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EX-32.2 - CERTIFICATION - Life On Earth, Inc.exhibit_32-2.htm
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EX-31.2 - CERTIFICATION - Life On Earth, Inc.exhibit_31-2.htm
EX-31.1 - CERTIFICATION - Life On Earth, Inc.exhibit_31-1.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 AUGUST 31, 2016

 

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 333-190788

 

 
HISPANICA INTERNATIONAL DELIGHTS OF AMERICA, INC.
(Exact name of registrant as specified in its charter)
 

 

Delaware 46-2552550
(State or other jurisdiction (I.R.S. Employer Identification No.)
 of incorporation or organization)  

 

   
575 Lexington Avenue, 4th Floor  
New York, New York 10022
(Address of principal executive offices) (Zip Code)

 

Registrant's telephone number including area code 1(866) 928-5070

 

 
 
(Former Name or Former Address, if changed since last report)

 

Indicate by check mark if the registrant is a well known seasoned issuer, as defined in Rule 405 of the Securities Act

Yes (  )       No  (X)

 

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.

Yes (  )       No  (X)

 

 

 


 
 

 

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

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes (X) No ( )

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any and every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes (X) No ( )

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

 

(Check one)

Large accelerated filer ( ) Accelerated filer ( )

Non-accelerated filer ( ) Smaller reporting company (X)

 

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

 

APPLICABLE ONLY TO CORPORATE ISSUERS

 

As of the period ended in this report, August 31, 2016 the registrant had 14,112,151 shares of common stock outstanding. As of the date of filing, October 14, 2016 the registrant had 14,864,055 shares of common stock outstanding.

 

 

 

 

 

 

 

2


 
 

 

 

 

 

HISPANICA INTERNATIONAL DELIGHTS OF AMERICA, INC.

 

FORM 10-Q

 

 TABLE OF CONTENTS Page
  
PART I – FINANCIAL INFORMATION 
Item 1.  Financial Statements 
              Condensed Consolidated Balance Sheets4
              Condensed Consolidated Statements of Operations5
              Condensed Consolidated Statements of Cash Flows6
              Notes to Condensed Consolidated Financial Statements7
Item 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations15
Item 3.  Quantitative and Qualitative Disclosures About Market Risk21
Item 4.  Controls and Procedures21
  
PART II – OTHER INFORMATION 
Item 1.  Legal Proceedings21
Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds21
Item 3.  Defaults Upon Senior Securities21
Item 4.  Mining Safety Disclosure22
Item 5.  Other Information22
Item 6.  Exhibits22
  
SIGNATURES23

 

 

 

3


 
 

PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS AND NOTES TO FINANCIAL STATEMENTS

 

  

Hispanica International Delights of America, Inc.

Condensed Consolidated Balance Sheets

 

 

 

 

 

 

 

ASSETS

 

 

August 31,

 

 

May 31,

 

 

 

2016

 

 

2016

 

Current Assets:

 

(Unaudited)

 

 

 

 

   Cash and cash equivalents

 

$115,783

 

 

$27,241

 

   Accounts receivable

 

 

264,353

 

 

 

1,692

 

   Prepaid expenses

 

 

 

 

 

14,740

 

   Inventory

 

 

250,073

 

 

 

12,887

 

 

 

 

 

 

 

 

 

 

Total current assets

 

 

630,209

 

 

 

56,560

 

 

 

 

 

 

 

 

 

 

Equipment, net of accumulated depreciation of $3,750

 

 

71,250

 

 

 

 

 

 

 

 

 

 

 

 

 

Other Assets:

 

 

 

 

 

 

 

 

   Intangibles, net of accumulated amortization of $6,250

 

 

368,750

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$1,070,209

 

 

$56,560

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

 

 

 

 

 

Current Liabilities

 

 

 

 

 

 

 

 

   Accounts payable and accrued expenses

 

$424,223

 

 

$28,051

 

   Customer advances

 

 

 

 

 

20,880

 

   Note payable

 

 

 

 

 

18,500

 

   Loans payable, net of capitalized financing costs of $95,525 and $ -0-, respectively

 

 

335,225

 

 

 

 

   Convertible note payable

 

 

3,000

 

 

 

3,000

 

   Loan payable - Stockholder

 

 

10,000

 

 

 

10,000

 

 

 

 

 

 

 

 

 

 

   Convertible note payable, net of capitalized financing costs of $6,105 and $7,735, respectively

 

 

42,573

 

 

 

55,025

 

   Line of credit, net of capitalized financing costs of $295,333 and $ -0-, respectively

 

 

354,667

 

 

 

 

   Total Liabilities

 

 

1,169,688

 

 

 

135,456

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commitments and contingencies

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stockholders' Equity (Deficiency):

 

 

 

 

 

 

 

 

   Series A Preferred stock, $0.001 par value; 10,000,000 shares authorized, 1,200,000 and 1,000,000 shares issued and outstanding

 

 

1,200

 

 

 

1,200

 

   Common stock, $0.001 par value; 100,000,000 shares authorized, 14,112,151 and 13,040,471 shares issued and outstanding, respectively

 

 

14,112

 

 

 

13,040

 

   Additional paid in capital

 

 

1,727,017

 

 

 

721,413

 

   Accumulated deficit during development stage

 

 

(1,841,808)

 

 

(814,549)

 

 

 

 

 

 

 

 

 

 

 

 

(99,479)

 

 

(78,896)

 

 

 

 

 

 

 

 

 

 

 

$1,070,209

 

 

$56,560

 

 

 

 

 

 

 

 

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements

 

4


 
 

 

Hispanica International Delights of America, Inc.

