SECURITIES AND EXCHANGE COMMISSION
UNITED STATES
Washington, D.C. 20549
FORM 10-Q
(Mark One)
x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 2014
OR
¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to ________________
Commission File Number: 333-59114
SNACKHEALTHY, INC.
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(Exact name of small business issuer as specified in charter)
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Nevada
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33-0730042
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(State or other jurisdiction of
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(I.R.S. Employer
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incorporation or organization)
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Identification No.)
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620 Newport Center Drive, Suite 1100
Newport Beach, CA
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92660
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(Address of principal executive offices)
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(Zip Code)
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(949) 719-2491
(Issuer's Telephone number, including area code)
_________________________________________________________________
(Former name, former address, and former fiscal year, if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports,), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No ¨
Indicate by check mark whether the registrant is a larger accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "larger accelerated filer" and "smaller or a smaller reporting company" in Rule 12b-2 of the Exchange Act.
Large accelerated Filer
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¨
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Accelerated filer
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¨
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Non-accelerated filer
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¨
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Smaller reporting company
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x
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(Do not check if a smaller reporting company)
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|
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Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act) Yes ¨ No x
Indicate the number of shares of the registrant's common stock outstanding of each of the insurer's common stock, as of the latest practicable date. The number of shares outstanding of the registrant's only class of common stock, $0.001 par value per share, was 11,161,030 as of February 13, 2015. The registrant has no outstanding non-voting common equity.
SNACKHEALTHY, INC.
QUARTERLY REPORT ON FORM 10-Q
FOR THE PERIOD ENDED DECEMBER 31, 2014
TABLE OF CONTENTS
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PAGE |
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PART I. FINANCIAL INFORMATION
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3
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Item 1.
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Financial Statements
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3
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(a) Condensed Balance Sheets (unaudited)
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3
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(b) Condensed Statements of Operations (unaudited)
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4
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(c) Condensed Statement of Changes in Stockholders' Deficit (unaudited)
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5
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(d) Condensed Statements of Cash Flows (unaudited)
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6
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(e) Notes to Condensed Financial Statements (unaudited)
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7
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Item 2.
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Management's Discussion and Analysis of Financial Condition and Results of Operations
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14
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Item 3.
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Quantitative and Qualitative Disclosures about Market Risk
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19
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Item 4.
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Controls and Procedures
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20
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PART II. OTHER INFORMATION
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22
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Item 1.
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Legal Proceedings
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22
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Item 1A.
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Risk Factors
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22
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Item 2.
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Unregistered Sales of Equity Securities and Use of Proceeds
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30
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Item 3.
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Defaults On Senior Securities
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30
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Item 4.
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Mine Safety Disclosures
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30
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Item 5.
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Other Information
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30
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Item 6.
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Exhibits
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31
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Signatures
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32
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PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
SnackHealthy, Inc.
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(formerly Healthient, Inc.)
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Condensed Consolidated Balance Sheets
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(Unaudited) |
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(Audited) |
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December |
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June |
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31, 2014 |
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30, 2014 |
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ASSETS
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Current Assets
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Cash
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$
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1,815
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$
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1,815
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Deposits and prepaid expenses
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1,777
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1,777
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Total Current Assets
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3,592
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3,592
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Property and Equipment
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Website costs (net of accummulated amortization)
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-
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-
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Office equipment (net of accumulated depreciation)
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9,385
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10,809
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Total Fixed Assets
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9,385
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10,809
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Other Assets
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Licensed drink (net of accummulated amortization)
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-
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1,250
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Total Assets
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$
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12,977
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$
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15,651
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LIABILITIES AND STOCKHOLDERS' DEFICIT
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Current Liabilities
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Accounts payable
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$
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98,381
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$
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43,745
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Accrued expense
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1,654
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28
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Liability for lease judgement
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181,968
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181,968
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Payroll taxes
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3,565
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3,565
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Directors' fees
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67,500
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67,500
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Shareholder loans
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127,146
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84,637
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Total Current Liabilities
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480,214
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381,443
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|
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|
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Total Liabilities
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480,214
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|
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381,443
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|
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Commitments and Contingencies
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Stockholders' Deficit
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Preferred stock, $0.001 Par value, 25,000,000 authorized:
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No shares issued
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-
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-
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Common stock, $0.001 par value: 200,000,000 shares authorized
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5,482,380 and 5,467,380 shares issued and outstanding
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at December 31 and June 30, 2014, respectively
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5,482
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5,467
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Additional paid-in capital
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47,756,300
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47,712,065
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Deficit accumulated
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(48,229,019
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)
|
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(48,083,324
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)
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Total Stockholders' Defict
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(467,237
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)
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(365,792
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)
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Total Liabilities and Stockholders' Deficit
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$
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12,977
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$
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15,651
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|
The accompanying notes are an integral part of these condensed unaudited financial statements.
SnackHealthy, Inc.
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(formerly Healthient, Inc.)
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Condensed Consolidated Statements of Operations
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(Unaudited)
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For the three months ended December 31, 2014 |
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For the three months ended December 31, 2013 |
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For the six months ended December 31, 2014
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For the six months ended December 31, 2013 |
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Revenues
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$
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-
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$
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-
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$
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-
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$
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-
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Cost of revenues
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-
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-
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-
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-
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Gross profit
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-
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-
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-
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-
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Operating Expenses
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Selling expenses
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-
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-
|
|
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-
|
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2,188
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General and administrative expenses
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|
|
87,135
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130,130
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|
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145,695
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|
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192,303
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Loss on settlement of liabilities with equity
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-
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|
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27,387,797
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|
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-
|
|
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29,427,796
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Total operating expenses
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87,135
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|
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|
27,517,927
|
|
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145,695
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29,622,287
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Operating loss
|
|
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(87,135
|
)
|
|
|
(27,517,927
|
)
|
|
|
(145,695
|
)
|
|
|
(29,622,287
|
)
|
|
|
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Provision for income taxes
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
Net loss
|
|
$
|
(87,135
|
)
|
|
$
|
(27,517,927
|
)
|
|
$
|
(145,695
|
)
|
|
$
|
(29,622,287
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)
|
|
|
|
|
|
|
|
|
|
|
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|
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|
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Net loss per share-basic and diluted
|
|
$
|
(0.02
|
)
|
|
$
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(7.44
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)
|
|
$
|
(0.03
|
)
|
|
$
|
(15.00
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
Weighted average number of common shares oustanding - basic and diluted |
|
|
5,480,913
|
|
|
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3,696,238
|
|
|
|
5,474,146
|
|
|
|
1,974,599
|
|
The accompanying notes are an integral part of these condensed unaudited financial statements.
SnackHealthy, Inc.
|
(formerly Healthient, Inc.)
|
Condensed Consolidated Statements of Changes in Stockholders' Deficit
|
|
|
Common Shares |
|
|
Additional |
|
|
|
|
|
|
|
|
|
|
|
|
Par Value |
|
|
Paid-In |
|
|
Deficit |
|
|
Accumulated |
|
|
|
Shares (1)
|
|
|
$0.001
|
|
|
Capital
|
|
|
Accumulated
|
|
|
Deficit
|
|
Balance June 30, 2013 (Audited)
|
|
|
174,606
|
|
|
$
|
175
|
|
|
$
|
17,532,898
|
|
|
$
|
(18,084,903
|
) |
|
$
|
(551,830
|
) |
Common shares issued for services
|
|
|
29,666
|
|
|
|
29
|
|
|
|
160,781
|
|
|
|
-
|
|
|
|
160,810
|
|
Common shares issued for settlement of liabilities
|
|
|
251,875
|
|
|
|
252
|
|
|
|
639,434
|
|
|
|
-
|
|
|
|
639,686
|
|
Common shares issued for settlement of liabilities - related parties
|
|
|
5,010,947
|
|
|
|
5,011
|
|
|
|
29,378,952
|
|
|
|
-
|
|
|
|
29,383,963
|
|
Fractional shares issued (100-1 split)
|
|
|
286
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Net loss for the year
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(29,998,421
|
)
|
|
|
(29,998,421
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance June 30, 2014 (Audited)
|
|
|
5,467,380
|
|
|
|
5,467
|
|
|
|
47,712,065
|
|
|
|
(48,083,324
|
) |
|
|
(365,792
|
) |
Common shares issued for services
|
|
|
15,000
|
|
|
|
15
|
|
|
|
44,235
|
|
|
|
-
|
|
|
|
44,250
|
|
Net loss for the period
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(145,695
|
) |
|
|
(145,695
|
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance December 31, 2014 (Unaudited)
|
|
|
5,482,380
|
|
|
$
|
5,482
|
|
|
$
|
47,756,300
|
|
|
$
|
(48,229,019
|
) |
|
$
|
(467,237
|
) |
(1) As retrospectively restated for the October 28, 2013 100:1 reverse split.
The accompanying notes are an integral part of these condensed unaudited financial statements.
