20 days previous to conversion.


The Company's Common Stock is quoted on the OTC Market Groups, Inc. OTCQB (the “OTCQB”) under the symbol "FBEC."





Basis of presentation and going concern uncertainty





The accompanying unaudited condensed consolidated financial statements have been prepared in conformity with generally accepted accounting principles in the United States of America (“GAAP”), which contemplates continuation of the Company as a going concern, which is dependent upon the Company's ability to establish itself as a profitable business.  At September 30, 2015, the Company has an accumulated deficit of $2,691,021 and has  a working capital deficit of $1,358,379. The Company’s ability to continue in business is dependent upon obtaining sufficient financing or attaining profitable operations; however, there can be no assurance that management will be successful in obtaining additional funding or in attaining profitable operations, therefore  these matters raise substantial doubt about the Company's ability to continue as a going concern.  These unaudited condensed consolidated financial statements do not include any adjustments that might result from the outcome of these uncertainties, nor do they include adjustments relating to the recoverability and realization of assets and classification of liabilities that might be necessary should the Company be unable to continue in operation.





Critical Accounting Policies





There have been no changes from the Critical Accounting Policies described in the Annual Report on Form 10-K filed with the Securities and Exchange Commission on  June 23, 2015.





Liquidity and Capital Resources





We began current operations in February 2014 and have yet to attain a level of operations which allows us to meet our current overhead requirements.  We do not contemplate attaining profitable operations prior to 2015 and there is no assurance that such an operating level will ever be achieved. We will be dependent upon obtaining additional financing in order to adequately fund working capital, infrastructure, production expenses and significant marketing related expenditures to gain market recognition, so that we can achieve a level of revenue adequate to support our cost structure, none of which can be assured. These factors raise substantial doubt about our ability to continue as a going concern and the accompanying financial statements do not include any adjustments related to the recoverability or classification of asset carrying amounts or the amounts and classification of liabilities that may result should we be unable to continue as a going concern.





As of September 30, 2015, the Company’s cash balance was $6,616.  Outstanding debt as of September 30, 2015 totaled $1,598,060, which is attributable accounts payable and accruals of $85,996, derivative liability $560,837 and loans and advances of $951,227. The Company’s working capital deficit as of September 30, 2015 was $1,591,444.





The Company will need to raise additional capital to expand operations to the point at which the Company can achieve profitability. The terms of financing that may be raised may not be on terms acceptable by the Company. If adequate funds cannot be raised outside of the Company, the Company’s current stockholders may need to contribute funds to sustain operations. The Company does not have any agreements with any of its stockholders to provide any capital and there can be no assurance that any stockholder would be able or willing to fund the Company's continued operations.






17





Results of Operations





For the period from January 13, 2014 (date of inception) through September30, 2014 and January 1, 2015 through September 30, 2015, the Company’s revenue totaled $0, for which its respective cost of revenues totaled $0.





During the from January 13, 2014 (date of inception)through September 30, 2015, the Company reported no sales of its beverage products or from KruudKleenTM.





For the period from January 13, 2014 (date of inception)through September 30, 2014 and January 1, 2015 through September 30, 2015, the Company had operating expenses totaling $3,428,852 and  $175,123, respectively. These costs were primarily from wages and consulting fees.





For the three months ended September 30, 2014 and three months ended September 30, 2015, the Company’s revenue totaled $0, for which its respective cost of revenues totaled $0.





For the three months ended September 30, 2014 and three months ended September 30, 2015, the Company had operating expenses totaling $2,672,930 and  $17,687, respectively. These costs were primarily from wages and consulting fees.





Off Balance Sheet Arrangements





We do not have any off balance sheet arrangements.





Inflation





The Company believes that inflation has not had, and is not expected to have, a material effect on our operations.





Climate Change





We believe that neither climate change, nor governmental regulations related to climate change, have had, or are expected to have, any material effect on our operations.





Recently Issued Accounting Pronouncements





There are no recently issued accounting pronouncements that are expected to have a material impact on the unaudited condensed consolidated financial statements or notes thereto.





ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK





Our Company is a “smaller reporting company” as defined by Rule 12b-2 of the Exchange Act, and as such, is not required to provide the information required under this Item.





ITEM 4.  CONTROLS AND PROCEDURES





Evaluation of Disclosure Controls and Procedures





Pursuant to Rule 13a-15(b) under the Securities Exchange Act of 1934 ("Exchange Act"), Jason Spatafora, the Company's President and Principal Executive Officer  and Treasurer and Principal Accounting Officer ("CFO") (the Company’s principal financial and accounting officer), initially evaluated the effectiveness of the Company’s disclosure controls and procedures (as defined under Rule 13a-15(e) under the Exchange Act) as of the end of the period covered by this report.






