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EXCEL - IDEA: XBRL DOCUMENT - CURATIVE BIOSCIENCES, INC.Financial_Report.xls
EX-31.1 - CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT - CURATIVE BIOSCIENCES, INC.eex_31-1.htm
EX-31.1 - CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT - CURATIVE BIOSCIENCES, INC.ex_31-1.htm
EX-32 - CERTIFICATION OF CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER - CURATIVE BIOSCIENCES, INC.ex_32.htm
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 10-Q
 
(Mark One)
 
x  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the quarterly period ended September 30, 2013

OR

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

Nevada
33-0730042
(State or other jurisdiction of
(I.R.S. Employer
incorporation or organization)
Identification No.)

15132 Park of Commerce Blvd., Jupiter, Fl
33478
(Address of principal executive offices)
(Zip Code)

(561) 935-6449
(Issuer's Telephone number, including area code)

_______Healthient, Inc.______________________________________________
(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 þ    No o

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 þ     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 o
Accelerated filer o
Non-accelerated filer o
Smaller reporting company þ
(Do not check if a smaller reporting company)
 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act) Yes o  No þ
 
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. As of October 31, 2013, 414,606 shares of common stock were outstanding after a 100 to 1 reverse stock split declared effective on October, 28, 2013.
 
 
 

 
 
 
 
SNACKHEALTHY,  INC.
QUARTERLY REPORT ON FORM 10-Q
FOR THE PERIOD ENDED SEPTEMBER 30,  2013
 
TABLE OF CONTENTS
 
 
PAGE
   
PART I.  FINANCIAL INFORMATION
3
   
Item 1.  Financial Statements
3
   
(a         Balance Sheets
4
(b)       Statements of Operations
5
(c)       Statement of Shareholders' Equity (deficit)
6
(d)       Statements of Cash Flows
 
(e)       Notes to Financial Statements
8
   
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
13
   
Item 3.  Quantitative and Qualitative Disclosures about Market Risk
19 
   
Item 4. Controls and Procedures
19
   
PART II. OTHER INFORMATION
20
   
Item 1.  Legal Proceedings
20 
   
Item 1A.  Risk Factors
20 
   
Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds
28
   
Item 3.  Defaults On Senior Securities
28
   
Item 4.  Mine Safety Disclosured 
28
   
Item 5.  Other Information
28
   
Item 6.  Exhibits
28
   
 
28
SIGNATURES
29
 
 
 
 

 
 
PART I
FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

The accompanying unaudited financial statements of Snackhealthy, Inc., formerly known as Healthient, Inc. (the "Company"), have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q. Accordingly, these financial statements may not include all of the information and disclosures required by generally accepted accounting principles for complete financial statements. The interim financial statements should be read in conjunction with the annual financial statement for the year ended June 30, 2013 included in the 10-K amended, filed September 28on October 1, 2013.  In the opinion of management, the accompanying unaudited financial statements contain all adjustments necessary to fairly present the Company's financial position as of September 30, 2013 and its results of operations and its cash flows for the three months ended September 30, 2013 and 2012.
 
 
1

 

Snackhealthy, Inc.
 Balance Sheets
Unaudited
 
   
September
   
June
 
    30, 2013     30, 2013  
ASSETS
               
Current Assets
               
Cash
  $ 1,815     $ 1,815  
Inventory
    50,964       50,964  
Deposits and prepaid expenses
    11,226       11,226  
                 
Total Current Assets
    64,005       64,005  
                 
Property and Equipment
               
Website costs (net of accummulated amortization)
    22,483       37,576  
Licensed drink (net of accummulated amortization)
    3,125       3,750  
Office equipment ( net of depreciation)
    12,975       13,723  
  Total Fixed Assets
    38,583       55,049  
                 
  Total Assets
  $ 102,588     $ 119,054  
                 
                 
 LIABILITIES AND STOCKHOLDERS'  EQUITY  (DEFICIT)
               
Current Liabilities
               
 Accounts payable
    110,982       105,019  
 Payroll taxes
    3,565       3,565  
 Accrued liabilities
    29       39  
 Directors' fees
    180,000       180,000  
 Directors' loans
    224,201       382,260  
Total Current Liabilities
    518,777       670,883  
                 
Stockholders'  Equity (Deficit)
               
Preferred stock, $0.001 Par value, 25,000,000 authorized:
               
  No shares issued
    -       -  
Common stock, $0.001 par value: 200,000,000 shares
               
  authorized, 41,460,578 issued and outstanding at September 30,
               
  2013 and 17,460,678 at June 30, 2013  respectively
    41,460       17,460  
Additional paid-in capital
    19,731,613       17,515,613  
Deficit accumulated
    (18,084,902 )     (18,084,902 )
Net loss current year
    (2,104,360 )        
                  
 Total Stockholders' Equity
    (416,189 )     (551,829 )
                 
Total Liabilities and Stockholder's Equity
  $ 102,588     $ 119,054  
 
The accompanying notes are an intergral part of these financial statements

 
2

 


Snackhealthy, Inc.
Statement of Operations
(Unaudited)
   
 
 
   
For the three months ended September 30, 2013
     
For the three months ended September 30, 2012
 
                 
Revenues
  $ -     $ 97,689  
Cost of revenues
    2,188       45,091  
                 
Gross profit
    (2,188 )     52,598  
                 
Selling expenses
    -       22,282  
General and dministrative expenses
    2,102,172       230,785  
Total
    2,102,172       253,067  
                 
Operating loss
    (2,104,360 )     (200,469 )
Provision for income taxes
    -       -  
                 