SnackHealthy, Inc. |
(formerly Healthient, Inc.) |
Condensed Consolidated Statements of Cash Flows |
(Unaudited) |
|
|
For the Six Months ended December 31, 2014 |
|
|
For the Six Months ended December 31, 2013 |
|
Cash Flows from Operating Activities |
|
|
|
|
|
|
Net loss |
|
$ |
(145,695 |
) |
|
$ |
(29,622,287 |
) |
Adjustments to reconcile net loss to net cash used in operating activities: |
|
|
|
|
|
|
|
|
Depreciation |
|
|
1,424 |
|
|
|
1,490 |
|
Amortization of websites and license drink |
|
|
1,250 |
|
|
|
31,436 |
|
Loss on settlement of liabilities for equity |
|
|
- |
|
|
|
29,427,796 |
|
Shares issued for services |
|
|
44,250 |
|
|
|
64,500 |
|
Changes in operating assets and liabilities |
|
|
|
|
|
|
|
|
Settlement of lease |
|
|
- |
|
|
|
- |
|
Increase (decrease) in accured liabilities |
|
|
19,320 |
|
|
|
(10 |
) |
Increase in accounts payable |
|
|
36,942 |
|
|
|
37,435 |
|
Net Cash Used in Operations |
|
|
(42,509 |
) |
|
|
(59,640 |
) |
|
|
|
|
|
|
|
|
|
Cash Flows from Investing Activities |
|
|
- |
|
|
|
- |
|
Net Cash Provided by (used in) Financing Activities |
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
Cash Flows from Financing Activities |
|
|
|
|
|
|
|
|
Shareholder loans advanced |
|
|
42,509 |
|
|
|
59,640 |
|
Net Cash Provided by Financing Activities |
|
|
42,509 |
|
|
|
59,640 |
|
|
|
|
|
|
|
|
|
|
Net Decrease in Cash |
|
|
- |
|
|
|
- |
|
Cash - Beginning of Period |
|
|
1,815 |
|
|
|
1,815 |
|
Cash - Ending of Period |
|
$ |
1,815 |
|
|
$ |
1,815 |
|
|
|
|
|
|
|
|
|
|
Supplemental Disclosure of Non-Cash Investing and Financing Activities: |
|
|
|
|
|
|
|
Shares issued for services |
|
$ |
42,750 |
|
|
$ |
64,500 |
|
Settlement of Directors' fees for shares |
|
$
|
- |
|
|
$ |
180,000 |
|
Settlement of accounts payable for shares |
|
$
|
- |
|
|
$ |
53,853 |
|
Shares issued to pay shareholder loans |
|
$
|
- |
|
|
$ |
200,000 |
|
Income taxes paid |
|
$
|
- |
|
|
$
|
- |
|
Interest paid |
|
$
|
- |
|
|
$
|
- |
|
The accompanying notes are an integral part of these condensed unaudited financial statements.
SnackHealthy, Inc.
(formerly Healthient, Inc.)
FOOTNOTES TO CONDENSED FINANCIAL STATEMENTS
For the Three and Six Months ended December 31, 2014 and 2013
(Unaudited)
Note 1. The Company
On October 4, 2013, Healthient, Inc. (“the Company”) changed its name to "SnackHealthy, Inc." and dissolved its sole wholly-owned subsidiary SnackHealthy, Inc., a Nevada corporation.
SnackHealthy, Inc. markets and distributes organic and all-natural healthy food products. The Company offers a portfolio of healthy foods and beverages that are organic, all-natural, low-calorie, and free from artificial sweeteners; created for consumption over several eating occasions daily. SnackHealthy continues to pursue its mission of developing and distributing great tasting nutritious snacks, and beverages under the SnackHealthy brand. Healthient, a division of SnackHealthy, Inc. plans to focus on providing organic, natural and gourmet food products to large retailers and club stores in the U.S.
Note. 2 Significant Accounting Policies
Basis of Presentation
The accompanying condensed financial statements of SnackHealthy, Inc. for the three and six months ended December 31, 2014 and 2013 are unaudited and, in the opinion of management, contain all adjustments that are of a normal and recurring nature necessary to present fairly the financial position and results of operations for such periods. These condensed financial statements have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and footnote disclosures normally included in financial statements prepared on an accrual basis in accordance with generally accepted accounting principles in the United States (“U.S. GAAP”) have been condensed or omitted pursuant to SEC regulations. The condensed financial statements should be read in conjunction with the consolidated financial statements and related notes contained in the Company’s 2014 Annual Report on Form 10-K filed on October 27, 2014. The results of operations for the three and six months ended December 31, 2014 are not necessarily indicative of the results expected for the year ended June 30, 2015 or of other future periods.
Principles of Consolidation
The accompanying consolidated financial statements include the accounts of the Company and its wholly owned subsidiary SnackHealthy, Inc. until its dissolution effective October 4, 2013. All significant inter–company transactions and balances have been eliminated in consolidation
Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities on the date of the financial statements and the reported amounts of revenues and expenses during the period. Actual results could differ from those estimates.
Cash and Cash Equivalents
The Company considers all highly liquid investments with an original maturity of three months or less as cash equivalents.
Inventory
Inventory comprises packaged healthy snacks ready for final sale, and is stated at the lower of cost or market value. Cost is determined by the first-in, first-out method.
Financial Instruments
The carrying value of the Company’s financial instruments, including cash and cash equivalents, accounts receivable, accounts payable, and due to related parties, as reported in the accompanying balance sheets, approximates fair value due to the short term nature of these financial instruments.
Property and Equipment
Property and equipment are stated at cost and depreciated on the straight-line method over the estimated life of the asset, which is three to seven years.
Websites Development Cost
The Company has adopted the provisions of FASB Accounting Standards Codification No. 350 Intangible-Goodwill and Other. Costs incurred in the planning state of a websites are expensed, while costs incurred in the development stage are capitalized and amortized over the estimated three-year life of the asset. All website development costs have been totally amortized at December 31, 2014.
Other Assets
The drink license is being amortized over three years.
Long-Lived Assets
In accordance with ASC 350, the Company regularly reviews the carrying value of intangible and other long-lived assets for the existence of facts or circumstances, both internally and externally, that may suggest impairment. If impairment testing indicates a lack of recoverability, an impairment loss is recognized by the Company if the carrying amount of a long-lived asset exceeds its fair value.
Income Taxes
The Company accounts for income taxes under FASB Codification Topic 740-10-25 (“ASC 740-10-25”) Income Taxes. Under ASC 740-10-25, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Under ASC 740-10-25, the effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.
Revenue Recognition
Revenue is recognized only when the price is fixed or determinable, persuasive evidence of an arrangement exists, products are shipped, which is when title and risk of loss pass to the customer and collectability of the amount is reasonably assured. Specifically, revenue is recognized when products are shipped, which is when title and risk of loss pass to the customer. The Company classifies selling discounts and rebates, if any, as a reduction of revenue.
Advertising Costs
The Company’s policy regarding advertising is to expense advertising when incurred. The Company incurred no advertising expenses during the three and six month periods ended December 31, 2014 and 2013.
Stock-Based Compensation
In December 2004, the FASB issued FASB Accounting Standards Codification No. 718, Compensation – Stock Compensation. Under FASB Accounting Standards Codification No. 718, companies are required to measure the compensation costs of share-based compensation arrangements based on the grant-date fair value and recognize the costs in the financial statements over the period during which employees are required to provide services. Share-based compensation arrangements include stock options, restricted share plans, performance-based awards, share appreciation rights and employee share purchase plans. As such, compensation cost is measured on the date of grant at their fair value. Such compensation amounts, if any, are amortized over the respective vesting periods of the option grant. The Company applies this statement prospectively.
Equity instruments (“instruments”) issued to other than employees are recorded on the basis of the fair value of the instruments, as required by FASB Accounting Standards Codification No. 718. FASB Accounting Standards Codification No. 505, Equity Based Payments to Non-Employees defines the measurement date and recognition period for such instruments. In general, the measurement date is when either a (a) performance commitment, as defined, is reached or (b) the earlier of (i) the non-employee performance is complete or (ii) the instruments are vested. The measured value related to the instruments is recognized over a period based on the facts and circumstances of each particular grant as defined in the FASB Accounting Standards Codification.
Basic and Diluted Net Loss per Common Share
Net Loss per Common Share is computed pursuant to FASB Accounting Standards Codification No. 260, Earnings per Share. Basic net loss per share is computed by dividing net loss by the weighted average number of shares of common stock outstanding during the period. Diluted net loss per share is computed in the same way as for Basic net loss.
At December 31, 2014 the Company had 4,716,000 common shares remaining to be issued in satisfaction of the settlement agreement. These shares have not been included in the number diluted shares because their effect would be anti-dilutive as the Company realized losses all periods presented in these financial statements.
Reclassifications
Certain amounts previously presented for prior year have been reclassified. The reclassifications had no effect on net loss, total assets, or stockholders' deficit.
Recent Accounting Pronouncements
The Company has reviewed all recently issued, but not yet effective, accounting pronouncements and does not believe the future adoption of any such pronouncements may be expected to cause a material impact on its financial condition or the results of its operations.
Note 2. Going Concern
The financial statements have been prepared assuming that the Company will continue as a going concern. The Company had a net loss of $145,695 during the six months ended December 31, 2014 and cash used in operations for the six months of $42,509. This raises substantial doubt about its ability to continue as a going concern. The ability of the Company to continue as a going concern is dependent on the Company’s ability to raise additional capital and to successfully implement its business plan and achieve profitability.
