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: June 30, 2015
or
[ ]
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For
the transition period from _______________
to _______________
Commission
File Number: 00-24723
FRESH
PROMISE FOODS, INC.
(Exact
Name of registrant as specified in its charter
Nevada |
|
88-0393257 |
(State
or other Jurisdiction of
incorporation or organization) |
|
(I.R.S.
Employer
Identification Number) |
1111
Alderman Drive, Suite 210
Alpharetta,
Georgia 30005
(Address
of Principal Executive Offices)
(855)
404-3734
(Registrant’s
telephone number, including area code)
Indicate
by check
mark whether the
registrant: (1) has
filed all reports
required to be
filed by Section
13 or
15(d) of the
Exchange Act during the preceding
12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]
Indicate
by check mark
whether the registrant
has submitted electronically
and posted on
its corporate Web
site, if any,
every Interactive Data File required
to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months
(or for such shorter period that the registrant was required to submit and post such files). Yes [X] No [ ]
Indicate
by check mark
whether the registrant
is a large
accelerated filer, an
accelerated filer, or
a non-accelerated filer.
See definition of “accelerated
filer and large accelerated filer” in Rule 12b-2 of the Exchange Act:
[ ]
Large Accelerated Filer |
|
[ ]
Accelerated Filer |
|
|
|
[ ]
Non-Accelerated Filer |
|
[X]
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 [ ] No
[X]
As
of August 17, 2015, there were 580,398,797 shares outstanding of the registrant’s common
stock.
TABLE
OF CONTENTS
PART
I. FINANCIAL STATEMENTS
ITEM I. FINANCIAL STATEMENTS
Fresh Promise Foods, Inc.
Consolidated Balance Sheet
| |
June 30, 2015 | | |
December 31, 2014 | |
| |
| (Unaudited) | | |
| | |
Assets | |
| | | |
| | |
Current Assets | |
| | | |
| | |
Cash | |
$ | 25,568 | | |
$ | 1,663 | |
Accounts Receivable | |
| 5,010 | | |
| - | |
Inventory | |
| 61,024 | | |
| 20,935 | |
Other Current Assets | |
| 10,273 | | |
| 515 | |
Total Current Assets | |
| 101,875 | | |
| 23,112 | |
| |
| | | |
| | |
Property, Plant & Equipment net | |
| 113,417 | | |
| 90,559 | |
Website Development & Software Purchased | |
| 4,782 | | |
| 4,782 | |
Total
Assets | |
$ | 220,074 | | |
$ | 118,454 | |
| |
| | | |
| | |
Liabilities and Stockholders Deficit | |
| | | |
| | |
Liabilities | |
| | | |
| | |
Current Liabilities | |
| | | |
| | |
Account payable | |
$ | 297,929 | | |
$ | 298,815 | |
Accrued expenses | |
| 84,325 | | |
| 69,087 | |
Convertible note payable | |
| 806,475 | | |
| 388,957 | |
Accrued salaries due officers | |
| 108,971 | | |
| 330,465 | |
Convertible note derivative liability | |
| 969,212 | | |
| 584,857 | |
Loan due related parties | |
| 30,452 | | |
| 23,600 | |
Capital lease liability-short term | |
| 16,541 | | |
| 7,678 | |
Total Current Liabilities | |
| 2,313,905 | | |
| 1,703,458 | |
| |
| | | |
| | |
Long Term Liabilities | |
| | | |
| | |
Capital Lease Liability net of current portion | |
| 50,146 | | |
| 35,748 | |
Total
Liabilities | |
| 2,364,051 | | |
| 1,739,206 | |
| |
| | | |
| | |
Preferred stock series B - par value, $0.00001 10 shares authorized, and
2 and 2 shares outstanding, respectively. | |
| | | |
| | |
Preferred stock series C - par value $0.00001 30,000,000 shares authorized,
308,180 and 341,180 shares outstanding, respectively. | |
| 3 | | |
| 3 | |
Common stock - par value $0.00001 2,000,000,000 shares authorized, 177,354,907
and 7,155,532 shares outstanding, respectively | |
| 1,773 | | |
| 71 | |
Additional paid In Capital | |
| 7,543,574 | | |
| 7,135,240 | |
Accumulated deficit | |
| (9,689,327 | ) | |
| (8,756,066 | ) |
Total Stockholders’ Deficit | |
| (2,143,977 | ) | |
| (1,620,752 | ) |
Total
Liabilities and Stockholders’ Deficit | |
$ | 220,074 | | |
$ | 118,454 | |
See accompanying notes to unaudited consolidated
financial statements.
