10-K 1 reliabrand_10k-15705.htm RELIABRAND, INC. 06/30/2013 10-K reliabrand_10k-15705.htm
 
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K

x Annual Report Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934

For the Fiscal Year Ended June 30, 2013

o Transition Report Pursuant to Section 13or 15(d) of The Securities Exchange Act of 1934

COMMISSION FILE NUMBER: 000-54300
 


RELIABRAND INC.
 (Exact Name of Small Business Issuer as Specified in its Charter)

Nevada
(State of Incorporation)

75-3260541
(IRS Employer ID Number)

720 Evans Court, Suite 103, Kelowna, BC Canada V1X 6G4
(Address of principal executive offices)

(778) 478-9997
(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Exchange Act: None

Securities registered pursuant to Section 12(g) of the Exchange Act: Common Stock, par value $0.001 per share

Indicate by check mark whether the registrant (1) 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. x Yes o No

Indicate by check mark if disclosure of delinquent filers in pursuant to Item 405 of Regulation S-K (ss.229.405 of this chapter) is not contained herein, and will not be contained, to the best of the 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. x

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
 o
  
 Accelerated filer
 o
 Non-accelerated filer  
 o
  
 Smaller reporting company
 x
 (Do not check if a smaller reporting company)
    
 
 
 
1
 
 
 
Indicate by check mark whether the registrant is a shell company (as defined by Rule 12b-2 of the Act) o Yes x No

State the issuer's revenues for its most recent fiscal year. $114,946
State the aggregate market value of the voting stock held by non-affiliates computed by reference to the price at which the stock was sold, or the average bid and ask prices of such stock as of a specified date within 60 days $5,737,537

State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date.
 
 Outstanding Shares
  
 Class as of September 15, 2013
 Common Stock, Par Value $0.0001 per share
  
86,872,871
 
DOCUMENTS INCORPORATED BY REFERENCE

A description of "Documents Incorporated by Reference" is contained in Part III, Item 13.
 
 
 
 
 
 
 
 
 
 
 
 

 





 
2
 

 
RELIABRAND INC.

TABLE OF CONTENTS


PART I
  
 Page
     
Item 1.
Description of Business
4
Item 1A.
Risk Factors
6
Item 1B.
Unresolved Staff Comments
9
Item 2.
Description of Properties
9
Item 3.
Legal Proceedings
10
Item 4.
Mine Safety Disclosures
10
     
PART II
    
     
Item 5.
Market for Common Equity and Related Stockholders Matters
10
Item 6.
Selected Financial Data
11
Item 7.
Management's Discussion and Analysis of Financial Condition and Results of Operations
12
Item 7A.
Quantitative and Qualitative Disclosures About Market Risk
15
Item 8.
Financial Statements and Supplementary Data
16
Item 9.
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
17
Item 9A.
Controls and Procedures
17
Item 9B.
Other Information
17
     
PART III
    
     
Item 10.
Directors, Executive Officers, Promoters and Control persons; Compliance with Section 16(a) of the Exchange Act
17
Item 11.
Executive Compensation
19
Item 12.
Security Ownership of Certain Beneficial Owners and Management
20
Item 13.
Certain Relationships and Related Transactions
21
Item 14.
Principal Accountant Fees and Services
22
     
PART IV
    
     
Item 15.
Exhibits, Financial Statement Schedules
22
     
Signatures
23
 
 






 
3
 


Cautionary Statement

This report on Form 10-K and the documents or information incorporated by reference herein contain forward-looking statements within the meaning of the federal securities laws. These forward-looking statements include, among others, the following:

 
·
our growth strategies;
 
 
·
anticipated trends in our business;
 
 
·
our ability to make or integrate acquisitions;
 
 
·
our liquidity and ability to finance our products,
 
 
·
acquisition and development strategies;
 
 
·
market conditions in the implant industry;
 
 
·
the impact of government regulation;
 
We identify forward-looking statements by use of terms such as "may," "will," "expect," "anticipate," "estimate," "hope," "plan," "believe," "predict," "envision," "intend," "will," "continue," "potential," "should," "confident," "could" and similar words and expressions, although some forward-looking statements may be expressed differently. You should be aware that our actual results could differ materially from those contained in the forward-looking statements. You should consider carefully the statements under the "Risk Factors" section of this report and other sections of this report which describe factors that could cause our actual results to differ from those set forth in the forward-looking statements.

Forward-looking statements speak only as of the date of this report or the date of any document incorporated by reference in this report. Except to the extent required by applicable law or regulation, we do not undertake any obligation to update forward-looking statements to reflect events or circumstances after the date of this report or to reflect the occurrence of unanticipated events.


PART I

ITEM 1 - DESCRIPTION OF BUSINESS OVERVIEW

Our Corporate Organization

The Company was incorporated in the State of Nevada, United States of America on February 22, 2007 as Startale Group, Inc. and its fiscal year end is June 30.

The Company’s name was changed to Alco Energy Inc. effective May 21, 2008 and on June 4, 2009, the Company’s name was changed to A & J Venture Capital Group, Inc.  On February 4, 2011, the Company changed its name to Reliabrand Inc.

The Company’s principal offices are located at 720 Evans Court, Suite 103, Kelowna, BC Canada V1X 6G4.  The Company’s telephone number is (778) 478-9997.
 
Our Business

On January 20, 2011, Reliabrand Inc. fka A & J Venture Capital Group, Inc. (the “Company”) entered into an Asset Purchase Agreement (the “Agreement”) with 0875505 B.C. Ltd. (“0875505 BC”), a British Columbia, Canadian company.  This transaction closed on April 26, 2011.
 
The Company acquired multiple patents and trademarks previously owned by Adiri, Inc. (“Adiri”) and ultimately acquired by 0875505 BC.  These patents and trademarks relate to a baby bottle and related components that 0875505 BC expended approximately $1,500,000 in acquiring and further development.  The Company issued 35,000,000 shares of its common stock, par value $.0001, to 0875505 BC for these assets.


 
4
 

 
ITEM 1 - DESCRIPTION OF BUSINESS OVERVIEW - continued

Our Business - continued
 
The Company acquired from 0875505 BC  all right, title, interest, applications and registrations of all the trademarks and patents of Adiri acquired by 0875505 BC in the following jurisdictions:  Australia, Brazil, Canada, Chile, China, Columbia, the European Union, Hong Kong, Israel, Japan, Mexico, New Zealand, Russia, South Africa, South Korea, Switzerland, Taiwan, and the United States.  There are four U.S. patents, one European Patent (EP) patent application (valid until 2019), and one Canadian patent covering Adiri’s unique breast shaped nipple. There are additional U.S. utility & design patent applications pending as well as a Patent Cooperation Treaty (PCT) application filed along with numerous International Registered Trademarks.
 
With the acquisition of these assets including the patents and trademarks, the Company has developed and has begun manufacturing a newer version of the Adiri baby bottles and related components such as sippy cups. The Company intends to aggressively promote and market the bottles and hopes to secure widespread retail distribution outlets for the bottles.  To achieve that goal, the Company has begun negotiation with large retail chains to supply the Adiri bottles for sale to retail customers. The Company manufactures the baby bottles and accessories in China.
 
Presently, the Company is selling the baby bottles through its online website and has begun limited retail distribution as well.  The Company is presently in discussion with distributors of baby bottles and related products in over 20 countries worldwide.   The Company has entered into agreements with Walmart of Canada to sell the Company’s products in the 338 Walmart stores in Canada.  The Company is also in the process of entering into additional agreements with distributors and retailers to sell its products domestically and internationally.  The Company also sells its products through its website, www.reliabrand.com.
 
Overall, during the next 12 months, we cannot predict accurately the amount of capital that we will need to accomplish our plan of operations. The capital needed will vary depending on the projects that we seek.  If during the next 12 months, we are unsuccessful in effectuating our plan of operations as described above, we expect to incur total cash expenditures of at least $1,000,000. In this regard and during such period, we anticipate spending $100,000 on professional fees attributable to fulfilling our reporting obligations under the federal securities laws and $50,000 on general administrative costs and expenditures associated with complying with reporting obligations.  We anticipate that additional funding will be required in the form of equity financing from the sale of our common stock. However, we cannot provide investors with any assurance that we will be able to raise sufficient funding from the sale of our common stock to fund our marketing plan and operations. We believe that debt financing will not be an alternative for funding the marketing plan. We do not have any agreements or arrangements in place for any future equity financing event. If we are required to raise additional funds, substantial dilution may result to existing shareholders.
 
Competitive Business Conditions, Competitive Position in the Industry and Methods of Competition

The Company will compete with much larger companies in the baby bottle and related baby products that have significantly longer operating histories and are much better capitalized as well as having well-known names that consumers recognize.    The Company’s competitive position within the industry is negligible in light of the fact. Older, well-established baby bottle companies with records of success currently attract customers. The Company expects to compete with these companies based on the unique design of the Company’s baby bottles and components.    Mr. Markus, the Company’s sole officer and director, presently devotes his full time to its operations.

Patents, Trademarks, Licenses, Franchises, Concessions, Royalty Agreements or Labor Contracts, Including Duration

At present, the Company has the patents and trademarks it acquired from 0875505 BC Ltd. in April, 2011 as described above.  The Company has filed additional patent and trademark applications and anticipates making additional filings in the future as the Company begins to grow.

The Company’s web site, www.reliabrand.com, is copyrighted under United States law and is a registered domain name owned directly by the Company.

 
 


 
5
 

 
ITEM 1 - DESCRIPTION OF BUSINESS OVERVIEW - continued
 
Research and Development

The Company currently intends to continue producing the Adiri baby bottle and components.  As the Company generates anticipated revenues from the future sales of baby products, the Company may begin research and development into other baby products.  At the present time, the Company does not have any research and development (“R & D”) personnel and it may not ever reach the level of operations and revenues which would be required to sustain such an R & D department.  If an R & D department is established, there can be no assurances that the R & D would be successful in developing or patenting any new products or enhancements on existing patents or that any such potential patents would generate any significant revenue, if any, to the Company.
 
The Company has not expended any material amount in research and development activities during the last two fiscal years but anticipate that we will be spending more money on research and development in the future.   We have developed, created and paid for molds for the Adiri transitional cap, H2Glo cap, MD+ Nurser and have hired a design engineer to design the 3.0 version of our baby bottle.

Number of Total Employees and Number of Full-Time Employees

The Company presently utilizes the services of consultants and has no full-time employees. The services of Antal Markus, our CEO, are provided pursuant to a consulting agreement with his company, Marant Holdings, Inc.   The Company utilizes the services of outside consultants as needed.  The Company does not anticipate adding any employees at the present time.
 
ITEM 1A. - RISK FACTORS

In addition to the other information included in this Form 10-K, the following risk factors should be considered in evaluating the Company’s business and future prospects. The risk factors described below are not necessarily exhaustive and you are encouraged to perform your own investigation with respect to the Company and its business. You should also read the other information included in this Form 10-K, including the financial statements and related notes.

We lack an operating history and have losses which we expect to continue into the future.

There is no assurance our future operations will result in profitable revenues. If we cannot generate sufficient revenues to operate profitably, our business will fail. We were incorporated on February 28, 2007 and we have realized minimal revenues to date. We have very little operating history upon which an evaluation of our future success or failure can be made. Our net loss since inception on February 28, 2007 to June 30, 2013 is $3,377,557. Based upon current plans, we expect to incur operating losses in future periods because we will be incurring expenses and are just beginning to generate revenues. We cannot guarantee that we will be successful in generating revenues in the future. Failure to generate revenues will cause us to go out of business.

If we do not obtain additional financing, our business may fail.

Our business plan calls for ongoing expenses in connection with the marketing and sales of our baby products. We have not generated any significant revenue from operations to date. In order to expand our business operations, we anticipate that we will have to raise additional funding. If we are not able to raise the funds necessary to fund our business expansion objectives, we may have to delay the implementation of our business plan. We do not currently have any arrangements for financing. Obtaining additional funding will be subject to a number of factors, including general market conditions, investor acceptance of our business plan and initial results from our business operations. These factors may impact the timing, amount, terms or conditions of additional financing available to us. The most likely source of future funds presently available to us is through the sale of additional shares of common stock.

We have few customers and we cannot guarantee we will ever have any significant amount of customers. Even if we obtain customers, there is no assurance that we will make a profit.

We have few customers since we have only begun to have a retail presence in stores in Canada within the past fiscal year.  We have not established ourselves sufficiently in the retail market and online to have many repeat customers and we cannot guarantee we ever will have any. If we are unable to attract enough customers once we commence sales of our baby bottles, we will have to suspend or cease operations.






 
6
 

 
ITEM 1A. - RISK FACTORS - continued

Because we are small and do not have much capital, we must limit marketing our services to potential customers and distributors. As a result, we may not be able to attract enough customers to operate profitably. If we do not make a profit, we may have to suspend or cease operations.

Because we are small and do not have much capital, we must limit marketing our website and personal contacts to potential customers. The promotion of our products via our website is how we will initially generate revenues. Because we will be limiting our marketing activities, we may not be able to attract enough customers to buy our products to operate profitably. If we cannot operate profitably, we may have to suspend or cease operations.

Because our management does not have prior experience in the marketing and sale of products via the Internet, we may have to hire individuals or suspend or cease operations.
 
Because our management does not have prior experience in retail sales via the Internet, we may have to hire additional experienced personnel to assist us with our operations. If we need the additional experienced personnel and we do not hire them, we could fail in our plan of operations and have to suspend operations or cease operations entirely.
 
Any change to government regulation/administrative practices may have a negative impact on the ability to operate and reach profitability.

The laws, regulations, policies or current administrative practices of any government body, organization or regulatory agency in the United States or any other jurisdiction, may be changed, applied or interpreted in a manner which will fundamentally alter the ability of our company to carry on our business.  If the government were to regulate the manufacture of our products or if the materials we use to manufacture our products were deemed unsafe by regulators, it would have a detrimental effect on our business.  We are unaware of any proposed regulations that would potentially affect our business.

The actions, policies or regulations, or changes thereto, of any government body or regulatory agency, or other special interest groups, may have a detrimental effect on us. Any or all of these situations may have a negative impact on our ability to operate profitably.

Because our auditors have expressed substantial doubt about our ability to continue as a going concern, we may find it difficult to obtain additional financing.

The accompanying financial statements have been prepared assuming that we will continue as a going concern. As discussed in Note 2 to the financial statements, we do not have a history of earnings, and as a result, our auditors have expressed substantial doubt about our ability to continue as a going concern. Continued operations are dependent on our ability to complete equity or debt financings or generate profitable operations. Such financings may not be available or may not be available on reasonable terms. Our financial statements do not include any adjustments that may result from the outcome of this uncertainty.

Risks Related to Our Stock

The OTC Bulletin Board is a quotation system, not an issuer listing service, market or exchange. Therefore, buying and selling stock on the OTC Bulletin Board is not as efficient as buying and selling stock through an exchange. As a result, it may be difficult for you to sell your common stock or you may not be able to sell your common stock for an optimum trading price.
 
The OTC Bulletin Board is a regulated quotation service that displays real-time quotes, last sale prices and volume limitations in over-the-counter securities. Because trades and quotations on the OTC Bulletin Board involve a manual process, the market information for such securities cannot be guaranteed. In addition, quote information, or even firm quotes, may not be available. The manual execution process may delay order processing and intervening price fluctuations may result in the failure of a limit order to execute or the execution of a market order at a significantly different price. Execution of trades, execution reporting and the delivery of legal trade confirmations may be delayed significantly. Consequently, one may not be able to sell shares of our common stock at the optimum trading prices.

When fewer shares of a security are being traded on the OTC Bulletin Board, volatility of prices may increase and price movement may outpace the ability to deliver accurate quote information. Lower trading volumes in a security may result in a lower likelihood of an individual’s orders being executed, and current prices may differ significantly from the price one was quoted by the OTC Bulletin Board at the time of the order entry.

Orders for OTC Bulletin Board securities may be cancelled or edited like orders for other securities. All requests to change or cancel an order must be submitted to, received and processed by the OTC Bulletin Board. Due to the manual order processing involved in handling OTC Bulletin Board trades, order processing and reporting may be delayed, and an individual may not be able to cancel or edit his order. Consequently, one may not able to sell shares of common stock at the optimum trading prices.

 
7
 
 
 
ITEM 1A. - RISK FACTORS - continued
 
Risks Related to Our Stock - continued
 
The dealer’s spread (the difference between the bid and ask prices) may be large and may result in substantial losses to the seller of securities on the OTC Bulletin Board if the common stock or other security must be sold immediately. Further, purchasers of securities may incur an immediate “paper” loss due to the price spread. Moreover, dealers trading on the OTC Bulletin Board may not have a bid price for securities bought and sold through the OTC Bulletin Board. Due to the foregoing, demand for securities that are traded through the OTC Bulletin Board may be decreased or eliminated.
 
We are subject to the penny stock rules and these rules may adversely affect trading in our common stock.
 
Our common stock is a “low-priced” security under rules promulgated under the Securities Exchange Act of 1934. In accordance with these rules, broker-dealers participating in transactions in low-priced securities must first deliver a risk disclosure document which describes the risks associated with such stocks, the broker-dealer’s duties in selling the stock, the customer’s rights and remedies and certain market and other information. Furthermore, the broker-dealer must make a suitability determination approving the customer for low-priced stock transactions based on the customer’s financial situation, investment experience and objectives. Broker-dealers must also disclose these restrictions in writing to the customer, obtain specific written consent from the customer, and provide monthly account statements to the customer. The effect of these restrictions decreases the willingness of broker-dealers to make a market in our common stock, decreases liquidity of our common stock and increases transaction costs for sales and purchases of our common stock as compared to other securities.

Our stock price may be volatile, which may result in losses to our stockholders.

Historically, the market prices of companies quoted on the Over-The-Counter Bulletin Board generally have been very volatile and have experienced sharp share price and trading volume changes.
 
The trading price of our common stock is likely to be volatile and could fluctuate widely in response to many of the following factors, some of which are beyond our control:

 
·
variations in our operating results;
 
 
·
announcements of technological innovations, new services or product lines by us or our competitors;
 
 
·
changes in expectations of our future financial performance, including financial estimates by securities analysts and investors;
 
 
·
changes in operating and stock price performance of other companies in our industry;
 
 
·
additions or departures of key personnel; and
 
 
·
future sales of our common stock.