Management believes that the actions presently being taken and the success of future operations will be sufficient to enable the Company to continue as a going concern, however, there can be no assurance that the raising of equity will be successful or that the Company will be able to achieve profitability. Failure to achieve the needed equity funding or establish profitable operations would have a material adverse effect on the Company’s ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Note 3. Property and Equipment
The Company started the construction of several websites, all of which have been completed and are being amortized over three years. Computers and furniture are being depreciated over three to seven years.
Property and equipment was as follows:
|
|
December 31, 2014 |
|
|
June 30, 2014 |
|
Website
|
|
$
|
181,008
|
|
|
$
|
181,008
|
|
Amortization
|
|
|
181,008
|
|
|
|
181,008
|
|
Total
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
Office equipment
|
|
|
22,165
|
|
|
|
22,165
|
|
Depreciation
|
|
|
12,780
|
|
|
|
11,356
|
|
Total
|
|
$
|
9,385
|
|
|
$
|
10,809
|
|
Note 4. Other Assets
|
|
December 31,2014 |
|
|
June 30, 2014 |
|
License for drink
|
|
$
|
7,500
|
|
|
$
|
7,500
|
|
Amortization
|
|
|
7,500
|
|
|
|
6,250
|
|
Total
|
|
$
|
-
|
|
|
$
|
1,250
|
|
The Company’s license for drink is being amortized over three years.
Note 5. Commitments and Contingencies
Lease Commitments
The Company gave up its leased office space in Jupiter, Florida in January 2014, and acquired a new office in Newport Beach, California. The Florida leaseholder obtained a judgment in the amount of $181,968 for the remainder of the monthly lease payments through June 2016 pursuant to the terms of the lease agreement plus legal fees of $1,487. The Company has recorded the full amount of the judgment, however believes that when the facility is re-leased it may not have to pay the full amount. Upon the leaseholder’s execution of a new lease with a new tenant, the Company plans to file for the release of the amount of the judgment over and above the actual loss incurred by the leaseholder. There is no guarantee the property will be re-leased or that such a filing will be successful and that the Company will be able to mitigate its loss in this way.
The Company’s Newport Beach, California lease term is one year commencing January 2014 at the rate of $1,439 per month. We believe that our existing facilities are adequate to meet our current needs and that suitable additional or alternative space will be available at this facility if needed. We have no assurance that future terms would be as favorable as our current terms. As of January 2015, the Company did not renew the lease, thereby converting to a month-to-month basis.
The Company has not invested in any real property at this time, nor does the Company intend to do so. The Company has no formal policy with respect to investments in real estate or investments with persons primarily engaged in real estate activities.
Legal
In 2011 Siesta Flow LLC filed a legal action against the Company in the Twelfth Circuit Court of Sarasota County, Florida, alleging breach of contract and seeking damages in the amount of $92,000 plus costs. In April of 2012, the court has issued final summary judgment against the Company in the total amount of $95,500. On April 27, 2012, the court issued an order to approve a settlement of the judgment issued against the Company. According to the terms of the approved settlement, a third party and a non-party to the legal action against the Company, agreed to purchase the claim of Siesta Flow LLC. in the amount of $75,000 and additional claims against the Company from other parties, for a total amount of $95,500 in exchange for the issuance of 19,100,000 shares of common stock by the Company, subject to certain limitations on the issuance of such shares set forth in settlement. The Company has recorded the settlement agreement at the market price of the stock on the date of issuance.
During the year ended June 30, 2013, the Company issued 14,384,000 shares of common stock with a market value of $7,562,500 in payment of the settlement. $1,719,000 was in satisfaction of the settlement payable and $5,843,000 was recognized as a loss on the settlement of this liability, which was netted to $5,799,000 by forgiven amounts of $44,000. At December 31, 2014 there is a balance of 4,716,000 common shares remaining to be issued under the settlement agreement. Under the agreement, the shares can be drawn upon at any time, provided that the number of shares of common stock of the Company beneficially owned by the purchaser of the Siesta Flow LLC's claim does not exceed 9.99%. The number of shares required to settle this liability is unchanged by the Company’s recent reversed spilt in the number of its issued and outstanding shares of common stock.
In June of 2013, a former officer of the Company filed a lawsuit against the Company and its President and directors alleging several counts, including a breach of contract and fiduciary duty, and seeking damages in the amount of $122,300 and other unspecified damages. The Company considers the lawsuit without any merit and will defend it vigorously. On September 18, 2013, the plaintiff filed a motion to compel early mediation. In February 2014 the parties attended a settlement conference; however, no settlement could be reached. As of December 31, 2014 the case was still pending.
On October 8, 2014, a former Director pled not guilty to charges by the U.S. Attorney’s office of 15 U.S.C. Sections 77e and 77x (Illegal Sales of Unregistered Securities) and 18 U.S.C. Section 2 (Aiding and Abetting and Causing an Act to be Done). The alleged violation pertains to January, 2012 when the Director caused the Company to issue shares of common stock pursuant to the Company's 2010 Equity Compensation Plan, as amended, registered on the registration statement on Form S-8, purportedly for certain consulting services provided to the Company. According to the charges, the actual intended purpose of such stock issuances was to raise capital for the Company through the sale of its stock. Shares registered on Form S-8 cannot be used by the issuer to raise capital for the issuer or to promote the issuer's stock price and are limited for the issuance to the issuer's employees, consultants, and advisors for bona fide services to the company. Our current management was not involved, had no knowledge of these allegations, and is conducting a thorough review and investigation of its policies and compliance procedures to discover any deficiencies in its internal controls.
On July 24, 2014, the Company, its Chairman and Chief Financial Officer received subpoenas from the Securities Exchange Commission (the “SEC”) that stated that the staff of the SEC is conducting an investigation In the Matter of PEI Worldwide and Certain Other Issuers, File No. HO 11576 and that the subpoena was issued to the Company, its Chairman and CFO as part of the foregoing investigation. The Company has no knowledge of PEI Worldwide. The SEC’s subpoena and accompanying letter do not indicate whether the Company (or its Chairman and CFO, respectively) is, or is not, under investigation. The Company has contacted the SEC’s staff regarding the subpoenas, and the Company is cooperating with the SEC. As of December 31, 2014, no further communication from the SEC has been received by the Company.
Note 6. Stockholders’ Deficit
The Company has authorized 200,000,000 shares of common stock with a par value of $0.001 and 25,000,000 shares of preferred stock with a par value of $0.001.
On October 28, 2013, the Company effected a 100 to 1 reverse split of its common stock that has been reflected in the Stockholders’ Deficit.
During the six months ended December 31, 2014 the Company issued 15,000 shares of common stock for services ($44,250).
At December 31, 2014 the Company had a balance of 4,716,000 common shares remaining to be issued in satisfaction of the settlement agreement. Under the agreement, the shares can be drawn upon at any time, provided that the number of shares of common stock of the Company beneficially owned by the purchaser of the Siesta Flow LLC's claim does not exceed 9.99%. The number of shares required to settle this liability is unchanged by the Company’s recent reversed spilt in the number of its issued and outstanding shares of common stock.
Non-Employee Stock Options and Warrants
The Company accounts for non-employee stock options and warrants under ASC 718, whereby option and warrant costs are recorded based on the fair value of the consideration received or the fair value of the equity instruments issued, whichever is more reliably measurable. Unless otherwise provided for, the Company covers option and warrant exercises by issuing new shares.
There were no warrants or stock options issued or outstanding at December 31, 2014. All warrants issued in prior periods expired without being exercised.
Note 7. Loans from Directors and Shareholders
During the six months ended December 31, 2014, a shareholder advanced the Company an additional $42,509 which makes total loans payable $127,146. The loans are non-interest bearing and due on demand.
Note 8. Income Taxes
The components of the deferred tax asset are as follows:
|
|
December 31, 2014 |
|
|
June 30, 2014 |
|
Deferred tax assets
|
|
|
|
|
|
|
Net operating loss carry-forward
|
|
$
|
9,228,000
|
|
|
$
|
9,200,000
|
|
Valuation allowance
|
|
|
(9,228,000
|
)
|
|
|
(9,200,000
|
)
|
|
|
|
|
|
|
|
|
|
Net deferred tax assets
|
|
$
|
-
|
|
|
$
|
-
|
|
The Company had available approximately $46,145,000 at December 31, 2014 and $46,000,000 at June 30, 2014 of unused Federal and Florida net operating loss carry-forwards that may be applied against future taxable income. These net operating loss carry-forwards expire through 2033. There is no assurance that the Company will realize the benefit of the net operating loss carry-forwards.
ASC No. 740 requires a valuation allowance to be recorded when it is more likely than not that some or all of the deferred tax assets will not be realized.
Reconciliation of the differences between the statutory tax rate and the effective income tax rate is as follows at December 31, 2014 and June 30, 2014 respectively:
Statutory rate
|
|
|
35
|
%
|
State taxes, net of Federal tax benefit
|
|
|
6
|
%
|
Net operating loss carry-forward
|
|
|
(41
|
)%
|
|
|
|
|
|
Federal effective tax rate
|
|
|
(-
|
)%
|
Note 9. Subsequent Events
As of February, 2015 a Director of the Company converted loans made to the Company totaling $127,146 to a total of 3,178,650 shares of common stock.
As of February, 2015 an Officer of the Company was issued 2,500,000 shares for services valued at $1,250,000.