Fresh Promise Foods,
Inc.
Consoldiated Statement
of Operations
Three and Six Months
Ended June 30
Unaudited
| |
Three
Months Ended | | |
Six
Months Ended | |
| |
June
30, 2015 | | |
June
30, 2014 | | |
June
30, 2015 | | |
June
30, 2014 | |
Revenues | |
$ | 19,093 | | |
$ | - | | |
$ | 27,030 | | |
$ | - | |
Cost of Goods Sold | |
| 10,836 | | |
| - | | |
| 23,649 | | |
| 3,136 | |
Gross Margin | |
| 8,258 | | |
| - | | |
| 3,381 | | |
| (3,136 | ) |
| |
| | | |
| | | |
| | | |
| | |
Operating Expenses | |
| | | |
| | | |
| | | |
| | |
Rent | |
| 11,208 | | |
| 3,575 | | |
| 22,458 | | |
| 3,575 | |
Professional fees | |
| 87,843 | | |
| 133,359 | | |
| 160,293 | | |
| 133,359 | |
Consulting fees | |
| - | | |
| 622 | | |
| - | | |
| 5,399 | |
General and administrative expense | |
| 89,592 | | |
| 34,606 | | |
| 148,770 | | |
| 38,635 | |
Payroll and related expense | |
| 74,100 | | |
| 310,668 | | |
| 148,200 | | |
| 310,668 | |
Depreciation | |
| 3,954 | | |
| - | | |
| 7,062 | | |
| - | |
Stock based compensation | |
| - | | |
| 2,950 | | |
| - | | |
| 2,950 | |
| |
| - | | |
| - | | |
| - | | |
| | |
Total Operating Expenses | |
| 266,697 | | |
| 485,780 | | |
| 486,783 | | |
| 494,586 | |
| |
| | | |
| | | |
| | | |
| | |
Loss from operations | |
| (258,439 | ) | |
| (485,780 | ) | |
| (483,402 | ) | |
| (497,722 | ) |
| |
| | | |
| | | |
| | | |
| | |
Other expenses (Income) | |
| | | |
| | | |
| | | |
| | |
Debt forgiveness | |
| - | | |
| - | | |
| - | | |
| (22,000 | ) |
(Gain) Loss on Change in value of derivative liability | |
| 30,563 | | |
| (371,640 | ) | |
| (394,020 | ) | |
| (371,640 | ) |
Derivative liability expense | |
| 2,409 | | |
| 233,293 | | |
| 133,185 | | |
| 233,293 | |
(Gain) Loss on Extinguishment | |
| (7,086 | ) | |
| - | | |
| 153,659 | | |
| - | |
(Gain) loss on Note conversion | |
| 1,359 | | |
| 5,321 | | |
| 4,433 | | |
| 5,321 | |
Other expense | |
| | | |
| - | | |
| - | | |
| (97 | ) |
(Gain) Loss on stock issuance | |
| - | | |
| (51,000 | ) | |
| - | | |
| (51,000 | ) |
Interest expense | |
| 229,491 | | |
| 10,753 | | |
| 552,101 | | |
| 194,080 | |
| |
| 256,736 | | |
| (173,273 | ) | |
| 449,358 | | |
| (12,043 | ) |
| |
| | | |
| | | |
| | | |
| | |
Loss before provision for income tax | |
| (515,175 | ) | |
| (312,507 | ) | |
| (932,760 | ) | |
| (485,679 | ) |
| |
| | | |
| | | |
| | | |
| | |
Provision for income tax | |
| - | | |
| - | | |
| - | | |
| - | |
| |
| | | |
| | | |
| | | |
| | |
Net Loss | |
$ | (515,175 | ) | |
$ | (312,507 | ) | |
$ | (932,760 | ) | |
$ | (485,679 | ) |
| |
| | | |
| | | |
| | | |
| | |
Net Loss per share: Basic and diluted | |
$ | (0.02 | ) | |
$ | (0.46 | ) | |
$ | (0.02 | ) | |
$ | (0.83 | ) |
| |
| | | |
| | | |
| | | |
| | |
Weighted Average Number of Shares Outstanding: Basic and diluted | |
| 21,489,355 | | |
| 685,412 | | |
| 40,613,561 | | |
| 584,306 | |
See accompanying notes
to unaudited consolidated financial statements.
