Attached files

file filename
EXCEL - IDEA: XBRL DOCUMENT - SOUPMAN, INC.Financial_Report.xls
EX-31.1 - CERTIFICATION - SOUPMAN, INC.f10q1114ex31i_soupmaninc.htm
EX-32.1 - CERTIFICATION - SOUPMAN, INC.f10q1114ex32i_soupmaninc.htm
EX-31.2 - CERTIFICATION - SOUPMAN, INC.f10q1114ex31ii_soupmaninc.htm
EX-32.2 - CERTIFICATION - SOUPMAN, INC.f10q1114ex32ii_soupmaninc.htm

 

 

UNITED STATES

  SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

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

 

For the quarterly period ended November 30, 2014

 

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:  000-53943

 

SOUPMAN, INC.

 (Exact name of registrant as specified in its charter)

 

Delaware   61-1638630
(State or other jurisdiction of
incorporation or organization)
  (I.R.S. Employer
Identification No.)

 

1110 South Avenue, Suite 100

Staten Island, New York 10314

 (Address of principal executive offices) (Zip Code)

 

(212) 768-7687

 (Registrant’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 o

   

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

 

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

 

Large accelerated filer ¨ Accelerated filer                        ¨
Non-accelerated filer o Smaller reporting company      x
(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 x

 

Number of shares of common stock outstanding as of March 19, 2015 was 51,627,566

 

 

 

 

  

ITEM 1. Financial Statements.

 

Soupman, Inc. and Subsidiaries

Consolidated Balance Sheets

       

   November 30, 2014   August 31, 2014 
   (Unaudited)     
Assets
         
         
Cash  $30,750   $14,179 
Accounts receivable - net   415,941    358,296 
Inventory   397,658    467,658 
Prepaid expenses and other   17,152    39,769 
Total Current Assets   861,501    879,902 
           
Property and equipment  - net   12,225    13,486 
           
Other Assets          
Accounts receivable - related parties - net   96,334    76,335 
Due from franchisee   78,683    62,683 
Debt issue costs   13,023    22,096 
Intangible assets - net   6,261    10,978 
Other assets   4,800    9,692 
Total Other Assets   199,101    181,784 
           
Total Assets  $1,072,827   $1,075,172 
           
Liabilities and Stockholders' Deficit          
           
Current Liabilities          
Accounts payable and accrued liabilities  $4,593,259   $4,539,930 
Accounts payable and accrued liabilities - related parties   650,498    530,769 
Convertible debt - net of discount   2,742,791    2,576,043 
Non convertible debt - net of discount   3,498,074    3,533,192 
Deferred franchise revenue   118,750    122,750 
Derivative liabilities   830,131    180,418 
Total Current Liabilities   12,433,503    11,483,102 
           
Equity          
Series A convertible Preferred stock, par value $0.001; 2,500,000 shares authorized; 931,360 issued and outstanding   932    932 
Common stock, par value $0.001; 75,000,000 shares authorized; 51,057,566  and 47,170,509 issued and outstanding   51,058    47,171 
Additional paid in capital   12,273,959    12,114,969 
Accumulated deficit   (23,004,407)   (21,881,988)
Total stockholders' deficit   (10,678,458)   (9,718,916)
Noncontrolling interest in subsidiary   (682,218)   (689,014)
Total equity   (11,360,676)   (10,407,930)
           
Total Liabilities and Stockholders' Deficit  $1,072,827   $1,075,172 


2
 

 

Soupman, Inc. and Subsidiaries

 Consolidated Statements of Operations

(Unaudited)

 

   Three Months Ended November 30, 
   2014   2013 
         
Revenue        
Soup sales - net  $600,234   $1,072,216 
Franchise royalties   41,250    29,432 
Total revenue   641,484    1,101,648 
           
Cost of sales   573,797    967,027 
           
Gross profit   67,687    134,621 
           
Operating expenses:          
General and administrative   508,811    939,742 
Royalty   18,067    56,250 
Total operating expenses   526,878    995,992 
           
Loss from operations   (459,191)   (861,371)
           
Other income (expense)          
Interest income   -    1,866 
Interest expense   (306,719)   (382,060)
Forbearance agreement   -    (165,000)
Prepayment of debt penalty   -    (56,700)
Change in fair value of derivative liabilities   (349,713)   960,181 
Total other income (expense)  - net   (656,432)   358,287 
           
Net loss including noncontrolling interest   (1,115,623)   (503,084)
  Income (loss) attributable to noncontrolling interest   6,796    (5,677)
           
Net loss attributable to Soupman  $(1,122,419)  $(497,407)
           
Basic and diluted loss per common share  $(0.02)  $(0.01)
           
Weighted average number of common shares outstanding          
  during the period - basic and diluted   48,071,202    37,226,004 

 

3
 

 

Soupman, Inc. and Subsidiaries

Consolidated Statement of Stockholders 'Deficit

Three Months Ended November 30, 2014

 (Unaudited) 

 

   Preferred Stock
$0.001 Par Value
   Common Stock
$0.001 Par Value
   Additional
Paid-in
   Accumulated   Noncontrolling   Total Stockholders' 
   Shares   Amount   Shares   Amount   Capital   Deficit   Interest   Deficit 
Balance, August 31, 2014   931,360   $932    47,170,509   $47,171   $12,114,969   $(21,881,988)  $(689,014)  $(10,407,930)
                                         
Stock based compensation   -    -    -    -    45,304    -    -    45,304 
                                         
Issuance of common stock for services rendered  ($0.03 - $0.19/share)   -    -    1,030,000    1,030    32,570    -    -    33,600 
                                         
Issuance of common stock for debt and accrued interest ($0.02 - $0.10/share)   -    -    2,857,057    2,857    81,116    -    -    83,973 
                                         
Net loss   -    -    -    -    -    (1,122,419)   6,796    (1,115,623)
                                         
Balance, November 30, 2014   931,360   $932    51,057,566   $51,058   $12,273,959   $(23,004,407)  $(682,218)  $(11,360,676)

 

4
 

 

Soupman, Inc. and Subsidiaries

Consolidated Statements of Cash Flows

(Unaudited)

 