In general, domestic and international stock markets often experience significant price and volume fluctuations. These fluctuations, as well as general economic and political conditions unrelated to our performance, may adversely affect the price of our common stock. In particular, the market prices for stocks of companies in volatile markets often reach levels that bear no established relationship to the operating performance of these companies. These market prices are generally not sustainable and could vary widely. In certain instances, following periods of volatility in the market price of a public company’s securities, securities class action litigation has often been initiated.

We will incur increased costs and compliance risks as a result of being a public company.

As a public company, we will incur significant legal, accounting and other expenses. We will incur costs associated with our public company reporting requirements. We also anticipate that we will incur costs associated with recently adopted corporate governance requirements, including certain requirements under the Sarbanes-Oxley Act of 2002, as well as new rules implemented by the SEC and the Financial Industry Regulatory Authority (“FINRA”). We expect these rules and regulations to significantly increase our legal and financial compliance costs and to make some activities more time-consuming and costly.



 
8
 
 
 
ITEM 1A. - RISK FACTORS - continued
 
Risks Related to Our Stock – continued

We also expect these rules and regulations may make it more difficult and more expensive for us to obtain director and officer liability insurance if we choose to do so in the future. Thus, we may be required to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage. As a result, it may be more difficult for us to attract and retain qualified individuals to serve on our Board of Directors or as executive officers. We are currently evaluating and monitoring developments with respect to these new rules, and we cannot predict or estimate the amount of additional costs we may incur or the timing of such costs.

If we fail to maintain the adequacy of our internal controls, our ability to provide accurate financial statements and comply with the requirements of the Sarbanes-Oxley Act of 2002 could be impaired, which could cause our stock price to decrease substantially.

We have committed limited personnel and resources to the development of the external reporting and compliance obligations that would be required of a public company. We have taken measures to evaluate how we can address and improve our financial reporting and compliance capabilities and we are in the process of instituting changes to satisfy our obligations in connection with joining a public company, when and as such requirements become applicable to us. Prior to taking these measures, we did not believe we had the resources and capabilities to do so. We plan to obtain additional financial and accounting resources to support and enhance our ability to meet the requirements of being a public company. We will need to continue to improve our financial and managerial controls, reporting systems and procedures, and documentation thereof. If our financial and managerial controls, reporting systems or procedures fail, we may not be able to provide accurate financial statements on a timely basis or comply with the Sarbanes-Oxley Act of 2002 as it applies to us. Any failure of our internal controls or our ability to provide accurate financial statements could cause the trading price of our common stock to decrease substantially.

U.S. investors may experience difficulties in attempting to effect service of process and to enforce judgments based upon U.S. federal securities laws against the company and its sole non-U.S. resident officer and director.

Our director and sole officer, Antal Markus, is not a resident of the United States. Consequently, it may be difficult for investors to effect service of process on Mr. Markus in the United States and to enforce in the United States judgments obtained in United States courts against Mr. Markus based on the civil liability provisions of the United States securities laws. Since substantially all of our tangible assets are located in Canada, it may be difficult or impossible for U.S. investors to collect a judgment against us. Further, any judgment obtained in the United States against us may not be enforceable in Canada.

We do not expect to pay dividends in the foreseeable future.

We have never paid any dividends on our common stock. We do not expect to pay cash dividends on our common stock at any time in the foreseeable future. The future payment of dividends directly depends upon our future earnings, capital requirements, financial requirements and other factors that our board of directors will consider. Since we do not anticipate paying cash dividends on our common stock, return on your investment, if any, will depend solely on an increase, if any, in the market value of our common stock.

We have the right to issue additional common stock without the consent of shareholders. This would have the effect of diluting your ownership in the company and could decrease the value of your stock.

There are additional authorized but unissued shares of our common stock that may be later issued by our management for any purpose without the consent or vote of the stockholders that would dilute a stockholder’s percentage ownership of the company. Our articles of incorporation authorize the issuance of up to 150,000,000 shares of common stock.


ITEM 1B. - UNRESOLVED STAFF COMMENTS

Not Applicable.

 
ITEM 2 – DESCRIPTION OF PROPERTY

Our principal offices are located at 720 Evans Court, Suite 103, Kelowna, BC Canada V1X 6G4. Our telephone number is (778) 478-9997.  We entered into a two year lease of our office and warehouse space on April 1, 2013.  Our monthly rent is $3,600.  The Company believes that our facilities are sufficient for our current operations.
 

 
9
 

 
ITEM 3 - LEGAL PROCEEDINGS
 
No officer, director, or persons nominated for these positions, and no promoter or significant employee of our corporation has been involved in legal proceedings that would be material to an evaluation of our management. We are not aware of any pending or threatened legal proceedings which involve Reliabrand Inc., its directors or officers. Our Bylaws provide that we shall have a minimum of one director. There is no stated maximum number of directors allowed but such number may be fixed from time to time by action of the stockholders or of the directors. Our address for service of process in Nevada is 1645 Village Center Circle, Las Vegas, NV 89134.
 
 
ITEM 4 – MINE SAFETY DISCLOSURES

N/A

 
PART II

ITEM 5 - MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

Market Information

The Company’s common stock is currently listed on the OTC Bulletin Board under the symbol “RLIA.” Prior to April 5, 2011, the Company’s stock was listed on the OTC Bulletin Board under the symbols “AJVE”, “ACOE” and “SLEG”.

For the period from November 12, 2007 to date, the table sets forth the high and low closing bid prices based upon information obtained from inter-dealer quotations on the OTC Bulletin Board without retail markup, markdown, or commission and may not necessarily represent actual transactions.

Period
  
High Price
    
Low Price
  
November 12, 2007 ­ December 31, 2007
  
$
n/a
    
$
n/a
  
January 1, 2008 – March 31, 2008
  
$
n/a
    
$
n/a
  
April 1, 2008 ­ June 30, 2008
  
$
n/a
    
$
n/a
  
July 1, 2008 – September 30, 2008
  
$
n/a
    
$
n/a
  
October 1, 2008 – December 31, 2008
  
$
1
    
$
0.01
  
January 1, 2008 – March 31, 2008
  
$
1
    
$
0.01
  
April 1, 2008 ­-June 30, 2008
  
$
1
    
$
0.01
  
July1, 2009 - June 30,2010
  
$
0.21
    
$
.0021
  
July 1, 2010 – September 30, 2010
  
$
.25
    
$
.25
  
October 1, 2010 – December 31, 2010
  
$
.25
    
$
.25
  
January 1, 2011 – March 31, 2011
  
$
.250
    
$
.16
  
April 1, 2011 – June 30, 2011
  
$
.25
    
$
.10
  
July 1, 2011 – September 30, 2011
  
$ 
.25
    
$
.10
  
October 1, 2011 – December 31, 2011
  
$
.25
    
$
.025
  
January 1, 2012 – March 31, 2012
  
$
.04
    
$
.025
  
April 1, 2012 – June 30, 2012
  
$
.12
    
$
.025
  
July 1, 2012 – September 30, 2012
  
$
.11
    
$
.51
  
October 1, 2012 – December 31, 2012
  
$
.19
    
$
.53
  
January 1, 2013 – March 31, 2013
  
$
.10
    
$
.37
  
April 1, 2013 – June 30, 2013
  
$
.10
    
$
.185
  

Recent Sales of Unregistered Securities

During the year ended June 30, 2013, the Company closed several private placements for aggregate proceeds of $642,184, or 6,420,000 shares, respectively, at the price of $0.10 per share, for total proceeds of $642,184, net of costs. The Company relied on exemptions from registration under Regulation S, Regulation D and Section 4(2) of the Securities Act of 1933, as amended.

For the year ended June 30, 2013, the Company commenced a private offering of its securities.  The offering was comprised of units consisting of 50,000 shares of our common stock, in restricted form, and a royalty agreement for pro-rata share of $1.00 per sale of a specific future product, up to the amount of the initial investment, subsequently converting to a 2.5% perpetual royalty on the same product. For the year ended June 30, 2013, the Company issued twenty-nine units, consisting of 1,450,000 shares of our restricted common stock and a royalty agreement for which it received net proceeds of $145,000. The Company relied on exemptions from registration under Regulation S, Regulation D and Section 4(2) of the Securities Act of 1933, as amended.

Holders

As of June 30, 2013, we have 86,822,868 shares of our Common Stock issued and outstanding held by 119 shareholders of record.
 
 
 
 
10
 
 
 
ITEM 5 - MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS - continued
 
Dividends
 
The Company has never paid any cash dividends on its capital stock and does not anticipate paying any cash dividends on the Common Stock in the foreseeable future. The Company intends to retain future earnings to fund ongoing operations and future capital requirements. Any future determination to pay cash dividends will be at the discretion of the Board of Directors and will be dependent upon financial condition, results of operations, capital requirements and such other factors as the Board of Directors deems relevant.

Securities Authorized For Issuance under Equity Compensation Plans

Our Board of Directors adopted and approved our 2013 Stock Option Plan (“Plan”) on January 18, 2013, which provides for the granting and issuance of up to 30 million (30,000,000) shares of our common stock.

Our Board of Directors administers our Plan, however, they may delegate this authority to a committee formed to perform the administration function of the Plan. The Board of Directors or a committee of the Board has the authority to construe and interpret provisions of the Plan as well as to determine the terms of an award.  Our Board of Directors may amend or modify the Plan at any time. However, no amendment or modification shall adversely affect the rights and obligations with respect to outstanding awards unless the holder consents to that amendment or modification.

The Plan permits us to grant Non-qualified stock options to our employees, directors and consultants.  The options issued under this Plan are intended to be Non-qualified Stock Options in full compliance with Code Section 409A.

The duration of a stock option granted under our Plan cannot exceed ten years.  The exercise price of an incentive stock option cannot be less than 100% of the fair market value of the common stock on the date of grant.

The Plan administrator determines the term of stock options granted under our Plan, up to a maximum of ten years, except in the case of certain events, as described below.  Unless the terms of an optionee's stock option agreement provide otherwise, if an optionee's relationship with us ceases for any reason other than disability or death, the optionee may exercise any vested options for a period of ninety days following the cessation of service.  If an optionee's service relationship with us ceases due to disability or death the optionee or a beneficiary may exercise any vested options for a period of 12 months in the event of disability or death.

Unless the Plan administrator provides otherwise, options generally are not transferable except by will, the laws of descent and distribution, or pursuant to a domestic relations order.  An optionee may designate a beneficiary, however, who may exercise the option following the optionee's death.

For the year ended June 30, 2013, the Company granted the following stock options:

For the year ended June 30, 2013
Grant Date
  
Options Granted
    
Exercise Price
    
Expiration term in years
  
To Whom Granted
  
Vesting Terms
                         
January 29, 2013
 
    
8,381,150
 
    
$
 
0.10
 
      
9.59
 
  
Granted to current President
 
  
Fully vested at date of grant
 
                               
Total Granted
 
    
8,381,150
 
                        

After this grant there will be 21,618,850 available for future grant.

Increase of authorized common stock shares

In December 2012, the Company increased its authorized shares of common stock from 100,000,000 to 150,000,000.

 
ITEM 6 - SELECTED FINANCIAL DATA

N/A
 

 
11
 

 
ITEM 7 - MANAGEMENT’S DISCUSSION AND ANALYSIS
 
The following discussion highlights the principal factors that have affected our financial condition and results of operations as well as our liquidity and capital resources for the periods described. This discussion contains forward-looking statements. Please see “Forward-Looking Statements” and “Risk Factors” for a discussion of the uncertainties, risks and assumptions associated with these forward-looking statements.
 
The following discussion and analysis of the Company’s financial condition and results of operations are based on the Company’s financial statements, which the Company has prepared in accordance with U.S. generally accepted accounting principles. You should read the discussion and analysis together with such financial statements and the related notes thereto.

Plan of Operations

The Company’s strategy is to manufacture baby bottles and the related components initially and to offer those products for sale via the Company’s website, wholesale to specialty baby products retailers, or through distributors throughout the world.

Overall, during the next 12 months, we cannot predict accurately the amount of capital that we will need to accomplish our plan of operations. The amount of capital needed will vary depending on the projects that we seek.  If during the next 12 months, we are unsuccessful in effectuating our plan of operations as described above, we expect to incur total cash expenditures of at least $1,000,000. In this regard and during such period; we anticipate spending $100,000 on professional fees attributable to fulfilling our reporting obligations under the federals securities laws and $50,000 on general administrative costs and expenditures associated with complying with reporting obligations.  We anticipate that additional funding will be required in the form of equity financing from the sale of our common stock. However, we cannot provide investors with any assurance that we will be able to raise sufficient funding from the sale of our common stock to fund our marketing plan and operations. We believe that debt financing will not be an alternative for funding the marketing plan. We do not have any arrangements in place for any future equity financing. If we are required to raise additional funds, substantial dilution may result to existing shareholders. Our auditors have raised substantial doubt concerning our ability to continue as a going concern. Please see our audited financial statements contained in our Form 10-K for the period ended June 30, 2013. In the fourth quarter of fiscal year 2013, the Company’s management determined that it exited the development stage.

Results of Operations for the Year Ended June 30, 2013 and the Year Ended June 30, 2012

We had revenues of $114,946 for the year ended June 30, 2013 compared to revenues of $13,600 for the year ended June 30, 2012. The increase in sales of $101,346 or 745.10%, is due to our retail sales increasing through our website, and beginning wholesale sales to WalMart Canada and CFO Group, in pursuit of our marketing plan for our products.

During the year ended June 30, 2013, we incurred operating expenses in the amount of $2,000,059. These operating expenses were comprised of amortization and depreciation expenses, accounting and audit fees, consulting fees, rent expense, general and management expenses, and transfer agent fees. This compared to operating expenses of $813,129 for the year ended June 30, 2012. The increase was primarily due to the Company’s increased manufacturing and sales activities in connection with the sale of its products and the generation of revenue and from the cost of issuing stock options to our CEO and impairment of patents.

As of June 30, 2013, we had total assets of $1,891,633 and total liabilities of $445,289 compared to total assets of $1,806,130 and total liabilities of $165,333 as of June 30, 2012.  Of the total assets as of June 30, 2013, current assets were $444,920 and consisted of cash of $10,488, inventory of $279,316, accounts receivable of $41,929 and prepaid expenses of $113,187.  Other assets were $1,446,713 and consisted of patents of $1,093,459, intellectual properties of $100,000, net property and equipment of $132,413, deposits of $5,278, and product molds of $115,563. Total liabilities consisted of $211,341 in accounts payable, $21,654 in Accounts payable – related party, in Notes payable – shareholder  $96,907, in Contingent Royalties payable $82,264, in shareholder advances of $11,087, and $22,036 in miscellaneous accrued liabilities. Increase in liabilities due to equity-linked royalty and overall inability to remain current with its vendors.

During the year ended June 30, 2013, we analyzed our patents in accordance with our accounting policies and determined that nine of our patents were no longer useful to the Company's existing and future operations. As such we recorded an impairment loss of $181,633, as shown on the accompanying statement of operations.

On January 20, 2011, we entered into an Asset Purchase Agreement (the “Agreement”) with 0875505 B.C. Ltd. (“BC Ltd”), a British Columbia, Canadian company.  The Agreement provided for us to acquire multiple patents and trademarks acquired by BC Ltd through a receivership proceeding of Adiri, Inc. (“Adiri”). Adiri was granted the initial patents and trademarks.  These patents and trademarks relate to a baby bottle and related components that BC Ltd expended approximately $1,500,000 in cash in acquiring and further development; as of December 31, 2010 the patents and related expenses to acquire and maintain the patents, had a net book value, which approximates fair value, of $1,436,768.  As part of the Agreement, the Company also acquired $100,000 in cash, total note receivables and accrued interest in the amount of $63,296,   resin inventory of $8,160, pacifier inventory of $6,000, product molds of $5,266, assumed an executory contract with a plastics manufacturer, and assumed accounts payable of approximately $45,176.  In exchange, at the closing on April 26, 2011, we issued 35,000,000 shares of our common stock, par value $.0001, post-split.  As a condition to the Agreement, we had to implement our previously authorized 100-to-1 reverse stock split (Note 8) and change the Company’s name to “Reliabrand, Inc.” (Note 1).
 
 
 
12
 
 
 
ITEM 7 - MANAGEMENT’S DISCUSSION AND ANALYSIS - continued
 
Results of Operations for the Year Ended June 30, 2013 and the Year Ended June 30, 2012 - continued
 
In January 2011, the Company rented office space in Canada from a related party, a company owned by a son of our Company’s President, on a month to month basis for approximately $798 ($800 CAD) per month; beginning in February 2011 we took on more rental space within the office and began paying approximately $1,900 ($1,860 CAD) per month; beginning in May 2011, we began paying the owner of the building directly. Rent expense was $18,835 and $29,649 for the years ended June 30, 2013 and 2012, respectively.
 
On April 1, 2013, the Company entered into a two year term lease agreement of an office and warehouse space located in Kelowna, BC.  The lease commences on May 1, 2013 and the monthly rent is approximately $3,600 including related taxes and a $3,623 security deposit. We paid the first and security deposit on January 30, 2013. Rent expense was $14,413 and none for the years ended June 30, 2013 and 2012.  As part of the lease we agreed to pay the landlord for leasehold improvements made to the offices and warehouse. This work was completed as of June 30, 2013. We capitalized $46,855 in leasehold improvements.
 
During the year ended June 30, 2013, our President advanced the Company $22,552 USD on a non-interest bearing, non-secured, on demand basis, and was repaid $11,465 USD. As of June 30, 2013, the balance of $11,087 is outstanding.

We began generating revenue for the year ended June 30, 2012 and had revenues of $114,946 for the year ended June 30, 2013.  However, we continue to be dependent upon obtaining financing to pursue marketing and distribution activities. For these reasons, our auditors believe that there is substantial doubt that we will be able to continue as a going concern.

The Company has not adopted any policy regarding payment of dividends.  No dividends have been paid during the periods shown.  The Company does not anticipate paying dividends in the near future, if ever.