Fresh Promise Foods, Inc.
Consoldiated Statements of Cashflows
Six Months Ended June 30, 2015
Unaudited
| |
Six months ended | |
| |
6/30/2015 | | |
6/30/2014 | |
OPERATING ACTIVITIES | |
| | | |
| | |
Net loss from operations | |
$ | (932,760 | ) | |
$ | (485,679 | ) |
Adjustments to reconcile net loss to net cash used in operating activities: | |
| | | |
| | |
Amortization of debt discount | |
| 390,337 | | |
| 150,558 | |
(Gain) Loss on Change in value of derivative liability | |
| (394,020 | ) | |
| (371,640 | ) |
Derivative liability expense | |
| 133,185 | | |
| 233,293 | |
Debt forgiveness | |
| - | | |
| - | |
Other expense - other | |
| - | | |
| (97 | ) |
(Gain) Loss on note conversion | |
| 73,792 | | |
| 5,321 | |
(Gain) Loss on Extinguishment | |
| 153,659 | | |
| - | |
(Gain) Loss on stock issuance | |
| - | | |
| (51,000 | ) |
Premium expense | |
| - | | |
| - | |
Stock based compensation | |
| - | | |
| 2,950 | |
Depreciation | |
| 7,062 | | |
| - | |
Changes in working capital items | |
| | | |
| | |
Accrued salaries due officers | |
| 208,172 | | |
| 270,668 | |
Other current assets | |
| (9,757 | ) | |
| - | |
Amount due current and former officer | |
| - | | |
| (31,062 | ) |
Advances from related parties | |
| 6,852 | | |
| 3,600 | |
(Increase) decrease in inventory | |
| (40,089 | ) | |
| - | |
(Increase) in account receivable | |
| (5,010 | ) | |
| - | |
Decrease in accounts payable | |
| (886 | ) | |
| 1,042 | |
Increase (decrease) in accrued expenses | |
| 15,227 | | |
| (9,752 | ) |
Cashflow from operating activities | |
| (394,237 | ) | |
| (276,416 | ) |
| |
| | | |
| | |
INVESTING ACTIVITIES | |
| | | |
| | |
Purchase of Property, Plant & Equipment | |
| (29,920 | ) | |
| (12,661 | ) |
Website development | |
| 0 | | |
| (3,417 | ) |
Cashflow from investing activities | |
| (29,920 | ) | |
| (16,078 | ) |
| |
| | | |
| | |
FINANCING ACTIVITIES | |
| | | |
| | |
Proceeds from note payable | |
| 342,500 | | |
| 308,432 | |
Proceeds from short term loans | |
| 34,691 | | |
| - | |
Proceeds from Capital Lease | |
| 29,920 | | |
| - | |
Proceeds from stock sale | |
| - | | |
| - | |
Repayment of Capital Lease | |
| (6,659 | ) | |
| - | |
Cashflow from financing activities | |
| 400,452 | | |
| 308,432 | |
| |
| | | |
| | |
Net change in cash | |
| (23,705 | ) | |
| 15,938 | |
Beginning cash | |
| 49,273 | | |
| 33,335 | |
Ending Cash | |
| 25,568 | | |
| 49,273 | |
| |
| | | |
| | |
Supplemental disclosure of cash flow information: | |
| | | |
| | |
Cash paid for interest | |
$ | - | | |
$ | - | |
Cash paid for income taxes | |
$ | - | | |
$ | - | |
| |
| | | |
| | |
Non-Cash Investing and Financing Activities: | |
| | | |
| | |
Record derivative liability on notes | |
$ | - | | |
$ | 73,344 | |
Conversion of note to common stock | |
$ | 120,160 | | |
$ | - | |
Issuance of promissory note for accrued expenses | |
$ | - | | |
$ | - | |
Issuance of shares under stock payable | |
$ | - | | |
$ | 126,000 | |
See accompanying notes
to unaudited consolidated financial statements.