   Three Months Ended November 30, 
   2014   2013 
Cash Flows From Operating Activities:          
Net loss  $(1,115,623)  $(503,084)
Adjustments to reconcile net loss to net cash used in operating activities:          
Depreciation   1,261    2,245 
Amortization of intangibles   4,717    4,718 
Amortization of debt discount   183,482    225,029 
Amortization of debt issue cost   9,073    6,130 
Stock issued for compensation   45,304    127,382 
Stock issued for services   33,600    122,000 
Stock issued for forbearance agreement   -    165,000 
Change in fair market value of derivative liabilities   349,713    (960,181)
Changes in operating assets and liabilities:          
(Increase) Decrease in:          
 Accounts receivable   (57,645)   (46,625)
 Accounts receivable - related party   (19,999)   27,889 
 Inventory   70,000    (35,842)
 Other assets   4,892    - 
 Prepaid expenses   22,617    5,913 
Increase (Decrease) in:          
Accounts payable and accrued liabilities   53,329    678,137 
Accounts payable and accrued liabilities - related parties   119,729    1,680 
Deferred franchise revenue   (4,000)   - 
Net Cash Used in Operating Activities   (299,550)   (179,609)
           
Cash Flows From Investing Activities:          
Due from franchisee   -    (7,730)
Due from franchisee - related party   (16,000)   (16,311)
Purchase of property and equipment   -    (7,090)
Net Cash Used in Investing Activities   (16,000)   (31,131)
           
Cash Flows From Financing Activities:          
Proceeds from issuance of notes   383,500    270,000 
Repayment of debt   (51,379)   (382,683)
Cash paid for direct offering costs of convertible notes payable and issuance of common stock   -    (3,000)
Proceeds from issuance of common stock   -    316,000 
Net Cash Provided by Financing Activities   332,121    200,317 
           
Net increase (decrease) in cash   16,571    (10,423)
           
Cash at beginning of period   14,179    114,894 
           
Cash at end of period  $30,750   $104,471 
           
Supplemental disclosures of cash flow information:          
Cash paid for interest  $1,000   $80,231 
Cash paid for taxes  $-   $- 
           
Supplemental disclosures of non-cash investing and financing activities:          
Debt discount recorded on derivatives  $300,000   $- 
Stock issued for debt  $83,973   $- 

 

5
 

 

Soupman, Inc. and Subsidiaries

Notes to Consolidation Financial Statements

November 30, 2014

(Unaudited)

 

Note 1 - Significant Accounting Policies and Basis of Presentation

 

Basis of Presentation

 

The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules and regulations of the United States Securities and Exchange Commission for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they may not include all the information and footnotes necessary for a comprehensive presentation of financial position, results of operations or cash flows. It is management's opinion, however, that all material adjustments (consisting of normal recurring adjustments) have been made which are necessary for a fair financial statement presentation. The results for the interim period are not necessarily indicative of the results to be expected for the full year.

 

The unaudited interim consolidated financial statements should be read in conjunction with the Company’s Annual Report filed on Form 10-K for the year ended August 31, 2014, which contains the audited financial statements and notes thereto, together with Management’s Discussion and Analysis of Financial Condition and Results of Operation, for the year ended August 31, 2014. The interim results for the period ended November 30, 2014 are not necessarily indicative of results for the full fiscal year.

 

Fair Value of Financial Instruments

 

The Company measures assets and liabilities at fair value based on an expected exit price as defined by the authoritative guidance on fair value measurements, which represents the amount that would be received on the sale of an asset or paid to transfer a liability, as the case may be, in an orderly transaction between market participants. As such, fair value may be based on assumptions that market participants would use in pricing an asset or liability. The authoritative guidance on fair value measurements establishes a consistent framework for measuring fair value on either a recurring or nonrecurring basis whereby inputs, used in valuation techniques, are assigned a hierarchical level.

 

The following are the hierarchical levels of inputs to measure fair value:

 

Level 1 – Observable inputs that reflect quoted market prices in active markets for identical assets or liabilities.

 

Level 2 - Inputs reflect quoted prices for identical assets or liabilities in markets that are not active; quoted prices for similar assets or liabilities in active markets; inputs other than quoted prices that are observable for the assets or liabilities; or inputs that are derived principally from or corroborated by observable market data by correlation or other means.

 

Level 3 – Unobservable inputs reflecting the Company’s assumptions incorporated in valuation techniques used to determine fair value. These assumptions are required to be consistent with market participant assumptions that are reasonably available.

 

The following are the major categories of liabilities measured at fair value on a recurring basis as of at November 30, 2014 and August 31, 2014, using quoted prices in active markets for identical liabilities (Level 1); significant other observable inputs (Level 2); and significant unobservable inputs (Level 3):

 

    Nov. 30,
2014
    Aug. 30,
2014
 
Derivative Liabilities (Level 3)  $830,131   $180,418 

 

The Level 3 valuation relates to derivative liabilities measured using management's estimates of fair value as well as other significant inputs, such as volatility and risk free interest rate, which may be unobservable. See Note 5.

  

The Company has determined the estimated fair value amounts presented in these financial statements using available market information and appropriate methodologies. However, considerable judgment is required in interpreting market data to develop the estimates of fair value. The estimates presented in the financial statements are not necessarily indicative of the amounts that could be realized in a current market exchange. The use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value amounts.

 

Fair value estimates are based upon pertinent information available. The Company has determined that the carrying value of all financial instruments approximates fair value. The Company's financial instruments consist primarily of accounts receivable, inventory, prepaid expenses, accounts payable and accrued liabilities and debt. The carrying amounts of the Company's financial instruments generally approximated their fair values at November 30, 2014 and August 31, 2014, respectively, due to the short-term nature of these instruments.

  

6
 

 

Soupman, Inc. and Subsidiaries

Notes to Consolidation Financial Statements

November 30, 2014

(Unaudited)

 

Note 2 - Accounts Receivable / Accounts Receivable - Related Parties

 

Accounts receivable consisted of the following at November 30, 2014 and August 31, 2014.

 

   Nov. 30,
2014
   August 31,
2014
 
Accounts receivable  $649,037   $590,199 
Allowance for doubtful accounts   (233,096)   (231,903)
Accounts receivable – net  $415,941   $358,296 

 

Related-parties accounts receivable including amounts due from franchisees consisted of the following at November 30, 2014 and August 31, 2014.