Liquidity and Capital Resources

As of June 30, 2013 and 2012, the Company had a cash balance of $10,488 and $27,247, respectively.

We issued 974,500 and 1,199,500 shares as payment to certain vendors for services during the years ended June 30, 2013 and 2012, respectively.

For the year ended June 30, 2013, the Company issued 6,420,000 shares of its common stock in private placements pursuant to exemptions from registration under Regulations S, D and Section 4(2) of the Securities Act.

For the year ended June 30, 2013, the Company issued twenty-nine units, consisting of 1,450,000 shares of our restricted common stock and a royalty agreement, for which it received net proceeds of $145,000.The Company relied on exemptions from registration under Regulation S, Regulation D and Section 4(2) of the Securities Act of 1933, as amended.
 
During the year ended June 30, 2013, the Company used cash of approximately $790,000 for operations. Roughly $315,000 was used to pay related party consulting fees, $150,000 was used to purchase, or place a deposit, on inventory, and about $140,000 on professional and other consulting fees.

If the Company is not successful in generating sufficient liquidity from operations or in raising sufficient capital resources, on terms acceptable to it, this could have a material adverse effect on its business, results of operations liquidity and financial condition.
 
The Company presently does not have any available credit, bank financing or other external sources of liquidity, other than the net proceeds from its offering. Due to its brief history and historical operating losses, the Company’s operations have not been a source of liquidity. The Company will need to obtain additional capital in order to expand operations and become profitable. In order to obtain capital, the Company may need to sell additional shares of its common stock or borrow funds from private lenders. There can be no assurance that the Company will be successful in obtaining additional funding.

The Company will need additional investments in order to continue operations. Additional investments are being sought, but the Company cannot guarantee that it will be able to obtain such investments. Financing transactions may include the issuance of equity or debt securities, obtaining credit facilities, or other financing mechanisms. However, the trading price of the Company’s common stock and a downturn in the U.S. stock and debt markets could make it more difficult to obtain financing through the issuance of equity or debt securities. Even if the Company is able to raise the funds required, it is possible that it could incur unexpected costs and expenses, fail to collect significant amounts owed to it, or experience unexpected cash requirements that would force it to seek alternative financing. Further, if the Company issues additional equity or debt securities, stockholders may experience additional dilution or the new equity securities may have rights, preferences or privileges senior to those of existing holders of the Company’s common stock. If additional financing is not available or is not available on acceptable terms, the Company will have to curtail its operations.
 
 
 
13
 
 
 
ITEM 7 - MANAGEMENT’S DISCUSSION AND ANALYSIS - continued
 
Critical Accounting Policies

Our financial statements are prepared in accordance with accounting principles generally accepted in the United States of America. Preparing financial statements in accordance with generally accepted accounting principles requires management to make estimates and assumptions which affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the balance sheet dates, and the recognition of revenues and expenses for the reporting periods. These estimates and assumptions are affected by management's application of accounting policies.

Revenue Recognition

Revenue is recognized when the four basic criteria of revenue recognition are met: (i) a contractual agreement exists; (ii) transfer of goods has been completed or services have been rendered; (iii) the fee is fixed or determinable, and (iv) collectability is reasonably assured. Thus, we generally recognize sales revenue when shipment of the purchased product has occurred. Cash payments received in advance are recorded as deferred revenue. We currently permit our customers to return or exchange defective products. We have analyzed our quality control procedures and feel that our main exposure is from damages in shipping. Accordingly we do not need to establish a reserve for returns at this time. We will continue to analyze this each period and implement one if the need arises.

Patents

Patents are recorded at cost and are amortized on a straight-line basis over their remaining useful lives beginning with the date that the patent is secured by the Company.  The original patent useful life is 20 years from the date of issuance. Our patents have various expiration dates ranging from October 2017 through January 2032.

Intangible Assets

In accordance with ASC 350, “Intangibles – Goodwill and other,” goodwill and other intangible assets with indefinite lives are not amortized, but are reviewed annually for impairment and possible adjustment. Other intangible assets with definite lives are amortized over their individual useful lives. Intellectual properties are amortized using the straight-line method over the useful lives.

Stock-Based Compensation
  
The Company accounts for equity instruments issued in exchange for the receipt of goods or services from other than employees in accordance with FASB ASC 718-10 and the conclusions reached in FASB ASC 505-10.  Costs are measured at the estimated fair market value of the consideration received or the estimated fair value of the equity instruments issued, whichever is more reliably measurable.  The value of equity instruments issued for consideration other than employee services is determined on the earliest of a performance commitment or completion of performance by the provider of goods or services as defined by FASB ASC 505-10.

Contractual Obligations
 
On September 6, 2011, we entered into a non-cancellable contract to purchase 72,000 baby bottles and components from a 3rd party supplier in the amount of $135,360, and we fully pre-paid this commitment. In the year ended June 30, 2012, we purchased an additional $119,372 of inventory from the same 3rd party supplier; which was fully paid for all the product shipments.  As of June 30, 2012, we found that we had defective and substandard products, and after checking our inventory and have destroyed and disposed of the unusable inventory and recorded an inventory loss of $110,397 which is reflected in our statement of operations.  As of June 30, 2013, the Company did not have any purchase commitments.

License and exclusive marketing agreement

On July 11, 2012, the Company entered into a License and Exclusive Marketing Agreement with an unrelated party (Marketer). The Company granted Marketer an exclusive license to promote, advertise, market, sell and distribute the Company’s line of baby products, under the Adiri® brand, through commercials and over the Internet, in North America. The Agreement is for an initial four year term with automatic renewals for three additional two year periods if Marketer generates certain pre-determined sales of the Company’s products during the term of the Agreement.

Products sold through Marketer’s efforts will be sold to Marketer on a consignment basis. After the products are sold, Marketer shall reimburse the Company for the actual costs of manufacturing of the product. The Company shall also receive a 50% royalty of the adjusted proceeds, if any, of these sales generated. As of June 30, 2013, no sales have been generated through this arrangement.
 
 
 
 
14
 
 
 
ITEM 7 - MANAGEMENT’S DISCUSSION AND ANALYSIS - continued
 
Contractual Obligations - continued
 
The Company also agreed to issue Marketer eight million (8,000,000) shares of our restricted common stock, issuable when certain milestones are completed. The Company agreed to issue three million (3,000,000) shares upon completion of the initial “short-form” commercial, and the remaining five million (5,000,000) shares when Marketer’s gross sales of our products reach $1,000,000. The Company also agreed to pay Marketer a five percent (5%) royalty on the Company’s sales outside of the Marketer network, beginning once the commercial has been produced, this royalty shall continue to be payable to Marketer for a period of eight (8) years following any termination or expiration of the agreement. As of June 30, 2013, no commercial has been completed and as such no related royalties have been recorded. The Company may terminate this agreement with a thirty (30) day notice prior to the end of the current term, or if sales level have not been met by Marketer; Marketer may terminate this agreement with a sixty (60) day notice at any time. The Company retains all rights to our intellectual properties, and has not transferred any interest to Marketer.  

Contingent Royalties

For the year ended June 30, 2013, the Company started a new private placement at $5,000 per unit. A unit consists of 50,000 shares of our restricted common stock and a royalty agreement for pro-rata share of $1.00 per sale of a specific future product, up to the initial investment, after which this will convert to a 2.5% perpetual royalty on the same product. In connection with this royalty agreement, the Company recorded a contingent liability for this agreement in the amount of $82,264 and is based upon projections of our sales on these products. For the year ended June 30, 2013, the Company issued twenty-nine units, consisting of 1,450,000 shares of our restricted common stock and a royalty agreement, and received a cash payment of $145,000.

Off-Balance Sheet Commitments and Arrangements

We have not entered into any financial guarantees or other commitments to guarantee the payment obligations of any third parties. In addition, we have not entered into any derivative contracts that are indexed to our own shares and classified as shareholder’s equity, or that are not reflected in our consolidated financial statements. Furthermore, we do not have any retained or contingent interest in assets transferred to an unconsolidated entity that serves as credit, liquidity or market risk support to such entity. Moreover, we do not have any variable interest in any unconsolidated entity that provides financing, liquidity, market risk or credit support to us or engages in leasing, hedging or research and development services with us.

Inflation

Inflation has not materially impacted our results of operations in recent years.

As of June 30, 2013 and 2012, the Company’s management believes that there are no outstanding legal proceedings which would have a material adverse effect on the financial position of the Company.
 
 
ITEM 7A - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

N/A
 
 
 
 
15
 
 
 
ITEM 8 - FINANCIAL STATEMENTS
 
 
RELIABRAND, INC.
     
     
     
     
     
TABLE OF CONTENTS
     
     
Part I
Financial Information
Page
     
Item 1.
Financial Statements:
 
     
 
Report of Independent Registered Public Accounting Firm
F-1
     
 
Consolidated Balance Sheets, for the years ended June 30, 2013 and 2012
F-2
     
 
Consolidated Statements of Operations for the years ended June 30, 2013 and 2012, and cumulative during development stage from February 22, 2007 (inception) through June 30, 2013 
F-3
   
 
 
Consolidated Statements of Stockholders' (Deficit) for the period from February 22, 2007 (inception) through June 30, 2013
 F-4
     
 
Consolidated Statements of Cash Flows for the years ended June 30, 2013 and 2012, and cumulative during development stage from February 22, 2007 (inception) through June 30, 2013
F-8
   
 
 
Notes to Financial Statements
F-10
 
 
 
 
 
 
 
16
 
 
Board of Directors
Reliabrand, Inc.
 
 
Report of Independent Registered Public Accounting Firm
 
 
We have audited the consolidated balance sheets of Reliabrand Inc. as of June 30, 2013 and 2012, and the related statements of operations, stockholders’ equity and cash flows for each of the years then ended.  These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audit.
 
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 audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement.  The Company is not required to have, nor were we engaged to perform, an audit over its internal control over financial reporting. Our audit 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 consolidated financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.  We believe that our audit provides a reasonable basis for our opinion.
 
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Reliabrand Inc. as of June 30, 2013 and 2012, the results of operations, stockholders’ equity and its cash flows for the each of the years then ended , in conformity with accounting principles generally accepted in the United States of America.
 
The accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern.  As discussed in Note 2 to the consolidated financial statements, the Company has earned $128,546 in revenue since inception and has an accumulated deficit $3,377,557, which raises substantial doubt about its ability to continue as a going concern.  The consolidated financial statements do not include any adjustment that might result from the outcome of this uncertainty.
 
 
 
 
/s/ Farber Hass Hurley LLP
Farber Hass Hurley LLP
September 30, 2013
Granada Hills, CA

 
 
 
 
F-1
 
 
 
RELIABRAND, INC.
  
CONSOLIDATED BALANCE SHEETS
  
             
             
             
   
June 30,
    
June 30,
  
   
2013
    
2012
  
             
ASSETS
  
             
CURRENT ASSETS
            
     Cash
   $ 10,488     $ 27,247  
     Accounts receivable
     41,929       -  
     Inventory, net
     279,316       171,505  
     Prepaid expenses
     113,187       48,506  
                 
TOTAL CURRENT ASSETS
     444,920       247,258  
                 
OTHER ASSETS
                
     Deposits
     5,278       4,292  
     Property and equipment, net (Note 3)
     132,413       28,796  
     Intellectual and product properties (Note 5)
     100,000       143,828  
     Patents, net of amortization of $110,296 - June 30, 2013
                
          and $70,273 - June 30, 2012 (Note 5)
     1,093,459       1,303,348  
     Product molds, net of amortization of $58,319 - June 30, 2013
                
          and $18,974 - June 30, 2012 (Note 3)
     115,563       78,608  
                 
TOTAL OTHER ASSETS
     1,446,713       1,558,872  
                 
Total Assets
   $ 1,891,633     $ 1,806,130  
                 
                 
LIABILITIES AND STOCKHOLDERS' EQUITY
  
                 
CURRENT LIABILITIES
                
       Accounts payable
   $ 211,341     $ 52,230  
       Accounts payable - related party
     21,654       12,290  
       Accrued taxes payable
     4,493       174  
       Shareholder advances (Note 7)
     11,087       -  
       Note payable to shareholder (Note 6)
     96,907       95,254  
       Contingent royalties payable
     82,264       -  
       Royalties payable - related party
     16,389       -  
       Accrued liabilities - related party
     1,154       5,385  
                 
TOTAL CURRENT LIABILITIES
     445,289       165,333  
                 
STOCKHOLDERS' EQUITY (Note 9)
                
                 
     Preferred stock, par value $.0001, 10,000,000
                
        shares authorized, 10,000 issued and outstanding
                
        June 30, 2013 and 2012, respectively
     1       1  
                 
     Common stock, par value $.0001, 150,000,000 and 100,000,000
                
        shares authorized, respecctively;
                
        86,822,868 issued and outstanding - June 30, 2013
                
        59,677,500 issued and outstanding - June 30, 2012
     8,686       5,968  
     Paid in Capital
     4,829,967       2,148,338  
     Subscription receivable
     (2,253 )     (2,440 )
     Stock due from shareholder
     (12,500 )     -  
     Common Stock Subscribed
     -       853,705  
     Accumulated (Deficit)
     (3,377,557 )     (1,364,775 )
                 
                 
Total Stockholders' Equity
     1,446,344       1,640,797  
                 
Total Liabilities and Stockholders' Equity
   $ 1,891,633     $ 1,806,130  
                 
                 
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
  
 
 
F-2
 
 
RELIABRAND, INC.
  
CONSOLIDATED STATEMENTS OF OPERATIONS
  
             
             
   
For the years ended
  
   
June 30,
  
   
2013
    
2012
  
             
REVENUES
   $ 114,946     $ 13,600  
                 
COST OF GOODS
     124,288       19,817  
                 
GROSS LOSS
     (9,342 )     (6,217 )
                 
EXPENSES
                
                 
   Amortization and Depreciation
     104,713       62,019  
   Accounting, Audit, and Legal fees
     154,209       128,976  
   Consulting fees
     96,815       53,551  
   Consulting fees - related parties
     324,006       216,736  
   Rent expense
     62,897       44,538  
   Selling, general and administrative
     233,056       121,539  
   Consulting contract benefits - related party
     4,615       6,882  
   Stock compensation - officers
     838,115       -  
   Inventory impairment
     -       110,397  
   Loss on bad debt
     -       68,491  
   Loss on abandonment of patents
     181,633       -  
                 
                 
   Total expenses
     2,000,059       813,129  
                 
NET OPERATING (LOSS)
     (2,009,401 )     (819,346 )
                 
OTHER INCOME (EXPENSE)
                
   Interest Income
     -       3,355  
   Interest Expense
     (3,381 )     (6,711 )
                 
NET (LOSS)
   $ (2,012,782 )   $ (822,702 )
                 
                 
NET (LOSS) PER SHARE - BASIC AND DILUTED
   $ (0.02 )   $ (0.01 )
                 
WEIGHTED AVERAGE NUMBER OF
                
  COMMON SHARES OUTSTANDING
     81,918,032       59,578,165  
                 
                 
                 
                 
                 
                 
                 
                 
                 
                 
                 
                 
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS

 
 
F-3
 
 
RELIABRAND, INC.
  
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
  
   
   
Preferred Stock
    
Common Stock
    
Paid-in
    
Subscription
    
Common Stock
    
Accumulated
        
   
Shares
    
Amount
    
Shares
    
Amount
    
Capital
    
Receivable
    
Subscribed
    
(Deficit)
    
Total
  
                                                       
Balances, June 30, 2011
     10,000     $ 1       59,122,500     $ 5,912     $ 2,009,764     $ -     $ -     $ (542,073 )   $ 1,473,604  
                                                                         
Shares issued for cash in a private placement at $0.25 per share on August 8, 2011, net of offering costs
     -       -       100,000       10       24,990                               25,000  
                                                                         
Shares issued for cash in a private placement at $0.25 per share on August 16, 2011, net of offering costs
     -       -       20,000       2       4,998                               5,000  
                                                                         
Shares issued for payment for account payable invoice at $0.25 per share on August 31, 2011
     -       -       2,000       1       504                               505  
                                                                         
Shares issued for Website design and maintenance services at $0.25 per share on August 25, 2011
     -       -       62,500       6       15,619                               15,625  
                                                                         
Shares issued for cash in a private placement at $0.25 per share on September 12, 2011, net of offering costs
     -       -       208,000       21       51,979                               52,000  
                                                                         
Shares issued for cash in a private placement at $0.25 per share on September 14, 2011, net of offering costs
     -       -       80,000       8       19,992                               20,000  
                                                                         
Shares issued for cash in a private placement at $0.25 per share on September 19, 2011, net of offering costs
     -       -       12,000       1       2,999                               3,000  
                                                                         
Shares issued for cash in a private placement at $0.25 per share on September 21, 2011, net of offering costs
     -       -       60,000       6       14,994                               15,000  
                                                                         
Shares issued for payment for account payable invoices at $0.25 per share on September 22, 2011
     -       -       10,000       1       2,499                               2,500  
                                                                         
Shares subscribed for payment, 50,000 shares at $0.0483 per share on March 16, 2012
     -       -       -       -       -               3,705               3,705  
                                                                         
Shares subscribed for payment, 550,000 shares at $0.10 per share on April 2, 2012
     -       -       -       -       -               55,000               55,000  
                                                                         
Shares subscribed for payment, 2,500,000 shares at $0.10 per share on May 9, 2012
     -       -       -       -       -       (2,440 )     250,000               247,560  
                                                                         
Shares subscribed for operations consulting agreement, 1,000,000 shares at $0.04 per share on May 17, 2012
     -       -       -       -       -               40,000               40,000  
                                                                         
Shares subscribed for payment of account payable invoices, 125,000 shares at $0.04 per share on May 17, 2012
     -       -       -       -       -               5,000               5,000  
                                                                         
Shares subscribed for payment of notes payable loans, 12,500,000 shares at $0.04 per share on May 17, 2012
     -       -       -       -       -               500,000               500,000  
                                                                         
Net (loss) for the year
                                                             (822,702 )     (822,702 )
Balances, June 30, 2012
     10,000       1       59,677,000       5,968       2,148,338       (2,440 )     853,705       (1,364,775 )     1,640,797  
                                                                         