FRESH
PROMISE
FOODS, INC.
NOTES
TO THE
UNAUDITED CONSOLIDATED
FINANCIAL
STATEMENTS
June
30, 2015
NOTE
1 – ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature
of Business
Fresh
Promise Foods is a consumer products and marketing company focused on the high-margin multi-billion dollar health and wellness
food and beverage sectors. Under its wholly owned subsidiary, Harvest Soul Inc., the Company is building a production facility
in Atlanta, GA. and has launched two new flavors of Harvest Soul Chewable Juices in
the organic all-natural juice category.
On
March 15, 2013 all officers and directors resigned from the Company and Mr. Joseph C. Canouse was appointed President, Chief
Executive Officer, and Director.
On
April 17, 2013 Mr. Kevin P. Quirk joined the Company and was appointed President, Chief Executive Officer. Mr. Canouse, who continued
as a Director, assumed the title of Chief Financial Officer.
Effective
August 5, 2013 the Company completed a 1 for 100 reverse stock split, which reduced the number of issued and outstanding
common shares from 2,903,888,889
to approximately 29,038,889.
Fractional shares produced
as a result
of this reverse
stock split were
rounded up to the next whole share.
The consolidated financial statements have been retroactively adjusted to reflect this reverse stock
split.
On
September 26, 2013
the name of
the Company was
changed to Fresh
Promise Foods, Inc.
and the Company
also reduced the
number of authorized shares of common stock from four billion (4,000,000,000)
to four hundred seventy five million (475,000,000).
On
May 28, 2014,
the Company increased
the number of
authorized shares of
common stock to
nine hundred seventy
five million shares (975,000,000)
from four hundred seventy five million (475,000,000). On
September 1, 2014,
the Company increased
the number of
authorized shares of
common stock to
two billion shares
(2,000,000,000) from nine hundred seventy five million shares
(975,000,000).
On
June 2, 2014,
Joseph C. Canouse
resigned as Chairman
of the
Board of Directors
(the “Board”) of
Fresh Promise Foods,
Inc., a Nevada corporation
(the “Company”), and
as Chief Financial
Officer of the
Company. Mr. Canouse
informed the Company
that his decision
to resign was not the result of any disagreement with the Company on any matter
relating to the Company’s operations, policies or practices.
On
June 4, 2014,
the Board approved
by unanimous written
consent the appointment
of Scott Martin
as a member
of the Board
and Secretary of the Company, effective as of
such date.
On
June 4, 2014, the Board also approved by unanimous written consent the appointment of Mr. Kevin P. Quirk as Chairman of the Board.
Mr. Quirk currently serves as Chief Executive Officer & Chief Financial Officer of the Company and a director and will retain
his current positions.
In
January 1, 2015
the Company completed
a 1 for
150 reverse stock
split. All share
and per share
amounts have been presented
to give retroactive effective for this reverse stock
split.