Net loss
  $ (2,104,360 )   $ (200,469 )
                 
Net loss per share-Basic and Diluted
  $ (0.09 )   $ (0.19 )
                 
Weighted average number of Common
               
sharesoutstanding, basic and fully diluted
    24,243,387       1,070,707  
 
See accompanying notes to Financial Statements

 
3

 

Snackhealthy, Inc.
Statement of Stockholders' Equity (Deficit)
(Unaudited)
 
   
Common Shares
   
Additional
         
Accumulated
 
         
Par Value
   
Paid-In
   
Deficit
   
Equity
 
   
Shares
    $0.001    
Capital
   
accumulated
   
(Deficit)
 
Balance June 30,  2012
    2,289,721       2,290       9,508,249       (11,447,097 )     (1,936,558 )
Common stock cancelled (for services)
    (9,843 )     (10 )     (54,126 )             (54,136 )
Common stock issued for services
    389,200       389       166,331               166,720  
Shares issued for Settlement
    14,384,000       14,384       7,548,116               7,562,500  
Share issued for convertible note
    407,500       407       347,043               347,450  
Net loss
                            (6,637,805 )     (6,637,805 )
Balance June 30,  2013
    17,460,578     $ 17,460     $ 17,515,613     $ (18,084,902 )   $ (551,829 )
Common stock issue for shareholder loan
    1,333,333       1,333       198,667               200,000  
Common stares issued for services
    22,666,667       22,667       2,017,333               2,040,000  
Net loss
                            (2,104,360 )   $ (2,104,360 )
Balance September 3, 2013
    41,460,578       41,460       19,731,613       (20,189,262 )   $ (416,189 )
 
The Company did a reverse split of stockof 50 for 1 on October 1, 2012 that has been retroactively reflected at September 30, 2013
 
The accompanying notes are an integral part of these financial statements

 
4

 

Snackhealthy, Inc.
Statements of Cash Flows
(Unaudited)
             
   
For the nine months ended September 30, 2013
   
For the nine months ended September 30, 2012
 
Cash Flows from Operating Activities
           
Net loss
  $ (2,104,360 )   $ (200,469 )
Depreciation
    748       878  
Amortization of Websitesand license
    15,718       15,708  
Shares issued  for services
    2,040,000       50,464  
Changes in operating assets and liabilities
               
  Decrease (Increase) in inventory
    -       27,236  
  Decrease in accrued liabilities
    (10 )     (1,238 )
  Increase (decrease)  in accrued payroll taxes
    -       250  
  Increase (decrease)  in account payable
    5,962       51,431  
Net Cash  Used in Operations
    (41,942 )     (55,740 )
                 
                 
Cash Flows from Financing  Activities
               
    Directors' loans advanced
    41,942       58,378  
    Bank overdraft
    -       (2,638 )
Net Cash Provided by  Financing Activities
    41,942       55,740  
                 
Net  (decrease) increase  in Cash
    -       -  
Cash--Beginning of Period
    1,815       -  
Cash - Ending of Period
  $ 1,815     $ -  
                 
Supplemental Disclosure of Non-Cash Investing and Financing Activities:
         
Shares issued for services
  $ 2,040,000     $ 50,646  
Shares issued for shareholder loans
  $ 200,000     $ -  
Share issued for an account payable
          $ 10,100  
Income taxes paid
  $ -     $ -  
Interest paid
  $ -     $ -  
 
The accompanying notes are an integral part of these financial statements
 

 
5

 

Snackhealthy, Inc.

FOOTNOTES TO FINANCIAL STATEMENTS
For the three Months ended September 30, 2013
(Unaudited)
 
Note 1. Reorganization and Line of Business

On October 5, 2010 Time Associates, a Nevada corporation ("the Company") acquired all of the issued and outstanding common stock of Healthient, Inc., a Nevada corporation organized April 29, 2009 ("Healthient") in exchange for the issuance by the Company of a total of 43,618,356 newly issued restricted shares of common voting stock to the Healthient shareholders pursuant the Agreement and Plan of Reorganization dated as of September 23, 2010. Prior to the issuance of the shares, the Company had 160,078 shares of common stock issued and outstanding. Subsequent to the exchange there were 43,778,434 shares issued and outstanding. The shareholders of Healthient owned 99.6% of the common stock outstanding of the Company after the issuance of the 43,618,356 shares. On November 15, 2010 Time Associates, Inc. name was changed to Healthient, Inc.

The acquisition of Healthient by the Company on October 5, 2010 has been accounted for as a purchase and treated as a reverse acquisition and re-capitalization since the former owners of Healthient controlled 99.6% of the total shares of Common Stock of the Company outstanding immediately following the acquisition. In November 2010 Healthient, Inc. changed its name to SnackHealthy, Inc.

On this basis, the historical financial statements prior to October 5, 2010 have been restated to be those of the accounting acquirer Healthient (now SnackHealthy, Inc.). The historical stockholders' equity prior to the reverse acquisition has been retroactively restated (a re-capitalization) for the equivalent number of shares received in the acquisition after giving effect to any difference in par value of the issuer's and acquirer's stock. The original 160,078 shares of common stock outstanding prior to the exchange reorganization have been reflected as an addition in the stockholders' equity account of the Company on October 5, 2010.

On October 4, 2013, the Company changed its name to "Snackhealthy, Inc." and dissolved its wholly-owned subsidiary SnackHealthy, Inc., a Nevada corporation.