Condensed Consolidated Statements of Operations

For the three months ended August 31,

(Unaudited) 

 

 

2016

 

 

2015

 

 

 

 

 

 

 

 

Product sales, net

 

$649,411

 

 

$129,871

 

Cost of goods sold

 

 

501,257

 

 

 

127,501

 

   Gross income

 

 

148,154

 

 

 

2,370

 

 

 

 

 

 

 

 

 

 

Expenses:

 

 

 

 

 

 

 

 

Officers' compensation

 

 

3,750

 

 

 

 

Salary & wages

 

 

63,340

 

 

 

 

Repairs and Maintenance

 

 

4,210

 

 

 

 

Advertising and promotion

 

 

759

 

 

 

2,000

 

Insurance

 

 

9,266

 

 

 

 

Professional fees

 

 

595,888

 

 

 

21,711

 

Travel

 

 

24,971

 

 

 

 

Rent

 

 

13,064

 

 

 

2,250

 

Other

 

 

8,506

 

 

 

871

 

 

 

 

723,754

 

 

 

26,832

 

 

 

 

 

 

 

 

 

 

   Net loss before other expenses

 

 

(575,600)

 

 

(24,462)

 

 

 

 

 

 

 

 

 

Other (expenses)

 

 

 

 

 

 

 

 

Interest and financing costs

 

 

(441,659)

 

 

(1,350)

Depreciation and amortization

 

 

(10,000)

 

 

 

 

 

 

 

 

 

 

 

 

Total other expenses

 

 

(451,659)

 

 

(1,350)

 

 

 

 

 

 

 

 

 

Net loss before provision for income taxes

 

 

(1,027,259)

 

 

(25,812)

 

 

 

 

 

 

 

 

 

Provision for income taxes

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

   Net loss

 

$(1,027,259)

 

$(25,812)

 

 

 

 

 

 

 

 

 

Basic and diluted loss per share

 

$(0.07)

 

$(0.00)

 

 

 

 

 

 

 

 

 

Basic and diluted weighted average number

 

 

 

 

 

 

 

 

 of shares outstanding

 

 

13,710,632

 

 

 

12,194,242

 

 

 

 

 

 

 

 

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements

 

5


 
 

 

 

Hispanica International Delights of America, Inc.

Condensed Consolidated Statements of Cash Flows

For the three months ended August 31,

(Unaudited)

 

 

2016

 

 

2015

 

 

 

 

 

 

 

 

Cash flows from operating activities:

 

 

 

 

 

 

   Net loss

 

$(1,027,259)

 

$(25,812)
   Adjustments to reconcile net loss to net cash (used in) operating activities:

 

 

 

 

 

 

 

 

   Stock based compensation

 

 

656,676

 

 

 

4,826

 

   Depreciation and amortization

 

 

10,000

 

 

 

 

   Amortization of capitalized financing costs

 

 

169,152

 

 

 

 

   Accounts receivable

 

 

(262,661)

 

 

(1,982)
   Prepaid expenses

 

 

14,740

 

 

 

15,000

 

   Inventory

 

 

(237,186)

 

 

8,897

 

   Accounts payable and accrued expenses

 

 

396,172

 

 

 

18,598

 

   Customer advances

 

 

(20,880)

 

 

 

   Net cash (used in) provided by operating activities

 

 

(301,246)

 

 

19,527

 

 

 

 

 

 

 

 

 

 

   Cash flows from financing activities:

 

 

 

 

 

 

 

 

   Proceeds from issuance of common stock

 

 

 

 

 

6,000

 

   Repayment of notes payable

 

 

(18,500)

 

 

 

   Repayment of convertible notes payable

 

 

(14,082)

 

 

 

   Proceeds from loans payable

 

 

364,820

 

 

 

 

   Repayment of loans payable

 

 

(49,450)

 

 

 

   Proceeds from line of credit

 

 

557,000

 

 

 

 

   Net cash provided by financing activities

 

 

839,788

 

 

 

6,000

 

 

 

 

 

 

 

 

 

 

   Cash flows (used in) investment activities:

 

 

 

 

 

 

 

 

   Fixed assets acquired

 

 

(75,000)

 

 

 

   Intangible assets acquired

 

 

(375,000)

 

 

 

 

 

 

 

 

 

 

 

 

   Net cash (used in) investment activities

 

 

(450,000)

 

 

 

 

 

 

 

 

 

 

 

 

   Net increase in cash and cash equivalents

 

 

88,542

 

 

 

25,527

 

   Cash and cash equivalents at beginning of period

 

 

27,241

 

 

 

44,101

 

   Cash and cash equivalents at end of period

 

$115,783

 

 

$69,628

 

 

 

 

 

 

 

 

 

 

   Supplemental cash flow information:

 

 

 

 

 

 

 

 

   Cash paid during the period for:

 

 

 

 

 

 

 

 

   Interest

 

$36,374

 

 

$1,341

 

 

 

 

 

 

 

 

 

 

   Non-cash transactions:

 

 

 

 

 

 

 

 

   Supplemental Schedule of non-cash investing and

 

 

 

 

 

 

 

 

   financing activities:

 

 

 

 

 

 

 

 

   Conversion of debt to common stock and additional paid in capital

 

$27,500

 

 

$

 

   Shares issued for financing costs

 

$350,000

 

 

$

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements

 

6


 
 

 

 

 

 

Hispanica International Delights of America, Inc.

Notes to Condensed Consolidated Financial Statements

August 31, 2016

 

Note 1. NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Nature of Operations

Organization

The accompanying consolidated financial statements include the financial statements of Hispanica International Delights of America, Inc. (“HISP”) and its wholly owned subsidiary, Energy Source Distributors Inc., (“ESD”) (collectively , the “Company“). All intercompany balances and transactions have been eliminated in consolidation.

 

HISP was incorporated in Delaware in April 2013 and acquired ESD during July 2016. The Company currently markets and sells traditional Hispanic beverages and ethnic food packaged products and will license and/or acquire existing brands and distributors of Hispanic products.

 

Basis of Presentation

The accompanying interim condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP"). In the opinion of management, all adjustments considered necessary for a fair presentation of the interim periods presented have been included. All such adjustments are of a normal recurring nature. The accompanying condensed financial statements and the information included under the heading Management's Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with the Company's audited financial statements and related notes included in the Company's Form 10-K as of May 31, 2016. Interim results are not necessarily indicative of the results of a full year.