Shares issued for common stock subscribed
     -       -       16,725,000       1,673       852,032               (853,705 )             -  
                                                                         
Shares issued for cash in a private placement at $0.10 per share on July 1, 2012, net of offering costs
     -       -       100,000       10       9,990                               10,000  
 
 
F-4
 
 
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT) - continued
 
Shares issued for cash in a private placement at $0.10 per share on July 12, 2012, net of offering costs
     -       -       50,000       5       4,995                               5,000  
                                                                         
Shares issued for cash in a private placement at $0.10 per share on July 15, 2012, net of offering costs
     -       -       85,000       9       8,491       100                       8,600  
                                                                         
Shares issued for cash in a private placement at $0.10 per share on July 17, 2012, net of offering costs
     -       -       590,000       59       58,941                               59,000  
                                                                         
Shares issued for cash in a private placement at $0.10 per share on July 18, 2012, net of offering costs
     -       -       700,000       70       69,930       344                       70,344  
                                                                         
Shares issued for payment for account payable invoices at $0.10 per share on July 18, 2012
     -       -       24,500       2       2,448                               2,450  
                                                                         
Shares issued for cash in a private placement at $0.10 per share on July 20, 2012, net of offering costs
     -       -       360,000       36       35,964       (311 )                     35,689  
                                                                         
Shares issued for cash in a private placement at $0.10 per share on July 23 2012, net of offering costs
     -       -       350,000       35       34,965                               35,000  
                                                                         
Shares issued for cash in a private placement at $0.10 per share on July 24, 2012, net of offering costs
     -       -       50,000       5       4,995       54                       5,054  
                                                                         
Shares issued for cash in a private placement at $0.10 per share on August 12, 2012, net of offering costs
     -       -       100,000       10       9,990                               10,000  
                                                                         
Shares issued for agreement to cancel royalty agreement, 125,000 shares total, on August 24, 2012
     -       -       75,000       8       7,492               5,000               12,500  
                                                                         
Share to be returned and cancelled by our President for the above issuance
                                             (12,500 )                     (12,500 )
                                                                         
Shares issued for public relation consulting at $0.10 per share on August 24, 2012
     -       -       30,000       3       2,997                               3,000  
                                                                         
Shares subscribed for payment, 55,000 shares at $0.10 per share on September 26, 2012
     -       -       -       -       -       -       5,500               5,500  
                                                                         
Shares subscribed for payment, 500,000 shares at $0.10 per share on September 27, 2012
     -       -       -       -       -       -       50,000               50,000  
                                                                         
Shares subscribed for payment, 380,000 shares at $0.10 per share on September 28, 2012
     -       -       -       -       -       -       38,000               38,000  
                                                                         
Shares issued for common stock subscribed
     -       -       935,000       94       93,406               (93,500 )             -  
                                                                         
Shares issued for agreement to cancel royalty agreement, 50,000 shares on October 1, 2012
     -       -       50,000       5       4,995               (5,000 )             -  
                                                                         
Shares issued for payment for account payable invoices at $0.42 per share on October 1, 2012
     -       -       100,000       10       42,693                               42,703  
                                                                         
Shares issued for payment for account payable invoices at $0.10 per share on October 1, 2012
     -       -       25,000       3       2,497                               2,500  
 
 
F-5
 
 
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT) - continued
 
Shares issued for cash in a private placement at $0.10 per share on October 24, 2012, net of offering costs
     -       -       1,000,000       100       99,900                               100,000  
                                                                         
Shares issued for cash in a private placement at $0.10 per share on October 30, 2012, net of offering costs
     -       -       100,000       10       9,990                               10,000  
                                                                         
Shares issued for cash in a private placement at $0.10 per share on October 31, 2012, net of offering costs
     -       -       150,000       15       14,985                               15,000  
                                                                         
Shares issued for cash in a private placement at $0.10 per share on November 2, 2012, net of offering costs
     -       -       300,000       30       29,970                               30,000  
                                                                         
Shares issued for cash in a private placement at $0.10 per share on November 3, 2012, net of offering costs
     -       -       10,000       1       999                               1,000  
                                                                         
Shares issued for cash in a private placement at $0.10 per share on November 5, 2012, net of offering costs
     -       -       210,000       21       20,979                               21,000  
                                                                         
Shares issued for cash in a private placement at $0.10 per share on November 6, 2012, net of offering costs
     -       -       60,000       6       5,994                               6,000  
                                                                         
Shares issued for public relation consulting at $0.10 per share on November 6, 2012
     -       -       15,000       2       1,498                               1,500  
                                                                         
Shares issued for cash in a private placement at $0.10 per share on November 7, 2012, net of offering costs
     -       -       100,000       10       9,990                               10,000  
                                                                         
Shares issued for cash in a private placement at $0.10 per share on November 8, 2012, net of offering costs
     -       -       350,000       35       34,965                               35,000  
                                                                         
Shares issued for cash in a private placement at $0.10 per share on November 9, 2012, net of offering costs
     -       -       50,000       5       4,995                               5,000  
                                                                         
Shares issued for payment for account payable invoices at $0.10 per share on November 15, 2012
     -       -       200,000       20       19,980                               20,000  
                                                                         
Shares issued for cash in a private placement at $0.10 per share on November 27, 2012, net of offering costs
     -       -       50,000       5       4,995                               5,000  
                                                                         
Shares issued for cash in a private placement at $0.10 per share on November 28, 2012, net of offering costs
     -       -       500,000       50       49,950                               50,000  
                                                                         
Shares issued for cash in a private placement at $0.10 per share on November 30, 2012, net of offering costs
     -       -       500,000       50       49,950                               50,000  
                                                                         
Shares issued for cash in a private placement at $0.10 per share on December 5, 2012, net of offering costs
     -       -       70,000       7       6,993                               7,000  
                                                                         
Shares issued for cash in a private placement at $0.10 per share on December 6, 2012, net of offering costs
     -       -       120,000       12       11,988                               12,000  
                                                                         
Shares issued for cash in a private placement at $0.10 per share on December 13, 2012, net of offering costs
     -       -       95,000       10       9,490                               9,500  
                                                                         
Shares issued for payment of a notes payable at $0.10 per share on December 14, 2012
     -       -       751,368       75       75,062                               75,137  
 
 
F-6
 
 
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT) - continued
 
Shares issued for cash in a private placement at $0.10 per share on December 14, 2012, net of offering costs
     -       -       500,000       50       21,583                               21,633  
                                                                         
Shares issued for cash in a private placement at $0.10 per share on December 15, 2012, net of offering costs
     -       -       50,000       5       4,995                               5,000  
                                                                         
Shares issued for cash in a private placement at $0.10 per share on January 14, 2013, net of offering costs
     -       -       45,000       5       4,495                               4,500  
                                                                         
Shares issued for settlement of an account payable at $0.10 per share on January 16, 2013
     -       -       130,000       13       12,987                               13,000  
                                                                         
Shares issued for cash in a private placement at $0.10 per share on January 22, 2013, net of offering costs
     -       -       40,000       4       3,996                               4,000  
                                                                         
Stock option expense for vested options granted January 29, 2013
                                     838,115                               838,115  
                                                                         
Shares issued for cash in a private placement at $0.10 per share on March 27, 2013, net of offering costs
     -       -       100,000       10       4,317                               4,327  
                                                                         
Shares issued for cash in a private placement at $0.10 per share on April 8, 2013, net of offering costs
     -       -       100,000       10       4,317                               4,327  
                                                                         
Shares issued for consulting services performed at $0.10 per share on June 7, 2013
     -       -       200,000       20       19,980                               20,000  
                                                                         
Shares issued for cash in a private placement at $0.10 per share on June 12, 2013, net of offering costs
     -       -       50,000       5       2,158                               2,163  
                                                                         
Shares issued for payment of a notes payable at $0.10 per share on June 21, 2013
     -       -       700,000       70       30,217                               30,287  
                                                                         
Shares issued for marketing consulting at $0.10 per share on June 21, 2013
     -       -       250,000       25       24,975                               25,000  
                                                                         
Net (loss) for the year
                                                             (2,012,782 )     (2,012,782 )
Balances, June 30, 2013
     10,000     $ 1       86,822,868     $ 8,686     $ 4,829,967     $ (14,753 )   $ -     $ (3,377,557 )   $ 1,446,344  
                                                                         
                                                                         
                                                                         
                                                                         
The accompanying notes are an integral part of these financial statements
  
 
 
 
F-7
 
 
RELIABRAND, INC.
  
CONSOLIDATED STATEMENTS OF CASH FLOWS
  
             
             
   
For the years ended
  
   
June 30,
  
   
2013
    
2012
  
             
OPERATING ACTIVITIES
            
         Net (loss)
   $ (2,012,782 )   $ (822,702 )
    Adjustments to reconcile net income (loss) to net cash used by
                
       operating activities:
                
         Stock issued for services
     24,500       40,000  
         Stock compensation - officers
     838,115       -  
         Depreciation and amortization
     144,059       80,993  
         Inventory impairment
     20,722       110,397  
         Loss on abandonment of patents
     181,633       -  
         Bad debt expense
     -       68,491  
    Changes in operating assets and liabilities:
                
         Accounts receivable
     (41,929 )     -  
         Prepaid expenses
     (40,667 )     (16,787 )
         Inventory
     (128,533 )     (272,481 )
         Accrued interest - notes receivable
     -       (3,355 )
         Accounts payable
     197,067       89,532  
         Accounts payable - related party
     9,364       -  
         Accrued liabilities
     16,476       5,559  
         Accrued interest - notes payable
     3,359       1,363  
                 
 
                
NET CASH (USED BY) OPERATING ACTIVITIES
     (788,616 )     (718,990 )
                 
INVESTING ACTIVITIES
                
         Cash received from the BC Ltd. asset acquisition
     -       3,705  
         Purchase of property and equipment
     (93,543 )     (14,814 )
         Increase in capitalized patent costs
     -       (4,343 )
         Increase in intellectual properties
     -       (92,316 )
         Increase in product molds
     (76,300 )     -  
                 
NET CASH (USED BY) INVESTING ACTIVITIES
     (169,843 )     (107,768 )
                 
FINANCING ACTIVITIES
                
         Proceeds from sale of common stock
     787,184       422,562  
         Proceeds from shareholder advances/ notes
     165,981       77,808  
         Proceeds from notes payable
     -       343,890  
         Repayment of shareholder advances
     (11,465 )     (20,128 )
                 
NET CASH PROVIDED BY FINANCING ACTIVITIES
     941,700       824,132  
                 
NET (DECREASE) IN CASH
     (16,759 )     (2,626 )
                 
CASH, BEGINNING OF PERIOD
     27,247       29,873  
                 
CASH, END OF PERIOD
   $ 10,488     $ 27,247  
                 
                 
CASH PAID FOR INTEREST
   $ -     $ 5,278  
 
 
F-8
 
 
CONSOLIDATED STATEMENTS OF CASH FLOWS - continued
 
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES
        
                 
B.C. Ltd asset acquisition
                
   Fair value of assets acquired
   $ -     $ -  
   Less liabilities assumed
     -       -  
   Net assets acquired
     -       -  
   Less shares issued
     -       (3,705 )
   Net cash acquired
   $ -     $ (3,705 )
                 
Shares issued for website development
                
    Website development
   $ -     $ (13,125 )
    Common stock issued
     -       13,125  
    $ -     $ -  
Debt Converted to Common Stock Subscribed
                
   Accounts payable
   $ (37,949 )   $ (5,000 )
   Accounts payable - related party
     -       (93,555 )
   Notes payable
     -       (248,636 )
   Accrued interest
     -       (1,364 )
   Note Payable - shareholder
     (145,137 )     (156,445 )
   Purchase of property and equipment
     (42,704 )     -  
   Contingent royalties
     39,713       -  
   Common stock subscribed
     186,077       505,000  
    $ -     $ -  
Shares issued for common stock subscribed
                
    Common stock subscribed
   $ 853,705     $ -  
    Common stock issued
     (853,705 )     -  
    $ -     $ -  
                 
                 
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
  


 
F-9
 
RELIABRAND, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the years ended June 30, 2013 and 2012

NOTE 1 – HISTORY, NATURE OF OPERATIONS, AND BASIS OF PRESENTATION

History, Nature of Operations and Basis of Presentation

Reliabrand, Inc. (the Company, we, us, our, RLIA), formerly known as A&J Venture Capital Group, Inc., Alco Energy Corp., and Startale Group, Inc., is a Nevada corporation, formed February 22, 2007. Since inception we have had minimal operations and not earned any significant revenues to date, in the current year ended June 30, 2013, we have commenced sales of our products, and have started our marketing program. We are in the process of establishing ourselves as a company that will focus its operations on developing the Adiri brand of products and sell them in the open markets. Adiri was one of the first baby bottle manufacturers to offer BPA-free products when it was launched in 2007.  The Adiri Natural Nurser bottle achieved more international design recognition than any other bottle of any kind in history, winning 15 internationally recognized product design competitions including tying for first place in the D&AD Design Award (known as the “Yellow Pencils”) in 2008 with the “Apple iPod Touch” from 23,000 international product submissions.  The iconic and patented “natural breast shape” and “petal vent” are among the features that reduced colic and improved the infant feeding experiences which led to Adiri earning the prestigious Gold MDEA (Medical Design Excellence Award) along with the design firm Whipsaw, Inc. in 2008. We are currently developing a newer version of the baby bottle that Adiri was previously producing and it will be free of Estrogenic Activity (EA) as well as being BPA-free (Note 5).  The Company intends to aggressively promote and market the bottles and accessories and plan to secure retail distribution outlets for the bottles. The Company’s year-end is June 30. In the fourth quarter of fiscal year 2013, the Company’s management determined that it exited the development stage, as defined in FASB ASC 915-10. The Company had adjusted its financial statement presentation accordingly.

Business Composition

On January 20, 2011, we entered into an Asset Purchase Agreement (the “Agreement”) with 0875505 B.C. Ltd. (“BC Ltd”), a British Columbia, Canadian company.  The Agreement provided for us to acquire multiple patents and trademarks acquired by BC Ltd through a receivership proceeding of Adiri, Inc. (Adiri”). Adiri was granted the initial patents and trademarks.  These patents and trademarks relate to a baby bottle and related components that BC Ltd expended approximately $1,500,000 in cash in acquiring and further development; as of December 31, 2010 the patents, and related expenses to acquire and maintain the patents, had a net book value, which approximates fair value, of $1,436,768.  As part of the Agreement, the Company also acquired $100,000 in cash, total note receivables and accrued interest in the amount of $63,296 owed by Watergeeks, Inc, a related party entity, to BC Ltd, resin inventory of $8,160, pacifier inventory of $6,000, product molds of $5,266, assumed an executory contract with a plastics manufacturer, and assumed accounts payable of approximately $45,176.  In exchange, at the closing on April 26, 2011 we issued 35,000,000 shares of our common stock, par value $.001, post-split

On March 16, 2012, we entered into a Share Purchase Agreement (the “agreement 2”) with 0875505 B.C. Ltd. (“BC Ltd”), a British Columbia, Canadian company to acquire the company through a share exchange. As noted above, we had already purchased all the assets and liabilities from the company in the above agreement. We decided to purchase the equity in BC Ltd because while we were beginning the process to transfer the patents and trademarks to our company name, we found the process to be very costly and very lengthy. Whereas if we acquired the BC Ltd as a wholly owned subsidiary we would own the patents and trademarks without completing the transfer process, which was most cost effective for our company with our limited cash reserves, and offered the quickest and most cost effective remedy to protect our interests and our shareholders assets. In exchange for the shares of stock of BC Ltd, we agreed to issue to the shareholders of BC Ltd 50,000 shares of our restricted common stock, as of June 30, 2012, these shares are pending to be issued, and were issued on September 11, 2012. We also acquired the remaining cash of approximately $3,705 USD.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Accounting Basis

These consolidated financial statements are prepared on the accrual basis of accounting in conformity with accounting principles generally accepted in the United States of America (GAAP).

Consolidation Policy

The accompanying June 30, 2013 financial statements include the Company’s accounts and the accounts of its subsidiary. All significant intercompany transactions and balances have been eliminated in consolidation. The Company’s ownership of its subsidiary as of June 30, 2013 is as follows:
 
Name of Subsidiary Percentage of Ownership
0875505 B.C. Ltd. 100.00%
 
Our operations are treated as one operating segment. All inter-company balances and transactions have been eliminated.
 
 

 
F-10
 
RELIABRAND, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the years ended June 30, 2013 and 2012
 
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - continued
 
Liquidity and Capital Resources
 
The Company anticipates that revenue for fiscal year 2014 may be insufficient to fully cover it’s expenses. The Company also expects to continue to incur substantial expenses relating to its marketing and sales efforts. As a result, the Company expects to incur losses over the next year unless it is able to realize additional revenues under any current or future agreements. The timing and amounts of such revenues, if any, cannot be predicted with certainty. Accordingly, results of operations for any period may be unrelated to the results of operations for any other period.
 
The Company will likely need to raise and is pursuing additional funds through strategic collaborations, public or private equity or debt financing, or other funding sources. This funding may not be available on acceptable terms, or at all, and may be dilutive to shareholder interests. If sufficient capital is not available, the Company may be required to delay, reduce the scope of or eliminate one or more of its product offerings, any of which could have a material adverse effect on its business. If the Company is not able to secure additional capital by the end of its fiscal year, it may be forced to terminate operations altogether in 2014.

 Basis of Consolidation
 
The consolidated financial statements include the accounts of Reliabrand, Inc. and its wholly owned subsidiary, BC Ltd.

Going Concern

Our financial statements have been presented on the basis that we are a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business.  We have sustained operating losses since inception.

As of June 30, 2013 we have a working capital deficit of $369, and accumulated deficit of $3,377,557. During the year ended June 30, 2013 we had a net loss of $2,012,782 and cash used in operating activities of $788,616. There is substantial doubt regarding the Company’s ability to continue in existence is dependent on its ability to develop additional sources of capital, and/or achieve profitable operations and positive cash flows. Management’s plan is to aggressively pursue its present business plan. Since inception we have funded our operations through the issuance of common stock and related party loans and advances, and will seek additional debt or equity financing as required. However, there can be no assurances the the Company will be successful in these pursuits. The accompanying financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Cash and Cash Equivalents

The Company considers all highly liquid investments with an original maturity of three months or less from the date of purchase that are readily convertible to cash to be cash equivalents.