 Snackhealthy, Inc., develops and markets snacks and beverages with the objective of making healthy eating a fun experience for the entire family. The Company’s goal is to develop a portfolio of products and successfully position them as convenient, healthy solutions across several snacking occasions daily. The Company sells snacks through a network marketing distribution model.
 
 
6

 
 
Note 2  Significant Accounting Policies

Cash and cash equivalents

The Company considers all highly liquid investments with an original maturity of three months or less as cash equivalents.

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.
 
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.

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.

Revenue Recognition

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.

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.
 
 
7

 
 
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 3-7 years.

Websites Development Cost and License to produce drink

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. The drink license is also being amortized over three years.

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.
 
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 $xxxxxxxxxx during the three months ended September 30, 2013. Cash used in operations for the three months approximated $xxxxxxx. 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 implement its business plan.

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. 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.
 
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.
 
 
8

 
 
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.

There are no warrants outstanding as of September 30, 2013.

Recent Accounting Pronouncements

There have been no recent accounting pronouncements of changes in accounting pronouncements that impacted the three months ended September 30, 2013 and year end June 30, 2013, or which are expected to impact future periods, that were not already adopted and disclosed in prior periods.

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. License for drink is being amortized over three years and computers and furniture are being depreciated over three to seven years.

Property and equipment was as follows:
 
             
   
September 30, 2013
   
June 30, 2013
 
Website
  $ 181,008     $ 181,008  
Amortization
    158,525       143,432  
Total
  $ 22,483     $ 37,576  
License for drink
  $ 7,500     $ 7,500  
Amortization
    4,375       3,750  
Total
  $ 3,125     $ 3,750  
Conputers and furniture
  $ 22,165     $ 22,165  
Depreciation
    9,190       8,442  
 Total
  $ 12,975     $ 13,723  

 
9

 
 
 
The Company leases its office space. The current facility lease runs from July 1, 2011 through June 30, 2016. Our current lease payments are $4,642 per month including operating expense and tax. The lease increases three percent each of the following years. We maintain our executive and administrative offices in this facility. Our rental payments in fiscal 2012 were $75,917. Our rental payments for the three months ended September 30, 2013 were $12,972. Future minimum payments under the office lease are approximately as follows: Year ended June 2014 $41,000; 2015 $55,000; and 2016 $56,000 for a total of $152,000.
 
Note 4 . Stockholders’ Deficit
 
The Company has authorized 200,000,000 shares of common stock with a par value of $.001 and 25,000,000 shares of preferred stock with a par value of $.001. The Company effected a 3 for 1 share exchange as part of its reverse acquisition in October 2010. All share amounts in the financial statements and footnotes reflect this action.
 
The Company authorized the issuance of 816,480 shares of common stock to the founders at the fair value of $13,480.  The fair value of the shares of $13,480 was recorded as an expense.
 
During the year ended June 30, 2010, the Company sold to investors 40,607 Units for cash of $672,500 with each unit containing one share of common stock and one common stock purchase warrant. 33,900 Units were sold at $17 per Unit with warrants exercisable at $17 per share. 5,850 Units were sold at $17 per Unit with warrants exercisable at $21 per share and 857 Units were sold at $12 per Unit with warrants exercisable at $21 per share.
 
During the year ended June 30, 2011 the Company sold investors 46,426 Units for cash of $594,485.  The Company issued 111,134 shares for services for $1,555,357 ($14 per share) and 30,685 under the 2010 Equity Compensation Plan for $506,302 ($17 per share).
 
During the year ended June 30, 2012 the Company issued 76,802 common shares for cash of $409,239 common shares in satisfaction of a stock subscription payable, 73,307 common shares for officer debt of $183,268; 1,225,008 common shares for services of $5,448,408; 20,000 common shares for director’s fees payable $90,000; and 1,000 common shares for a drink license $7,500.
 
On October 1, 2012 the Company effected a 50 to 1 reverse split of their common stock that has been reflected in the Stockholders’ Deficit.
 
During the year ended June 30, 2013 the Company issued 389,200 common shares for services of $166,200; cancelled 9,843 common shares that had been previously issued for services in the amount of $54,136; issued 14,384,000 shares in settlement of a lawsuit ($7,562,500) with $1,719,000 paying off a settlement payable and $5,843,000 recorded as additional expense, netted to $5,799,000 by forgiven amounts of $44,000; 407,500 shares in payment of a note payable $347,450, with $12,225 paying off the note and $335,225 recorded as extra expense. The Company used market price as fair market value.
 
On October 1, 2012 the Company effected a 50 to 1 reverse split of their common stock that has been reflected in the Stockholders’ Deficit.

During the three months ended September 30, 2013 the company issued 1,333,333 common shares in payment of Director loans ($200,000) and 22,666,667 common shares for Directors compensation ($2,040,000).

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.

At September 30, 2013 there were no warrants outstanding. All warrants issued in prior periods expired without being exercised.
 
Note 5. Directors Loans

Director loans of $224,201 at September 30, 2013 are non interest bearing and due on demand, as were the loans of $382,260 outstanding at June 30, 2013.
 
 
10

 
 
Note 6.  Income Taxes

The components of the deferred tax asset are as follows:
 
 
September 30, 2013
 
June 30, 2013
 
Deferred tax assets
       
Net operating loss carry-forward
$ 3,684,000   $ 1,900,000  
Valuation allowance
    (3,684,000 )      (1,900,000 )
                 
Net deferred tax assets
$ -   $ -  
 
The Company had available approximately $18,400,000 at September 30, 2013 and $16,319,000 at June 30, 2013 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 September 30, 2013 and June 30, 2013 respectively:
 
St Statutory rate
35%
St State taxes, net of Federal tax benefit
6%
   
N Net operating loss carry-forward
41%
E Federal effective tax rate
0%
 
Note 7. Other Matters
 
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 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 in payment ($7,562,500). At June 30, 2013 the Company had 4,716,000 common shares remaining to be issued in satisfaction of the settlement.