 

Revenue Recognition

In general, the Company records revenue when persuasive evidence of an arrangement exists, services have been rendered or product delivery has occurred, the sales price to the customer is fixed or determinable, and collectability is reasonably assured. The following policies reflect specific criteria for the various revenue streams of the Company: Revenue is recognized at the time the product is delivered. Provision for sales returns is estimated based on the Company's historical return experience. Revenue is presented net of returns.

 

Use of Estimates

The preparation of condensed financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the dates of the condensed balance sheets and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates.

 

7


 
 

Hispanica International Delights of America, Inc.

Notes to Condensed Consolidated Financial Statements

August 31, 2016

 

Note 1. NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

 

Net Loss Per Common Share

The Company calculates net income (loss) per share based on the authoritative guidance. Basic earnings (loss) per share is calculated by dividing net income (loss) by the weighted average number of common shares outstanding for the period. Diluted earnings (loss) per share is calculated by dividing net income (loss) by the weighted average number of common shares and dilutive common stock equivalents outstanding. During periods in which the Company incurs losses, common stock equivalents, if any, are not considered, as their effect would be anti-dilutive. As of August 31, 2016, the convertible notes payable, which could be converted into approximately 52,000 shares of common stock, were outstanding.

 

Income Taxes

The Company utilizes the accrual method of accounting for income taxes. Under the accrual method, deferred tax assets and liabilities are determined based on the differences between the financial reporting basis and the tax basis of the assets and liabilities, and are measured using enacted tax rates and laws that will be in effect when the differences are expected to reverse. An allowance against deferred tax assets is recognized when it is more likely than not that such tax benefits will not be realized.

 

The Company recognizes the financial statement benefit of an uncertain tax position only after considering the probability that a tax authority would sustain the position in an examination. For tax positions meeting a “more-likely-than-not” threshold, the amount recognized in the financial statements is the benefit expected to be realized upon settlement with the tax authority. For tax positions not meeting the threshold, no financial statement benefit is recognized. The Company recognizes interest and penalties, if any, related to uncertain tax positions in income tax expense. The Company did not have any unrecognized tax benefits as of August 31, 2016, and does not expect this to change significantly over the next 12 months.

Stock-Based Compensation

The Company accounts for equity instruments issued to employees in accordance with ASC 718, Compensation - Stock Compensation. ASC 718 requires all share-based compensation payments to be recognized in the financial statements based on the fair value on the issuance date.

 

Equity instruments granted to non-employees are accounted for in accordance with ASC 505, Equity. The final measurement date for the fair value of equity instruments with performance criteria is the date that each performance commitment for such equity instrument is satisfied or there is a significant disincentive for non-performance.

8


 
 

Hispanica International Delights of America, Inc.

Notes to Condensed Consolidated Financial Statements

August 31, 2016

 

Note 1. NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

 

Cash and Cash Equivalents

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

 

Accounts Receivable

The Company extends credit to its customers in the normal course of business and performs ongoing credit evaluations of its customers, maintaining an allowance for potential credit losses. Uncollectible accounts are written off at the time they are deemed uncollectible. Accounts receivable is reported net of the allowance for doubtful accounts. The allowance is based on management's estimate of the amount of receivables that will actually be collected. As of February 29, 2016 and May 31, 2015, an allowance for doubtful accounts was not necessary.

 

Inventory

Inventory consists of finished goods and is stated at the lower of cost (first-in, first-out) or market value.

 

Recent Pronouncements

Management does not believe that any recently issued, but not yet effective accounting pronouncement, if adopted, would have a material effect on the accompanying condensed consolidated financial statements.

Note 2. ACQUISITION OF ESD

 

In July 2016, the Company entered into a Senior Secured Revolving Credit Facility Agreement (the “Credit Facility”) with TCA Global Credit Master Fund L.P. (“TCA”) for a total amount of $7.5 million. However, as of the execution date of the Credit Facility, only $1.6 million was allocated by TCA to the Company for working capital financing and for any other purpose permitted under the terms of the Credit Facility. Energy Source Distributors, Inc. (“ESD”) is Corporate Guarantor to the Credit Facility. Under the terms of the Credit Facility, the Company paid advisory fees to TCA in the amount of $350,000, through the issuance of 374,332 shares of common stock. On July 5, 2016, the Company borrowed $650,000 from the Credit Facility and used the proceeds to acquire ESD for $450,000; payoff a note payable in the amount of $32,534; $74,466 was used to pay vendors for inventory purchases and $93,000 was paid to TCA for closing fees. The credit facility has a maturity date of January 5, 2017 which may be extended for an additional six months at the lender’s discretion. The credit facility requires fees and interest only payments at 12% during the first two months. Principal payments begin in the third month. At the maturity date, all unpaid principal and interest is due. During the current quarter, the Company issued an additional 157,480 shares of common stock to satisfy a default notice in the amount of $200,000.

On July 5, 2016, the Company acquired all of the net assets of Energy Source Distributors, Inc. by purchasing all of the outstanding shares of common stock for $450,000.

9


 
 

Hispanica International Delights of America, Inc.

Notes to Condensed Consolidated Financial Statements

August 31, 2016

 

The following table presents the unaudited pro forma condensed consolidated statements of operations for the three months ended August 31, 2016:

 

Unaudited Pro Forma Condensed Consolidated Statements of Operations
For the three months ended August 31, 2016
           
      Pro Forma   Pro Forma
  HISP ESD Adjustments Notes Combined
           
Product sales, net $111,004  $884,526  $—      $995,530 
Cost of goods sold  81,089   690,277   —       771,366 
Gross income  29,915   194,249   —       224,164 
                   
Selling general and administrative expenses  628,435   156,595   —       785,030 
                   
Net Income/(loss) before other income and expenses  (598,520)  37,654   —       (560,866)
                   
Other income and (expenses)  (415,342)  (59,664)  —       (475,006)
                   
Provision for taxes  —     —    —      —  
                   
Net Income/(loss) $(1,013,862) $(22,010) $—     $(1,035,872)
                   
See accompanying notes to the Unaudited Pro Forma Condensed Consolidated Financial Information

 

 

Hispanica International Delights of America, Inc.