ITEM 2. MANAGEMENT'S DISCUSSION OF FINANCIAL CONDITION AND RESULTS OF OPERATION
Forward-Looking Statements
This document contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended. All statements other than statements of historical fact are “forward-looking statements” for purposes of federal and state securities laws, including any projections of earnings, revenue or other financial items; any statements of the plans, strategies and objectives of management for future operations; any statements concerning proposed new services or developments; any statements regarding future economic conditions or performance; any statements of belief; and any statements of assumptions underlying any of the foregoing. Forward-looking statements may include the words “may,” “will,” “estimate,” “intend,” “continue,” “believe,” “expect” or “anticipate” and any other similar words. Although we believe that the expectations reflected in any of our forward-looking statements are reasonable, actual results could differ materially from those projected or assumed in any of our forward-looking statements. Our future financial condition and results of operations, as well as any forward-looking statements, are subject to change and to inherent risks and uncertainties, such as those disclosed or incorporated by reference in our filings with the Securities and Exchange Commission. Important factors that could cause our actual results, performance and achievements, or industry results to differ materially from estimates or projections contained in our forward- looking statements include, among others, the following:
●
|
product liability claims;
|
|
|
●
|
our relationship with, and our ability to influence the actions of, our brand partners;
|
|
|
●
|
adverse publicity associated with our products or network marketing organization;
|
|
|
●
|
improper action by our employees or international brand partners in violation of applicable law;
|
|
|
●
|
changing consumer preferences and demands;
|
|
|
●
|
loss or departure of any member of our senior management team which could negatively impact our brand partner relations and operating results;
|
|
|
●
|
the competitive nature of our business;
|
|
|
●
|
regulatory matters governing our products, including potential governmental or regulatory actions concerning the safety or efficacy of our products, and network marketing program including the direct selling market in which we operate;
|
|
|
●
|
third party legal challenges to our network marketing program;
|
|
|
●
|
risks associated with operating internationally and the effect of economic factors, including foreign exchange, inflation, pricing and currency devaluation risks;
|
●
|
our dependence on increased penetration of existing markets;
|
●
|
contractual limitations on our ability to expand our business;
|
|
|
●
|
our reliance on our information technology infrastructure and outside manufacturers;
|
●
|
the sufficiency of trademarks and other intellectual property rights;
|
|
|
●
|
the sufficiency of trademarks and other intellectual property rights;
|
|
|
●
|
product concentration;
|
|
|
●
|
our reliance on our management team;
|
|
|
●
|
uncertainties relating to the application of transfer pricing, duties, value added taxes, and other tax regulations, and changes thereto;
|
|
|
●
|
changes in tax laws, treaties or regulations, or their interpretation; • taxation relating to our brand partners;
|
|
|
●
|
any collateral impact resulting from the ongoing worldwide financial “crisis,” including the availability of liquidity to us, our customers and our suppliers or the willingness of our customers to purchase products in a recessionary economic environment; and
|
|
|
●
|
whether we will purchase any of our shares in the open markets or otherwise.
|
Additional factors that could cause actual results to differ materially from our forward-looking statements are set in this report under the heading “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and in our Consolidated Financial Statements and the related Notes.
Forward-looking statements in this report speak only as of the date hereof, and forward- looking statements in documents attached that are incorporated by reference speak only as of the date of those documents. We do not undertake any obligation to update or release any revisions to any forward-looking statement or to report any events or circumstances after the date hereof or to reflect the occurrence of unanticipated events, except as required by law.
OVERVIEW
As a development stage snack food company we have been primarily engaged in developing our infrastructure and our product portfolio of snacks and beverage mixes which were designed to help people achieve and maintain their healthy weight. We commenced sales of two products from our product lines in the third quarter of fiscal year 2011 and had net revenue of $314,980 for the fiscal year ended June 30, 2012.
During 2013, we began to implement our strategic plan, which provides for future growth of our existing core brands through a new expanded distribution method, innovation and advertising. Our primary focus was on decreasing general and administrative costs associated with network marketing and improving sales and profit margins through pricing strategies and enhanced packaging and product configuration. To accomplish this we began the process of winding down the network marketing sales in order to better position the Company to serve retailers and ultimately, the end consumer. We completed this project in the last quarter of fiscal 2014 and the Company is now prepared to focus on mass retail distribution.
To more effectively facilitate the process of shifting to retail distribution, in November 2013, Richard Damion joined our Company as the acting chief executive officer. He was then approved by the Board of Directors as the Company's CEO in January 2014. Since the hiring of Mr. Damion, the Company has focused on the export of branded organic and natural food products mainly in Asia with a niche focus of providing safe, organic and all-natural dairy products to satisfy the growing demands of Asian consumers. In the first quarter of fiscal year 2014, the Company launched an organic, GMO-free line of gourmet pork sausage. We generated no revenues during the fiscal year ended June 30, 2014.
Healthient, a division of SnackHealthy, Inc. will continue to focus on providing organic, natural and gourmet food products to large retailers and club stores in the U.S. The Company recently completed development of a unique “better for you” beverage that we plan to introduce in early 2015. The product, with super antioxidant status, is a unique blend of fruits and spices, offering extraordinary health benefits and great taste. While there can be no assurance, management believes that this strategy will ultimately prove successful.
SnackHealthy is a virtual company with a focus on staying lean through the use of cloud based technologies, maintaining low overhead, subcontracting services, creating sales through commissioned brokers, developing products through reputable co-packers and keeping little to no inventory except for use in sales and business development activities.
Industry wide factors that affect us include the increasing prevalence of obesity in adults and children and food safety, which are driving the demand for healthier snacking alternatives worldwide.
Principle Accounting Policies
For the Company’s principle accounting policies see Footnote 2 to the accompanying December 31, 2014 condensed unaudited financial statements.
Presentation
“Net sales,” reflect distribution allowances and handling and shipping income, represent what we collect and recognize as net revenues in our financial statements.
Our “gross profit” consists of net sales less “cost of sales,” which represents the prices we pay to our raw material suppliers and manufacturers of our products as well as costs related to product shipments to our warehouse and distribution center, duties and tariffs, expenses relating to shipment of products to customers and importers and similar expenses.
“Selling fees” consist of commissions, overrides and production bonuses.
Our “operating margins” consist of net sales, less cost of sales and selling fees.
“General and administrative expenses” represent our operating expenses, components of which include labor and benefits, sales and marketing events, professional fees, travel and entertainment, marketing, occupancy costs, communication costs, bank fees, depreciation and amortization and other miscellaneous operating expenses.
RESULTS OF OPERATIONS
Our results of operations for the periods below are not necessarily indicative of results of operations for future periods, which depend on numerous factors, including our ability to distribute our products through major retailers, open new markets, penetrate existing markets, and our ability to secure, develop and introduce new products.
Three Months Ended December 31, 2014 Compared to Three Months Ended December 31, 2013
and Six Months Ended December 31, 2014 Compared to Six Months Ended December 31, 2013
Revenue
The Company revised its sales method from network marketing sales through individual brand partners to direct to consumer and retail store sales at the end of its fiscal year June 30, 2013. The Company had no revenues in the three months ended December 31, 2014 and December 31, 2013, nor did it have revenues during the six months period ended December 31, 2014 or 2013.
Cost of Revenues
The Company recognized no cost of sales in the three and six months periods ended December 31, 2014 or 2013 as it recognized no sales during these periods.
Gross Profit
The Company recognized no gross profit in the three and six months ended December 31, 2014 and 2013 due to the factors described above.
Selling Expenses
The Company incurred no selling expenses in the three months ended December 31, 2014 and 2013 as it had no sales activity in these periods. The Company incurred no selling expenses in the six months ended December 31, 2014 as compared to $2,188 in the six months ended December 31, 2013 which related to the transfer of inventory from Utah to Florida which was classified as a selling expense.
General and Administrative Expenses
General and administrative expenses comprised the following for the three months ended December 31, 2014 and 2013:
Salaries and wages
|
|
$
|
-
|
|
|
$
|
2,900
|
|
Independent contractors
|
|
|
44,500
|
|
|
|
87,999
|
|
Professional fees
|
|
|
26,566
|
|
|
|
3,945
|
|
Technology
|
|
|
3,457
|
|
|
|
1,589
|
|
Travel and entertainment
|
|
|
5,863
|
|
|
|
1,285
|
|
Office expenses
|
|
|
-
|
|
|
|
2,370
|
|
Telephone
|
|
|
391
|
|
|
|
610
|
|
Rent
|
|
|
5,021
|
|
|
|
12,972
|
|
Amortization
|
|
|
625
|
|
|
|
15,718
|
|
Depreciation
|
|
|
712
|
|
|
|
742
|
|
|
|
$
|
87,135
|
|
|
$
|
130,130
|
|
General and administrative expenses consist primarily of professional advisor fees, audit fees and travel associated with exploring new opportunities. Our general and administrative expenses for the three months ended December 31, 2014 were $42,995 less than for the three months ended December 31, 2013 primarily due to reductions in salaries, rent, amortization of websites, and independent contractors.