 Note 8. Subsequent Events

On October 28, 2013 the  Company effected a 100 to 1 reverse split of its common stock. On October 4, 2013, the Company dissolved its wholly-owned subsidiary SnackHealthy, Inc., and changed its name to "SnackHealthy, Inc."
 
As of October, 2013 a Director of the Company converted a portion of a loan made to the Company totaling $188,389 to a total of4,709,722 shares of common stock.

As of November, 2013 a Director of the Company was issued 51,224 shares for services valued at $102,448.
 
 
11

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

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS FOR PLAN OF OPERATION

PRELIMINARY NOTE REGARDING FORWARD-LOOKING STATEMENTS:

ALL FORWARD-LOOKING STATEMENTS CONTAINED HEREIN ARE DEEMED BY THE COMPANY TO BE COVERED BY AND TO QUALIFY FOR THE SAFE HARBOR PROTECTION PROVIDED BY THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995. PROSPECTIVE SHAREHOLDERS SHOULD UNDERSTAND THAT SEVERAL FACTORS GOVERN WHETHER ANY FORWARD - LOOKING STATEMENT CONTAINED HEREIN WILL BE OR CAN BE ACHIEVED. ANY ONE OF THOSE FACTORS COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE PROJECTED HEREIN. THESE FORWARD-LOOKING STATEMENTS INCLUDE PLANS AND OBJECTIVES OF MANAGEMENT FOR FUTURE OPERATIONS, INCLUDING PLANS AND OBJECTIVES RELATING TO THE PRODUCTS AND THE FUTURE ECONOMIC PERFORMANCE OF THE COMPANY. ASSUMPTIONS RELATING TO THE FOREGOING INVOLVE JUDGMENTS WITH RESPECT TO, AMONG OTHER THINGS, FUTURE ECONOMIC, COMPETITIVE AND MARKET CONDITIONS, FUTURE BUSINESS DECISIONS, AND THE TIME AND MONEY REQUIRED TO SUCCESSFULLY COMPLETE DEVELOPMENT PROJECTS, ALL OF WHICH ARE DIFFICULT OR IMPOSSIBLE TO PREDICT ACCURATELY AND MANY OF WHICH ARE BEYOND THE CONTROL OF THE COMPANY.  ALTHOUGH THE COMPANY BELIEVES THAT THE ASSUMPTIONS UNDERLYING THE FORWARD-LOOKING STATEMENTS CONTAINED HEREIN ARE REASONABLE, ANY OF THOSE ASSUMPTIONS COULD PROVE INACCURATE AND, THEREFORE, THERE CAN BE NO ASSURANCE THAT THE RESULTS CONTEMPLATED IN ANY OF THE FORWARD-LOOKING STATEMENTS CONTAINED HEREIN WILL BE REALIZED.  BASED ON ACTUAL EXPERIENCE AND BUSINESS DEVELOPMENT, THE COMPANY MAY ALTER ITS MARKETING, CAPITAL EXPENDITURE PLANS OR OTHER BUDGETS, WHICH MAY IN TURN AFFECT THE COMPANY'S RESULTS OF OPERATIONS.  IN LIGHT OF THE SIGNIFICANT UNCERTAINTIES INHERENT IN THE FORWARD-LOOKING STATEMENTS INCLUDED HEREIN, THE INCLUSION OF ANY SUCH STATEMENT SHOULD NOT BE REGARDED AS A REPRESENTATION BY THE COMPANY OR ANY OTHER PERSON THAT THE OBJECTIVES OR PLANS OF THE COMPANY WILL BE ACHIEVED.

The following Management’s Discussion and Analysis should be read in conjunction with Management’s Discussion and Analysis included in our Annual Report on Form 10-K for the year ended June 30, 2013 filed with the Securities and Exchange Commission (“SEC”), and our other filings, including Current Reports on Form 8-K, filed with the SEC through the date of this report.

COMPANY OVERVIEW

OUR BUSINESS

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 2013 and the Company is now prepared to focus on mass retail distribution.
 
 
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Our products are grouped in two principal categories: weight management and energy, sports & fitness, along with premium marketing websites and promotional items. Our products are often sold in packages that are comprised of a variety of related products designed to simplify healthy snacking and weight management for consumers and to maximize cross-selling opportunities for us.
 
Industry wide factors that affect us include the increasing prevalence of obesity in adults and children, which are driving the demand for healthier snacking alternatives.
 
Product Overview
 
Our products are designed to help people achieve and maintain their healthy weight, improve their health and experience life-changing results. Our snacks and beverages appeal to the growing base of consumers seeking differentiated products and desiring a healthier lifestyle.
  
The following information summarizes our products by product category.
 
Product Categories:
 
Weight Management & Energy, Sports &Fitness
 
Representative Products
 
Smart Shake, CrispyFruit, LoliBars, RealFruit, Lite Natural Microwave Mini Popcorn, Multigrain Pretzel Nuggets, LoliCrunch, Low-Sodium Mini-Twist Pretzels, and Zing! Healthy Energy Drink Mix.
  