Notes to the Unaudited Pro Forma Condensed Consolidated Financial Information

 

Pro Forma Note 1. — Basis of presentation

 

The unaudited pro forma Consolidated Statements of Operations for the three months ended August 31, 2016 gives effect to the ESD acquisition as if it had occurred on June 1, 2016.

 

Pro Forma Note 2 — Purchase price allocation

 

On July 5, 2016, the Company acquired all of the outstanding stock of ESD and certain assets from ESD for total consideration of $450,000. The unaudited pro forma condensed consolidated financial information includes various assumptions, including those related to the purchase price allocation of the assets acquired from ESD based on management’s estimates.

 

10


 
 

Hispanica International Delights of America, Inc.

Notes to Condensed Consolidated Financial Statements

August 31, 2016

 

 

The following table shows the allocation of the purchase price the acquired assets:

 

Property, plant and equipment $75,000 
Intangible assets  375,000 
Total purchase price $450,000 

 

The estimated useful life of the intangible assets is Ten (10) years. Amortization expense of $ 6,250 was recorded during the three months ended August 31, 2016.

 

Note 3. LOANS PAYABLE – STOCKHOLDERS

 

In April 2016, a stockholder and officer lent the Company $10,000. The loan bears interest at 18% per annum. The maturity date of the note is July 1, 2016. As of August 31, 2016, the Company has not repaid the loan. Accrued and unpaid interest totaled $661 at August 31, 2016, and is reported as accounts payable and accrued expenses.

 

11


 
 

Hispanica International Delights of America, Inc.

Notes to Condensed Consolidated Financial Statements

August 31, 2016

 

Note 4. NOTES PAYABLE

 

In September 2014, the Company issued a convertible note for the principal amount of $6,000. The note had an original due date of December 31, 2014. In January 2015, the holder signed an amendment that made the note and accrued interest payable on demand. Interest accrues at 10% per annum. The holder has the option of converting the note in whole or in part into the Company's common stock at the rate of $0.25 per share at any time prior to redemption. In October 2015, the Company repaid $3,000 of principal and $651 of interest. Accrued interest totaled $268 and $193 as of August 31, 2016 and May 31, 2016, respectively, and is reported as accounts payable and accrued expenses.

 

In September 2015, the Company issued a convertible note payable (the “Note”) for the principal amount of $87,500, including an original issue discount ("OID") of $7,500 and loan costs of $5,000. The OID and loan costs have been capitalized and are being amortized over 23 months and are reported as financing costs. The note bears interest at 10%. The note requires payment of unpaid principal and accrued interest upon maturity in August 2017. Unamortized OID and loan costs totaled $7,735 at May 31, 2016. There is a prepayment premium of 125% of the loan balance being paid prior to the maturity date. Upon an event of default as described in the Note, the Company would incur penalties and fees and the annual interest rate would increase to 22%. At August 31, 2016, accrued interest of $1,045 is reported as accounts payable and accrued expenses.

 

Under the terms of the Note, the Note holder has the right, until the outstanding balance has been paid in full, to convert all or any part of the outstanding balance into shares of fully paid and non-assessable common stock, $0.001 par value per shares of the Company (the “Lender Conversion Shares”), as per the following conversion formula:

 

The number of Lender Conversion Shares equals the amount being converted (the "Conversion Amount") divided by the Lender Conversion Price.

 

The Lender Conversion Price is defined in the Note as being $3.00 per share, however, in the event the Market Capitalization falls below $20,000,000.00 at any time, then in such event (a) the Lender Conversion Price for all Lender Conversions occurring after the first date of such occurrence shall equal the lower of the Lender Conversion Price and the Market Price as of any applicable date of Conversion.

 

Subject to certain conditions, a Conversion Factor of 70% shall apply to the Lender Conversion Price, subject to the following adjustments: (i) If at any time the average of the three (3) lowest Closing Bid Prices in the twenty (20) Trading Days immediately preceding any date of measurement is below $1.00, then in such event the then-current Conversion Factor shall be reduced by 10% for all future conversions; (ii) if at any time after the effective date of the Note, the Conversion Shares are not Eligible, then the then-current Conversion Factor will automatically be reduced by 5% for all future conversions; and, (iii) in addition to the Default Effect, as defined, if any Major Default occurs, as defined, after the effective date of the Note, the Conversion Factor shall automatically be reduced for all future conversions by an additional 5% for each of the first three (3) Major Defaults that occur.

 

Under the terms of the Note, on June 17, 2016, the note holder elected to convert $12,500 of the outstanding principal and accrued interest balance into 18,315 shares of our common stock at a conversion price of $0.6825 per share.

 

Under the terms of the Note, on July 25, 2016, the note holder elected to convert $15,000 of the outstanding principal and accrued interest balance into 52,053 shares of our common stock at a conversion price of $0.288167 per share.

 

In March 2016, the Company borrowed $18,500 from an unrelated third party (GHS). The loan bears interest at 22% per annum. During the three months ended August 31, 2016 the Company incurred late payment penalties and other fees of approximately $13,304. The outstanding balance including penalties, fees, and accrued interest was repaid in July 2016.

 

On July 15, 2016, the Company entered into a Future Sales Proceeds Purchase Agreement with Merchant Cash and Capital, LLC d/b/a Bizfi (the “Buyer”). Under the terms of the agreement, the Company received $167,450 of cash proceeds from the Buyer in exchange for a loan payable in the amount of $214,200 secured by future sales proceeds. The difference between the cash received and the cash to be paid from future sales proceeds of $46,750 was recognized as capitalized financing costs and is being amortized over the repayment period. This amount has been reflected as a direct reduction of the loan payable in the accompanying condensed consolidated balance sheets. As of August 31, 2016, unamortized financing costs related to this loan were approximately $38,000. The Company is obligated to make payments equal to 10% of future receipts estimated to be approximately 210 payments of $1,020 to the Buyer each business day until the full amount of the future sales proceeds is repaid.

