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

The following discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements and the notes thereto included elsewhere in this Quarterly Report on Form 10-Q, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of such financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses. On an ongoing basis, we evaluate these estimates, including those related to useful lives of real estate assets, bad debts, impairment, contingencies and litigation. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. There can be no assurance that actual results will not differ from those estimates. The analysis set forth below is provided pursuant to applicable SEC regulations and is not intended to serve as a basis for projections of future events. See "Cautionary Statement Regarding Forward Looking Statements" above.

  Plan of Operation

Our Business

Hip Cuisine, Inc. was incorporated in the state of Florida on March 24, 2014. Our United States offices are currently located at 2250 NW 114 ^th Ave. Unit 1P, PTY 11020, Miami, FL 33172-3652. Our Panama offices are located at Balboa Boutiques, Ave. Balboa, Local B104, Panama City, Panama. Our telephone number is 011-507-6501-8105.

On September 30, 2014, we entered into a Share Exchange Agreement (the "Share Exchange Agreement") with Hip Cuisine, Inc., a Panamanian corporation incorporated pursuant to the laws of the Republic of Panama on February 24, 2014 ("Hip Panama"), and its sole shareholder, and our Chief Executive Officer, President and Director, Natalia Lopera, whereby we acquired one hundred percent (100%) of the issued and outstanding common stock of Hip Panama in exchange for 5,000,000 shares of our Common Stock. Upon the consummation of the Share Exchange Agreement, Hip Panama became a wholly-owned subsidiary of our Company.

Hip Cuisine, Inc. has created a restaurant concept that combines the Health Food restaurant which uses the brand Healthy, Vegan & Raw to identify to the public what it has to offer which is low sodium, low calorie, high in protein dishes and the ingredients are Vegan Friendly, Vegetarian and a full menu with fresh fish, chicken and steak. The vegetables are purchased fresh daily from the local farmers market. We also added, with the restaurant, a full array of "Cold Press Juices & Smoothies". The United States is exploding with Cold Press juice stores to meet the demand of the general public who has moved to a Healthier Diet and who is becoming more conscience of what foods it is consuming.

We made the decision to open the first location in Panama City Panama for several reasons. The main reason was the fact that the Health & Fitness market in Central and South America was growing at a very rapid pace and compared to the United States the Cold Press and Healthy Food restaurants were virtually nonexistent. In fact we know of only four Vegan restaurants in all of Panama City. In addition, Panama City is one of the fastest growing cities in Latin America and with the expansion of the Panama Canal there is a very large international population and they are looking for Healthy alternative than what is currently being offered in Panama. The labor is substantially less yet the prices of the dishes are equal to that of the United States.

We opened for business in July of 2015 after 15 months of construction at the Balboa Boutiques shopping mall located on Ave. Balboa, which is a prime location in Panama City near the financial district and on the water. A major renovation to the "Cinta Costera" along Balboa now offers a biking and jogging trail along with exercise equipment, basketball and tennis courts and this extends for 5 kilometers along Balboa Ave. and continues over the water all the way to the Amador which is Panama City's main marina. Every Sunday they close Ave. Balboa and set up biking events and other events like Yoga classes and more.

In March 2017, we completed the construction and design project of our 2 ^nd restaurant in Costa del Este Panama. We expect to open this location in May 2017. This location is 288 square meters, which is much larger than our first location in the Balboa Boutiques shopping center in Panama City. The Costa del Este locationwill be used for our production kitchen where we will prepare the meal packages and juices for the other spoke locations and deliveries.

We entered into an Asset Purchase Agreement with Rawkin Bliss LLC dba Rawkin Juice of Burbank California www.rawkinjuice.com which closed on April 14, 2017. This will allow us to not only expand our offerings into the US market with an established brand like Rawkin Juice, but we now can offer a Hip Cuisine in areas that a Hip Cuisine “Vegan Friendly” offering would work better than a 100% Vegan offering like that of Rawkin Juice in Burbank California.

We entered into a second “spoke” location for Rawkin Juice located in Santa Monica, CA, and this location is scheduled to open on May 1 ^st of 2017. We will produce the products in the production kitchen in Burbank and deliver to the Santa Monica location daily to maintain a 100% Organic, Vegan fresh line of products including Cold Pressed Juices, Smoothies, Desserts, Salads and the Living Gourmet line of Raw Vegan foods.