Concentration in Sales and Accounts Receivables to Few Customers

In the year ended June 30, 2013, our WalMart Canada and CFO Group sales accounted for 30.86% and 16.36%, respectively, of our revenues. In the year ended June 30, 2013, our North American and Russian sales accounted for 83.64% and 16.36%, respectively, of our revenues. In the year ended June 30, 2013, our WalMart Canada and CFO Group account receivables accounted for 89.34% and 10.43%, respectively, of our receivable balances.

Income Taxes

The Company accounts for income taxes under the liability method, which requires the recognition of deferred tax liabilities and assets for the expected future tax consequences of events that have been included in the consolidated financial statements or tax returns  Under this method, deferred income taxes are recognized for the tax consequences in future years of differences between the tax bases of assets and liabilities and their financial reporting amounts at each period end based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income.  Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.  The provision for income taxes represents the tax payable for the period and the change during the period in deferred tax assets and liabilities.  Tax returns are subject to examination by taxing authorities and returns for fiscal years 2008 – 2012 are still open.

Earnings (Loss) Per Common Share
 
Basic  loss per common share  is  computed   by  dividing  net  loss  available to common stockholders by  the   weighted  average  number  of  shares of common stock outstanding during the period.  Diluted loss per share is computed similar to basic loss per share except that the denominator is increased to include dilutive options, warrants, and other potential common stock outstanding during the period.  There have been no potentially dilutive common shares issued from inception.
 
 
F-11
 
RELIABRAND, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the years ended June 30, 2013 and 2012
 
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - continued
 
Reclassifications

Certain amounts in the 2012 consolidated financial statements have been reclassified to conform to the 2013 presentation.

Fair Value of Financial Instruments

In January 2008, the Company adopted FASB ASC 820, Fair Value Measurements and Disclosures (“ASC 820”), to value its financial assets and liabilities. The adoption of ASC 820 did not have a significant impact on the Company’s results of operations, financial position or cash flows.  ASC 820 defines fair value, establishes a framework for measuring fair value under GAAP and expands disclosures about fair value measurements.  Standards define fair value as the exchange price that would be paid by an external party for an asset or liability (exit price).

ASC 820, "Fair Value Measurements and Disclosures" establishes a framework for measuring fair value, and expands disclosures about fair value measurements. ASC 820 establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair values into three levels as follows:
 
·
Level 1 – Active market provides unadjusted quoted prices for identical assets or liabilities that the company has the ability to access;
·
Level 2 – Quoted prices for similar assets or liabilities in active markets or quoted prices for identical or similar assets or liabilities in inactive markets. Level 2 inputs include those other than quoted prices that are observable for the asset or liability and that are derived principally from, or corroborated by, observable market data by correlation of other means. If the asset or liability has a specified term the Level 2 input must be observable for substantially the full term of the asset or liability; and
·
Level 3 – Inputs to the valuation methodology are unobservable and significant to the fair value measurement.
 
Fair value estimates discussed herein are based upon certain market assumptions and pertinent information available to management as of June 30, 2013.  The Company uses the market approach to measure fair value for its Level 1 financial assets and liabilities.  The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities.  
 
The respective carrying value of certain on-balance-sheet financial instruments approximated their fair values.  These financial instruments which include cash, inventory, notes receivable, accounts payable, and notes payable are valued using Level 1 inputs and are immediately available without market risk to principal.  Fair values were assumed to approximate carrying values for these financial instruments since they are short-term in nature. The Company does not have other financial assets that would be characterized as Level 2 or Level 3 assets.

Use of Estimates in the Preparation of Consolidated financial statements

The preparation of consolidated 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 and disclosures. Accordingly, actual results could differ from those estimates and assumptions.

Foreign Currency Translation

The consolidated financial statements are presented in United States dollars, since the functional currency of the Company is U.S. dollars; the foreign currency consolidated financial statements of the Company’s subsidiaries are re-measured into U.S. dollars.  Monetary assets and liabilities are re-measured using the foreign exchange rate that prevailed at the balance sheet date.  Revenue and expenses are translated at weighted average rates of exchange during the year and stockholders’ equity accounts and furniture and equipment are translated by using historical exchange rates.  Any re-measurement gain or loss incurred is immaterial to the consolidated financial statements.

Accounts Receivable, Notes Receivable and Allowance for Doubtful Accounts

Accounts and Notes receivable are stated at net realizable value. The Company analyzes each note receivable each period for probability of collectability. Notes are considered in default when payments have not been received within the agreed upon terms, and are written off when management determines that collection is not probable. During June 30, 2012, we analyzed our receivables and determined that we had reason to doubt the collection of our notes receivable, from a related party, as such we recorded a bad debt impairment of $68,491, including three notes receivable and the associated accrued interest.
 
 
F-12
 
RELIABRAND, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the years ended June 30, 2013 and 2012
 
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - continued
 
Accounts Receivable, Notes Receivable and Allowance for Doubtful Accounts - continued
 
The Company establishes the allowance for doubtful accounts using the specific identification method and may also provide a reserve in the aggregate. The estimates for calculating the aggregate reserve are based on historical information. As of June 30, 2013, we have analyzed our accounts receivables and determined that no allowance is necessary.

Furniture and Computer Equipment

Furniture and computer equipment are stated at cost less accumulated depreciation. Maintenance and repairs are charged to operations as incurred. Depreciation is based on the straight-line method over the estimated useful lives of the related assets. When assets are retired or otherwise disposed of, the cost and accumulated depreciation are removed from the accounts, and any resulting gain or loss is reflected in operations in the period realized. Accelerated depreciation methods are generally used for income tax purposes.

Depreciation

Depreciation is computed on the straight-line method net of salvage value with useful lives as follows:
 
Office furniture and equipment  5 years
Leasehold improvements   Term of lease
 
Inventory

The only component of inventory is finished goods inventory, valued on a first in first out basis, and includes production cost, product freight in, and packaging costs. Slow moving and obsolete inventories are written down based on a comparison of on-hand quantities to historical and projected usages (see Note 4). Additionally, reserves for non-cancelable open purchase orders for components the Company is obligated to purchase in excess of projected usage, or for open purchase orders where the market price is lower than the purchase order price, if any, are recorded as other accrued expenses on the balance sheet. As of June 30, 2013 and 2012, we did not have any such accrued expenses.

Intangible Assets

In accordance with ASC 350, “Intangibles – Goodwill and other,” goodwill and other intangible assets with indefinite lives are not amortized, but are reviewed annually for impairment and possible adjustment. Other intangible assets with definite lives are amortized over their individual useful lives. Intellectual properties are amortized using the straight-line method over the useful lives (see Note 6).

Patents

Patents are recorded at cost and are amortized on a straight-line basis over their remaining useful lives beginning with the date that the patent is secured by the Company.  The original patent useful life is 20 years from the date of issuance. Our patents have various expiration dates ranging from October 2017 through January 2032.

Dividends

The Company has not adopted any policy regarding payment of dividends.  No dividends have been paid since the Company’s inception.

Revenue Recognition

Revenue is recognized when the four basic criteria of revenue recognition are met: (i) a contractual agreement exists; (ii) transfer of goods has been completed or services have been rendered; (iii) the fee is fixed or determinable, and (iv) collectability is reasonably assured. Thus, we generally recognize sales revenue when shipment of the purchased product has occurred. Cash payments received in advance are recorded as deferred revenue. We currently permit our customers to return or exchange defective products. We have analyzed our quality control procedures and feel that our main exposure is from damages in shipping. Accordingly we do not need to establish a reserve for returns at this time. We will continue to analyze this each period and implement one if the need arises.

Shipping and Handling

Shipping and handling costs of $12,836 and $2,792 for the years ended June 30, 2013 and 2012, respectively, are included in general and administrative expenses.
 
 
 
F-13
 
RELIABRAND, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the years ended June 30, 2013 and 2012
 
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - continued
 
Advertising Costs

The Company expenses advertising costs when incurred. During the years ended June 30, 2013 and 2012, we had $93,570 and $51,710 in expenditures on advertising, respectively.

Stock-Based Compensation
  
The Company accounts for equity instruments issued in exchange for the receipt of goods or services from other than employees in accordance with FASB ASC 718-10 and the conclusions reached in FASB ASC 505-10.  Costs are measured at the estimated fair market value of the consideration received or the estimated fair value of the equity instruments issued, whichever is more reliably measurable.  The value of equity instruments issued for consideration other than employee services is determined on the earliest of a performance commitment or completion of performance by the provider of goods or services as defined by FASB ASC 505-10.

Impairment of long lived assets

The Company reviews the recoverability of the carrying value of long-lived assets using the methodology prescribed in ASC 360 "Property, Plant and Equipment." The Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying value of such assets may not be recoverable. Upon such an occurrence, recoverability of these assets is determined by comparing the forecasted undiscounted net cash flows to which the assets relate, to the carrying amount. If the asset is determined to be unable to recover its carrying value, it is written down to fair value. Fair value is determined based on discounted cash flows, appraised values or other information available in the market, depending on the nature of the assets.

The Company reviews the carrying value of goodwill and non-amortizable intangible assets using the methodology prescribed in ASC 350, "Intangibles—Goodwill and Other." ASC 350 requires that the Company not amortize goodwill and intangible assets with indefinite lives, but instead subject them to impairment tests on at least an annual basis and whenever circumstances suggest that they may be impaired. The Company tests its goodwill and non-amortizable intangible assets for impairment on an annual basis at the end of its June fiscal year. ASC 350 requires the Company to perform a two-step impairment test. Under the first step of the goodwill impairment test, the Company is required to compare the fair value of the asset with its carrying amount, including goodwill. If the fair value of an asset exceeds its carrying amount, goodwill is not considered impaired and the Company does not perform the second step. If the results of the first step impairment test indicate that the fair value of a reporting unit does not exceed its carrying amount, then the second step of the goodwill impairment test is required. The second step of the goodwill impairment test compares the implied fair value of the reporting unit goodwill with the carrying amount of that goodwill. The impairment loss is measured by the excess of the carrying amount of the reporting unit goodwill over the implied fair value of that goodwill. As of June 30, 2013, we did recognize write off in our patents, see Note 5, and in the year ended June 30, 2012, the Company did not recognize any impairment associated with long lived assets.

General Accounting Policy for Contingencies

Certain conditions may exist which may result in a loss to the Company, but which will only be resolved when one or more future events occur or fail to occur. The Company’s management and its legal counsel assess such contingent liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal proceedings that are pending against the Company, or unasserted claims that may result in such proceedings, the Company’s legal counsel evaluates the perceived merits of any legal proceedings or unasserted claims as well as the perceived merits of the amount of relief sought or expected to be sought therein.

If the assessment of a contingency indicates that it is probable that a material loss has been incurred and the amount of the liability can be estimated, the estimated liability would be accrued in the Company’s consolidated financial statements. If the assessment indicates that a potentially material loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, the nature of the contingent liability, together with an estimate of the range of possible loss if determinable and material, would be disclosed.

Loss contingencies considered remote are generally not disclosed unless they arise from guarantees, in which case the guarantees would be disclosed.
 
As of June 30, 2013 and 2012, the Company’s management believes that there are no outstanding legal proceedings which would have a material adverse effect on the financial position of the Company.
 
 
 
F-14
 
RELIABRAND, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the years ended June 30, 2013 and 2012
 
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - continued
 
Recently Issued Accounting Standards

We have examined all recent accounting pronouncements and believe that none of them will have a material impact on the consolidated financial statements of the Company, except for the following:

In July 2012, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2012-02, Testing Indefinite-Lived Intangible Assets for Impairment. With the ASU, a company testing indefinite-lived intangibles for impairment now has the option to assess qualitative factors to determine whether the existence of events and circumstances indicates that it is more likely than not that the indefinite-lived intangible asset is impaired. If, after assessing the totality of events and circumstances, an entity concludes that it is not more likely than not that the indefinite-lived intangible asset is impaired, then the entity is not required to take further action. However, if an entity concludes otherwise, then it is required to determine the fair value of the indefinite-lived intangible asset and perform the quantitative impairment test by comparing the fair value with the carrying amount in accordance with current guidance. An entity also has the option to bypass the qualitative assessment for any indefinite-lived intangible asset in any period and proceed directly to performing the quantitative impairment test. An entity will be able to resume performing the qualitative assessment in any subsequent period. The amendments were effective for annual and interim goodwill impairment tests performed for fiscal years beginning after September 15, 2012. The adoption of this ASU did not have a material impact on the Company’s consolidated financial statements.


NOTE 3 – PROPERTY AND EQUIPMENT

Property and equipment consisted of the following:
 
   
June 30, 2013
    
June 30, 2012
  
Computer equipment
  
$
7,279
    
$
4,054
  
Website
    
15,257
      
15,257
  
Office furniture and equipment
    
97,477
      
11,310
  
Leasehold improvements
    
46,855
      
--
  
     
166,868
      
30,621
  
Less accumulated depreciation and amortization
    
(34,455
)
    
(1,825
)
   
$
132,413
    
$
28,796
  
 
   
June 30, 2013
    
June 30, 2012
  
Product production molds
   $ 173,882     $ 97,582  
Less accumulated amortization
     (58,319 )     (18,974 )
    $ 115,563     $ 78,608  

Depreciation was $32,630 and $1,875 for the years ended June 30, 2013 and 2012, respectively.

The Company also recorded amortization of products molds expense for the years ended June 30, 2013 and 2012 of $39,345 and $18,974, respectively, as reflected in cost of goods sold on the accompanying Statement of Operations.

 
NOTE 4 – INVENTORY

Purchase Commitment

On September 6, 2011, we entered into a non-cancellable contract to purchase 72,000 baby bottles and components from a 3rd party supplier in the amount of $135,360, and we have fully pre-paid this commitment. In the year ended June 30, 2012, we purchased an additional $119,372 of inventory from the same 3rd party supplier; we have fully paid for all the product shipments.  As of June 30, 2012, we found that we had defective and substandard products, we have checked our inventory and have destroyed and disposed of the unusable inventory and recorded an inventory loss of $110,397 which is reflected in our statement of operations. The Company had no such commitments as of June 30, 2013.
 
 
 
F-15
 
RELIABRAND, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the years ended June 30, 2013 and 2012
 
NOTE 4 – INVENTORY - continued
 
Inventory Write off

In accordance with our accounting policies, we have examined our inventory for obsolete inventory and determined that we have an inventory write down as of June 30, 2013 of $20,722 and is included in cost of goods on the accompanying statement of operations.


NOTE 5 – INTELLECTUAL PROPERTIES AND PATENTS

Patents

Patents and licenses consist of the following:
 
   
June 30, 2013
    
June 30, 2012
  
Adiri patents
  
$
800,552
    
$
1,014,246
  
Adiri trademarks
    
359,375
      
359,375
  
Adiri patent legal fees
    
43,828
      
-
  
     
1,203,755
      
1,373,621
  
Less accumulated amortization
    
(110,296
)
    
(70,273
)
   
$
1,093,459
    
$
1,303,348
  
                 
Plastic technology properties
  
$
100,000
    
$
100,000
  
Adiri patent legal fees
    
-
      
43,828
  
   
$
100,000
    
$
143,828
  

The Company has recorded amortization of patents expense for the years ended June 30, 2013 and 2012 of $72,084 and $60,234, respectively.

During the year ended June 30, 2013, we analyzed our patents in accordance with our accounting policies and determined that nine of our patents were no longer useful to the Company's existing and future operations. As such we recorded a net loss of $181,633, and is shown on the accompanying statement of operations.


NOTE 6 – NOTES PAYABLE TO SHAREHOLDERS

On August 26, 2011 the Company borrowed $203,523 (CDN$200,000) from one of the Company’s shareholders. In connection with the above note, the Company agreed to restrictive covenants on substantially all of its assets to maintain them free of indebtedness or liens, and that we will maintain our corporate status. On February 27, 2012, we entered into an extension of the above loan agreement, all terms and conditions remain in full force, the only change is the maturity date was extended from the original date of February 28, and extended to August 31, 2012. On May 17, 2012 the principal and interest of this note was converted to restricted shares of our common stock in its entirety.
 
On March 1, 2012 the Company borrowed $151,410 (CDN$150,000) from one of the Company’s shareholders on an uncollateralized, non-interest bearing, demand note that matures on February 28, 2013. On May 17, 2012, we converted $56,166 USD of the above debt’s principal into shares of our restricted common stock at $0.04 per share. On December 14, 2012, we converted $75,137 USD, or 751,368 shares of our restricted common stock, of the above debt’s principal into shares of our restricted common stock at $0.10 per share. As of June 30, 2013, the remaining balance of $20,117 is outstanding

On October 23, 2012 the Company borrowed $20,130 (CDN$20,000) from a company owned by one of the Company’s shareholders on an uncollateralized, demand note, bearing a 8% interest rate per annum and matures on January 14, 2013. We accrued $1,116 in interest expense in connection with this note, and both the principal and interest are outstanding as of June 30, 2013.

On April 26, 2013 the Company borrowed $30,000 USD from the same company as above owned by one of the Company’s shareholders on an uncollateralized, demand note, bearing a 8% interest rate per annum and is payable upon demand of the note holder. We accrued $433 in interest expense in connection with this note, and both the principal and interest are outstanding as of June 30, 2013.
 
 
 
 
F-16
 
RELIABRAND, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the years ended June 30, 2013 and 2012
 
NOTE 6 – NOTES PAYABLE TO SHAREHOLDERS - continued
 
On June 26, 2013 the Company borrowed $23,300 USD (CDN $24,500) from the same company as above owned by one of the Company’s shareholders on an uncollateralized, demand note, bearing a 8% interest rate per annum and is payable upon demand of the note holder. We accrued $22 in interest expense in connection with this note, and both the principal and interest are outstanding as of June 30, 2013.