Product Development
 
We are committed to providing  delicious healthy snacks and beverage mixes to help them increase retailing. We believe this can be best accomplished in part by introducing new products and by upgrading, reformulating and repackaging existing product lines.
 
 
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Manufacturing and Distribution
 
Our products are manufactured for us by third party manufacturing companies. We work closely with our vendors in an effort to achieve the highest quality standards and product availability. We continually strive to establish excellent relationships with our manufacturers and to obtain improvements in product quality and product delivery. Some of our key input materials such as whey proteins and packaging materials are subject to pricing fluctuations driven by commodities pricing. We are confident that we can offset potential cost increases of these materials with volume increases in our inventory purchases and, when necessary, by raising the prices of our products.
 
In order to coordinate and manage the manufacturing of our products, we will utilize a demand planning and forecasting process that is directly tied to our production planning and purchasing systems.
 
Shipping and processing standards for orders placed are either same day or the following business day. Products are distributed in the United States market from our third party warehouse and distribution center in Salt Lake City.
 
Product Return and Buy-Back Policies
 
Our products include a customer satisfaction guarantee. Under this guarantee any customer who is not satisfied with a SnackHealthy product for any reason may return it unopened or any unopened unused portion of it within 30 days of purchase.
 
Management Information, Internet and Telecommunication Systems
 
In order to facilitate our growth and support brand partner activities, we plan to continually upgrade our management information, Internet and telecommunication systems. These systems include: (1) Multiple centralized host computer systems managed by Exigo Office in Dallas, Texas. These systems are linked together via a secure wide area network that provides on-line, real-time access to information, transitioning and reporting; (2) 24 hour order fulfillment center located in Salt Lake City, Utah linked in real time to our transitioning systems; (3) Local area networks of personal computers within our markets, serving our regional administrative staffs; (4) A state of the art international e-mail system through which our employees communicate; (5) A standardized Cisco telecommunication system in all of our markets; (6) Internet websites to provide a variety of online services  such as , product information, educational materials and, in select markets including the United States, sales ordering capabilities.
 
 
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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 recruit new brand partners and retain existing brand partners, open new markets, further penetrate existing markets, introduce new products and programs that will help our brand partners increase their retail efforts and develop niche markets.

Revenue

The Company revised its sales method from individual brand partners to direct  store sales at the end of its fiscal year June 30, 2013.  The Company expects to sell product in the next quarter under its revised sales policy.

Cost of Revenues

The Company did not ship any inventory during the first three months except from its Utah warehouse to Florida $2,188.

Gross Profit

Because of non sales and  there was no gross  loss of $2,188

Selling Expenses

There were no selling expense during the three months..
 
General and Administrative Expenses

     
GENERAL AND ADMINISTRATIVE
 
 
 
 
9/30/2013
 
 
 
9/30/2012
 
                 
Salaries and wages
    $ 8,376       $ 19,999  
Independent contractors
      2,500         117,718  
Directors' expense
      2,040,000            
Professional fees
      15,435         -  
Technology
      2,492         38,972  
Travel and entertainment
      1,903         7,562  
Office expenses
      1,962         11,577  
Utilities
      796         3,081  
Rent
      12,242         14,542  
Amortization
      15,718         15,708  
Depreciation
      748         878  
Other
      -         748  
      $ 2,102,172       $ 230,785  
 
General and administrative expenses consist primarily of compensation and benefits to our general management, finance and administrative staff, professional advisor fees, audit fees and other expenses incurred in connection with general operations.  Our general and administrative expenses for the three months ended September 30, 2013 increased  $1,871,387compared to the same period in 2013.  The increase was primary due to an issuance of common stock to Directors of $2,040,000 less the reduction in other expenses due to lesser selling activity.
 
 
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Provision for Income Taxes

None.

Net Loss

Net loss for the three months ended September 30, 2013 was $2,104,360 as compared to $200,469 for the same period in 2013. The increase was due primarily to the issuance of stock for  Directors’ stock payment.
 
Liquidity and Capital Resources

Generally, our principal uses of cash includes operating expenses, particularly selling expenses, and working capital (principally inventory purchases), as well as capital expenditures and the development of operations in new markets.  The capital expenditures to date have been primarily related to the following:
   
 
purchases of computer systems and software and development costs;
 
the build-out and upgrade of leasehold improvements in our new corporate headquarters;
 
the purchase of office furniture, phone systems and equipment;
 
product inventory.

The Company anticipates it will need to raise additional funds during the next twelve months in order to sustain the growth of our business and has signed an investment banking agreement with a licensed broker dealer. Monies will be used primarily to build significant product inventory and cash reserves.

 The Company plans to continue to raise funds through the sales of common stock and to obtain credit from vendors for the purchase of inventory.  The Company has a bank  balance of  $1,815 at September 30, 2013. The Company had a negative working capital ratio as follows:

Total current assets
 
$
64,005
 
Total current liabilities
   
518,776
 
         
Negative working capital
 
$
(454,771
)

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. 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.
 
 
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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.  The Company has disclosure controls and procedures (as defined in Rules 13a-14and 15d-14 under the Securities Exchange Act of 1934, as amended) to ensure that material information contained in its filings with the Securities and Exchange Commission is recorded, processed, summarized and reported on a timely and accurate basis. Based on such evaluation, the Company's principal executive officer and principal financial officer have concluded that the Company's disclosure controls and procedures are effective at ensuring that material information is recorded, processed, summarized and reported on a timely and accurate basis in the Company's filings with the Securities and Exchange Commission. Since such evaluation there have not been any significant changes in the Company's internal controls, or in other factors that could significantly affect these controls.

CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING

During the three months ended September 30, 2013  there were no changes in our internal controls that have materially affected or are reasonably likely to have materially affected our internal control over financial reporting.

Our management, including the Chief Executive Officer and Chief Financial Officer, does not expect that our disclosure controls and procedures or our internal control over financial reporting will prevent all errors and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system is met. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the company have been detected.
 
 
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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 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..
 
ITEM 1A - RISK FACTORS
 
The worldwide financial and economic “crisis” could negatively impact our access to capital and the sales of our products and could harm our financial condition and operating results.
 
The current worldwide financial and economic “crisis” could potentially have a negative impact on us, our liquidity, our access to capital, our operations and our overall financial condition. While we have historically met our funding needs, no assurances can be given that the current overall downturn in the world economy will not significantly adversely impact us, and our business operations. We note economic and financial markets are fluid and we cannot ensure that there will not be in the near future a material adverse deterioration in our sales or liquidity.
 
 
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Our failure to appropriately respond to changing consumer preferences and demand for new products or product enhancements could significantly harm our customer relationships and product sales and harm our financial condition and operating results.
 
Our business is subject to changing consumer trends and preferences, especially with respect to weight management products. Our continued success depends in part on our ability to anticipate and respond to these changes, and we may not respond in a timely or commercially appropriate manner to such changes.  Furthermore, the healthy snack food and nutritional supplement industries are characterized by rapid and frequent changes in demand for products and new product introductions and enhancements.
 
 Our failure to accurately predict these trends could negatively impact consumer opinion of our products, which in turn could harm our customer  relationships and cause the loss of sales. The success of our new product offerings and enhancements depends upon a number of factors, including our ability to:
   
accurately anticipate customer needs;
   
innovate and develop new products or product enhancements that meet these needs;
   
successfully commercialize new products or product enhancements in a timely manner;
   
price our products competitively;
   
manufacture and deliver our products in sufficient volumes and in a timely manner; and
   
differentiate our product offerings from those of our competitors.
      
If we do not introduce new products or make enhancements to meet the changing needs of our customers in a timely manner, some of our products could be rendered obsolete, which could negatively impact our revenues, financial condition and operating results.
 
Due to the high level of competition in our industry, we might fail to retain our customers , which would harm our financial condition and operating results.
 
The business of marketing snack foods and nutrition products is highly competitive and sensitive to the introduction of new products or weight management plans, including various prescription drugs, which may rapidly capture a significant share of the market. These market segments include numerous manufacturers,  marketers, retailers and physicians that actively compete for the business of consumers both in the United States and abroad.
 
In addition, we anticipate that we will be subject to increasing competition in the future from sellers that utilize electronic commerce. Some of these competitors have longer operating histories, significantly greater financial, technical, product development, marketing and sales resources, greater name recognition, larger established customer bases and better-developed distribution channels than we do.
 
Our present or future competitors may be able to develop products that are comparable or superior to those we offer, adapt more quickly than we do to new technologies, evolving industry trends and standards or customer requirements, or devote greater resources to the development, promotion and sale of their products than we do. Accordingly, we may not be able to compete effectively in our markets and competition may intensify.
 
 
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Our competitors include both direct selling companies such as Herbalife, NuSkin, Alticor/Amway, Melaleuca, Avon Products and Mary Kay, as well snack food manufactures and retail health food and grocery stores.
 
In addition, because the industry in which we operate is not particularly capital intensive or otherwise subject to high barriers to entry, it is relatively easy for new competitors to emerge who will compete with us for our brand partners and customers.
 
We are affected by extensive laws, governmental regulations, administrative determinations, court decisions and similar constraints, and our failure  to comply with these constraints could lead to the imposition of significant penalties or claims, which could harm our financial condition and operating results.
 
The formulation, manufacturing, packaging, labeling, distribution, importation, exportation, licensing, sale and storage of our products are affected by extensive laws, governmental regulations, administrative determinations, court decisions and similar constraints. Such laws, regulations and other constraints may exist at the federal, state or local levels in the United States and at all levels of government in foreign jurisdictions.
 
 There can be no assurance that we are in compliance with all of these regulations. Our failure  to comply with these regulations or new regulations could lead to the imposition of significant penalties or claims and could negatively impact our business.
 
In addition, the adoption of new regulations or changes in the interpretations of existing regulations may result in significant compliance costs or discontinuation of product sales and may negatively impact the marketing of our products, resulting in significant loss of sales revenues.
 
 
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In April 2006, the FTC issued a notice of proposed rulemaking which, if implemented in its originally proposed form, would have regulated all sellers of “business opportunities” in the United States. The FTC has approved revisions to its Guides Concerning the Use of Endorsements and Testimonials in Advertising, or Guides, which became effective on December 1, 2009. Although the Guides are not binding, they explain how the FTC interprets Section 5 of the FTC Act’s prohibition on unfair or deceptive acts or practices. Consequently, the FTC could bring a Section 5 enforcement action based on practices that are inconsistent with the Guides. Under the revised Guides, advertisements that feature a consumer and convey his or her atypical experience with a product or service will be required to clearly disclose the results that consumers can generally expect. The revised Guides also add new examples to illustrate the long-standing principle that “material connections” between advertisers and endorsers (such as payments or free products), connections that consumers might not expect, must be disclosed.
 
Governmental regulations in countries where we plan to commence operations may prevent or delay entry into those markets. In addition, our ability to sustain satisfactory levels of sales in our markets is dependent in significant part on our ability to introduce additional products into such markets. However, governmental regulations, both domestic and international, can delay or prevent the introduction, or require the reformulation or withdrawal, of certain of our products.
 