 

On July 15, 2016, the Company entered into a Purchase Rights Purchase and Sale Agreement with ESBF California LLC (the “Buyer”). Under the terms of the agreement, the Company received $197,370 of cash proceeds from the Buyer in exchange for a loan payable in the amount of $266,000 secured by future sales proceeds. The difference between the cash received and the cash to be paid from future sales proceeds of $68,630 was recognized as capitalized financing costs and is being amortized over the repayment period. This amount has been reflected as a direct reduction of the loan payable in the accompanying condensed consolidated balance sheets. As of August 31, 2016, unamortized financing costs related to this loan were approximately $57,000. The Company is obligated to make payments equal to 15% of future receipts estimated to be approximately 231 payments of $1,152 to the Buyer each business day until the full amount of the future sales proceeds is repaid.

 

 

 

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Hispanica International Delights of America, Inc.

Notes to Condensed Consolidated Financial Statements

August 31, 2016

 

 

Note 5. COMMITMENTS AND CONTINGENCIES

 

The Company currently leases its offices on a month to month basis from the Company's Chief Operating Officer and stockholder for $750 per month.

 

In connection with the acquisition of ESD, the Company assumed a lease for approximately 12,000 square feet of warehouse space located in Gilroy, California at a base rent of $5,248 per month. The lease terminates on June 30, 2021. In addition, the Company entered into an employment agreement with a general manager for a period of one year at a cost of $58,000. The employment agreement expires in July 2017.

 

Rent expense for the three months ended August 31, 2016 and 2015 totaled $13,064 and $2,250, respectively.

 

On October 30, 2015, the company entered into an agreement to acquire a 20% minority equity interest in Just Buns, Inc. in exchange for 20,000 shares to the Company’s common stock. The Company also entered into an exclusive Distribution Agreement with Just Buns, Inc. to distribute their proprietary Ensaimades sold under the name “Swirly Buns”. As of the date of this filing the Company has not finalized these transactions. Upon finalization the Company will issue 20,000 shares of common stock.

 

Note 6. INCOME TAXES 

The deferred tax asset consists of the following:

 

  August 31, 2016 May 31, 2016
Net operating loss carryforward $736,000  $326,000 
Valuation allowance  (736,000)  (326,000)
Deferred tax asset, net $—    $—   

 

The income tax benefit differs from the amount computed by applying the statutory federal and state income tax rates to the loss before income taxes. The sources and tax effects of the differences are as follows:

 

Effective Income Tax Rate Reconciliation
  August 31, 2016 May 31, 2016
Federal Rate  34%  34%
State Rate  6%  6%
Valuation Allowance  (40%)  (40%)
Effective income tax rate  0%  0%

 

As of August 31, 2016, the Company has net operating loss carryforwards of approximately $1,840,000 to reduce future federal and state taxable income through 2036.

 

The Company currently has no federal or state tax examinations in progress, nor has it had any federal or state examinations since its inception. All of the Company's tax years are subject to federal and state tax examinations.

 

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Hispanica International Delights of America, Inc.

Notes to Condensed Consolidated Financial Statements

August 31, 2016

 

  

Note 7. RELATED PARTY TRANSACTIONS

The Company purchases its inventory from a supplier related through common ownership and management. The Chief Executive Officer and Chairman of the Company is the supplier's President. In addition, the Chief Financial Officer and Director of the Company has a minority interest in the supplier. The amount of inventory purchased from the supplier during the three months ended August 31, 2016 and August 31, 2015 was approximately $12,817 and $111,059, respectively. As of August 31, 2016 and August 31, 2015, accounts payable to this supplier of $-0- and $10,000, respectively, were reported as accounts payable and accrued expenses.

 

Note 8. BASIS OF REPORTING

The accompanying financial statements have been prepared assuming the Company will continue as a going concern, which contemplates the recoverability of assets and the satisfaction of liabilities in the normal course of business.

 

The Company has incurred losses from inception of approximately $1,840,000, which, among other factors, raises substantial doubt about the Company's ability to continue as a going concern. The ability of the Company to continue as a going concern is dependent upon management's plans to raise additional capital from the sale of stock and receive additional loans from related parties. The accompanying financial statements do not include any adjustments that might be required should the Company be unable to continue as a going concern.

 

NOTE 9. SUBSEQUENT EVENTS

 

On September 30, 2016, the Company entered into a Securities Purchase Agreement (“Purchase Agreement”) with Anson Investments Master Fund LP (“Anson”) pursuant to which Anson purchased the Company’s unsecured convertible promissory note in the principal amount of $440,000 (“Note”). The carries interest at the rate of 5% per annum. The maturity date of the Note is October 30, 2017. The Note was issued with a 10% original issue discount. As additional consideration for the purchase of the note, the Company will issue 1,100,000 of its common stock to Anson.

 

Pursuant to the Purchase Agreement, the Company issued its Common Stock Purchase Warrant to Anson. The Warrant allows Anson to purchase up to 400,000 shares of the Company’s Common Stock at an exercise price of $0.85 per share until September 30, 2021.

 

Also, under the terms of the Purchase Agreement, the Company and Anson entered into a Registration Rights Agreement covering the 1,100,000 shares issued to Anson. Under the Registration Rights Agreement, the Company is required to file a registration statement with the U.S. Securities and Exchange Commission covering up to an aggregate of 8,000,000 shares within 45 days of the sale and receipt by the Company of an aggregate of $400,000 of Notes sold pursuant to the Purchase Agreement.

 

From September 1 through October 17, 2016, the Company issued 682,500 shares of its common stock for services and 69,404 shares of its common stock to repay debt.

 

 

 

 

 

 

 

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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS FORWARD LOOKING STATEMENTS

 

This Form 10-Q contains forward-looking statements rather than historical facts that involve risks and uncertainties. You can identify these statements by the use of forward- looking words such as “may,” “will,” “expect,” “anticipate,” “estimate,” “continue” or other similar words. Such forward-looking statements discuss our current expectations of future results of operations or financial condition. However, there may be events in the future that we are unable to accurately predict or control and there may be risks, uncertainties and events that may cause our actual results to differ materially from the expectations we describe in our forward-looking statements, which could have a material adverse effect on our business, operating results and financial condition. The forward-looking statements included herein are only made as of the date of the filing of this Form 10-Q, and we undertake no obligation to publicly update such forward-looking statements to reflect subsequent events or circumstances.