 

   Nov. 30,
2014
   August 31,
2014
 
Accounts receivable, related parties  $96,334   $76,335 
Due from franchisee        62,683 
Accounts receivable, related parties – net  $96,334   $139,018 

 

Note 3 – Accounts Payable and Accrued Liabilities – Related Parties

 

Accounts payable and accrued liabilities – related parties consist of the following at November 30, 2014 and August 31, 2014:

 

   Nov. 30,
2014
   August 31,
2014
 
Accrued payroll  $565,698   $452,569 
Accrued expenses (auto allowances)   84,800    78,200 
Total  $650,498   $530,769 

 

7
 

 

Soupman, Inc. and Subsidiaries

Notes to Consolidation Financial Statements

November 30, 2014

(Unaudited)

Note 4 – Debt

 

Debt consists of the following at November 30, 2014 and August 31, 2014:

 

Description  Nov. 30,
2014
   Aug. 31,
2014
 
A. Unsecured convertible debt – Derivative Liabilities - net  $1,759,920   $1,533,154 
           
B. Convertible debt – Unsecured   1,434,707    1,378,207 
Less : debt discount   (451,836)   (335,318)
Convertible debt – net   982,871    1,042,889 
           
C. Notes – Secured   2,700,000    2,700,000 
           
D. Notes – Unsecured   798,074    833,192 
           
Total debt  $6,240,865   $6,109,235 

 

Debt in default consists of secured and unsecured notes totaling $2,700,000 and $2,477,586 at November 30, 2014, and $2,546,597 and $1,646,768 at August 31, 2014, respectively.

 

The corresponding debts above are more fully discussed below:

 

(A)           Unsecured Convertible Debt – Derivative Liabilities

 

During the three months ended November 30, 2014, the Company issued unsecured convertible debt and warrants that had an embedded conversion feature in the form of an anti-dilution provision (ratchet feature); see Note 5. During the year ended August 31, 2014, the Company converted certain of its convertible debts to derivative debt because of the application of an embedded conversion feature in the form of an anti-dilution provision (ratchet feature); see Note 5.

 

This debt includes the following terms: 

 

Description  Information  Nov. 30,
2014
   Aug. 31,
2014
 
Interest Rate      12%     N/A   
Maturity Date(s)       Oct. 7, 2015        June 24, 2014 to
Dec. 9, 2014  
 
              
Series 5  Converted to a derivative after 180 days; see Note 4(b).   -    73,404 
Series 10  Fixed conversion price of $0.04  (no warrants)   283,739    - 

  

During the year ended August 31, 2014, the Company entered into various debts that could have become a derivative if not pad within 180 days (Series 1 debts); the Company entered into no such debt during the three months ended November 30, 2014. During the year ended August 31, 2014, the Company paid $158,400 as a non-payment of debt penalty against these debts; the Company made no such payments during the three months ended November 30, 2014.

 

Unsecured convertible debt recorded as a derivative liability consists of the following:

 

Description  Nov. 30,
2014
   Aug. 31,
2014
 
Carry forward balance  $1,533,154   $1,732,250 
Borrowings   300,000    - 
Repayment of convertible debt   (16,261)   (118,500)
Reclassification of convertible non-derivative debt to derivative debt   -    347,160 
Conversion of convertible non-derivative debt to stock   (56,973)   (427,756)
Ending balance  $1,759,920   $1,533,154 

 

8
 

 

Soupman, Inc. and Subsidiaries

Notes to Consolidation Financial Statements

November 30, 2014

(Unaudited)

 

(B)           Convertible Debt – Unsecured

 

During the three months ended November 30, 2014, and the year ended August 31, 2014, the Company issued unsecured convertible debt (that was not recorded as a derivative liability.) This debt includes the following terms: 

 

   Information  Nov. 30,
2014
   Aug. 31,
2014
 
Interest rate      8%   12%
Default interest rate      22%   N/A 
Term      9 months    1 year 
Maturity      Jun. 9, 2015    Aug. 3, 2014 to
Aug. 20, 2014
 
Series 5 debt  Zero percent (0%) interest if repaid within 3 months; Convertible at the lesser of $0.47 or 65% of the lowest trade price in the then prior 25 days, but only after 180 days from the loan date   -    1,380,526 
Series 7 debt  1-year, 12% interest, fixed conversion at $0.60   83,500    280,000 
Series 8 debt  24 month, 8% interest, fixed conversion at $0.40  $-   $100,000 
Series 9 debt  9 months, 8% interest, fixed conversion at $0.02   83,500    - 

  

In connection with Series 5 debt and for the year ended August 31, 2014, the Company incurred $25,000 in debt issue costs.

 

Holders of Series 5 debt are entitled, at their option, to convert all or part of the principal and accrued interest into shares of the Company’s common stock at the conversion prices and terms discussed above.

 

In connection with its series 7 debt, and for the years ended August 31, 2014 the Company issued 900,000 shares of its common stock with a fair value of $270,000; there were no shares issued during the three months ended November 30, 2014.

 

Convertible debt consists of the following activity and terms:

 

   Nov. 30,
2014
   Aug. 31,
2014
 
Carry forward balance  $1,378,207   $479,097 
Borrowings   83,500    1,246,270 
Repayment of convertible debt   -    - 
Conversion of convertible debt to stock   (27,000)   - 
Reclassification of convertible debt to derivative debt   -    (347,160)
Ending balance  $1,434,707   $1,378,207 

 

(C)           Notes - Secured

 

Secured notes consist of the following activity and terms:

 

   Information  Nov. 30,
2014
   Aug. 31,
2014
 
Interest Rate      7% - 12.75%   7% - 12.75%
Maturity      Sep. 1, 2014- 
Aug. 28, 2014
    Sep. 1, 2014- 
Aug. 28, 2014
 
SKI debts  Secured by all the assets of OSM   2,700,000    2,700,000 

 

The total amounts owed to both secured debt holders represent amounts originally owed by SKI which were guaranteed by the Company.