18





Based upon that initial evaluation, Mr. Spatafora concluded, upon consultation with prior management,that the Company’s disclosure controls and procedures were not effective as of September 30, 2015 to ensure that information required to be disclosed by the Company in the reports that the Company files or submits under the Exchange Act, is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to the Company’s management, including the Company’s President/CFO, as appropriate, to allow timely decisions regarding required disclosure, due to the material weaknesses described below. These weaknesses are being addressed with the inclusion of additional board of director members and the intention to hire a Chief Financial Officer with requisite experience and knowledge of the requirements. When this is complete the Company will have an audit committee task with addressing and correcting all material weaknesses.





A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company's annual or interim financial statements will not be prevented or detected on a timely basis.





The Company believes its weaknesses in internal controls and procedures is due to the Company's lack of sufficient personnel with expertise in the area of SEC, GAAP and tax accounting procedures.  In addition, the Company lacks the personnel structure, size and complexity to segregate duties sufficiently for proper controls. The Company has not implemented a formal system of internal control that provides for multiple levels of supervision and review.





The Company is currently without sufficient funds to hire additional personnel with expertise in these areas and to segregate duties for proper controls and until such time as additional personnel are hired, the Company believes that it will continue to recognize a weakness in its internal controls and procedures.  The Company currently engages outside consultants to assist in the areas of tax and accounting procedures. This will be addressed for correction during the period ending September 30, 2015.





The Company plans to hire additional personnel to properly implement a control structure during the quarter ending December 31, 2015.  In the meantime, the Chief Executive Officer/Financial Officer will continue to perform or supervise the performance of additional accounting and financial analyses and other post-closing procedures including detailed validation work with regard to balance sheet account balances, additional analysis on income statement amounts and managerial review of all significant account balances and disclosures, to ensure that the Company's Annual Report and the financial statements forming part thereof are in accordance with GAAP.





Changes in Internal Control Over Financial Reporting





During the three months ended September 30, 2015, there were no changes in our internal control over financial reporting that occurred during 2015 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.





Limitations on the Effectiveness of Controls





Our disclosure controls and procedures provide our principal executive and financial officer with reasonable assurances that our disclosure controls and procedures will achieve their objectives. However, our management does not expect that our disclosure controls and procedures or our internal control over financial reporting can or will prevent all human error. A control system, no matter how well designed and implemented, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Furthermore, the design of a control system must reflect the fact that there are internal resource constraints, and the benefit of controls must be weighed relative to their corresponding costs. Because of the limitations in all control systems, no evaluation of controls can provide complete assurance that all control issues and instances of error, if any, within our company are detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur due to human error or mistake. Additionally, controls, no matter how well designed, could be circumvented by the individual acts of specific persons within the organization. The design of any system of controls is also based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated objectives under all potential future conditions.






19





Management is aware that there is a lack of segregation of duties at the Company due to the fact that the Company has only one director and executive officer dealing with general administrative and financial matters. This constitutes a significant deficiency in the internal controls. Management has decided that considering the officer/director involved, the control procedures in place, and the outsourcing of certain financial functions, the risks associated with such lack of segregation were low and the potential benefits of adding additional employees to clearly segregate duties did not justify the expenses associated with such increases. Management plans to re-evaluate this situation periodically. In light of the Company’s current cash flow situation, the Company does not intend to increase staffing to mitigate the current lack of segregation of duties within the general administrative and financial functions.





PART II - OTHER INFORMATION





ITEM 1.  LEGAL PROCEDINGS





There are no material pending legal or governmental proceedings relating to our Company or its properties to which we are a party, and to our knowledge, there are no material proceedings to which any of our directors, executive officers, affiliates or shareholders are a party adverse to us or have a material interest adverse to us.





ITEM 1A.  RISK FACTORS





Our Company is a “smaller reporting company” as defined by Rule 12b-2 of the Exchange Act, and as such, is not required to provide the information required under this Item.





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





There are no unreported sales of unregistered securities during the six months ended September 30, 2015.





ITEM 3.  DEFAULTS UPON SENIOR SECURITIES





None.





ITEM 4.  MINE SAFETY DISCLOSURES





Not applicable.





ITEM 5.  OTHER INFORMATION





None.





ITEM 6.  EXHIBITS





The following exhibits are filed with this Quarterly Report on Form 10-Q or are incorporated by reference as described below.






20





Exhibit
Description31.1
Certification of Principal Executive Officer and Principal Financial Officer pursuant to Rule 13a-14a/Rule 14d-14(a)*32.1
Certification of Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S.C. Section 1350*101.1
Interactive data files pursuant to Rule 405 of Regulation S-T*


*Filed herewith.








21





SIGNATURES





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





December 21, 2015
FBEC WORLDWIDE, INC.By:
/s/  Jason SpataforaJason SpataforaPresident and Treasurer

(Principal Executive Officer, Principal Financial and

Accounting Officer and Authorized Signatory)











22