General and administrative expenses comprised the following for the six months ended December 31, 2014 and 2013:
Salaries and wages
|
|
$
|
-
|
|
|
$
|
11,276
|
|
Independent contractors
|
|
|
48,250
|
|
|
|
70,500
|
|
Professional fees
|
|
|
33,432
|
|
|
|
39,380
|
|
Technology
|
|
|
5,876
|
|
|
|
4,081
|
|
Travel and entertainment
|
|
|
26,112
|
|
|
|
3,188
|
|
Office expenses
|
|
|
466
|
|
|
|
4,331
|
|
Telephone
|
|
|
1,106
|
|
|
|
1,407
|
|
Rent
|
|
|
10,085
|
|
|
|
25,214
|
|
Amortization
|
|
|
1,250
|
|
|
|
31,436
|
|
Depreciation
|
|
|
1,424
|
|
|
|
1,490
|
|
Other
|
|
|
17,694
|
|
|
|
-
|
|
|
|
$
|
145,695
|
|
|
$
|
192,303
|
|
General and administrative expenses consist primarily of professional advisor fees, audit fees and travel associated with exploring new opportunities. Our general and administrative expenses for the six months ended December 31, 2014 were $46,608 less than for the six months ended December 31, 2013 primarily due to reductions in salaries, rent, amortization of websites, and independent contractors, offset by the increase in required travel in order to explore new sales opportunities.
Settlement of Liabilities with Equity
During the three and six months ended December 31, 2013 we recognized a loss on settlement of liabilities with equity of $27,387,797 (2014 - $0) and $29,427,796 (2014 - $0) respectively.
During the three and six months ended December 31, 2013, the Company issued 226,667 common shares for directors’ compensation valued at $2,040,000. This was subsequently reclassified as settlement of liabilities with equity as the shares were issued to settle outstanding balances of directors’ fees payable rather than as new compensation for directors. There were no comparable transactions during the three and six months ended December 31, 2014.
Provision for Income Taxes
We incurred taxable losses; consequently no liability to taxation was incurred during the three and six months ended December 31, 2014 or 2013.
Net Loss
The net loss for the three months ended December 31, 2014 was $87,135 as compared to $27,517,927 for the three months ended December 31, 2013. The net loss for the six months ended December 31, 2014 was $145,695 as compared to $29,622,287 for the six months ended December 31, 2013. The decrease was largely due to the prior period non-cash loss of $29,427,796 for the settlement of liabilities with equity.
Liquidity and Capital Resources
The Company had a cash balance of $1,815 at December 31, 2014 and a working capital deficit as follows:
Total current assets
|
|
$
|
3,592
|
|
Total current liabilities
|
|
|
480,214
|
|
Working capital deficit
|
|
|
(476,622
|
)
|
The ability of the Company to continue as a going concern is dependent on the Company's ability to raise additional capital and to successfully implement its business plan.
Management believes that the actions presently being taken and the success of future operations may be sufficient to enable the Company to continue as a going concern. However, there can be no assurance that the raising of equity will be successful. Failure to achieve the needed equity funding could have a material adverse effect on the Company’s ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Cash Flows
The following table summarizes selected items from our accompany “Statement of Cash Flows for the six months ended December 31, 2014 and December 31, 2013
|
|
December 31, 2014 |
|
|
December 31, 2013 |
|
Net cash provided by (used in):
|
|
|
|
|
|
|
Operating activities
|
|
$
|
(42,509
|
)
|
|
$
|
(59,640
|
)
|
Investment activities
|
|
|
-
|
|
|
|
-
|
|
Financing activities
|
|
|
42,509
|
|
|
|
59,640
|
|
Total decrease in cash
|
|
$
|
-
|
|
|
$
|
-
|
|
During the six months ended December 31, 2014 and 2013, the Company's operating expenses were paid by a shareholder from their bank account in the amounts of $42,509 and $59,640 respectively. Accordingly, there was no movement in the Company's own bank account during the period.
Off Balance Sheet Arrangements
At December 31, 2014 we had no material off balance sheet arrangements as defined in Item 303(a)(4)(ii) of Regulation S-K.
ITEM 3. Quantitative and Qualitative Disclosures about Market Risk.
As a Smaller Reporting Company, as defined by Rule 12b-2 of the Exchange Act and in Item 10 (f) (1) of Regulation S-K, we are electing scaled disclosure reporting obligations and therefore are not required to provide the information requested by this Item.
ITEM 4 - Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
A system of disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-l5(e)) under the Securities Exchange Act of 1934,as amended [the "Exchange Act"]) are controls and other procedures that are designed to provide reasonable assurance that the information that the Company is required to disclose in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms, and that such information is accumulated and communicated to the Company's management, including the Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure. There are inherent limitations to the effectiveness of any system of disclosure controls and procedures, including the possibility of human error and the circumvention or overriding of the controls and procedures. Accordingly, even effective disclosure controls and procedures can only provide reasonable assurance of achieving their control objectives, and management necessarily is required to use its judgment in evaluating the cost-benefit relationship of possible controls and procedures. In addition, the design of any system of controls is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Moreover, over time, controls may become inadequate because of changes in conditions, or the degree of compliance with policies or procedures may deteriorate. Because of the inherent limitations in a control system, misstatements due to error or fraud may occur and not be detected.
The Company's Chief Executive Officer and Chief Financial Officer are responsible for establishing and maintaining disclosure controls and procedures for the Company, and have concluded that our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) were not effective as of the end of the period covered by this report, based on their evaluation of these controls and procedures required by paragraph (b) of Rules 13a-15(f) and 15d-15(f), due to certain material weaknesses in our internal control over financial reporting as discussed below.
Internal Control over Financial Reporting
The Company’s management is responsible for establishing and maintaining adequate internal controls over financial reporting for the Company. Due to limited resources, Management conducted an evaluation of internal controls based on criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). The results of this evaluation determined that our internal control over financial reporting was ineffective as of December 31, 2014, due to material weaknesses. A material weakness in internal control over financial reporting is defined as a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company's annual or interim financial statements will not be prevented or detected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control over financial reporting that is less severe than a material weakness, yet important enough to merit attention by those responsible for oversight of our financial reporting.
Management’s assessment identified the following material weaknesses in internal control over financial reporting:
|
·
|
The small size of our Company limits our ability to achieve the desired level of separation of internal controls and financial reporting. We currently do not have independent directors on our Board of Directors to review and oversee the financial policies and procedures of the Company.
|
|
·
|
We do not have a functional audit committee since our Board of Directors acts as the audit committee.
|
|
·
|
We have not achieved the desired level of documentation of our internal controls and procedures. When the Company obtains sufficient funding, this documentation will be strengthened through utilizing a third party consulting firm to assist management with its internal control documentation and further help to limit the possibility of any lapse in controls occurring.
|
As a result of the material weaknesses in internal control over financial reporting described above, the Company’s management has concluded that, as of December 31, 2014, the Company's internal control over financial reporting was not effective based on the criteria in Internal Control - Integrated Framework issued by the COSO.
To date, the Company has not been able to establish an Audit Committee with an independent director due its limited financial resources. When the Company obtains sufficient funding, Management intends to add establish its Audit Committee and charge them with assisting the Company in addressing the material weaknesses noted above. The Company’s lack of current financial resources makes it impossible for the Company to hire the appropriate personnel needed to overcome these weaknesses and ensure that appropriate controls and separation of responsibilities of a larger organization exist. We also will continue to follow the standards for the Public Company Accounting Oversight Board (United States) for internal control over financial reporting to include procedures that:
|
●
|
Pertain to the maintenance of records in reasonable detail accurately that fairly reflect the transactions and dispositions of the Company's assets;
|
|
●
|
Provide reasonable assurance that transactions are recorded as necessary to permit preparation of the financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures are being made only in accordance with authorizations of management and the Board of Directors; and
|
|
●
|
Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company's assets that could have a material effect on the financial statements.
|
Changes in Internal Control over Financial Reporting
Our management determined that there were no changes made in our internal controls over financial reporting during the six months ended December 31, 2014 that have materially affected, or are reasonably likely to materially affect our internal control over financial reporting.
This quarterly report does not include an attestation report of the Company’s registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the Company’s registered public accounting firm pursuant to rules of the Securities and Exchange Commission that permit the Company to provide only management’s report in this annual report.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
In 2011 Siesta Flow LLC filed a legal action against the Company in the Twelfth Circuit Court of Sarasota County, Florida, alleging breach of contract and seeking damages in the amount of $92,000 plus costs. In April, 2012, the court issued a final summary judgment against the Company in the total amount of $95,500. On April 27, 2012, the court issued an order to approve a settlement of the judgment issued against the Company. According to the terms of the approved settlement, a third party and a non-party to the legal action against the Company, agreed to purchase the claim of Siesta Flow LLC. in the amount of $75,000 and additional claims against the Company from other parties, for a total amount of $95,500 in exchange for the issuance of 19,100,000 shares of common stock by the Company, subject to certain limitations on the issuance of such shares set forth in settlement.
In June of 2013, a former officer of the Company filed a lawsuit against the Company and its President and directors alleging several counts, including a breach of contract and fiduciary duty, and seeking damages in the amount of $122,300 and other unspecified damages. The Company considers the lawsuit without any merit and will defend it vigorously. On September 18, 2013, the plaintiff filed a motion to compel early mediation. In February 2014 the parties attended a settlement conference; however, no settlement could be reached. As of December 31, 2014 the case was still pending (see Note 5 Commitments and Contingencies to the financial statements).