 

   Nov. 30,
2014
   Aug. 31,
2014
 
Carry forward balance  $2,700,000   $3,246,902 
Repayment of debt   -    (50,000)
Conversion of debt to common stock   -    (206,000)
Removal of secured debt associated with deconsolidation of VIE   -    (290,902)
Ending balance  $2,700,000   $2,700,000 

 

9
 

 

Soupman, Inc. and Subsidiaries

Notes to Consolidation Financial Statements

November 30, 2014

(Unaudited)

 

(D)           Notes – Unsecured Demand Notes

 

Unsecured demand notes consist of the following:

 

Description  Nov. 30,
2014
   Aug. 31,
2014
 
Carry forward balance  $833,192   $1,127,183 
Borrowings   -    626,870 
Repayments   (35,118)   (708,861)
Conversion of demand debt to stock   -    (212,000)
Ending balance  $798,074   $833,192 

 

Unsecured demand notes at August 31, 2014 and 2013 consist of the following:

 

Amount   Information   Maturity
$750,574     Represents current convertible demand debt   Nov. 6, 2014 – May 10, 2014
$10,000     Represents an advance from a third party   Due on demand
$37,500     The Company is in litigation regarding this debt; see Note 8.   In litigation

 

E)           Debt discount

 

For the three months ended November 30, 2014 and the year ended August 31, 2014, the Company recorded debt discount of $300,000 and $610,064, respectively.

 

For the three months ended November 30, 2014, debt discount consisted of $300,000 related to its series 10 debt, which contained embedded conversion options that are required to be bifurcated and reported at fair value (see Note 4(A)).

 

For the year ended August 31, 2014, debt discount consists of $66,843 related to notes that contained embedded conversion options that are required to be bifurcated and reported at fair value (see Note 4(A)) and, $543,221 related to convertible debt that contained a beneficial conversion feature (see Note 4(B)).

 

Debt – net of discount consist of the following:

 

   Nov. 30,
2014
   Aug. 31,
2014
 
Total outstanding debt  $6,692,701   $6,444,553 
Carry forward debt discount – net   (335,318)   (584,768)
Additional debt discount   (300,000)   (610,064)
Amortization of debt discount   183,482    859,514 
Debt  – net  $6,240,865   $6,109,235 

 

The Company’s remaining debt discount of $451,837 will be fully amortized during fiscal year 2016.

 

The Company recorded debt discount relating to its derivative debt to the extent of gross proceeds raised in its debt financing transactions, and immediately expensed the remaining value of the derivative if it exceeded the gross proceeds of the note.  The Company recorded a derivative expense of $529,808 and $0 for the three months ended November 30, 2014 and the year ended August 31, 2014, respectively.

 

10
 

 

Soupman, Inc. and Subsidiaries

Notes to Consolidation Financial Statements

November 30, 2014

(Unaudited)

 

Note 5 – Derivative Liabilities

 

During the three months ended November 30, 2014, the Company identified conversion features embedded within its convertible debt (see Note 4(A)).

 

The fair value of the Company’s derivative liabilities at November 30, 2014 and August 31, 2014 is as follows:

 

   Nov. 30,
2014
   Aug. 31,
2013
 
Carry forward balance  $180,418   $1,895,630 
Fair value at the commitment date for convertible notes   829,808    241,444 
Loss on debt extinguishment   -    147,893 
Fair value mark-to-market adjustment   (180,095)   (2,104,549)
Derivative liabilities (balance)  $830,131   $180,418 

 

The Company incurred a derivate expense of $529,808, which is included in the change in fair value in derivative liabilities on both the Company’s statement of operations and cash flow.

 

The fair values at the commitment and re-measurement dates for convertible debt and warrants that were treated as derivative liabilities are based upon the following estimations/assumptions made by management for the three months ended November 30, 2014:

 

Three months ended  Commitment Date  Re-measurement Date  
         
Exercise price  $0.04 per share  Lesser of $0.47 or 65% of the lowest trade price in the then prior 25 days, but only after 180 days from the date of the loan  
Expected dividends   0% 0 %
Expected volatility  294% 169% to 316 %
Expected term: convertible debt and warrants  1 year  .18 to 1.48 years  
Risk free interest rate   0.10% .02 %

  

Note 6 - Stockholders’ Deficit

 

During the three months ended November 30, 2014, the Company expensed $45,304 in stock based compensation and offset this amount to APIC. This amount is comprised of compensation expenses relating to certain contractual commitments (See Note 8).

 

(A)        Series A – Convertible Preferred Stock

 

Holders of the Company’s Series A preferred shares have no voting rights and receive no dividends, but receive $1.00 per share in the case of liquidation of the Company. This series of shares convert on a 1:1 basis at par value ($0.001) into shares of the Company’s common stock.  In the event that shares are issued, the Company will evaluate for beneficial conversion features.

 

For the three months ended November 30, 2014, no preferred stock was converted into common stock

 

(B)        Common Stock

 

For the three months ended November 30, 2014, the Company issued the following shares of common stock:

 

Type  Shares   Fair value   Range of
value
per share
 
                
Stock  issued for services   1,030,000   $33,600   $  0.03 - $0.19 
                
Stock issued for debt   2,857,057   $83,973   $  0.02 - $0.10 

 

11
 

 

Soupman, Inc. and Subsidiaries

Notes to Consolidation Financial Statements

November 30, 2014

(Unaudited)

 

Fair value for the share issued was based upon the quoted closing trading price on the dates shares were issued and the conversion prices for the stock issued for debt.

 

(C)       Stock Options

 

The Company issued no stock options during the three months ended November 30, 2014.

  

The following is a summary of the Company’s stock option activity for the three months ended November 30, 2014:

 

   Options   Weighted
Average
Exercise Price
   Weighted
Average
Remaining
Contractual  Life
   Aggregate
 Intrinsic
 Value
 
Balance – August 31, 2014   1,975,000   $0.53    7.44 years    408,250 
Granted   -    -           
Exercised   -    -           
Forfeited   -    -           
Balance – November 30, 2014   1,975,000   $0.51    5.76 years    - 
                     
Outstanding options held by related parties (November 30, 2014)   1,450,000                
Exercisable options held by related parties (November 30, 2014)   1,450,000                
Exercisable options held by third parties (November 30, 2014)   425,000                

 

The following is a summary of the Company’s unvested stock options at November 30, 2014:

 

   Un-vested
Stock Options
   Weighted
Average
Grant Date
Fair Value
 
Unvested – August 31, 2014   100,000   $0.75 
Granted   -    - 
Vested/Exercised   -    - 
Forfeited/Cancelled   -    - 
Unvested – November 30, 2014   100,000   $- 
Weighted average remaining life for vesting   6.19 years      

 

No options vested during the three months ended November 30, 2014; therefore, the Company had no expense related to options that vested.