We have already designed and can order the packaging, labels and bottles for delivery. We currently use a POS system called LAVU and this can handle everything from inventory control, orders, menu and employee payroll. It is a complete system designed for restaurants and is scalable. The only additional cost is for the equipment for the additional restaurants, such as I-Pads, kitchen printer, fiscal printer and cashier I-pad and register, which is approximately $4,500 per location. Then we pay a monthly service fee that is approximately $105 per month.

We currently offer to our customers at both the Balboa Boutiques location and Rawkin Juice in Burbank the ability to purchase one day detox (6 juices) or 3 day detox (18 juices), as well as weekly meal plans. These plans range from $37.50 to $55.00 for the 1 day, $112.50 to $155.00 for the 3 day detox and $150 for the weekly meal plan.

We have budgeted a total cost of $12,000 to complete the website which will allow us to accept online orders for our customers who want deliveries. Currently we use a delivery service to deliver orders, and they charge a delivery fee and pay for the order when they pick up. The Rawkin Juice location in Burbank utilizes several 3 ^rd party delivery companies that offer our menu for a fee such as Grub Hub, Uber Eats, Eat 24 and Door Dash. We plan to launch our own application for deliveries in May of 2017, through our online ordering site called www.rawkintogo.com.

Our goals over the next twelve (12) months are to:

Expenditures

The following chart provides an overview of our budgeted expenditures by significant area of activity over the next twelve (12) months, assuming we are able to attract sufficient debt or equity financing. There can be no assurance that we will be able to attract financing and we may be required to scale back operations accordingly.

Milestones

Months 1 through 9

During the first nine (9) months we plan to:

Months 9 through 12

During the following three (3) months, we expect to achieve the following:

In March 2017, the Company completed and closed a private offering exempt from registration pursuant to Rule 506(b) of Regulation D of 1,000,000 shares of the Company's common stock, par value $0.001, issued at $0.75 per share for cash proceeds of $750,000. No brokers or underwriters were utilized in this offering and no commissions were paid.

We do not currently have any arrangements for financing and we can provide no assurance to investors we will be able to find such financing. There can be no assurance that additional financing will be available to us, or on terms that are acceptable. Consequently, we may not be able to proceed with our intended business plan.

For the three months ended March 31, 2017 Compared to the three months ended March 31, 2016

For the three months ended March 31, 2017, we earned revenue of $127,737 compared to $35,208 for the three months ended March 31, 2016. Cost of goods sold for the three months ended March 31, 2017 were $91,932 resulting in a gross profit of $35,805, compared to cost of goods sold of $11,852 and gross profit $23,356 from the three months ended March 31, 2015 due to growth and expansion of the business to new restaurants locations.

Operating expenses were $432,199 for the three months ended March 31, 2017, compared to $61,578 for the three months ended March 31, 2016, due to additional costs related to the completion and opening of our restaurant and costs associated with ongoing regulatory expenses.

Operating expenses for the three months ended March 31, 2017 were comprised of $21,680 for depreciation, $114,727 for general and administrative, $40,480 for professional fees, $13,312 for salaries and wages and $242,000 for stock based compensation. Operating expenses for the three months ended March 31, 2016 were comprised of $5,252 for depreciation, $29,044 for general and administrative, $19,543 for professional fees and $7,739 for salaries and wages.

Depreciation was $21,680 for the three months ended March 31 2017, which increased by $16,428 from $5,252 for the three months ended March 31, 2016, due to the acquisition of property, plant and equipment to support expansion of the business.

General and Administrative expenses were $114,727 for the three months ended March 31, 2017, which increased by $85,683 from $29,044 for the three months ended March 31, 2016, attributed to increase in rental expenses and other general administrative expenses for additional restaurant locations.

Professional fees were $40,480 for the three months ended March 31, 2017, increased by $20,937 from $19,543 for the three months ended March 31, 2016, related to the increases in accounting, auditing, legal and market listing expenses and public offerings.

Salaries and wages were $13,312 for the three months ended March 31, 2017, increased by $5,573 from $7,739 for the three months ended March 31, 2016, as the Company hired more restaurant staffs to support operational expansion.

Stock based compensation $242,000 was incurred for the three months ended March 31, 2017, relates to the issuance of common shares for consulting services to support the expansion of the new restaurant locations.

As of March 31, 2017 and December 31, 2016 our cash was $377,120 and $191,660, respectively. The increase in cash for the three months ended March 31, 2017 was mainly attributed from a $554,668 cash flows provided by financing activities achieved from $750,000 cash proceeds received from issuance of common stock from the Company second public offering.