On February 15, 2013 the Company borrowed $50,000 USD from a company owned by one of the Company’s shareholders on an uncollateralized, demand note, bearing an 8% interest rate per annum. Repayment of this note shall be from sales of the Company’s products through WalMart Canada.  For each check received from WalMart Canada, the Company shall pay five percent (5%) of the proceeds which shall be applied to the repayment of this Note, including principal and accrued interest.  Upon satisfaction of this Note, the note holder shall be entitled to a 2.5% royalty on future sales of the Company’s products through WalMart Canada in perpetuity. We accrued $1,500 in interest expense in connection with this note, and on June 21, 2013, we converted $50,000 USD, or 500,000 shares of our restricted common stock, of the above debt’s principal into shares of our restricted common stock at $0.10 per share. As of June 30, 2013, we had no remaining balance outstanding

On April 26, 2013 the Company borrowed $20,000 USD from the same company as above owned by one of the Company’s shareholders on an uncollateralized, demand note, bearing a 8% interest rate per annum and is payable upon demand of the note holder. We accrued $289 in interest expense in connection with this note, and on June 21, 2013, we converted $20,000 USD, or 200,000 shares of our restricted common stock, of the above debt’s principal into shares of our restricted common stock at $0.10 per share. As of June 30, 2013, we had no remaining balance outstanding
 
The notes payable to shareholders balance comprised of the below, net of accrued interest of $3,360:
 
   
June 30,
    
June 30,
  
Description
  
2013
    
2012
  
Uncollateralized note to a related entity bearing no interest per annum which matures on February 28, 2013.
  
$
20,117
    
$
95,254
  
Uncollateralized note to a related entity bearing 8% interest per annum.
    
30,000
      
-
  
Uncollateralized note to a related entity bearing 8% interest per annum.
    
23,300
      
-
  
Uncollateralized note to a related entity bearing 8% interest per annum which matures on January 14, 2013.
    
20,130
      
-
  
Total liabilities
    
93,547
      
95,254
  
Less current liabilities
    
93,547
      
95,254
  
Total long term liabilities
  
$
-0-
    
$
-0-
  
 

NOTE 7 – RELATED PARTY TRANSACTIONS AND BALANCES

Related party transactions

On May 1, 2012 the Company entered into a new consulting agreement with a son of our current President, for his consulting services at a rate of $43,000 USD per annum.  The agreement was in effect for a period of twelve months, ending on December 31, 2012, and renewed for successive twelve month terms. He also received one month’s salary as a signing bonus, and he received a 2.50% royalty on all gross sales of the Company. On January 18, 2013, the Company entered into a new consulting agreement with the same son for his consulting services at a rate of $47,300 USD per annum.  The agreement will be in effect for a period of twelve months, ending on December 31, 2013, and is automatically renewed for successive twelve month terms.  The agreement may be terminated by the Company at any time, or by mutual consent, without consequence with a ninety day written notice. He also received one month’s salary as a signing bonus, and he will continue to receive a 2.50% royalty on all gross sales of the Company. For the years ended June 30, 2013 and 2012, we recorded $50,722 and $39,089, respectively, in consulting fees – related party expense to this individual. As of June 30, 2013, the Company accrued a total of $3,198 in royalties payable.

On May 1, 2012 the Company entered into a consulting agreement with another son of our current President, for his consulting services at a rate of $43,000 USD per annum.  The agreement was in effect for a period of twelve months, ending on December 31, 2012, and renewed for successive twelve month terms.  He also received one month’s salary as a signing bonus, and he received a 2.50% royalty on all gross sales of the Company. On January 18, 2013, the Company entered into a new consulting agreement with the same son for his consulting services at a rate of $47,300 USD per annum.  The agreement will be in effect for a period of twelve months, ending on December 31, 2013, and is automatically renewed for successive twelve month terms.  The agreement may be terminated by the Company at any time, or by mutual consent, without consequence with a ninety day written notice. He also received one month’s salary as a signing bonus, and he will continue to receive a 2.50% royalty on all gross sales of the Company. For the years ended June 30, 2013 and 2012, we recorded $50,656 and $37,309, respectively, in consulting fees – related party expense to this individual. As of June 30, 2013, the Company accrued a total of $3,198 in royalties payable.
 
 
 
 
F-17
 
RELIABRAND, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the years ended June 30, 2013 and 2012
 
NOTE 7 – RELATED PARTY TRANSACTIONS AND BALANCES - continued
 
On May 1, 2012 the Company entered into a new consulting agreement with a third son of our current President, for his consulting services at a rate of $43,000 USD per annum.  The agreement was in effect for a period of twelve months, ending on December 31, 2012, and renewed for successive twelve month terms.  He also received one month’s salary as a signing bonus, and he received a 2.50% royalty on all gross sales of the Company. On January 18, 2013, the Company entered into a new consulting agreement with the same son for his consulting services at a rate of $47,300 USD per annum.  The agreement will be in effect for a period of twelve months, ending on December 31, 2013, and is automatically renewed for successive twelve month terms.  The agreement may be terminated by the Company at any time, or by mutual consent, without consequence with a ninety day written notice. He also received one month’s salary as a signing bonus, and he will continue to receive a 2.50% royalty on all gross sales of the Company. For the years ended June 30, 2013 and 2012, we recorded $51,020 and $19,304, respectively, in consulting fees – related party expense in connection with these contracts. As of June 30, 2013, the Company accrued a total of $3,198 in royalties payable.
 
On January 18, 2013, the Company entered into a consulting agreement with a fourth son of our current President, for his consulting services at a rate of $35,200 USD per annum.  The agreement will be in effect for a period of twelve months, ending on December 31, 2013, and is automatically renewed for successive twelve month terms.  The agreement may be terminated by the Company at any time, or by mutual consent, without consequence with a ninety day written notice. He also received one month’s salary as a signing bonus, and he will also receive a 2.50% royalty on all gross sales of the Company. For the years ended June 30, 2013 and 2012, we recorded $35,561 and none, respectively, in consulting fees – related party expense to this individual. As of June 30, 2013, the Company accrued a total of $2,019 in royalties payable.

On May 1, 2011, the Company entered into a consulting agreement with a company controlled by our President and Chief Executive Officer, for his consulting services at a rate of $10,000 per month, and he received a 3.00% royalty on all gross sales of the Company. On January 18, 2013, the Company entered into an amendment of the above consulting agreement, dated May 1, 2011, with the same Company as above, the prior agreement remains in force except for the following provisions, his consulting services will be at a rate of $11,000 per month, and he will also be granted an option to purchase an amount of shares to represent 10% of our issued and outstanding common stock as of December 31st of the prior year. On January 18, 2013 the President received an option to purchase 8,131,150 shares of the Company’s common stock for $0.10 per share (Note 11). For the years ended June 30, 2013 and 2012, we recorded $136,047 and $120,000, respectively, in consulting fees – related party expense in connection with these contracts. As of June 30, 2013, the Company accrued a total of $3,837 in royalties payable.

Shareholder advances

In the twelve month period ended June 30, 2012, our current President paid operating bills on behalf of the Company totaling $77,808, and was repaid $20,128 in cash. On May 17, 2012, we agreed to convert $156,445 of advances owed to him for shares of our restricted common stock, and is included in Common Stock subscribed. As of June 30, 2012, he was owed zero.

During the year ended June 30, 2013, our President advanced the Company $22,552 USD on a non-interest bearing, non-secured, on demand basis, and was repaid $11,465 USD. As of June 30, 2013, the balance of $11,087 USD is outstanding.

 
NOTE 8 - COMMITMENTS AND CONTINGENCIES

Office lease

In January 2011, the Company rented office space in Canada from a related party, a company owned by a son of our Company’s President, on a month to month basis for approximately $798 ($800 CAD) per month; beginning in February 2011 we took on more rental space within the office and began paying approximately $1,900 ($1,860 CAD) per month; beginning in May 2011, we began paying the owner of the building directly. Rent expense was $18,835 and $29,649 for the years ended June 30, 2013 and 2012, respectively.

 
 
F-18
 
RELIABRAND, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the years ended June 30, 2013 and 2012
 
NOTE 8 - COMMITMENTS AND CONTINGENCIES - continued

Warehouse lease
 
On October 4, 2011 the Company entered into a month-to-month lease agreement of a warehouse space located in Kelowna, BC.  The lease, commencing on October 5, 2011 requires monthly payment of $2,690 (CDN $2,500) plus related taxes and a $2,690 (CDN $2,500) security deposit. Rent expense was $29,649 and $22,194 for the years ended June 30, 2013 and 2012, respectively.

Office – warehouse lease

On April 1, 2013 the Company entered into a two year term lease agreement of an office and warehouse space located in Kelowna, BC.  The lease commences on May 1, 2013 and requires a monthly payment of approximately $3,600 including related taxes and a $3,623 security deposit. We paid the first and security deposit on January 30, 2013. Rent expense was $14,413 and none for the years ended June 30, 2013 and 2012, respectively.

As part of the lease we agreed to pay the landlord for leasehold improvements made to the offices and warehouse, work was completed as of June 30, 2013. We capitalized $46,855 in leasehold improvements and began depreciating them according to our policies.
 
The Company has the following required minimum lease payments for the years ending June 30,:
 
2014   $ 43,200  
2015   $ 32,400  
    $ 75,600  
 
Consulting agreements

On May 16, 2012 the Company entered into a consulting agreement with a third party for her consulting services to perform the duties Chief Operating Officer (COO) at a rate of $100,000 USD per annum for the first year, after the first year the base compensation would not be less than $120,000 per year.  The agreement was to be in effect for a period of twenty-four months, ending on April 30, 2014, and automatically renewed for successive twelve month terms. On December 7, 2012, the Company terminated this agreement for cause.  The Consultant also received a signing bonus of 1,000,000 shares of our restricted common stock valued at $40,000.

For the year ended June 30, 2013 and 2012, we recorded $39,999 and $50,000, respectively, in total consulting fees expense in connection with this contract.

On July 24, 2012, the Company entered into a consulting agreement with a third party for consulting services to perform public relations services at a rate of $2,000 USD per month for three months beginning August 1, 2012.  The agreement was in effect for a period of three months ending on October 31, 2012.  The Consultant also received 15,000 shares of our restricted common stock for each month of service, or a total of 45,000 shares valued at $4,500. For the year ended June 30, 2013, we recorded $10,500, in total consulting fees expense in connection with this contract.

On May 6, 2013, the Company entered into a consulting agreement with a third party for product development consulting services to perform product development services. The Consultant shall be paid 2,000,000 shares of our restricted common stock, to be issued as follows: 200,000 shares upon execution of the agreement, 500,000 shares upon completion of the initial project, and the remaining 1,300,000 shares upon successful manufacture and acceptance by the Company of the initial completed product. In addition, the Consultant will be entitled to a 2.50% perpetual royalty on the future sales of the completed product. The agreement will be in effect until completion of the project or upon 10 day written notice of either party.  For the year ended June 30, 2013, we issued the initial 200,000 shares of our restricted common stock and recorded $20,000, in total marketing consulting fees in connection with this contract.

On June 21, 2013, the Company entered into a consulting agreement with a third party for advertising consulting services to perform advertising services at a rate of $7,500 USD and 250,000 shares of our restricted common stock, valued at $25,000, for the initial 90 days beginning June 21, 2013. The agreement was in effect for a period of three months ending on October 31, 2012.  For the year ended June 30, 2013, we recorded $25,000, in total marketing consulting fees in connection with this contract, and is reflected in prepaid expenses.
 
License and exclusive marketing agreement

On July 11, 2012, the Company entered into a License and Exclusive Marketing Agreement with an unrelated party (Marketer). The Company granted Marketer an exclusive license to promote, advertise, market, sell and distribute the Company’s line of baby products, under the Adiri® brand, through commercials and over the Internet, in North America. The Agreement is for an initial four year term with automatic renewals for three additional two year periods if Marketer generates certain pre-determined sales of the Company’s products during the term of the Agreement.

Products sold through Marketer’s efforts will be sold to Marketer on a consignment basis. After the products are sold, Marketer shall reimburse the Company for the actual costs of manufacturing of the product. The Company shall also receive a 50% royalty of the adjusted proceeds, if any, of these sales generated. As of June 30, 2013, no sales have been generated through this arrangement.
 
 
F-19
 
RELIABRAND, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the years ended June 30, 2013 and 2012
 
NOTE 8 - COMMITMENTS AND CONTINGENCIES - continued
 
The Company also agreed to issue Marketer eight million (8,000,000) shares of our restricted common stock, issuable when certain milestones are completed. The Company agreed to issue three million (3,000,000) shares upon completion of the initial “short-form” commercial, and the remaining five million (5,000,000) shares when Marketer’s gross sales of our products reach $1,000,000. The Company also agreed to pay Marketer a five percent (5%) royalty on the Company’s sales outside of the Marketer network, beginning once the commercial has been produced, this royalty shall continue to be payable to Marketer for a period of eight (8) years following any termination or expiration of the agreement. As of June 30, 2013, no commercial has been completed and as such no related royalties have been recorded. The Company may terminate this agreement with a thirty (30) day notice prior to the end of the current term, or if sales level have not been met by Marketer; Marketer may terminate this agreement with a sixty (60) day notice at any time. The Company retains all rights to our intellectual properties, and has not transferred any interest to Marketer.  

Cancellation of royalty agreements and correction of an error

On April 19, 2012, we cancelled two royalty agreements with two unrelated individuals in exchange for 125,000 shares of our restricted common stock valued at $12,500. The original royalty agreements were consideration for principal loans totaling $12,500 and were in force for five years from December 30, 2011, the effective date. The cancellation is effective retroactive to the effective date of the original agreement. On August 24, 2012, we issued 75,000 shares of the common stock and on October 1, 2012 we issued the remaining 50,000 shares of the common stock. In November 2012, we detected an error in recording these transactions. The funds loaned to the Company were originally misclassified as shareholder advances to our current President. As of June 30, 2012, he converted all amounts owed to him into shares of common stock, as a result our President converted an excess of 312,500 shares. To correct the error, we have recorded a common stock receivable for $12,500 from him. He will be returning and cancelling 312,500 shares back to the Company in repayment of the funds incorrectly converted by him.

Supplier agreement

On January 22, 2013, the Company entered into a supplier agreement with Wal-Mart Canada Corp. (Wal-Mart) to supply 150 of its stores initially. The agreement provides for the terms and conditions for the purchases of the Company’s products by Wal-Mart, as well as the payment terms for the purchases.

Royalty agreement

In connection with a common stock subscription, described below (Note 9), the Company granted as part of the subscription, a pro-rata royalty agreement for $1.00 per sale of a specific future product, up to the initial investment, after which this will convert to a 2.5% perpetual royalty on the same product. The Company has recorded a contingent liability for this agreement in the amount of $82,264 and is based upon projections of our sales on these products.
 
 
NOTE 9 – STOCKHOLDER’S EQUITY

Stock Shares – Authorized

The Company has 150,000,000 common shares authorized at a par value of $0.0001 per share and 10,000,000 shares of preferred stock, par value $0.0001 per share. On April 26, 2012 the Company approved and in December 2012 the Company increased its authorized shares of common stock from 100,000,000 to 150,000,000. All common stock shares have equal voting rights, are non-assessable and have one vote per share.  Voting rights are not cumulative and, therefore, the holders of more than 50% of the common stock could, if they choose to do so, elect all the directors of the Company. There is currently only one designated class of preferred shares, “A,” see below. The holders of the preferred stock shall have such rights, preferences and privileges as may be determined by the Board of Director’s prior to the issuance of such shares. The preferred stock may be issued in such series as are designated by the Board of Director’s and the Board of Director’s may fix the number of authorized shares of preferred stock for each series and the rights, preferences, and privileges of each series of preferred stock. As of the years ended June 30, 2013 and June 30, 2012, there were 86,822,868 and 59,677,500 shares of our common stock issued and outstanding, respectively. As of the years ended June 30, 2013 and 2012, there were 10,000 shares of our preferred stock issued and outstanding.

Common Shares – Issued and Outstanding

In the year ended June 30, 2012, we closed several private placements for an aggregate total of $120,000, or 480,000 units consisting of one share of our common stock and one share common stock warrant to purchase shares of our common stock, with a purchase price of $0.25 per share and an expiration date, for the warrants, of two years from the closing.

For the year ended June 30, 2013, the Company issued closed several private placements for an aggregate total of $787,184, or 7,870,000 shares, at the price of $0.10 per share, for total proceeds of $787,184, net of costs.
 
 
F-20
 
RELIABRAND, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the years ended June 30, 2013 and 2012
 
NOTE 9 – STOCKHOLDER’S EQUITY - continued
 
Private Placements Closed and Opened

On March 22, 2012, we closed our previously approved private placement offering at $.25 per unit, which is one share of our restricted common stock and one share purchase warrants to purchase additional shares of our restricted common stock.

On March 23, 2012, we also approved a new private placement offering of our restricted common stock at the offering price of $.10 per share and not to offer more than 5,000,000 shares of stock as part of this offering. During the year ended June 30, 2013, the Company issued 6,420,000 for total price of $642,184 related to this placement.

For the year ended June 30, 2013, the Company started a new private placement at $5,000 per unit. A unit consists of 50,000 shares of our restricted common stock and a royalty agreement for pro-rata share of $1.00 per sale of a specific future product, up to the initial investment, after which this will convert to a 2.5% perpetual royalty on the same product. In connection with this royalty agreement, the Company recorded a contingent liability for this agreement in the amount of $82,264 and is based upon projections of our sales on these products. For the year ended June 30, 2013, the Company issued twenty-seven units, consisting of 1,450,000 shares of our restricted common stock and a royalty agreement (Note 9), and received a cash payment of $145,000.

Preferred Stock – Series A

On February 26, 2010, we filed with the Secretary of State of the State of Nevada a Certificate of Designation of Series A Preferred Stock (the "Certificate of Designations") designating ten thousand (10,000) of the Company's previously authorized preferred stock.

The 10,000 Series A Preferred Stock shall have an aggregate voting power of 45% of the combined voting power of the entire Company’s shares, Common Stock and Preferred Stock as long as the Company is in existence. Each holder of the Series A Preferred Stock shall have full voting rights and powers equal to the voting rights and powers of the holders of Common Stock, and shall be entitled, notwithstanding any provision hereof, to notice of any stockholders’ meeting in accordance with the by-laws of the Company, and shall be entitled to vote, together with holders of Common Stock, with respect to any question upon which holders of Common Stock have the right to vote.
 