 

(D)       Stock Warrants

 

The following is a summary of the Company’s stock warrant activity for the three months ended November 30, 2014:

 

   Number of
Warrants
   Weighted Average
Exercise
Price
 
Balance at August 31, 2014   5,938,202   $.67 
Granted   -    - 
Exercised   -    - 
Forfeited/Cancelled   -    - 
Balance at November 30, 2014   5,938,202   $.66 

 

12
 

 

Soupman, Inc. and Subsidiaries

Notes to Consolidation Financial Statements

November 30, 2014

(Unaudited)

 

    Warrants Outstanding  Warrants Exercisable
Range of
exercise
price
   Number
Outstanding
  Weighted
Average
Remaining
Contractual Life
(in years)
   Weighted
Average 
Exercise Price
   Number 
Exercisable
  Weighted
Average 
Exercise Price
   Intrinsic
Value
 
$  0.40 - 1.25   5,938,202   2.52   $.66   5,938,202  $.66   $0 

 

Note 7 - Commitments and Contingencies

 

Commitments

 

During the three months ended November 30, 2014, the Company recorded stock-based compensation expense of $45,304 in connection with a June 2012 agreement, (as further described in the Company’s Annual Report filed on Form 10-K for the year ended August 31, 2014.)

 

 Litigations, Claims and Assessments 

 

 Soupman, Inc. is one of several defendants in a lawsuit filed by Gourmet Sales and Marketing, LLC (“GSM”) in July 2011 in the Supreme Court of the City of New York (Case Index 651961/2011). GSM claims that it is owed $37,500 in sales commissions based upon an August 2009 sales and marketing agreement. Aside from the claim for an accounting, compensatory damages and/or punitive damages are demanded with respect to the other claims. The Company served its answer to the complaint in October 2011, in which it denied the allegations of the complaint with respect to the claims of liability and asserted numerous defenses and affirmative defenses.  The matter is in the discovery phase of litigation.  In the Company and its counsel’s opinion, the complaint lacks merit as the agreement that forms the basis of GSM’s claims may be invalid and unenforceable, GSM is not owed any money, and the Company believes that punitive damages are without basis.

 

Soupman, Inc. is a defendant in a lawsuit filed by Mark Hellner and four other plaintiffs in New York State Supreme Court (Case Index No. 6083/2014). The plaintiffs are holders of a series of notes issued by the Company and are seeking repayment of the notes with interest. The plaintiffs have prevailed in the action and on December 23, 2014 submitted a proposed judgment in the amount of $263,941.43.  The Court received the proposed judgment and did not immediately enter the judgment.  Instead, in early January 2015 the court requested that counsel attempt to agree on the prejudgment interest calculations due and then present a stipulated judgment. To date, no such agreement has been reached. No assurance can be given as to when the judgment in this case will be entered. In addition, the entry of this judgment could have a material adverse effect on the Company and its business operations.

 

The Original Soupman, Inc. Kiosk Concepts Inc. and International Gourmet Soups Inc. are defendants in a lawsuit filed by Penny Fern Hart in New York State Supreme Court (Case Index No. 653215/ 2014) in which Hart is demanding repayment of a note in the amount of $1,500,000 plus interest for 2014 and collection costs. We believe. Hart has tortuously interfered with the Company’s business, business relationships and attempted capital financings and that the interference has had negative impact on the Company's business and enterprise value. The case is in discovery phase and the Company believes it will prove liability on the part of Hart. No assurance can be given as to the ultimate outcome of this action or its effect on the Company.  In the event the Company is not successful in defending this action it would likely have a material adverse effect on the Company and its business operations.

 

Soupman, Inc. is also a defendant in a filed by Hart in New York State Supreme Court (Case Index No. 650501/14) in which Hart is seeking, among other things, to have a restricted legend removed from 550,000 shares of Soupman, Inc. common stock. The Company believes that Hart has breached the terms of the Forbearance Agreement, dated May 20, 2011, as amended, which she entered into with the Company, and specifically that she sold shares that she was not entitled to sell by its terms, and, as such, and the restriction should not be lifted until a full accounting is made of her sales. The case is in discovery phase and the Company believes it will prevail in proving Hart breached the Forbearance Agreement. No assurance can be given as to the ultimate outcome of these actions or its effect on the Company.  In the event the Company is not successful in defending this action it could likely have a material adverse effect on the Company and its business operations.

  

13
 

 

Soupman, Inc. and Subsidiaries

Notes to Consolidation Financial Statements

November 30, 2014

(Unaudited)

 

Note 8 - Going Concern

 

As reflected in the accompanying financial statements, the Company had a net loss of approximately $1.3 million and net cash used in operations of approximately $0.3 million for the three months ended November 30, 2014, and a working capital deficit of approximately $11.1 million and a stockholders’ deficit of approximately $10.9 million at November 30, 2014. These factors raise substantial doubt about the Company’s ability to continue as a going concern.

 

The ability of the Company to continue its operations is dependent on management's plans, which may include the raising of capital through debt and/or equity markets with some additional funding from other traditional financing sources, including term notes, until such time that funds provided by operations are sufficient to fund working capital requirements.  The Company may need to incur liabilities with certain related parties to sustain the Company’s existence.

 

The Company will require additional funding to finance the growth of its current and expected future operations as well as to achieve its strategic objectives.  The Company believes its current available cash along with anticipated revenues will be insufficient to meet its cash needs for the near future.  There can be no assurance that financing will be available in amounts or terms acceptable to the Company, if at all.

 

In response to these problems, management has taken the following actions:

 

seeking equity financing of $3.0 million
seeking to increase sales and distribution of Tetra Pak products; and
seeking to open new franchise locations;
allocating sufficient resources to continue advertising and marketing efforts

 

The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business.  These financial statements do not include any adjustments relating to the recovery of the recorded assets or the classification of the liabilities that might be necessary should the Company be unable to continue as a going concern.

 

Note 9 - Subsequent Events  

 

The following unregistered securities were issued by the Company between December 1, 2014 and March 6, 2015:

 

Series B Preferred Stock

 

The Company issued 4,715,000 shares of Series B Preferred Stock at $0.20 per share, for cash proceeds of $943,000.

 

14
 

  

ITEM 2.     Management’s Discussion and Analysis of Financial Condition and Results of Operations.