 

BASIS OF PRESENTATION

 

The unaudited financial statements of Hispanica International Delights of America, Inc. (“HISP,” the “Company,” “our” or “we”), should be read in conjunction with the notes thereto. In the opinion of management, the unaudited financial statements presented herein reflect all adjustments (consisting only of normal recurring adjustments) necessary for fair presentation. Interim results are not necessarily indicative of results to be expected for the entire year.

 

We prepare our financial statements in accordance with U.S. generally accepted accounting principles, which require that management make estimates and assumptions that affect reported amounts. Actual results could differ from these estimates.

 

COMPANY OVERVIEW

 

Hispanica International Delights of America, Inc. (the “Company” or “HISP”, “us”, “we” “our”) was incorporated on April 15, 2013 as a Delaware company and is engaged in the distribution of proprietary, licensed and third party Hispanic and ethnic food and beverages throughout the United States. HISP has already begun to distribute fruit juices, nectars, and milk based products and expects begin to distribute teas, carbonated drinks, dry goods, preserves, frozen foods and bakery products. The brands distributed are under a proprietary basis (through distribution agreements and/or exclusive licensing arrangements). Our brands emulate the flavors, tastes, and traditions which have been known for generations among the Hispanic and other ethnic groups and are now becoming part of the American mainstream diet.

 

Our objective is to grow as rapidly as possible (both organically and via strategic alliances and acquisitions) using the public capital markets for access to capital. The companies and assets sought by us will be those that already have market penetration in the following segments: (1) Food Distribution and Manufacturing; (2) Beverage Brands and (3) Distribution Food Service.

 

Our management team has over 30 years of combined experience in the Hispanic food and beverage industry to generate these sales. In July 2016, we acquired the company’s first Direct Store Delivery (“DSD”) in an all cash purchase. HISP has new key personnel with previous managerial experience to begin the implementation of increasing our sales to potentially growing the business with a target of $5MM in revenues with plans to continue its growth via mergers and acquisitions.

 

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In October 2013 we signed a distribution agreement with Gran Nevada Beverage, Inc. (“Gran Nevada”), an entity related through common management. The agreement provides us with the right to sell and distribute Gran Nevada's beverages in Texas and California with purchase prices at the then applicable wholesale prices charged to Gran Nevada's distributors. The agreement is for an initial term of five years with automatic renewals of successive five year terms unless terminated.  We initiated sales and distribution operations in March 2014.

 

On October 30, 2015, the company entered into an agreement to acquire a 20% minority equity interest in Just Buns Inc. in exchange for 20,000 shares to the Company’s common stock. The Company also entered into an exclusive Distribution Agreement with Just Buns, Inc. to distribute their proprietary Ensaimades sold under the name “Swirly Buns”. As of the date of this filing the Company has not finalized these transactions. Upon finalization the Company will issue 20,000 shares of common stock.

 

Effective July 5, 2016, we entered into a Stock Purchase and Sale Agreement to acquire all of the issued and outstanding common stock of Energy Sources Distributors, Inc. (“ESD”) from its three founding shareholders. ESD provides wholesale distribution of specialty beverage products from its headquarters in Gilroy, California. The total purchase price for the acquisition was $450,000 in cash. We retained one of the selling founders as General Manager for a term of twelve (12) months pursuant to an employment agreement to manage operations at the ESD facility in Gilroy, California. ESD is now a wholly-owned subsidiary.

 

In July 2016, the Company entered into a Senior Secured Revolving Credit Facility Agreement (the “Credit Facility”) with TCA Global Credit Master Fund L.P. (“TCA”) for a total amount of $7.5 million. However, as of the execution date of the Credit Facility, only $1.6 million was allocated by TCA to the Company for working capital financing and for any other purpose permitted under the terms of the Credit Facility. Energy Source Distributors, Inc. (“ESD”) is Corporate Guarantor to the Credit Facility. Under the terms of the Credit Facility, the Company paid advisory fees to TCA in the amount of $350,000, through the issuance of 374,332 shares of common stock. On July 5, 2016 the Company borrowed $650,000 from the Credit Facility and used the proceeds to acquire ESD for $450,000; payoff a note payable in the amount of $32,534; $74,466 was used to pay vendors for inventory purchases and $93,000 was paid to TCA for closing fees. The credit facility has a maturity date of January 5, 2017 which may be extended for an additional six months at the lender’s discretion. The credit facility requires fees and interest only payments at 12% during the first two months. Principal payments begin in the third month. At the maturity date all unpaid principal and interest is due. During the current quarter the Company issued an additional 157,480 shares of common stock to satisfy a default notice in the amount of $200,000.

Our principal executive offices are located at 575 Lexington Avenue, 4th Floor, New York NY 10022 and our telephone number is (866) 928-5070.

 

CURRENT OPERATIONS

 

Sales

 

The Company currently markets and sells traditional Hispanic and ethnic food packaged products and will license and/or acquire existing brands and distributors of Hispanic products. Brands sought by HISP and primarily engaged in the business of developing, manufacturing, marketing and selling unique, premium, non-alcoholic beverages as well as all natural food products that are targeted towards Hispanic and ethnic-neutral consumers.

 

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Production and Distribution

 

The Company buys prepackaged goods for distribution through various channels. The Company distributes third party brands as well as a proprietary brand named GRAN NEVADA under an exclusive distribution agreement for the U.S.

 

As of August 2016, Hispanica International Delights of America, Inc. (HISP) distributed over 20 brands mainly through its Energy Source Distribution (ESD) subsidiary as well as sold the GRAN NEVADA beverages to other wholesalers that are primarily ethnic food distributors and mostly located in the Mid-Atlantic region of the U.S.

 

HISP sells to several distributors and regularly seeks to broaden its distribution channels from its current network of a dozen to over 100 by the end of 2017. The Company has engaged third party sales and marketing brokers in many areas of the country. The Company also intends to sell directly to retailers, including large chain stores.