Without the vote or consent of the holders of at least a majority of the shares of Series A Preferred Stock then outstanding, the Company may not (i) authorize, create or issue, or increase the authorized number of shares of, any class or series of capital stock ranking prior to or on a parity with the Series A Preferred Stock, (ii) authorize, create or issue any class or series of common stock of the Company other than the Common Stock, (iii) authorize any reclassification of the Series A Preferred Stock, (iv) authorize, create or issue any securities convertible into or exercisable for capital stock prohibited by (i) or (ii), (v) amend this Certificate of Designations or (vi) enter into any merger or reorganization, or disposal of assets involving 20% of the total capitalization of the Company.

Subject to the rights of the holders of any other series of Preferred Stock ranking senior to or on a parity with the Series A Preferred Stock with respect to liquidation and any other class or series of capital stock of the Company ranking senior to or on a parity with the Series A Preferred Stock with respect to liquidation, in the event of any liquidation, dissolution or winding up of the affairs of the Company, whether voluntary or involuntary, the holders of record of the issued and outstanding shares of Series A Preferred Stock shall be entitled to receive, out of the assets of the Company available for distribution to the holders of shares of Series A Preferred Stock, prior and in preference to any distribution of any of the assets of the Company to the holders of Common Stock and any other series of Preferred Stock ranking junior to the Series A Preferred Stock with respect to liquidation.

The holders of the Series A Preferred Stock shall not be entitled to receive dividends per share of Series A Preferred Stock.  The Company shall have no rights to redeem Series A Preferred Stock.

On March 1, 2010, we granted and issued our former President 100 series A preferred stock shares with a value of $10,000 for consulting services rendered, and the expense was included in consulting fees in the statements of operations. On September 18, 2010, these shares were returned and cancelled as per the term of the Binding Letter of Intent with our former President.

On May 2, 2011, we  authorized an issue to our President 10,000 shares of Class A Preferred Stock in exchange for him returning and cancelling nine million (9,000,000) shares of our common stock. This Class A preferred stock has the same terms and conditions as discussed above.

Stock Based Compensation

On August 31, 2011, the Company issued 2,000 restricted shares of our common stock for payment of debt owed to a legal counsel for services performed on a note payable, in the amount of $505.

On September 22, 2011, the same legal counsel converted $2,500 in accounts payable owed to them to 10,000 restricted shares of our common stock and 10,000 stock warrants to purchase shares of our common stock at $0.25 per share, and will expire two years from the date on granting.
 
 
F-21
 
RELIABRAND, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the years ended June 30, 2013 and 2012
 
NOTE 9 – STOCKHOLDER’S EQUITY - continued
 
Stock Based Compensation - continued
 
On August 25, 2011, the Company issued 62,500 restricted shares of our common stock for payment of website design and maintenance services performed by an unrelated third party in the amount of $15,625. The value of the maintenance services was $2,500 and was amortized over the six month contract period with that vendor. The value allocated to the website design is capitalized and amortized over a three year period (Note 6).

On July 18, 2012, the Company issued 24,500 restricted shares of our common stock for payment of debt owed to a legal counsel for services performed in the amount of $2,450.

On August 24, 2012, the Company issued 30,000 restricted shares of our common stock for payment of public relations management services performed by an unrelated third party in the amount of $3,000, in payment of the consulting agreement (Note 8). The value of the public relations services is included in consulting fees in our statement of operations. On November 6, 2012, the Company issued 15,000 restricted shares of our common stock for final payment of the services, valued at $1,500, rendered under the agreement above.
 
On October 1, 2012, we issued 25,000 restricted shares of our common stock for payment of debt owed to our outside accountant for services performed between January and March 2012, in the amount of $2,500.

On October 1, 2012, we issued 100,000 shares of our restricted common stock for payment of a debt owed to a vendor for our new exhibit booth in the amount of $42,703.

On November 15, 2012, the Company issued 200,000 restricted shares of our common stock for payment of debt owed to a legal counsel for services performed in the amount of $20,000.
 
On January 16, 2013, the Company issued 130,000 restricted shares of our common stock for payment of a debt owed to an advertiser for services performed in the amount of $13,000, plus $6,500 in a cash payment.

On June 7, 2013, the Company issued 200,000 restricted shares of our common stock for payment of consulting services performed in the amount of $20,000.

On June 21, 2013, the Company issued 250,000 restricted shares of our common stock for payment of consulting services performed in the amount of $25,000.

Common Stock Receivable

As part of the Royalty cancellation agreement (Note 8), we recorded a common stock receivable for $12,500 for the return and cancellation of shares of our common stock from our current President.

Common Stock Warrants

In connection with previous private placements and payables to common stock conversions, we valued the common stock detachable warrants granted during the period ended March 31, 2012, using the Black-Scholes method. The following weighted average assumptions were used to calculate the valued warrants: terms of two years; risk free interest rate of 0.39%; volatility of 96%; and a weighted fair value of $0.126.

A summary of the common stock warrants, exercise price of $0.25, outstanding as of June 30, 2013 is presented below:

   
Number of Warrants
  
Balance at June 1, 2011
    
-
  
Granted
    
490,000
  
Exercised
    
-
  
Forfeited or Expired
    
-
  
Balance at June 30, 2012
    
490,000
  
Exercisable at June 30, 2012
    
490,000
  
Balance at July 1, 2012
    
-
  
Granted
    
-
  
Exercised
    
-
  
Forfeited or Expired
    
 (490,000)
  
Balance at June 30, 2013
    
-
  
Exercisable at June 30, 2013
    
-
  
 
On April 19, 2012, the Board determined it was in the best interest of the Company to cancel all of the outstanding warrants. As of September 30, 2012, the Company collected all of the signatures from the warrant holders agreeing to the cancellations with no consideration.

 
 
F-22
 
RELIABRAND, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the years ended June 30, 2013 and 2012

NOTE 10 – 2013 STOCK OPTION PLAN

Our board of directors adopted and approved our 2013 Stock option Plan (“Plan”) on January 18, 2013, which provides for the granting and issuance of up to 30 million (30,000,000) shares of our common stock.

Our board of directors administers our Plan, however, they may delegate this authority to a committee formed to perform the administration function of the Plan. The board of directors or a committee of the board has the authority to construe and interpret provisions of the Plan as well as to determine the terms of an award.  Our board of directors may amend or modify the Plan at any time. However, no amendment or modification shall adversely affect the rights and obligations with respect to outstanding awards unless the holder consents to that amendment or modification.
 
The Plan permits us to grant Non-qualified stock options to our employees, directors and consultants.  The options issued under this Plan are intended to be Non-qualified Stock Options in full compliance with Code Section 409A.

The duration of a stock option granted under our Plan cannot exceed ten years.  The exercise price of an incentive stock option cannot be less than 100% of the fair market value of the common stock on the date of grant.

The Plan administrator determines the term of stock options granted under our Plan, up to a maximum of ten years, except in the case of certain events, as described below.  Unless the terms of an optionee's stock option agreement provide otherwise, if an optionee's relationship with us ceases for any reason other than disability or death, the optionee may exercise any vested options for a period of ninety days following the cessation of service.  If an optionee's service relationship with us ceases due to disability or death the optionee or a beneficiary may exercise any vested options for a period of 12 months in the event of disability or death.

Unless the Plan administrator provides otherwise, options generally are not transferable except by will, the laws of descent and distribution, or pursuant to a domestic relations order.  An optionee may designate a beneficiary, however, who may exercise the option following the optionee's death.

For the year ended June 30, 2013, the Company granted the following stock options:

For the year ended June 30, 2013
Grant Date
  
Options Granted
    
Exercise Price
    
Expiration term in years
  
To Whom Granted
  
Vesting Terms
                         
January 29, 2013
    
8,381,150
    
$
0.10
      
9.59
  
Granted to current President
  
Fully vested at date of grant
                               
Total Granted
    
8,381,150
                        

As of June 30, 2013, 21,618,850 options were available for future grant.

The value of employee and non-employee stock warrants granted during the nine months ended March 31, 2013 was estimated using the Black-Scholes model with the following assumptions:

   
January 29, 2013
  
Expected volatility (based on historical volatility)
    
501.71
%
Expected dividends
    
0.00
  
Expected term in years
    
10
  
Risk-free rate
    
2.030
%
 
 
 
 
F-23
 
RELIABRAND, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the years ended June 30, 2013 and 2012
 
NOTE 10 – 2013 STOCK OPTION PLAN - continued
 
The expected volatility assumption was based upon historical stock price volatility measured on a daily basis. The risk-free interest rate assumption is based upon U.S. Treasury bond interest rates appropriate for the term of the Company’s employee stock options. The dividend yield assumption is based on our history and expectation of dividend payments.

A summary of the options granted to employees and non-employees under the plan and changes during the year ended June 30, 2013 is presented below:

   
Number of Options
    
Weighted Average Exercise Price
    
Weighted Average Remaining Contractual Terms
(In Years)
    
Aggregate Intrinsic Value
  
Balance at July 1, 2012
    
-
    
$
-
              
Granted
    
8,381,150
      
0.10
              
Exercised
    
-
                      
Forfeited or expired
    
-
      
-
              
Balance at June 30, 2013
    
8,381,150
    
$
0.10
      
9.58
    
$
--
  
Exercisable at June 30, 2013
    
8,381,150
    
$
0.10
      
9.58
    
$
--
  
Weighted average fair value of options granted during the year ended June 30, 2013
          
$
0.10
                  

The following table summarizes information about employee stock options under the 2013 Plan outstanding at June 30, 2013:

Options Outstanding
    
Options Exercisable
  
Range of Exercise Price
    
Number Outstanding at June 30, 2013
    
Weighted Average Remaining Contractual Life (In years)
    
Weighted Average Exercise Price
    
Intrinsic Value
    
Number Exercisable at June 30, 2013
    
Weighted Average Exercise Price
    
Aggregate Intrinsic Value
  
$
0.10
      
8,381,150
      
9.59
    
$
0.10
    
$
--
      
8,381,150
    
$
0.10
    
$
--
  
         
8,381,150
      
9.59
    
$
0.10
    
$
--
      
8,381,150
    
$
0.10
    
$
--
  

The total value of employee and non-employee stock options granted during the year ended June 30, 2013, was $838,115. During year ended June 30, 2013 the Company recorded $838,115 in stock-based compensation expense relating to stock option grants.

At June 30, 2013 there was no unrecognized compensation cost related to stock options granted under the plan.


NOTE 11 – INCOME TAXES

The net operating loss carryforward is the only component of deferred tax assets for income tax purposes as of June 30, 2013, of approximately $58,435 for Federal USA income taxes and $560,587 for Canadian income taxes which was reduced to zero after considering the valuation allowance of $58,435 and $560,587, respectively, since there is no assurance of future taxable income.

The net operating loss carryforward as of June 30, 2013 expires as follows:
 
Expiring Year
  
Federal USA Amount
    
Canadian Amount
  
2027
   $ 10,611     $  --  
2028
     45,117        --  
2029
     19,121        --  
2030
     183,034          --  
2031
     58,097       226,061  
2032
     --       821,452  
2033
     --       1,194,835  
 Total
   $ 315,980     $ 2,242,348  
 
 
 
F-24
 
RELIABRAND, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the years ended June 30, 2013 and 2012
 
NOTE 11 – INCOME TAXES - continued
 
These loss carryovers could be limited under the Internal Revenue Code should a significant change in ownership occur.

The following is an analysis of deferred tax assets for Federal USA taxes as of June 30, 2013 and 2012:
 
         
Deferred
    
Valuation
  
   
Tax Assets
    
Allowance
    
Balance
  
Deferred tax assets at June 30, 2011
$
58,435
    
$
(58,435
)
  
$
-0-
  
                         
Additions for the year
    
--
      
--
      
-0-
  
                         
Deferred tax assets at June 30, 2012
$
58,435
    
$
(58,435
)
  
$
-0-
  
                         
Additions for the year
    
--
      
--
      
-0-
  
                         
Deferred tax assets at June 30, 2013
  
$
58,435
    
$
(58,435
)
  
$
-0-
  

The following is an analysis of deferred tax assets for Canadian taxes as of June 30, 2013 and 2012:
 
         
Deferred
    
Valuation
  
   
Tax Assets
    
Allowance
    
Balance
  
Deferred tax assets at June 30, 2011
$
56,515
    
$
(56,515
)
  
$
-0-
  
                         
Additions for the year
    
205,363
      
(205,363)
      
-0-
  
                         
Deferred tax assets at June 30, 2012
$
261,878
    
$
(261,878
)
  
$
-0-
  
                         
Additions for the year
    
298,709
      
(298,709
)
    
-0-
  
                         
Deferred tax assets at June 30, 2013
  
$
560,587
    
$
(560,587
)
  
$
-0-
  

The following is reconciliation from the expected statutory federal income tax rate to the Company’s actual Federal USA income tax rate for the years ended June 30:
 
   
2013
  
2012
  
Expected income tax (benefit) at
                
   Federal statutory tax rate -34%
  
$
--
    
$
--
  
Permanent differences
    
--
      
--
  
Temporary differences
    
--
      
--
  
Valuation allowance
    
--
      
--
  
Income tax expense
  
$
- 0 -
    
$
- 0 -
  

The following is reconciliation from the expected statutory federal income tax rate to the Company’s actual Canadian income tax rate for the years ended June 30:
 
   
2013
  
2012
  
Expected income tax (benefit) at
                
   Canadian statutory tax rate -25%
  
$
(508,446
)
  
$
(205,676
)
Permanent differences
    
208
      
312
  
Temporary differences
    
209,529
          
Valuation allowance
    
298,709
      
205,364
  
Income tax expense
  
$
- 0 -
    
$
- 0 -
  
 
 
F-25
 
RELIABRAND, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the years ended June 30, 2013 and 2012
 
NOTE 11 – INCOME TAXES - continued
 
We currently have four years of Federal USA tax returns that are subject to examination, including the fiscal years ended June 30, 2012, 2011, 2010, and 2009, based on their filing dates by taxing authorities. We currently have two years of Canadian tax returns that are subject to examination, including the fiscal years ended June 30, 2012 and 2011, based on their filing dates by taxing authorities.

We have adjusted our income tax provision from last year due to the fact that in October 2010, our company relocated to Kelowna, British Columbia, Canada. We have adjusted our figures accordingly, and show the amounts that are allocated to United States Income Tax and Canada Income Tax carryforwards of our Net loss. We currently have no uncertainty of the tax positions that we have taken and believe that we can defend them to any tax jurisdiction.


NOTE 12 – LEGAL MATTERS

In July 2011, the Company became aware of a claim against it by a previously contracted investor/ public relations firm. The agreement with the firm was for services to be performed and payment to be made in the Company’s common stock. The stock was issued to the firm and kept in trust, and the services were not performed in accordance with the agreement.

On January 19, 2012, the Company entered into a settlement agreement with the plaintiff of the above suit. The Company agreed to pay $15,000 in cash and 100,000 shares of our restricted common stock. The Company agreed to pay the cash payment in three equal payments commencing on March 1, 2012, and continuing through May 1, 2012, the Payment in common shares were to be issued on March 1, 2012. On March 30, 2012, we amended the settlement to pay $10,000 as total consideration instead of the original amounts above, and we paid this on April 2, 2012.

On October 27, 2011, the British Columbia Securities Commission issued a Cease Trade Order which prohibits the trading of the Company’s securities in British Columbia until such time as the Company files all required reports with SEDAR, the System for Electronic Analysis and Document Retrieval, operated by the Canadian securities administrators.  The Company satisfied all the requests and the Cease Trade Order was lifted as of March 31, 2012.


NOTE 13 – SUBSEQUENT EVENTS (unaudited)

Private Placements

Since year end close of June 30, 2013, in connection with the private placement discussed in Note 10, the Company issued fifteen units, consisting of 750,000 shares of our restricted common stock and a royalty agreement (Note 9), and received a cash payment of $75,000. In connection with this royalty agreement, the Company recorded a contingent liability for this agreement in the amount of $42,550 and is based upon projections of our sales on these products.

Subscription and lock-up agreements

On July 24, 2013, the Company entered into a subscription agreement with an unrelated individual for 3,000,000 shares of our restricted common stock for $500,000 or $0.16 per share. In addition, the subscribers also received a 5.0% percent perpetual royalty on net sales of the product line, and first right to refusal to sell the product line in Germany, Austria, and Switzerland for both retail and wholesale distribution channels. In addition, the subscriber also agreed to a Lock-up and trickle out agreement. Beginning August 1, 2014 the subscriber agrees to sell a maximum percent of the total shares purchased per year. For the years of August 1, 2014 through July 31, 2015 they can sell 3% per quarter up to a maximum of 12% for the year. For the years ended July 31, 2016, 5% per quarter and 20% for the year, for July 31, 2017, 7% per quarter and 28% for the year, for July 31, 2015, 10% per quarter and 40% for the year. They also further agreed to not sell any shares below $0.10 per share.

 
 
 
F-26
 
 
 
ITEM 9 - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.   
 
 
ITEM 9A - EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES

Disclosure controls and procedures

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), as appropriate, to allow timely decisions regarding required disclosure. In connection with the preparation of this Annual Report on Form 10-K, our management carried out an evaluation, under the supervision and with the participation of our CEO and CFO, as of June 30, 2013, of the effectiveness of the design and operation of our disclosure controls and procedures, as such term is defined under Rule 13a-15(e) and 15d-15(e) under the Exchange Act.  Based upon this evaluation, our CEO and CFO concluded that our disclosure controls and procedures were not effective as of June 30, 2013. Our external auditors have informed us that our disclosure controls surrounding the recording of equity transactions are not effective.
 
Management’s Annual Report on Internal Control over Financial Reporting

As required by Rule 13a-15 under the Securities Exchange Act of 1934, as of the end of the period covered by this annual quarterly report, we have carried out an evaluation of the effectiveness of the design and operation of our company’s disclosure controls and procedures. This evaluation was carried out under the supervision and with the participation of our management, including our Chief Executive Officer. Based upon that evaluation, our Chief Executive Officer concluded that our disclosure controls and procedures were not effective as at the end of the period covered by this report. There have been no significant changes in our internal controls over financial reporting that occurred during our most recent fiscal year ended June 30, 2013 that have materially affected, or are reasonably likely to materially affect our internal controls over financial reporting.  Our auditors have informed us that we have a material weakness in internal controls regarding recording equity transactions and equity instruments. The Chief Executive Officer and Chief Accounting Officer has examined our controls and has implemented changes to improve the flow of information regarding equity transactions.