 

The following analysis of our consolidated financial condition and results of operations for the quarter ended November 30, 2014 should be read in conjunction with the consolidated financial statements, including footnotes, and other information presented elsewhere in this Quarterly Report on Form 10-Q and the risk factors and the financial statements and the other information set forth in our Annual Report on Form 10-K filed with the Securities and Exchange Commission on February 25, 2015.

 

The following Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is intended to help the reader understand our results of operations and financial condition.

 

Cautionary Note Regarding Forward-Looking Statements

 

This report and other documents that we file with the Securities and Exchange Commission contain forward-looking statements that are based on current expectations, estimates, forecasts and projections about our future performance, our business, our beliefs and our management’s assumptions.  Statements that are not historical facts are forward-looking statements.  Words such as “expect,” “outlook,” “forecast,” “would,” “could,” “should,” “project,” “intend,” “plan,” “continue,” “sustain”, “on track”, “believe,” “seek,” “estimate,” “anticipate,” “may,” “assume,” and variations of such words and similar expressions are often used to identify such forward-looking statements, which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.  These forward-looking statements are not guarantees of future performance and involve risks, assumptions and uncertainties, including, but not limited to, those described in our reports that we file or furnish with the Securities and Exchange Commission.  Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those indicated or anticipated by such forward-looking statements.  Accordingly, you are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date they are made.  Except to the extent required by law, we undertake no obligation to update publicly any forward-looking statements after the date they are made, whether as a result of new information, future events, changes in assumptions or otherwise.

 

Overview

 

We manufacture and sell soups under the “Original Soupman®” brand.  We sell our soups in the new and innovative Tetra Recart shelf-stable cartons, which allow our soups to be sold next to Campbell’s and Progresso in the canned soup aisle of supermarkets across the country. We believe that side-by-side, many consumers will choose Soupman’s famous soups from Al Yeganeh   over the other typical inferior tasting canned soups and that we will capture the health conscientious consumers who are aware that recent reports have warned consumers that canned products contain BPA, a known cancer causing agent. Tetra Recart packaging is BPA free and recyclable.

 

We also franchise and license restaurants to sell our soups in specifically designated heavy traffic locations, such as the Mohegan Sun Casino in Connecticut and Resorts Hotel and Casino in Atlantic City, New Jersey.  We recently introduced our cart and food truck concept, the “Soupmobile”, and believe that this business segment has excellent growth potential. We sell the Original Soupman soups in bulk 8 lb. frozen “heat ‘n serve” pouches to our franchised and licensed restaurants. The bulk 8 lb. pouches are also used for the Original Soupman soups and products that we sell to the New York City Public school system.

 

Results of Operations – Three Months Ended November 30, 2014

 

The following table summarizes our operating results for the three months ended November 30, 2014 and 2013; all amounts have been rounded to the nearest thousandth.

 

   2014   2013 
Revenue  $641,000   $1,102,000 
Cost of Sales   

573,000

    967,000 
Gross Profit   68,000    135,000 
Operating Expenses   527,000    996,000 
Loss From Operations   (459,000)   (861,000)
Other Income (Expense)   (656,000)   358,000 
Net Loss (including non-controlling interest)  $(1,116,000)  $(503,000)

 

15
 

 

Revenue

Soup sales accounted for approximately 94% and 97% of overall revenue for the three months ended November 30, 2014 and 2013, respectively, while franchise revenues accounted for the remaining 6% and 3%, respectively. Our quarter-over-quarter revenues decreased approximately 42% primarily attributable to an FDA forced recall, due to mislabeling on September 22, 2014 of our number one selling soup. The recall was due solely to a misprint on the ingredients label however, the soup was made to our specifications and still safe to eat. All product had to be removed from the retailer’s shelves as well as all warehouses nationwide. Many retailers across the country did not stock the product or take delivery for the quarter. Returns and refunds for the products greatly impacted our sales for the quarter as they are deducted directly from sales.  As we collect and assess the total impact we will attempt to get reimbursement from our supplier and insurance company.

 

Our Tetra Recart line of soups accounted for approximately $260,000 (40%) of total revenue, which was reduced by approximately $180,000 as a result of the recall, while sales to the New York City school system accounted for approximately another $157,000 (24%) of total revenue.  The balance of soup sales of approximately $183, 000 (36 %) of total revenue were sold to our franchisees. Our quarter-over-quarter soup sales decreased 44%, due to the reasons explained above.

 

Reported revenues are net of slotting fees (a fee charged by supermarkets in order to have the product placed on their shelves) promotions (such as buy one get one free), sales discounts (early payment discounts) and the credit for the recall of the above product mentioned.  Slotting fees, product recall and promotions for three months ended November 30, 2014 and 2013 were approximately $208,000 and $114,000, respectively, while sales discounts for the same periods were approximately $12,000 and $20,000 respectively. The product recall accounted for approximately $180,000.

 

Cost of Sales

Costs of sales, for the three months ended November 30, 2014 and 2013, included freight of approximately $38,000 and $49,000 respectively.  Cost of sales represents costs associated with soup sales only; the Company had no cost of sales associated with its franchise activities.

 

Cost of Sales for the three months ended November 30, 2014 and 2013 increased approximately 1% (from 88% to 89%)  due primarily to the increase in slotting fees and promotion  and the credit issued for the recall mentioned above.  This percentage is negatively impacted by slotting fees and promotions, sales discounts and the credit for the recall, which lowers the reportable revenue and therefore increase our cost of sales percentage.  

 

Cost of goods sold for our tetra soups (specifically cost of ingredients and packaging) decreased 9% quarter-over-quarter (from 69% to 60%),  primarily attributable to our transitioning the manufacturing of our Tetra Recart production from Canada to the United States in early 2014. All tetra pack soups sold during the three months ended November 30, 2014 were manufactured in the United States.

  

Operating  Expenses

Operating expenses for the three months ended November 30, 2014 and 2013 were approximately $527, 000 and $996, 000, respectively, or 82% and 90% of revenue, respectively.  Major components of our operating expenses for the three months ended November 30, 2014 primarily consisted of approximately $196,000 for payroll and payroll related expenses, approximately $111,000 in professional fees, approximately $57,000 of insurance expense, $45,000 for stock issued for services, approximately $38,000 for business travel and trade shows and $18,000 in royalty fees.