 

Intellectual Property

 

The Company is in the process of securing a trademark for its name and logo. HISP does not have its trademark registered for Hispanica International Delights of America, Inc. as of August 2016.

 

Competition

 

As a distributor of Hispanic and ethnic packaged food products, the Company expects to have a portfolio of products that will not only include beverages. The main competitors of the Company include Goya Foods, Marquez Brothers International, Diaz Foods, La Fe Foods International, Grace Foods, as well as other regional/ethnic food distributors. HISP will focus on selecting brands of all-natural packaged foods. Although some competitors are selling and distributing similar products, they use different packaging options and market foods that have high contents of artificial flavors, colors, and sweeteners as well high sodium contents. Additionally, our competitors import the majority of their distributed products, which are made with lower quality and price point raw materials. HISP will focus on distributing all-natural products as well as obtaining exclusive rights to brands that can be manufactured closer to its U.S. market base. HISP is committed to building long-term relationships with its consumers by offering superior, high quality products at the most competitive prices. 

 

The packaged beverage market is highly competitive. Competitors in our market compete for brand recognition, ingredient sourcing, qualified personnel, distribution and product shelf space. As a developing company, a majority of our competitors are more established and better capitalized than HISP. The packaged beverage market is generally dominated by the largest beverage providers, including The Coca-Cola Company and PepsiCo, Inc. Many of our competitors enjoy significant brand recognition and consumer confidence and are able to readily secure shelf space and media attention for their products. Many of our competitors also have existing relationships with the same distribution channels and retailers through which we sell our products. We intend to compete in the market by offering consumers affordable products that taste better and possess a longer shelf life than most products in the market.

 

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Government Regulation

 

Packaged beverage and juice products are governed by the U.S. Food and Drug Administration. As such, it is necessary for the Company to ensure its products distributed establish, maintain and make available for inspection, records and labels with nutrition information that meet legal food labeling requirements. The Company’s products are manufactured by contracted production facilities that are subject to many regulations, including Food Facility Registration, recordkeeping, Good Manufacturing Practice Requirements, reporting, preventive controls and inspections.

Employees

 

As of August 31, 2016, the Company has 14 employees. Certain positions are being filled with paid independent contractors or insider owners who do not receive cash compensation but may receive stock compensation. The Company mitigates the need for a production staff by purchasing finished inventory. The Company has contracted with food brokers to represent Gran Nevada to retail stores nationally. In certain regions of the United States, we utilize the services of direct sales and distribution companies, which sell our products through their distribution channels. This can mitigate the need for a large sales and merchandising force. The Company also outsources its logistics to third-parties, which can reduce the need for employees in these roles.

 

Emerging Growth Company

 

The Company is an “emerging growth company”, as defined in the Jumpstart Our Business Stamps Act of 2012 (“JOBS Act”), and may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth companies” including, but not limited to, not being required to comply with the auditor attestation requirements of section 404(b) of the Sarbanes-Oxley Act, and exemptions from the requirements of Sections 14A(a) and (b) of the Securities Exchange Act of 1934 to hold a nonbinding advisory vote of shareholders on executive compensation and any golden parachute payments not previously approved.

 

The Company has elected to use the extended transition period for complying with new or revised accounting standards under Section 102(b)(1) of the JOBS Act. This election allows us to delay the adoption of new or revised accounting standards that have different effective dates for public and private companies until those standards apply to private companies. As a result of this election, our financial statements may not be comparable to companies that comply with public company effective dates.

  

We will remain an “emerging growth company: until the earliest of (1) the last day of the fiscal year during which our revenues exceed $1 billion, (2) the date on which we issue more than $1 billion non-convertible debt in a three year period, (3) the last day of the fiscal year following the fifth anniversary of the date of the first sale of our common equity securities pursuant to an effective registration statement filed pursuant to the Securities Act of 1933, as amended, or (4) when the market value of our common stock that is held by non-affiliates exceeds $700 million as of the last business day of our most recently completed second fiscal quarter.

 

To the extent that we continue to qualify as a “smaller reporting company”, as such term is defined in Rule 12b-2 under the Securities Exchange Act of 1934, after we cease to qualify as an emerging growth company, certain of the exemptions available to us as an emerging growth company may continue to be available to us as a smaller reporting company, including (1) not being required to comply with the auditor attestation requirements of Section 404(b) of the Sarbanes-Oxley Act; (2) scaled executive compensation disclosures; and (3) the requirements to provide only two years of audited financial statements, instead of three years. 

 

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GOING CONCERN QUALIFICATION

Several conditions and events cast substantial doubt about the Company’s ability to continue as a going concern. The Company has incurred net losses of $1,027,259 and $25,812 for the three months ended August 31, 2016 and 2015, respectively, has limited revenues and requires additional financing in order to finance its business activities on an ongoing basis. The Company’s future capital requirements will depend on numerous factors including, but not limited to, continued progress in finding business opportunities.

 

At August 31, 2016, we had cash on hand of $115,783, and an accumulated deficit of $1,841,808. See “Liquidity and Capital Resources.”

 

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

 

The preparation of financial statements and related disclosures in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make judgments, assumptions and estimates that affect the amounts reported in our financial statements and accompanying notes. We base our estimates and judgments on historical experience and on various other assumptions that we believe are reasonable under the circumstances. However, future events are subject to change, and the best estimates and judgments routinely require adjustment. The amounts of assets and liabilities reported in our balance sheet and the amounts of revenues and expenses reported for each of our fiscal periods, are affected by estimates and assumptions which are used for, but not limited to, the accounting for allowance for doubtful accounts, goodwill and intangible asset impairments, restructurings, inventory and income taxes. Actual results could differ from these estimates. The following critical accounting policies are significantly affected by judgments, assumptions and estimates used in the preparation of our financial statements.

 

Off-Balance Sheet Arrangements

 

We have no significant off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to stockholders.

 

Inflation

 

The amounts presented in the financial statements do not provide for the effect of inflation on our operations or financial position. The net operating losses shown would be greater than reported if the effects of inflation were reflected either by charging operations with amounts that represent replacement costs or by using other inflation adjustments.