Disclosure controls and procedures and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported, within the time period specified in the Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed under the Securities Exchange Act of 1934 is accumulated and communicated to management, including our Chief Executive Officer to allow timely decisions regarding required disclosure.

Our management, including our Chief Executive Officer and Chief Accounting Officer, does not expect that our disclosure controls and procedures or our internal controls will prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of the controls can provide absolute assurance that all control issues and instances of fraud, if any, within our company have been detected.

This annual report does not include an attestation report of our registered public accounting firm regarding our internal control over financial reporting.  Management’s report was not subject to attestation by our registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permits us to provide only management’s report in this annual report.

Changes in Internal Control over Financial Reporting

As described above, there have been no changes in our internal control over financial reporting as defined in Rules 13a – 15(f) and 15d – 15(f) under the Exchange Act during the year ended June 30, 2013 that our certifying officers concluded materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.


ITEM 9B. - OTHER INFORMATION

None.

 
PART III

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

Executive Officers and Directors

Below are the names and certain information regarding the Company’s executive officers and directors:
 
Name:
  
Age
  
Title
Antal Markus
  
55
  
Director, CEO and CFO


 
17
 
 
 
ITEM 10 - DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS, CONTROL PERSONS AND CORPORATE GOVERNANCE; COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT - continued

Executive Officers and Directors - continued
 
Directors are elected to serve until the next annual meeting of stockholders and until their successors are elected and qualified.

Currently, directors are not compensated for their services, although their expenses in attending meetings are reimbursed. Officers are elected by the Board of Directors and serve until their successors are appointed by the Board of Directors. Biographical resumes of each officer and director are set forth below.

On August 19, 2010, Andi Klimm resigned all of his director and officer positions.  

On August 18, 2010, Antal Markus was appointed as CEO, Secretary, CFO.

Antal Markus, Director
 
Name and  
  
Year
  
Consulting Fee
    
Bonus
    
Stock
    
Option
    
Non-
    
All Other
    
Total
  
principal position
    
($)
    
($)
    
Awards
    
Awards
    
Equity
    
Compensation
    
($)
  
                 
($)
    
($)
    
Incentive
    
($)
        
                             
Plan
              
                             
Compensation
              
                             
($)
              
Antal Markus, CEO
2013
     136,047       -       -        838,115       -       8,452       982,614  
 
2012
     120,000       -       -       -       -       6,882       126,882  
 
Mr. Antal Markus has over 20 years of experience in the United States American financial markets. He has been involved in numerous mergers and acquisitions and has successfully listed companies on the Vancouver Stock Exchange.  Mr. Markus has served as an officer and director of numerous publicly traded US companies.  Mr. Markus has broad knowledge and experience in the inner workings of the US Stock Markets and his wide network of companies looking for investments are an indispensable resource for the company.

Board Committees

The Company currently has not established any committees of the Board of Directors.

Compliance with Section 16(a) of the Exchange Act

Section 16(a) Beneficial Ownership Reporting Compliance. During the year ended June 30, 2013, the following persons were officers, directors and more than ten-percent shareholders of the Company’s common stock:
 
Name
  
Position
  
Filed Reports
Antal Markus
  
Director, CEO, CFO, Secretary
  
Yes

Code of Ethics and Conduct

We currently have a Code of Ethics pursuant to Section 406 of the Sarbanes-Oxley Act of 2002 and has been filed as Exhibit 14.1 to the Form 10-K. The Code will be designed to deter wrongdoing and to promote:

 
·
Honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships;
 
 
·
Full, fair, accurate, timely and understandable disclosure in reports and documents that we file with, or submit to, the SEC, and in other public communications that we made;
 
 
·
Compliance with applicable governing laws, rules and regulations;
 
 
·
The prompt internal reporting of violations of the Code to the appropriate person or persons; and
 
 
·
Accountability for adherence to this Code.
 
This Code will require the highest standard of ethical conduct and fair dealing of its Chief Financial Officers. While this policy is intended to only cover the actions of our chief executive officers as required under Sarbanes-Oxley, we expect that our other officers, directors and employees will also review the Code and abide by its provisions. We believe that our reputation is a valuable asset and must continually be guarded by all associated with us so as to earn the trust, confidence and respect of our suppliers, customers and stockholders.

Our Chief Executive Officer is committed to conducting business in accordance with the highest ethical standards. Our Chief Executive Officer must comply with all applicable laws, rules and regulations. Furthermore, our Chief Executive Officer must not commit an illegal or unethical act, or instruct or authorize others to do so.
 
 
 
18
 
 
 
ITEM 10 - DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS, CONTROL PERSONS AND CORPORATE GOVERNANCE; COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT - continued
 
Corporate Governance

There have not been any material changes to the procedures by which security holders may recommend nominees to the registrant's board of directors.

We do not have a financial expert serving on our audit committee due its limited operations and available cash.
 
 
ITEM 11 - EXECUTIVE COMPENSATION

Consulting Agreements

On May 1, 2011, the Company entered into a consulting agreement with a company controlled by our President and Chief Executive Officer, for his consulting services at a rate of $10,000 per month, with a 3.00% royalty on all gross sales of the Company. On January 18, 2013, the Company entered into an amendment of the above consulting agreement,  with the same Company as above with the prior agreement remained in force except that his consulting services will be at a rate of $11,000 per month, and Mr. Markus was issued stock options to purchase 8,131,150 shares of the Company’s common stock for $0.10 per share. On January 1 of each year that the consulting agreement is in force, he will be granted an option to purchase an amount of shares to represent 10% of our issued and outstanding common stock as of December 31st of the prior year. For the years ended June 30, 2013 and 2012, we recorded $136,047 and $120,000, respectively, in consulting fees – related party expense in connection with these contracts. As of June 30, 2013, the Company accrued a total of $3,837 in royalties payable and owed our director approximately $21,000 in unpaid consulting fees.

Compensation of Directors

The Company does not have a policy in effect to pay compensation to its directors for serving as a director.  The shares issued to our director, Antal Markus, for his agreement to serve on the Board, was an isolated event.

Stock Option Grants

We granted stock options to our sole officer and director during our most recent fiscal year ended June 30, 2013.   Mr. Markus received options to purchase 8,131,150 shares of the Company’s common stock at a price of $0.10 per share for a period of ten (10) years.

Exercises of Stock Options and Year-End Option Values

None of our directors or officers exercised any stock options (i) during our most recent fiscal year ended June 30, 2013, or (ii) since the end of our most recent fiscal year on June 30, 2013.

Outstanding Stock Options
 
   
Number of Options
    
Weighted Average Exercise Price
    
Weighted Average Remaining Contractual Terms
(In Years)
    
Aggregate Intrinsic Value
  
Balance at July 1, 2012
    
-
    
$
-
              
                             
Granted
    
8,381,150
      
.10
              
                             
Exercised
    
-
                      
                             
Forfeited or expired
    
-
      
-
              
                             
Balance at June 30, 2013
    
8,381,150
    
$
0.10
      
9.59
    
$
--
  
                                 
Exercisable at June 30, 2013
    
8,381,150
    
$
0.10
      
9.59
    
$
--
  
                                 
Weighted average fair value of options granted during the year ended June 30, 2013
          
$
0.10
                  

 
 
19
 
 
 
ITEM 11 - EXECUTIVE COMPENSATION - continued
 
Outstanding Stock Options - continued
 
The following table summarizes information about employee stock options under the 2013 Plan outstanding at June 30, 2013:
 
Options Outstanding
    
Options Exercisable
  
Range of Exercise Price
    
Number Outstanding at June 30, 2013
    
Weighted Average Remaining Contractual Life (In years)
    
Weighted Average Exercise Price
    
Intrinsic Value
    
Number Exercisable at June 30, 2013
    
Weighted Average Exercise Price
    
Aggregate Intrinsic Value
  
$
0.10
      
8,381,150
      
9.59
    
$
0.10
    
$
--
      
8,381,150
    
$
0.10
    
$
--
  
                                                             
         
8,381,150
      
9.59
    
$
0.10
    
$
--
      
8,381,150
    
$
0.10
    
$
--
  

The total value of employee and non-employee stock options granted during the year ended June 30, 2013, was $838,115. During year ended June 30, 2013 the Company recorded $838,115 in stock-based compensation expense relating to stock option grants.
 
At June 30, 2013, there was no unrecognized compensation cost related to stock options granted under the plan.
 

ITEM 12 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

The following table sets forth information regarding the beneficial ownership of our common stock on June 30, 2013 (after giving effect to the above transaction) based on 86,822,868 shares outstanding on such date, by (i) each person known by us to be the beneficial owner of more than five percent (5%) of our outstanding shares of common stock, (ii) each of our directors, (iii) each of our executive officers, and (iv) by our directors and executive officers as a group. Each person named in the table, has sole voting and investment power with respect to all shares shown as beneficially owned by such person and can be contacted at our address as indicated below.

Title of Class
Name of
Beneficial Owner
  
Shares of
Common Stock
    
Percent of Class
  
               
Common Stock
Antal Markus (1)
720 Evans Court  Suite 103
Kelowna BC V1X 6G4
    
 
 
18,967,500
      
 
 
22.09
 
 
%
                   
Common Stock
Gerald Dalen
720 Evans Court Suite 103
Kelowna, BC, Canada V1X 6G4
    
10,281,368
      
11.10
%
                   
Common Stock
Directors and Officers
    
18,967,500
      
22.09
%
                   
 
 
(1)
Officer, director.  Of the shares noted, 360,000 shares are owned by Mr. Markus’ wife. Does not include options to purchase 8,131,150 shares of the Company’s common stock nor the Preferred A shares owned by Mr. Markus.    

 
20
 
 
 
ITEM 12 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS - continued
 
Changes in Control

On August 18, 2010, our former President, Chief Financial Officer, and Director resigned. Prior to his resignation, he appointed a replacement Director to serve on our Board of Directors and as our sole officer until additional directors are elected. On September 30, 2010, we issued 7,500,000 shares of our restricted common stock to our new sole officer and sole director for agreeing to serve our Company in that capacity, valued at $.002 per share for a total expense of $15,000 which is reflected in consulting fees expense.
 
On September 18, 2010 we entered in a binding letter of agreement with our former President to let him retain the active business contacts, contracts and assets of the Company’s business plan at that time in exchange for his returning 100 (post-split) shares of series “A” preferred stock that he was issued in January 2010 for cancellation and 180,000 (post-split) shares of common stock for cancellation. In addition, as part of this agreement, the amount of outstanding debt owed to him of $95,312, including advances of $94,775 and $537 in accounts payable – related party, was written off and recorded as paid in capital.
 
 The Company has canceled the 100 (post-split) Series A Preferred Stock that were issued and also canceled the 180,000 shares previously owned by our former President, Mr. Klimm and returned all those shares to the treasury. On May 2, 2011, we authorized the issuance to our President 10,000 shares of Class A Preferred Stock in exchange for him returning and cancelling nine million (9,000,000) shares of our common stock. 

There are currently no arrangements which may result in a change in control of the Company.

 
ITEM 13 - CERTAIN RELATIONSHIPS, RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE

Certain Relationships and Related Transactions

On May 1, 2011, we entered into a consulting agreement with Marant Holdings Inc., a company controlled by our President and Chief Executive Officer, for his consulting services at a rate of $10,000 per month. The terms of the consulting agreement also call for the Company to provide health insurance, vacation, a company credit card, and reimbursement for all reasonable business expenses incurred by him in the performance of his duties.  The agreement will be in effect for a five year period ending on May 1, 2016 and is renewable after that period; however, the Company has the option to cancel with or without “cause”.  To cancel with “cause” means that there is a breach of fiduciary duties or felonious conduct, and under the agreement the Company may terminate the contract with a 90 day notice. To cancel without “cause”, the Company would be liable for a lump sum payment equal to the balance of the consulting fees remaining under the current year’s consultant agreement.

On January 18, 2013, the Company entered into an amendment of the above consulting agreement with the same Company as above, the prior agreement remains in force except for the following provisions: Mr. Markus’ consulting services will be at a rate of $11,000 per month, and Mr. Markus also received an option to purchase 8,131,150 shares of the Company’s common stock for $0.10 per share. On January 1, each year that the consulting agreement is in force, Mr. Markus will be granted an option to purchase an amount of shares to represent 10% of our issued and outstanding common stock as of December 31st of the prior year. For the years ended June 30, 2013 and 2012, we recorded $136,047 and $120,000, respectively, in consulting fees – related party expense in connection with these contracts. As of June 30, 2013, the Company accrued a total of $3,837 in royalties payable.

On May 1, 2012, the Company entered into consulting agreements with Kyle, Anthony, and Brent Markus, sons of its President, for their respective consulting services at a rate of $43,000, respectively, USD per annum.  The agreements were each for a period of twelve months, ending on December 31, 2012, and are automatically renewed for successive twelve month terms.  The agreements may be terminated by the Company at any time, or by mutual consent, without consequence with a ninety day written notice. They each received one month’s salary as a signing bonus, and will each also receive a 2.50% royalty on all gross sales of the Company. On January 18, 2013, the Company entered into new consulting agreements with Kyle, Anthony, and Brent Markus increasing their respective annual compensation to $47,300 each. All others terms remained the same. For the years ended June 30, 2013 and 2012, we recorded $152,398 and $95,702, respectively, in consulting fees – related party expense in connection with these contracts. As of June 30, 2013, the Company accrued a total of $9,594 in royalties payable for each agreement.

On January 18, 2013, the Company entered into a consulting agreement with Michael Markus, the fourth son of our current President, for his consulting services at a rate of $35,200 USD per annum.  The agreement will be in effect for a period of twelve months, ending on December 31, 2013, and is automatically renewed for successive twelve month terms.  The agreement may be terminated by the Company at any time, or by mutual consent, without consequence with a ninety day written notice. He also received one month’s salary as a signing bonus, and he will also receive a 2.50% royalty on all gross sales of the Company. For the years ended June 30, 2013 and 2012, we recorded $35,561 and none, respectively, in consulting fees – related party expense in connection with this contract and fees charged previous to this contract. As of June 30, 2013, the Company accrued a total of $2,019 in royalties payable.
  
 
 
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ITEM 13 - CERTAIN RELATIONSHIPS, RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE - continued
 
Director Independence
 
We are not subject to listing requirements of any national securities exchange or inter-dealer quotation system which has requirements that a majority of the board of directors be “independent” and, as a result, we are not at this time required to have our Board comprised of a majority of “Independent Directors.”

 
ITEM 14 - PRINCIPAL ACCOUNTANT FEES AND SERVICES.

Audit Fees

The aggregate fees billed to us by our principal accountant for services rendered during the fiscal years ended June 30, 2013 and June 30, 2012 are set forth in the table below:
 
Fee Category
  
Fiscal year ended June 30, 2013
    
Fiscal year ended June 30, 2012
  
Audit fees (1)
  
$
24,500
    
$
25,000 
  
Audit-related fees (2)
    
14,000
      
14,500
  
Tax fees (3)
    
1,000
      
1,000
  
All other fees (4)
            
-
  
Total fees
  
$
39,500
    
$
40,500
  
  
(1)
Audit fees consists of fees incurred for professional services rendered for the audit of consolidated financial statements, for reviews of our interim consolidated financial statements included in our quarterly reports on Form 10-Q and for services that are normally provided in connection with statutory or regulatory filings or engagements.
 (2)
Audit-related fees consist of fees billed for professional services that are reasonably related to the performance of the audit or review of our consolidated financial statements, but are not reported under “Audit fees.”
 (3)
Tax fees consist of fees billed for professional services relating to tax compliance, tax planning, and tax advice.
 (4)
All other fees consist of fees billed for all other services.

Audit Committee’s Pre-Approval Practice

Insomuch as we do not have an audit committee, our board of directors performs the functions of an audit committee. Section 10A(i) of the Exchange Act prohibits our auditors from performing audit services for us as well as any services not considered to be “audit services” unless such services are pre-approved by the board of directors (in lieu of the audit committee) or unless the services meet certain de minimis standards.

 
PART IV

ITEM 15 - EXHIBITS

The following Exhibits are being filed with this Annual Report on Form 10K:
  
Exhibit
    
Number
  
Description of Exhibit
     
3.1(1)
    
Articles of Incorporation
       
3.2(1)
    
By-Laws
       
3.3(2)
    
Certificate of Amendment, as filed with the Nevada Secretary of State
       
3.3(3)
    
Certificate of Amendment, as filed with the Nevada Secretary of State
       
10.1(4)
    
Asset Purchase Agreement
       
   
Section 302 Certification of Chief Executive Officer
       
   
Section 302 Certification of Chief Financial Officer


 
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ITEM 15 - EXHIBITS - continued
       
   
Section 906 Certification of Chief Executive Officer
       
   
Section 906 Certification of Chief Financial Officer
 
(1)
Filed as an exhibit to our registration statement on Form SB-2 filed with the Commission on October 2, 2007.
   
(2)
Filed as an exhibit to our Form 8-K filed with Commission on June 6, 2008.
   
(3)
Filed as an exhibit to our Form 8-K with the Commission on March 4, 2011
   
(4)
Filed as an exhibit to our form 8-K filed with the Commission on January 26, 2011

 
SIGNATURES
 
Pursuant to the requirements of Section 13 or 15(d) 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, in the City of Kelowna, British Columbia, on September 30, 2013.
  
 
RELIABRAND INC.
  
       
 
By:
/s/ Antal Markus
  
   
Antal Markus
  
   
Chief Executive Officer
  
       

 
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities indicated on September 30, 2013.
 
 
By:
/s/ Antal Markus
  
   
Antal Markus 
  
   
Director, Chief Executive Officer
  
   
Chief Financial Officer (Principal Financial
  
   
Officer), Treasurer, Principal Accounting Officer, Secretary
  
 
 
 
 

 
 
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