 

Other Income/Expenses

Other expense for the three months ended November 30, 2014 was approximately 656, 000 compared to other income of approximately $358, 000 for the three months ended November 30, 2013. Our quarter-over-quarter increase in other expense of approximately  $1,014,000 was primarily associated with an approximately $1,310,000 change in fair value of derivative liabilities, offset by an decrease in interest expense of $75,000 and a decrease of $165,000 for a forbearance agreement and $58, 000 in debt penalty payments.

 

16
 

 

Net Loss

Our net loss for the three months ended November 30, 2014 as compared to the three months ended November 30, 2013 increased approximately $625,000 primarily due to the product recall, derivative expense and other factors discussed above under Revenue, Cost of Sales, Operating Expenses and Other Expenses.

 

Other than the product recall in the period there were no other unusual or infrequent events or transactions, or significant economic changes that materially affected the amount of reported income or expenses from operations and nor is the Company aware of any known uncertainties that it reasonably expects will have a material impact income or expenses from operations, other than in the normal course of business such as seasonality.

 

Liquidity and Capital

 

The following table summarizes our working capital as of November 30, 2014 and August 31, 2013; all amounts have been rounded to the nearest thousandth.

 

   As of November 30, 2014   As of
August 31, 2014
 
Current assets  $862,000   $880,000 
Current liabilities  $12,434,000   $11,483,000 
Working capital (deficit)  $(11,572,000)  $(10,603,000)

 

At November 30, 2014, we had cash and cash equivalents of approximately $31,000 as compared to approximately $14,000 at August 31, 2014.  Since November 30, 2014, we have additional committed capital of $943,000 through the issuance of preferred stock.  Our working capital deficit increased approximately $969,000 primarily due to an increase in derivative liabilities of approximately $650,000 and an increase in accounts payable of approximately of $173,000 and an increase in debt of approximately $132,000.

 

For the three months ended November 30, 2014, net cash used in operating activities was approximately $300,000 as compared to approximately $180,000 for the three months ended November 30, 2013.  Our primary uses of net cash from operating activities for the three months ended November 30, 2014 were losses from operations of approximately $1,116,000 offset by a change in fair market value of derivative liabilities.

 

Net cash used in investing activities for the three months ended November 30, 2014 was approximately $16,000 due to an increase in due from franchisees compared to approximately $31,000 for the three months ended November 30, 2013.

 

Net cash provided by financing activities for the three months ended November 30, 2014 was approximately $332,000 which included approximately $384,000 from the issuance of convertible notes offset by repayment of debt of approximately $51,000.

 

17
 

 

Current and Future Financing Needs

 

We have incurred a stockholders’ deficit of approximately $10,678,000 through November 30, 2014 and have incurred a net loss of approximately $1,122,000 for the three months ended November 30, 2014. We have incurred negative cash flow from operations since inception and have primarily financed our operations through the sale of stock and the issuance of notes. At November 30, 2014, we had short term debt of approximately $6,241, 000 and a working capital deficit of approximately $11,572,000. These factors raise substantial doubt about our ability to continue as a going concern. During the three months ended November 30, 2014, we raised approximately $384,000 from the issuance of notes and since then we have additional committed capital of additional $943,000 from the issuance of preferred stock. Our debt of approximately $6,241, 000 includes a guarantee of debt of $2,700,000. We have spent, and expect to continue to spend, substantial amounts in connection with implementing our business strategy, including the promotion of our new shelf stable Tetra Pak, our advertising and marketing campaign, and fees in connection with regulatory compliance and corporate governance. The actual amount of funds we will need to operate is subject to many factors, some of which are beyond our control. We do not have sufficient cash to operate our business at the current level for the next twelve months and insufficient cash to achieve our business goals. If our anticipated sales for the next few months do not meet our expectations, our existing resources will not be sufficient to meet our cash flow requirements. Furthermore, if our expenses exceed our anticipations, we will need additional funds to implement our business plan. We will not be able to fully establish our business if we do not have adequate working capital so we will need to raise additional funds, whether through a stock offering or otherwise. We believe it is important to restructure our debt with current holders, which we are negotiating at this time, in order to attract new capital to fund our growth. 

 

We are currently seeking additional funding from investors. While we believe we will require approximately $4, 000,000 to implement our full business strategy, we believe that if we are able to raise no less than $1,500,000, it will be sufficient to support our operations for the next 12 months. If we are unable to raise the entire $4, 000,000, we will be forced to reduce our marketing and promotion efforts and potentially the size of our operations as well, unless current sales increase enough to support implementing our full business plan. We believe that at $4, 000,000 in sales, our operations would be self-sustaining and cash flow positive. Due to the fact that we use co-packers to manufacture our products, have no bricks and mortar, rent very modest space and only have 4 full time employees, many of our fixed costs are minimal and will remain unchanged regardless of how much money we are able to raise. If we are forced to reduce our marketing and promotion efforts and/or size of our operations because we are unable to raise the entire $4, 000,000 and current sales do not increase enough to support implementing our full business plan, our revenues will likely be less than had we been able to implement our full program, and as a direct result our income may suffer, and may not be sufficient to cover our negative cash flow, negatively affecting our liquidity

 

Item 3.     Quantitative and Qualitative Disclosures About Market Risk.

  

Not applicable.

 

Item 4.      Controls and Procedures.

 

Disclosure Controls and Procedures

 

The Company has adopted and maintains disclosure controls and procedures that are designed to provide reasonable assurance that information required to be disclosed in the reports filed under the Exchange Act, such as this Form 10-Q, is collected, recorded, processed, summarized and reported within the time periods specified in the rules of the Securities and Exchange Commission. The Company’s disclosure controls and procedures are also designed to ensure that such information is accumulated and communicated to management to allow timely decisions regarding required disclosure. As required under Exchange Act Rule 13a-15, the Company’s management, including the Principal Executive Officer and Principal Financial Officer, has conducted an evaluation of the effectiveness of disclosure controls and procedures as of the end of the period covered by this report. Based upon that evaluation, the Company’s CEO and CFO concluded that the Company’s disclosure controls and procedures are not effective to ensure that information required to be disclosed by the Company in the reports that the Company files or submits under the Exchange Act, is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to the Company’s management, including the Company’s CEO and CFO, as appropriate, to allow timely decisions regarding required disclosure

 

18
 

 

PART II - OTHER INFORMATION

 

Item 1.       Legal Proceedings.