As of March 31, 2017, we experienced an increase in our working capital of $490,588. The increase in working capital during the three months ended March 31, 2017 was primarily from increases in cash and cash equivalents of $185,460 from the $750,000 shares issuance for cash proceeds from the public offering during the quarter.

Cash Flows

We fund our operations with cash generated from restaurant sales revenue, capital contributions, and issuances of common stock.

Operating Activities

For the three months ended March 31, 2017, net cash used in operating activities was $110,968, related to our net loss of $661,515 reduced by depreciation of $21,680, loss on debt settlement of $266,250, stock based compensation of $242,000, a decrease in refundable sales taxes of $14,029, an increase in prepaid expenses of $8,523, an increase in checks drawn in excess of bank balance of $21,198, an increase of $39,425 in accounts payable and a decrease of $34,500 in accrued interest. 

For the three months ended March 31 2016, net cash used in operating activities was $53,691.  This negative cash flow related to our net loss of $38,222, depreciation of $5,252, a decrease in refundable sales taxes of $730 a decrease in other receivable of $1,222, a decrease in prepaid expenses of $20,709, a decrease of $1,180 in accounts payables and an increase in unearned revenue of $3,120.

The increase of net cash used in operating cash flow was primarily due to an increase in net loss for increase cash used for operating activities to support business expansion.

Investing Activities

For the three months ended March 31, 2017, net cash used in investing activities was $258,240 compared to net cash used of $11,007 during the three months ended March 31, 2016. The increase in net cash used was related primarily to $245,332 of costs for the acquisition of building and equipment for the Company’s restaurants.

Financing Activities

Net cash provided by financing activities was $554,668 for the three months ended March 31, 2017 mainly attributed to cash proceeds from issuance of common shares for $750,000 from the Company second public offering. The Company has also repaid notes payable at $127,500 and bank loans at $2,225. In additional, the Company has repaid $65,607 to its sole officer.

Net cash provided by financing activities for the three months ended March 31, 2016 was $64,340 through advances from related parties.

Material Commitments

On March 1, 2017 we entered into a 3 year lease agreement located at 705 Montana Ave. in Santa Monica California and this location will be the second location under Rawkin Juice which is the wholly owned subsidiary of Hip Cuisine. This will serve as a “spoke” location where products will be delivered from our production kitchen in Burbank to the Santa Monica location. The total monthly lease payment is $4,300.

The following is a schedule by years of minimum future rent on leases for the Company’s 3 restaurant locations as of March 31, 2017:

Going Concern.

The accompanying financial statements have been prepared assuming that the company will continue as a going concern which contemplates, amongst other things, the realization of assets and satisfaction of liabilities in the course of business.

We anticipate that our future liquidity requirements will arise from the need to fund our growth, pay our current obligations and future capital expenditures. The primary sources of funding for such requirements are expected to be cash generated from operations and raising additional funds from private sources and/or debt financing.

Going Concern Consideration

Our independent auditors included an explanatory paragraph in their report on the accompanying financial statements expressing concerns about our ability to continue as a going concern. Our financial statements contain additional note disclosures describing the circumstances that lead to this disclosure by our independent auditors.

Critical Accounting Policies

The preparation of our financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, and expenses and related disclosures about contingent assets and liabilities. We base these estimates and assumptions on historical experience and on various other information and assumptions that are believed to be reasonable under the circumstance. Estimates and assumptions about future events and their effects cannot be perceived with certainty and, accordingly, these estimates may change as additional information is obtained, as more experience is acquired, as our operating environment changes and as new events occur. Our critical accounting policies are listed in the notes to our audited financial statements included in this registration Statement.

Future Financings.

We will continue to rely on equity sales of the Company's Common Stock in order to continue to fund business operations. Issuances of additional shares will result in dilution to existing shareholders. There is no assurance that the Company will achieve any additional sales of the equity securities or arrange for debt or other financing to fund planned operations

Recently Issued Accounting Pronouncements.

The Company has implemented all new accounting pronouncements that are in effect. These pronouncements did not have any material impact on the financial statements unless otherwise disclosed, and the Company does not believe that there are any other new accounting pronouncements that have been issued but not yet adopted that might have a material impact on its financial position or results of operations.

Off-Balance Sheet Arrangements.

The Company has no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on its financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

Changes In and Disagreements with Accountants on Accounting and Financial Disclosure.

During the period covered by this report, the Company has had no changes in or disagreements with its accountants.