On October 8, 2014, a former Director pled not guilty to charges by the U.S. Attorney’s office of 15 U.S.C. Sections 77e and 77x (Illegal Sales of Unregistered Securities) and 18 U.S.C. Section 2 (Aiding and Abetting and Causing an Act to be Done). The alleged violation pertains to January, 2012 when the Director caused the Company to issue shares of common stock pursuant to the Company's 2010 Equity Compensation Plan, as amended, registered on the registration statement on Form S-8, purportedly for certain consulting services provided to the Company. According to the charges, the actual intended purpose of such stock issuances was to raise capital for the Company through the sale of its stock. Shares registered on Form S-8 cannot be used by the issuer to raise capital for the issuer or to promote the issuer's stock price and are limited for the issuance to the issuer's employees, consultants, and advisors for bona fide services to the company. Our current management was not involved, had no knowledge of these allegations, and is conducting a thorough review and investigation of its policies and compliance procedures to discover any deficiencies in its internal controls (see Note 5 Commitments and Contingencies to the financial statements).
On July 24, 2014, A&M Acquisitions LLC, obtained a judgment against the Company, and defendants Katherine West and William Alverson, for default of the remainder of the Florida office lease through July 2016 in the amount of $181,968 including attorney’s fees of $1,488 (see Note 5 Commitments and Contingencies to the financial statements).
On July 24, 2014, the Company, its Chairman and Chief Financial Officer received subpoenas from the Securities Exchange Commission (the “SEC”) that stated that the staff of the SEC is conducting an investigation In the Matter of PEI Worldwide and Certain Other Issuers, File No. HO 11576 and that the subpoena was issued to the Company, its Chairman and CFO as part of the foregoing investigation. The Company has no knowledge of PEI Worldwide. The SEC’s subpoena and accompanying letter do not indicate whether the Company (or its Chairman and CFO, respectively) is, or is not, under investigation. The Company has contacted the SEC’s staff regarding the subpoenas, and the Company is cooperating with the SEC.
ITEM 1A - RISK FACTORS
In addition to the other information in this Form 10-K, the following risk factors should be considered carefully in evaluating our business. Our business, financial condition or results of operations may be adversely affected by any of these risks. Additional risks and uncertainties, including risks that we do not presently know of or currently deem insignificant, may also impair our business, financial condition or results of operations.
Our performance may be impacted by general economic conditions and an economic downturn.
Recessionary pressures from an overall decline in U.S. economic activity could adversely impact our business and financial results. Economic uncertainty may reduce consumer spending in our sales channels and create a shift in consumer preference toward private label products. Shifts in consumer spending could result in increased pressure from competitors or customers to reduce the prices of some of our products and/or limit our ability to increase or maintain prices, which could lower our revenues and profitability. Instability in the financial markets may impact our ability or increase the cost to enter into credit agreements in the future. Additionally, it may weaken the ability of our customers, suppliers, distributors, banks, insurance companies and other business partners to perform in the normal course of business, which could expose us to losses or disrupt the supply of inputs we rely upon to conduct our business. If one or more of our key business partners fail to perform as expected or contracted for any reason, our business could be negatively impacted.
Volatility in the price or availability of the inputs we depend on, including raw materials, packaging, energy and labor, could adversely impact our financial results.
Our financial results could be adversely impacted by changes in the cost or availability of raw materials and packaging. Continued growth would require us to hire, retain and develop a highly skilled workforce and talented management team. Any unplanned turnover or our failure to develop an adequate succession plan for current positions could erode our competitiveness. In addition, our financial results could be adversely affected by increased costs due to increased competition for employees, higher employee turnover or increased employee benefit costs.
We operate in a highly competitive food industry.
Price competition and industry consolidation could adversely impact our financial results. The sales of most of our products are subject to significant competition primarily through discounting and other price cutting techniques by competitors, many of whom are significantly larger and have greater resources than we do. In addition, there is a continuing consolidation in the snack food industry, which could increase competition. Significant competition increases the possibility that we could lose one or more major customers, lose existing product authorizations at customer locations, lose market share and/or shelf space, increase expenditures or reduce selling prices, which could have an adverse impact on our business or financial results.
Sales price increases initiated by us may negatively impact our financial results. Future price increases, such as those to offset increased ingredient costs, may reduce our overall sales volume, which could reduce revenues and operating profit. Additionally, if market prices for certain ingredients decline significantly below our contracted prices, customer pressure to reduce prices could lower revenues and operating profit.
Changes in our top customer relationships could impact our revenues and profitability.
We may be exposed to risks resulting from large retailers that could account for a significant portion of our revenue. The loss of one or more large retailers could adversely affect our financial results. These customers typically make purchase decisions based on a combination of price, product quality, product offerings, consumer demand, distribution capabilities and customer service and generally do not enter into long-term contracts. In addition, these significant retailers may re-evaluate or refine their business practices related to inventories, product displays, logistics or other aspects of the customer-supplier relationship. Our results of operations could be adversely affected if revenue from one or more of these customers is significantly reduced or if the cost of complying with customers’ demands is significant. If receivables from one or more of these customers become uncollectible, our financial results may be adversely impacted.
The loss of key personnel could have an adverse effect on our financial results and growth prospects.
There are risks associated with our ability to retain key employees. If certain key employees terminate their employment, it could negatively impact sales, marketing or development activities. Further, management’s attention might be diverted from operations to recruiting suitable replacements and our financial condition, results of operations and growth prospects could be adversely affected. In addition, we may not be able to locate suitable replacements for key employees or offer employment to potential replacements on acceptable terms.
Efforts to execute and accomplish our strategic initiatives could adversely affect our financial results.
If we are unsuccessful due to our execution, unplanned events, ability to manage change or unfavorable market conditions, our financial performance could be adversely affected. If we pursue strategic acquisitions, divestitures, or joint ventures, we may incur significant costs and may not be able to consummate the transactions or obtain financing.
Concerns with the safety and quality of certain food products or ingredients could cause consumers to avoid our products.
We could be adversely affected if consumers in our principal markets lose confidence in the safety and quality of certain products or ingredients. Negative publicity about these concerns, whether or not valid, may discourage consumers from buying our products or cause disruptions in production or distribution of our products and negatively impact our business and financial results.
If our products become adulterated, misbranded or mislabeled, we might need to recall those items and we may experience product liability claims if consumers are injured or become sick.
Product recalls or safety concerns could adversely impact our market share and financial results. We may be required to recall certain of our products should they be mislabeled, contaminated or damaged. We also may become involved in lawsuits and legal proceedings if it is alleged that the consumption of any of our products causes injury or illness. A product recall or an adverse result in any such litigation could have an adverse effect on our operating and financial results. We may also lose customer confidence for our entire brand portfolio.
Disruption of our supply chain or information technology systems could have an adverse impact on our business and financial results.
Our ability to manufacture, distribute and sell products is critical to our success. Damage or disruption to our manufacturing or distribution capabilities or the supply and delivery of key inputs, such as raw materials, finished goods, packaging, labor and energy, could impair our ability to conduct our business. Examples include, but are not limited to, weather, natural disasters, fires, terrorism, pandemics and strikes. Certain warehouses and manufacturing facilities may be located in areas prone to tornadoes, hurricanes and floods. Any business disruption due to natural disasters or catastrophic events in these areas could adversely impact our business and financial results if not adequately mitigated. We also rely on a certain supplier for the manufacturing of one of our core branded products. Although we have secured back-up suppliers in the case of emergency, any damage or disruption to this supplier's manufacturing or distribution capabilities could impair our ability to sell this product. Also, we increasingly rely on information technology systems to conduct our business. These systems can enhance efficiency and business processes but also present risks of unauthorized access to our networks or data centers. If unauthorized parties gain access to our systems, they could obtain and exploit confidential business, customer, or employee information and harm our competitive position. Further, these information systems may experience damage, failures, interruptions, errors, inefficiencies, attacks or suffer from fires or natural disasters, any of which could have an adverse effect on our business and financial results if not adequately mitigated by our security measures and disaster recovery plans.
Improper use or misuse of social media may have an adverse effect on our business and financial results.
Consumers are moving away from traditional means of electronic mail towards new forms of electronic communication, including social media. We support new ways of sharing data and communicating with customers using methods such as social networking. However, misuse of social networking by individuals, customers, competitors, or employees may result in unfavorable media attention which could negatively affect our business. Further, our competitors are increasingly using social media networks to market and advertise products. If we are unable to compete in this environment it could adversely affect our financial results.
Demand for our products may be adversely affected by changes in consumer preferences and tastes or if we are unable to innovate or market our products effectively.
We are a consumer products company operating in highly competitive markets and rely on continued demand for our products. To generate revenues and profits, we must sell products that appeal to our customers and consumers. Any significant changes in consumer preferences or any inability on our part to anticipate or react to such changes could result in reduced demand for our products and erosion of our competitive and financial position. Our success depends on the ability to respond to consumer trends, including concerns of consumers regarding health and wellness, obesity, product attributes and ingredients. In addition, changes in product category consumption or consumer demographics could result in reduced demand for our products. Consumer preferences may shift due to a variety of factors, including the aging of the general population, changes in social trends, changes in travel, vacation or leisure activity patterns, or negative publicity resulting from regulatory action or litigation against companies in the snack food industry. Any of these changes may reduce consumers’ willingness to purchase our products and negatively impact our financial results.