 

Soupman, Inc. is one of several defendants in a lawsuit filed by Gourmet Sales and Marketing, LLC (“GSM”) in July 2011 in the Supreme Court of the City of New York (Case Index 651961/2011). GSM claims that it is owed $37,500 in sales commissions based upon an August 2009 sales and marketing agreement. Aside from the claim for an accounting, compensatory damages and/or punitive damages are demanded with respect to the other claims. The Company served its answer to the complaint in October 2011, in which it denied the allegations of the complaint with respect to the claims of liability and asserted numerous defenses and affirmative defenses.  The matter is in the discovery phase of litigation.  In the Company and its counsel’s opinion, the complaint lacks merit as the agreement that forms the basis of GSM’s claims may be invalid and unenforceable, GSM is not owed any money, and the Company believes that punitive damages are without basis.

 

Soupman, Inc. is a defendant in a lawsuit filed by Mark Hellner and four other plaintiffs in New York State Supreme Court (Case Index No. 6083/2014). The plaintiffs are holders of a series of notes issued by the Company and are seeking repayment of the notes with interest. The plaintiffs have prevailed in the action and on December 23, 2014 submitted a proposed judgment in the amount of $263,941.  The Court received the proposed judgment and did not immediately enter the judgment.  Instead, in early January 2015 the court requested that counsel attempt to agree on the prejudgment interest calculations due and then present a stipulated judgment. To date, no such agreement has been reached. No assurance can be given as to when the judgment in this case will be entered. In addition, the entry of this judgment could have a material adverse effect on the Company and its business operations.

 

The Original Soupman, Inc. Kiosk Concepts Inc. and International Gourmet Soups Inc. are defendants in a lawsuit filed by Penny Fern Hart in New York State Supreme Court (Case Index No. 653215/ 2014) in which Hart is demanding repayment of a note in the amount of $1,500,000 plus interest for 2014 and collection costs. We believe. Hart has tortuously interfered with the Company’s business, business relationships and attempted capital financings and that the interference has had negative impact on the Company's business and enterprise value. The case is in discovery phase and the Company believes it will prove liability on the part of Hart. No assurance can be given as to the ultimate outcome of this action or its effect on the Company.  In the event the Company is not successful in defending this action it would likely have a material adverse effect on the Company and its business operations.

 

Soupman, Inc. is also a defendant in a filed by Hart in New York State Supreme Court (Case Index No. 650501/14) in which Hart is seeking, among other things, to have a restricted legend removed from 550,000 shares of Soupman, Inc. common stock. The Company believes that Hart has breached the terms of the Forbearance Agreement, dated May 20, 2011, as amended, which she entered into with the Company, and specifically that she sold shares that she was not entitled to sell by its terms, and, as such, and the restriction should not be lifted until a full accounting is made of her sales. The case is in discovery phase and the Company believes it will prevail in proving Hart breached the Forbearance Agreement. No assurance can be given as to the ultimate outcome of these actions or its effect on the Company.  In the event the Company is not successful in defending this action it could likely have a material adverse effect on the Company and its business operations.

 

Item 2.      Unregistered Sales of Equity Securities and Use of Proceeds.

 

During the three months ended November 30, 2014, we issued 1,030,000 shares of common stock for services rendered, having an aggregate fair market value of $33,600 based upon the quoted closing trading prices on the issue dates. We also issued 2,857,057 of common stock on the conversion of notes payable having a fair market value of $83,973 based upon the conversion prices in the notes ($0.02 - $0.10). These securities were issued pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”). The holders represented their intention to acquire the securities for investment only and not with a view towards distribution. The holders were given adequate information about us to make an informed investment decision. We did not engage in any general solicitation or advertising. We directed our transfer agent to issue the stock certificates with the appropriate restrictive legend affixed to the restricted stock. We did not engage in any general solicitation or advertising.

 

During the three months ended November 30, 2014, we issued 12% convertible notes in the principal amount of $300, 000.  These securities were issued pursuant to Section 4(a)(2) of the Securities Act and are convertible under certain circumstances into the next equity round of financing effected by the Company at the price offered in that round. The notes were issued with the appropriate restrictive legend affixed to the notes. The holders represented their intention to acquire the securities for investment only and not with a view towards distribution. The holders were given adequate information about us to make an informed investment decision. We did not engage in any general solicitation or advertising.

 

19
 

 

Subsequent to November 30, 2014, we issued 4,715,000 shares of Series B preferred stock for committed capital for cash to accredited investors, having an aggregate fair market value of $943,000 based on a price of $0.20 per share. These securities were issued pursuant to Section 4(a)(2) of the Securities Act. The holders represented their intention to acquire the securities for investment only and not with a view towards distribution. The holders were given adequate information about us to make an informed investment decision. We did not engage in any general solicitation or advertising. The stock certificates were issued with the appropriate restrictive legend affixed to the restricted stock. These funds were used to pay off convertible notes that had favorable conversion prices, the forced conversion of which throughout most of 2014 had negatively impacted and substantially depressed our stock price. 

 

Item 3.      Defaults upon Senior Securities.

 

None.

 

Item 4.      Mine Safety Disclosure

 

Not Applicable

 

Item 5.      Other Information.

 

None.

 

Item 6.      Exhibits.

 

Exhibit    
Number   Description
     
31.1*   Certification of the Principal Executive Officer, Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
     
31.2*   Certification of the Principal Financial Officer, Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
     
32.1*   Certification of the Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act
     
32.2*   Certification of the Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act

 

101.INS**     XBRL Instance
     
101.XSD**     XBRL Schema
     
101.PRE**     XBRL Presentation
     
101.CAL**     XBRL Calculation
     
101.DEF**     XBRL Definition
     
101.LAB**     XBRL Label  

  

*       Filed herewith

**     Filed herewith electronically

 

20
 

 

SIGNATURES

 

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

 

  SOUPMAN, INC.
     
Date: March 19, 2015 By: /s/ Robert N. Bertrand
    Robert N. Bertrand
   

Acting CEO

(Principal Executive Officer)

 

  SOUPMAN, INC.
     
Date: March 19, 2015 By: /s/ Robert Bertrand
    Robert Bertrand
    President & CFO
    (Principal Financial Officer)

 

 

21