On June 25, 2007, the FDA published its final rule for cGMPs affecting the manufacture, packing, and holding of dietary supplements. The final rule requires identity testing on all incoming dietary ingredients, but permits the use of certificates of analysis or other documentation to verify the reliability of the ingredient suppliers. On the same date the FDA also published an interim final rule that outlined a petition process for manufacturers to request an exemption to the cGMP requirement for 100 percent identity testing of specific dietary ingredients used in the processing of dietary supplements. Under the interim final rule the manufacturer may be exempted from the dietary ingredient testing requirement if it can provide sufficient documentation that the reduced frequency of testing requested would still ensure the identity of the dietary ingredient. The final rule includes a phased-in effective date based on the size of the manufacturer. These rules apply only to manufacturers and holders of finished products and not to ingredient suppliers unless the ingredient supplier is manufacturing a final dietary supplement.
  
If we fail to further penetrate existing markets or successfully expand our business into new markets, then the growth in sales of our products, along with our operating results, could be negatively impacted.
 
The success of our business is to a large extent contingent on our ability to continue to grow by entering new markets and further penetrating existing markets. Our ability to successfully expand our business into additional countries, to the extent we believe that we have identified attractive geographic expansion opportunities in the future, is subject to numerous factors, many of which are out of our control.
 
In addition, government regulations in both our domestic and international markets can delay or prevent the introduction, or require the reformulation or withdrawal, of some of our products, which could negatively impact our business, financial condition and results of operations.  While we anticipate significant growth in certain of our markets, we cannot assure you that such growth levels will continue in the immediate or long term future.
 
Furthermore, our efforts to support growth in such international markets could be hampered to the extent that our infrastructure in such markets is deficient when compared to our more developed markets, such as the U.S. Therefore, we cannot assure you that our general efforts to increase our market penetration in international markets will be successful. If we are unable to continue to expand into new markets or further penetrate existing markets, our operating results could suffer.
 
We depend on the integrity and reliability of our information technology infrastructure, and any related inadequacies may result in substantial interruptions to our business.
 
While we continue to invest in our information technology infrastructure, there can be no assurance that there will not be any significant interruptions to such systems or that the systems will be adequate to meet all of our future business needs.
 
Any such errors or inadequacies that we may encounter in the future may result in substantial interruptions to our services and may damage our relationships with our customers if the errors or inadequacies impair our ability to track sales.
 
 
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Such errors may be expensive or difficult to correct in a timely manner, and we may have little or no control over whether any inadequacies in software or services supplied to us by third parties are corrected, if at all.
 
Since we rely on independent third parties for the manufacture and supply of certain of our products, if these third parties fail to reliably supply products to us at required levels of quality, then our financial condition and operating results would be harmed.
 
Our products are manufactured at third party contract manufacturers. We cannot assure that our outside manufacturers will continue to reliably supply products to us at the levels of quality, or the quantities, we require, especially under the FDA’s cGMP regulations. While we are not presently aware of any current liquidity issues with our suppliers, we cannot assure you that they will not experience financial hardship as a result of the current global financial crisis.
 
In the event any of our third-party manufacturers were to become unable or unwilling to continue to provide us with products in required volumes and at suitable quality levels, we would be required to identify and obtain acceptable replacement manufacturing sources. There is no assurance that we would be able to obtain alternative manufacturing sources on a timely basis.
 
An extended interruption in the supply of products would result in the loss of sales. In addition, any actual or perceived degradation of product quality as a result of reliance on third party manufacturers may have an adverse effect on sales or result in increased product returns and buybacks.
 
Also, as we experience ingredient and product price pressure in the areas of whey products, plastics, and transportation reflecting global economic trends, we believe that we will have the ability to mitigate some of these cost increases through improved optimization of our supply chain coupled with select increases in the retail prices of our products.
 
If we fail to protect our trademarks and trade names, then our ability to compete could be negatively affected, which would harm our financial condition and operating results.
 
The market for our products depends to a significant extent upon the goodwill associated with our trademark and trade names. We own the material trademark and trade name rights used in connection with the packaging, marketing and distribution of our products. Therefore, trademark and trade name protection is important to our business.
 
The loss or infringement of our trademarks or trade names could impair the goodwill associated with our brands and harm our reputation, which would harm our financial condition and operating results.
 
If our intellectual property is not adequate to provide us with a competitive advantage or to prevent competitors from replicating our products, or if we infringe the intellectual property rights of others, then our financial condition and operating results would be harmed.
 
Our future success and ability to compete depend upon our ability to timely produce innovative products and product enhancements that motivate our brand partners and customers, some of which we will attempt to protect under a combination of copyright, trademark and trade secret laws, confidentiality procedures and contractual provisions.
 
However, our products are generally not patented and the legal protections afforded by common law and contractual proprietary rights in our products provide only limited protection and may be time- consuming and expensive to enforce and/or maintain.
 
Further, despite our efforts, we may be unable to prevent third parties from infringing upon or misappropriating our proprietary rights or from independently developing non- infringing products that are competitive with, equivalent to and/or superior to our products.
 
Monitoring infringement and/or misappropriation of intellectual property can be difficult and expensive, and we may not be able to detect any infringement or misappropriation of our proprietary rights. Even if we do detect infringement or misappropriation of our proprietary rights, litigation to enforce these rights could cause us to divert financial and other resources away from our business operations.
 