Our continued success also is dependent on product innovation, including maintaining a robust pipeline of new products, and the effectiveness of advertising campaigns, marketing programs and product packaging. Although we devote significant resources to meet this goal, there can be no assurance as to the continued ability to develop and launch successful new products or variants of existing products, or to effectively execute advertising campaigns and marketing programs. In addition, both the launch and ongoing success of new products and advertising campaigns are inherently uncertain, especially as to their appeal to consumers. Further, failure to successfully launch new products could decrease demand for existing products by negatively affecting consumer perception of existing brands, as well as result in inventory write-offs, trademark impairments and other costs, all of which could negatively impact our financial results.
Our distribution network relies on a significant number of consultants, and such reliance could affect our ability to efficiently and profitably distribute and market products, maintain existing markets and expand business into other geographic markets.
Our business relies on a significant number of consultants for the sale and distribution of our products. Our ability to recruit and maintain a network of consultants and distributors depends on a number of factors, many of which are outside of our control. Some of these factors include: (i) the level of demand for the brands and products which are available in a particular distribution area; (ii) the ability to price products at levels competitive with those offered by other competing producers; and (iii) the ability to deliver products in the quantity and at the time ordered by companies and retailers. There can be no assurance that we will be able to mitigate the risks related to all or any of these factors in any of the current or prospective geographic areas of distribution. To the extent that any of these factors have an adverse effect on the relationships with consultants, companies or retailers in a particular geographic area and, thus, limit our ability to maintain and expand the sales market, revenues and financial results may be adversely impacted.
There also is no assurance that we will be able to maintain distribution relationships or establish and maintain successful relationships in new geographic distribution areas. There is the possibility that we will have to incur significant expenses to attract and maintain relationships in one or more geographic distribution areas in order to profitably expand geographic markets. The occurrence of any of these factors could result in a significant decrease in sales volume of our branded products and the products which we distribute for others and harm our business and financial results.
Continued success depends on the protection of our trademarks and other proprietary intellectual property rights.
We will maintain trademarks and other intellectual property rights, which are important to our success and competitive position, and the loss of or our inability to enforce trademark and other proprietary intellectual property rights could harm our business. We will devote substantial resources to the establishment and protection of our trademarks and other proprietary intellectual property rights on a worldwide basis. Efforts to establish and protect trademarks and other proprietary intellectual property rights may not be adequate to prevent imitation of products by others or to prevent others from seeking to block sales of our products. In addition, the laws and enforcement mechanisms of some foreign countries may not allow for the protection of proprietary rights to the same extent as in the United States and other countries.
Impairment in the carrying value of goodwill or other intangible assets could have an adverse impact on our financial results.
The net carrying value of goodwill represents the fair value of acquired businesses in excess of identifiable assets and liabilities, and the net carrying value of other intangibles represents the fair value of trademarks, customer relationships and other acquired intangibles. Pursuant to generally accepted accounting principles in the United States, we are required to perform impairment tests on our goodwill and indefinite-lived intangible assets annually or at any time when events occur which could impact the value of our reporting units or our indefinite-lived intangibles. These values depend on a variety of factors, including the success of our business, market conditions, earnings growth and expected cash flows. Impairments to goodwill and other intangible assets may be caused by factors outside our control, such as increasing competitive pricing pressures; changes in discount rates based on changes in cost of capital or lower than expected sales and profit growth rates. Significant and unanticipated changes could require a non-cash charge for impairment in a future period which may significantly affect our financial results in the period of such charge.
New regulations or legislation could adversely affect our business and financial results.
Food production and marketing are highly regulated by a variety of federal, state and other governmental agencies. New or increased government regulation of the food industry, including but not limited to areas related to food safety, chemical composition, production processes, traceability, product quality, packaging, labeling, school lunch guidelines, promotions, marketing and advertising (particularly such communications that are directed toward children), product recalls, records, storage and distribution could adversely impact our results of operations by increasing production costs or restricting our methods of operation and distribution. These regulations may address food industry or society factors, such as obesity, nutritional and environmental concerns and diet trends.
A significant portion of our outstanding shares of common stock is controlled by a few individuals, and their interests may conflict with those of other stockholders.
The founders, William M. Alverson and his wife, Katherine T. West Alverson, beneficially owned a majority of the outstanding common stock of the Company. Mrs. Alverson currently serves as the Chairman of the Board. As a result, she may be able to exercise significant influence over the Company and certain matters requiring approval of its stockholders, including the approval of significant corporate transactions, such as a merger or other sale of the Company or its assets. This could limit the ability of other stockholders of the Company to influence corporate matters and may have the effect of delaying or preventing a third party from acquiring control of the Company. In addition, Mrs. Alverson may have actual or potential interests that diverge from the interests of the other stockholders of the Company. Sales by Mrs. Alverson, or other majority shareholders, of their shares into the public market, or the perception that such sales could occur, could cause the market price of our common stock to decline.
We may be unable to comply with our reporting and other requirements under federal securities laws.
As a publicly traded company, we are subject to the reporting requirements of the Securities Exchange Act of 1934, as amended, or the “Exchange Act” and the Sarbanes-Oxley Act of 2002, or the “Sarbanes-Oxley Act”. In addition, the Exchange Act requires that we file annual, quarterly and current reports. Our failure to prepare and disclose this information in a timely manner could subject us to penalties under federal securities laws, expose us to lawsuits and restrict our ability to access financing. The Sarbanes-Oxley Act requires that we, among other things, establish and maintain effective internal controls and procedures for financial reporting. From time to time we evaluate our existing internal controls in light of the standards adopted by the Public company Accounting Oversight Board. It is possible that we or our independent registered public accounting firm may identify significant deficiencies or material weaknesses in our internal control over financial reporting in the future. Any failure or difficulties in implementing and maintaining these controls could cause us to fail to meet the periodic reporting obligations or result in material misstatements in our financial statements.
Section 404 of the Sarbanes-Oxley Act requires annual management assessments of the effectiveness of our internal control over financial reporting. Our failure to satisfy the requirements of Section 404 on a timely basis could result in the loss of investor confidence in the reliability of our financial statements, which in turn could have a material adverse effect on our business and our common stock.
We are, and in the future may be, subject to legal or administrative actions that could adversely affect our results of operations and our business.
On July 24, 2014, the Company, its Chairman and Chief Financial Officer received subpoenas from the Securities Exchange Commission (the “SEC”) that stated that the staff of the SEC is conducting an investigation In the Matter of PEI Worldwide and Certain Other Issuers, File No. HO 11576. The Company has no knowledge of PEI Worldwide. The SEC’s subpoena and accompanying letter do not indicate whether the Company (or its Chairman and CFO, respectively) is, or is not, under investigation. The Company has contacted the SEC’s staff regarding the subpoenas, and the Company is cooperating with the SEC. Also, in July, 2014, the Company's former Chairman who resigned in January, 2014, was charged by the U.S. Attorney's Office and pled not guilty to the violation of 15 U.S.C. Sections 77e and 77x (Illegal Sales of Unregistered Securities) and 18 U.S.C. Section 2 (Aiding and Abetting and Causing an Act to be Done).
Legal and administrative actions are inherently uncertain, and there is no assurance as to the outcome of the SEC investigation described above. We could incur substantial legal fees and other expenses in connection with these matters, which could adversely affect our results of operations. These matters also may distract the time and attention of our officers and directors or divert our other resources away from our ongoing commercial and development programs. An unfavorable outcome in any of these matters could damage our business and reputation or result in additional claims or proceedings against us.
We have virtually no financial resources. Our independent registered auditors’ report includes an explanatory paragraph stating that there is substantial doubt about our ability to continue as a going concern.
We have decided to change our business strategy and as a result of that process which has not been completed yet and we virtually have no financial resources. We had a cash balance of $1,815 as of December 31, 2014. We had no revenues during the six months ended December 31, 2014. Our independent registered auditors included an explanatory paragraph in their opinion on our financial statements as of and for the period year ended June 30, 2014 that states that Company losses from operations raise substantial doubt about its ability to continue as a going concern. We will seek additional financing in the future. Financing sought may be in the form of equity or debt financing from various sources as yet unidentified. Most if not all of our efforts have been spent on our change of business strategy and developing our new business plan, however, we will seek necessary additional financing to pursue our business and growth plans. No assurances can be given that we will generate sufficient revenue or obtain the necessary financing to continue as a going concern.
Our internal controls may be inadequate, which could cause our financial reporting to be unreliable and lead to misinformation being disseminated to the public.
Our management is responsible for establishing and maintaining adequate internal control over our financial reporting. As defined in Exchange Act Rule 13a-15(f), internal control over financial reporting is a process designed by, or under the supervision of, the principal executive and principal financial officer and effected by the board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that:
pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the Company;
provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and/or directors of the Company; and
provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company's assets that could have a material effect on the financial statements.
Our internal controls may be inadequate or ineffective, which could cause our financial reporting to be unreliable and lead to misinformation being disseminated to the public. Investors relying upon this misinformation may make an uninformed investment decision.