 

LIQUIDITY AND CAPITAL RESOURCES

 

During the three months ended August 31, 2016 and 2015, the Company received cash proceeds of $0 and $6,000, respectively, as a result of the Company’s sale of common stock. The Company utilized these funds for operations.

 

In September 2015, the Company received $75,000, net of $12,500 in financing costs, under the terms of the Secured Convertible Promissory Note.

 

CASH FLOW

 

Our primary source of liquidity has been cash from sales of shares and the issuance of a convertible promissory note.

 

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WORKING CAPITAL

 

As of August 31, 2016 the Company had total current assets of $630,209 and total current liabilities of $1,169,688 resulting in negative working capital of $539,479. As of May 31, 2016, the Company had total current assets of $56,560 and total current liabilities of $80,431 resulting in negative working capital of $23,871. 

 

RESULTS OF OPERATIONS

 

FOR THE THREE MONTHS ENDED AUGUST 31, 2016

 

Revenues

 

The Company commenced distribution of Gran Nevada products in April 2013 in Delaware, Maryland, Virginia, Pennsylvania, New York, Texas and California.  With the acquisition of ESD by the Company in July 2016 the company expanded into Northern California. Revenues from the sale of the Company’s Gran Nevada products for the three months ended August 31, 2016 and 2015 were $111,004 and $129,871, respectively, representing a decrease of approximately fourteen percent (14%). Revenues from the sale of the Company’s ESD products from July 5 through August 31, 2016 were $538,407.

 

Cost of Goods Sold

 

Cost of Goods Sold includes finished goods, freight-in, freight-out, and warehousing expense.  For the three months ended August 31, 2016, the cost of goods sold from the sale of the Company’s Gran Nevada products was $81,089, or approximately 73% of sales compared to the three months ended August 31, 2015 when cost of goods sold the sale of the Company’s Gran Nevada products was $127,501, or approximately 98% of sales. For the three months ended August 31, 2016, the cost of goods sold from the sale of the Company’s ESD products was $420,169, or approximately 80% of sales

 

Operating Expenses

 

For the three months ended August 31, 2016, operating expenses were $723,754 (which included operating expenses incurred ESD from the acquisition date through August 31, 2016 which amounted to $95,319), an increase of $696,922 or approximately 2597% over operating expenses for the three months ended August 31, 2015 of $26,832. The Company continued to incur costs associated with launching commercial operations during the three months ended August 31, 2016.

 

Our operating expenses consisted of (a) officers compensation, which was $3,750 during the three months ended August 31, 2016, as compared to $0 during the three months ended August 31, 2015, (b) salary and wages, which was $63,340 during the three months ended August 31, 2016, as compared to $0 during the three months ended August 31, 2015, (c) professional advisory service fees and consulting fees, which were $595,888 for the three months ended August 31, 2016 as compared to $21,711 during the three months ended August 31, 2015, (d) marketing, promotional, licensing and related fees, which were $759 for the three months ended August 31, 2016 as compared to $2,000 during the three months ended August 31, 2015, (e) travel, which was $24,971 during the three months ended August 31, 2016 as compared to $0 during the three months ended August 31, 2015, (f) rent, which was $13,064 during the three months ended August 31, 2016 as compared to $2,250 during the three months ended August 31, 2015, (g) equipment which was $4,210 during the three months ended August 31, 2016 as compared to $0 during the three months ended August 31, 2015, (h) Insurance which was 9,266 during the three months ended August 31, 2016 as compared to $0 during the three months ended August 31, 2015, and (i) other, which was $8,506 during the three months ended August 31, 2016 as compared to $871 during the three months ended August 31, 2015.

 

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During the three months ended August 31, 2016, the Company recorded $1,630 of finance costs as amortization of the original issue discount of $7,500 and the reimbursed fees of $5,000 incurred as a result of the issuance of the Secured Convertible Promissory Note ("Note") in the principal amount of $87,500 to a private lender.

 

The Company’s interest expense was $18,960 during the three months ended August 31, 2016 as compared to $0 for the three months ended August 31, 2015. The increase reflects the increased debt incurred by the Company to finance operations.

 

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.

 

ITEM 4. CONTROLS AND PROCEDURES

 

EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES

 

We maintain disclosure controls and procedures that are designed to ensure the information required to be disclosed in our reports filed pursuant to the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission rules and forms and that such information is accumulated and communicated to our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.

 

As of August 31, 2016, we carried out an evaluation, under the supervision and with the participation of our principal executive officer and our principal financial officer of the effectiveness of the design and operation of our disclosure controls and procedures. Based on this evaluation, our principal executive officer and our principal financial officer concluded that our disclosure controls and procedures were effective as of the end of the period covered by this report. 

 

MANAGEMENT’S QUARTERLY REPORT ON INTERNAL CONTROLS OVER FINANCIAL REPORTING

 

CHANGES IN INTERNAL CONTROLS OVER FINANCIAL REPORTING

 

There have been no changes in our internal controls over financial reporting during the quarter ended August 31, 2016 that have materially affected, or are reasonably likely to materially affect our internal controls.

 

PART II. OTHER INFORMATION

 

ITEM 1. LEGAL PROCEEDINGS

 

None.

 

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

 

None. 

 

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

 

None.

 

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ITEM 4. MINING SAFETY DISCLOSURE

 

None.

 

ITEM 5. OTHER INFORMATION

 

None.

 

ITEM 6. EXHIBITS

 

 

 

 

 

 

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SIGNATURES

 

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

 

 

 HISPANICA INTERNATIONAL DELIGHTS OF AMERICA, INC.

 

Date: October 17, 2016

By: /s/ Fernando Oswaldo Leonzo

Fernando Oswaldo Leonzo

Chief Executive Officer, and Chairman of the Board

(Principal Executive Officer)

 

 

Date: October 17, 2016

By: /s/ Robert Gunther

Robert Gunther

Chief Operating Officer, and Director

(Principal Financial Officer)

 

 

 

 

 

 

 

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