Additionally, third parties may claim that products we have independently developed infringe upon their intellectual property rights. There can be no assurance that one or more of our products will not be found to infringe upon other third party intellectual property rights in the future.
 
 If any one of our products constituted a significant portion of our sales, significant decreases in consumer demand for this product or our failure to produce a suitable replacement should we cease offering it would harm our financial condition and operating results.
 
If consumer demand for this primary product decreased significantly or we ceased offering this product without a suitable replacement, then our financial condition and operating results would be harmed.
 
If we lose the services of members of our senior management team, then our financial condition and operating results could be harmed.
 
We depend on the continued services of senior management team including our Chairman and Executive Officer, William M. Alverson and our Chief Executive Officer, Katherine West as they work closely with the senior brand partner leadership to create an environment of inspiration, motivation and entrepreneurial business success. Although we do not believe that any of the management team is planning to leave in the near term, we cannot assure you that they will remain with us. The loss or departure of any member of our senior management team could adversely impact our brand partner relations and operating results.
 
 
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If any of the senior management team does not remain with us, our business could suffer and could negatively impact our ability to implement our business strategy. Our continued success will be dependent on our ability to retain existing, and attract additional, qualified personnel to meet our needs. We currently do not maintain “key person” life insurance with respect to our senior management team.
 
We may incur material product liability claims, which could increase our costs and harm our financial condition and operating results.
 
Our products are classified as foods or dietary supplements and not subject to pre-market regulatory approval in the United States. Our products could contain contaminated substances, and some of our products contain some ingredients that do not have long histories of human consumption. Previously unknown adverse reactions resulting from human consumption of these ingredients could occur.
 
As a marketer of foods and dietary supplements that are ingested by consumers may be subjected to various product liability claims, including that the products contain contaminants, the products include inadequate instructions as to their uses, or the products include inadequate warnings concerning side effects and interactions with other substances.
 
It is possible that widespread product liability claims could increase our costs, and adversely affect our revenues and operating income. Moreover, liability claims arising from a serious adverse event may increase our costs through higher insurance premiums and deductibles, and may make it more difficult to secure adequate insurance coverage in the future. In addition, product liability insurance may fail to cover future product liability claims, thereby requiring us to pay substantial monetary damages and adversely affecting our business.
 
We are subject to, among other things, requirements regarding the effectiveness of internal controls over financial reporting. In connection with these requirements, we conduct regular audits of our business and operations. Our failure to identify or correct deficiencies and areas of weakness in the course of these audits could adversely affect our financial condition and operating results.
 
We are required to comply with various corporate governance and financial reporting requirements under the Sarbanes-Oxley Act of 2002, as well as new rules and regulations adopted by the SEC, and the Public Company Accounting Oversight Board. In particular, we are required to include management and auditor reports on the effectiveness of internal controls over financial reporting as part of our annual reports on Form 10-K, pursuant to Section 404 of the Sarbanes-Oxley Act.
 
 
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We expect to spend significant amounts of time and money on compliance with these rules. Our failure to correct any noted weaknesses in internal controls over financial reporting could result in the disclosure of material weaknesses which could have a material adverse effect upon the market value of our stock.
 
On a regular and on-going basis, we will conduct audits of various aspects of our business and operations. These internal audits are conducted to insure compliance with our policies and to strengthen our operations and related internal controls. The Audit Committee of our Board of Directors regularly reviews the results of these internal audits and, if appropriate, will suggest remedial measures and actions to correct noted deficiencies or strengthen areas of weakness.
 
There can be no assurance that these internal audits will uncover all material deficiencies or areas of weakness in our operations or internal controls. If left undetected and uncorrected, such deficiencies and weaknesses could have a material adverse effect on our financial condition and results of operations.
 
From time to time, the results of these internal audits may necessitate that we conduct further investigations into aspects of our business or operations. In addition, our business practices and operations may periodically be investigated by one or more of the governmental authorities with jurisdiction over our operations. In the event that these investigations produce unfavorable results, we may be subjected to fines, penalties or loss of licenses or permits needed to operate in certain jurisdictions, any one of which could have a material adverse effect on our financial condition or operating results.
 
 
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ITEM 2  - UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

During the three months ended September 30, 2013 the company issued 1,333,333 common shares in payment of Director loans ($200,000) and 22,666,667 common shares for Directors compensation ($2,040,000). The shares of the Company's common stock were issued in reliance upon the exemption provided by Section 4(2) and Regulation D of the Securities Act of 1933.
  
ITEM 3  -  DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4  -  MINE SAFETY DISCLOSURED
 
None
 
ITEM 5  -  OTHER INFORMATION
 
None
 
ITEM 6 - EXHIBITS

(a) Exhibits

Exhibit No.
Description
   
Exhibit 31
CERTIFICATION OF CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT
   
Exhibit 32
 CERTIFICATION OF CHIEF EXECUTIVE OFFICER AND CHIEF  FINANCIAL OFFICER PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT
 
101.INS
XBRL Instance Document
   
101.SCH
XBRL Schema Document
   
101.CAL
XBRL Calculation Linkbase Document
   
101.DEF
XBRL Definition Linkbase Document
   
101.LAB
XBRL Label Linkbase Document
   
101.PRE
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.
 
 
Date:   November   ,  2013
HEALTHIENT, INC.
 
       
 
By:
/s/ Katherine West
 
   
Katherine West
 
   
President
 
       
 
By:
/s/ William Lindberg
 
   
William Lindberg
 
   
Chief Financial Officer
 
       
 
 
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