The interests of shareholders may be hurt because we can issue shares of our common stock to individuals or entities that support existing management with such issuances serving to enhance existing management’s ability to maintain control of our company.
Our board of directors has authority, without action or vote of the shareholders, to issue all or part of the authorized but unissued common shares. Such issuances may be issued to parties or entities committed to supporting existing management and the interests of existing management which may not be the same as the interests of other shareholders. Our ability to issue shares without shareholder approval serves to enhance existing management’s ability to maintain control of our company.
Any market that develops in shares of our common stock will be subject to the penny stock regulations and restrictions pertaining to low priced stocks that will create a lack of liquidity and make trading difficult or impossible.
The trading of our securities is on the OTCBB as maintained by FINRA and the OTCQB as maintained by the OTC Markets Group. As a result, an investor may find it difficult to dispose of, or to obtain accurate quotations as to the price of our securities.
Rule 3a51-1 of the Exchange Act establishes the definition of a “penny stock,” for purposes relevant to us, as any equity security that has a minimum bid price of less than $5.00 per share or with an exercise price of less than $5.00 per share, subject to a limited number of exceptions which are not available to us. It is likely that our shares will be considered to be penny stocks for the immediate foreseeable future. This classification severely and adversely affects any market liquidity for our common stock.
For any transaction involving a penny stock, unless exempt, the penny stock rules require that a broker or dealer approve a person's account for transactions in penny stocks and the broker or dealer receive from the investor a written agreement to the transaction setting forth the identity and quantity of the penny stock to be purchased. In order to approve a person's account for transactions in penny stocks, the broker or dealer must obtain financial information and investment experience and objectives of the person and make a reasonable determination that the transactions in penny stocks are suitable for that person and that that person has sufficient knowledge and experience in financial matters to be capable of evaluating the risks of transactions in penny stocks. The broker or dealer must also deliver, prior to any transaction in a penny stock, a disclosure schedule prepared by the SEC relating to the penny stock market, which, in highlight form, sets forth: the basis on which the broker or dealer made the suitability determination, and that the broker or dealer received a signed, written agreement from the investor prior to the transaction.
Disclosure also has to be made about the risks of investing in penny stock in both public offerings and in secondary trading and commissions’ payable to both the broker-dealer and the registered representative, current quotations for the securities and the rights and remedies available to an investor in cases of fraud in penny stock transactions. Additionally, monthly statements have to be sent disclosing recent price information for the penny stock held in the account and information on the limited market in penny stocks.
Because of these regulations, broker-dealers may not wish to engage in the above-referenced necessary paperwork and disclosures and/or may encounter difficulties in their attempt to sell shares of our common stock, which may affect the ability of selling shareholders or other holders to sell their shares in any secondary market and have the effect of reducing the level of trading activity in any secondary market. These additional sales practice and disclosure requirements could impede the sale of our securities.
Because we are not subject to compliance with rules requiring the adoption of certain corporate governance measures, our stockholders have limited protection against interested director transactions, conflicts of interest and similar matters.
The Sarbanes-Oxley Act of 2002, as well as rule changes proposed and enacted by the SEC, the New York and American Stock Exchanges and the Nasdaq Stock Market, as a result of Sarbanes-Oxley, require the implementation of various measures relating to corporate governance. These measures are designed to enhance the integrity of corporate management and the securities markets and apply to securities that are listed on those exchanges or the Nasdaq Stock Market. Because we are not presently required to comply with many of the corporate governance provisions and because we chose to avoid incurring the substantial additional costs associated with such compliance any sooner than legally required, we have not yet adopted these measures.
Because none of our directors (currently two persons) are independent directors, we do not currently have an independent audit or a compensation committee. As a result, directors have the ability, among other things, to determine their own level of compensation. Until we comply with such corporate governance measures, regardless of whether such compliance is required, the absence of such standards of corporate governance may leave our stockholders without protections against interested director transactions, conflicts of interest, if any, and similar matters and investors may be reluctant to provide us with funds necessary to expand our operations.
We intend to comply with all corporate governance measures relating to director independence as and when required. However, we may find it very difficult or be unable to attract and retain qualified officers, directors and members of board committees required to provide for our effective management as a result of Sarbanes-Oxley Act of 2002. The enactment of the Sarbanes-Oxley Act of 2002 has resulted in a series of rules and regulations by the SEC that increase responsibilities and liabilities of directors and executive officers. The perceived increased personal risk associated with these recent changes may make it more costly or deter qualified individuals from accepting these roles.
ITEM 2 - UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
During the six months ended December 31, 2014 the Company had no sales of unregistered equity securities.
ITEM 3 - DEFAULTS UPON SENIOR SECURITIES
During the six months ended December 31, 2014 the Company had no senior securities issued and outstanding.
ITEM 4 - MINE SAFETY DISCLOSURES
Not applicable to our Company.
ITEM 5 - OTHER INFORMATION
As of February 13, 2015, the Company issued a total of 3,178,650 shares of common stock of the Company, par value $0.001 per share to Panacea, Inc., a company owned and controlled by the Company’s officer and director. The shares were issued upon the conversion of the total amount of $127,146 loans provided to the Company by the above entity, at a conversion price of $0.04 per share. As of February 13, 2015, the Company also issued a total of 2,500,000 shares of common stock of the Company, par value $0.001 per share, to its officer and director for services rendered, valued at $1,250,000.
The above shares of the Company's common stock were issued and sold in reliance upon the exemption provided by Section 4(a)(2) and Regulation D of the Securities Act of 1933.
On February 15, 2015, the Board of Directors of the Company appointed A.R. (Bud) Grandsaert age 69, as the Company's new President. Richard Damion resigned as the Company’s President as of that date, however, he remains the Company’s Chief Executive Officer and Director.
Mr. Grandsaert was a co-founder and President of Illumination Management Systems, Inc. from October 2001 to March 2009 when the company was sold to Cooper Industries. From March 2009 through March 2010 Mr. Grandsaert was a Consultant for Cooper Industries, managing the sales transition. From April 2010 to the present, Mr. Grandsaert has been operating as a business consultant, principally in start-up projects. The Company has not entered into an employment agreement with Mr. Grandsaert as of the date hereof.
ITEM 6 - EXHIBITS
(a) Exhibits
Exhibit No.
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Description
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Exhibit 31.1
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CERTIFICATION OF THE CHIEF EXECUTIVE OFFICER PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT
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Exhibit 31.2
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CERTIFICATION OF THE CHIEF FINANCIAL OFFICER PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT
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Exhibit 32.1
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CERTIFICATION OF THE CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT
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101.INS
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XBRL Instance Document
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101.SCH
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XBRL Schema Document
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101.CAL
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XBRL Calculation Linkbase Document
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101.DEF
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XBRL Definition Linkbase Document
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101.LAB
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XBRL Label Linkbase Document
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101.PRE
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XBRL Presentation Linkbase Document
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SIGNATURES
Pursuant to the requirements of Section 12 of the Securities Exchange Act of 1934, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized.
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SNACKHEALTHY, INC.
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Date: February 17, 2015 |
By: |
/s/ Richard Damion |
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Richard Damion |
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Chief Executive Officer |
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By: |
/s/ William Lindberg
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William Lindberg
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Chief Financial Officer
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32
EXHIBIT 31.1
CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT
TO SECTION 302 OF THE SARBANES-OXLEY ACT
I, Richard Damion, certify that:
1.
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I have reviewed this report on Form 10-Q of SnackHealthy, Inc.;
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2.
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Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
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3.
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Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
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4.
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The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for registrant and have:
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(a)
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Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
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(b)
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Designated such internal control over financial reporting, or caused such internal control over financial reporting to be designated under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
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(c)
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Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
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(d)
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Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
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5.
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The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
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(a)
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All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to affect ability to record, process, summarize and report financial information; and
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(b)
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Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
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Date: February 17, 2015 |
By: |
/s/ Richard Damion |
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Richard Damion |
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Chief Executive Officer |
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EXHIBIT 31.2
CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT
TO SECTION 302 OF THE SARBANES-OXLEY ACT
I, William Lindberg, certify that:
1.
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I have reviewed this report on Form 10-Q of SnackHealthy, Inc.;
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2.
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Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
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3.
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Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
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4.
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The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for registrant and have:
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(a)
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Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
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(b)
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Designated such internal control over financial reporting, or caused such internal control over financial reporting to be designated under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
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(c)
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Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
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(d)
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Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
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5.
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The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
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(a)
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All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to affect ability to record, process, summarize and report financial information; and
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(b)
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Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
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Date: February 17, 2015 |
By: |
/s/ William Lindberg |
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William Lindberg
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Chief Financial Officer |
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EXHIBIT 32.1
CERTIFICATION OF CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER
PURSUANT TO 18 U.S.C. SS. 1350 ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Report of SnackHealthy, Inc. (the "Company") on Form 10-Q for the for the three months ended December 31, 2014 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), we, Richard Damion, Chief Executive Officer and William Lindberg, Chief Financial Officer of the Company, certify pursuant to 18 U.S.C. section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002, that:
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(1)
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The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
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(2)
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The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.
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/s/ Richard Damion
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/s/ William Lindberg
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Richard Damion
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William Lindberg
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Chief Executive Officer
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Chief Financial Officer
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February 17, 2015
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February 17, 2015
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