ACCOUNTING
BASIS
The
accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles
in the United States of America (“US GAAP”) for interim financial information and with the instructions to Form 10-Q
and Article 8-03 of Regulation S-X. Accordingly, the unaudited consolidated financial statements do not include all of the information
and footnotes required by US GAAP for complete financial statements. The unaudited consolidated financial statements and notes
included herein should be read in conjunction with the annual consolidated financial statements and notes for the year ended December
31, 2014 included in our Annual Report on Form 10-K filed with the SEC on April 24, 2015.
In
the opinion of management, all adjustments (consisting of normal recurring items) necessary to present fairly the Company’s
financial position as of June 30, 2015, and the result of operations and cash flows for the three and six months ending June 30,
2015 are not necessarily indicative of the results to be expected for a full year.
PRINCIPLES
OF CONSOLIDATION
The
consolidated financial statements include
the financial statements
of Fresh Promise
Foods Inc. and
its wholly-owned subsidiary
Harvest Soul Inc. All significant inter-company balances and transactions within the Company and subsidiary have been eliminated
upon consolidation.
FRESH
PROMISE
FOODS, INC.
NOTES
TO THE
UNAUDITED CONSOLIDATED
FINANCIAL
STATEMENTS
June
30, 2015
CASH
AND CASH EQUIVALENTS
Fresh
Promise Foods Inc. considers all highly liquid investments with maturities of three months or
less to be cash equivalents.
The
Company places its cash with a high credit quality financial institution. The Company’s account at this institution is insured
by the Federal Deposit Insurance
Corporation (“FDIC”) up
to $250,000. For
the period ended June 30, 2015 and the year ended December 31, 2014 the Company
has not reached
bank balances exceeding
the FDIC insurance
limit. To reduce
its risk associated
with the failure
of such financial institution, the
Company evaluates at least annually the rating of the financial institution in which it holds deposits.
CASH
FLOWS REPORTING
The
Company follows ASC 230, Statement of Cash Flows, for cash flows reporting, classifies cash receipts and payments according to
whether they stem from
operating, investing, or
financing activities and
provides definitions of
each category, and
uses the indirect
or reconciliation method (“Indirect method”) as defined by ASC 230,
Statement of Cash Flows, to report net cash flow from operating activities by adjusting net
loss to reconcile
it to net
cash flow from
operating activities by
removing the effects
of (a)
all deferrals of
past operating cash
receipts and payments and all accruals of expected future operating cash receipts
and payments and (b) all items that are included in net income that do
not affect operating cash receipts and payments.
FRESH
PROMISE
FOODS, INC.
NOTES
TO THE
UNAUDITED CONSOLIDATED
FINANCIAL
STATEMENTS
June
30, 2015
USE
OF ESTIMATES
The
preparation of
financial statements in
conformity with generally
accepted accounting principles
requires management to
make estimates and assumptions
that affect the
reported amounts of
assets and liabilities
and disclosure of
contingent assets and
liabilities at the
date the financial statements
and the reported
amount of revenues
and expenses during
the reporting period.
Actual results could
differ from those estimates.
INVENTORIES
Inventories
consisted of natural and organic food products, wrappers and boxes, and were stated at the lower of cost or market. Cost was
determined on the
average cost method.
Inventories are reviewed
and reconciled periodically.
As of June 30,
2015 and December
31, 2014, the Company
had inventory of
$61,024 and $20,935,
respectively. The increase
was due to
a ramp up
of production of
Harvest Soul Chewable Juices to meet increased
demand.
ACCOUNTS
RECEIVABLE
The
Company’s receivables consists of
billings to customers
for products invoiced
and shipped. Accounts
receivable as of
June 30, 2015 was $5,010 compared to zero for December 31, 2014. The Company charges off receivables if they determine
that the amount is no longer collectible. The
allowance for doubtful accounts
was zero at
June 30, 2015 and
December 31, 2014.
Bad debt expense
related to customer receivables
for the year ended June 30, 2015 and December 31, 2014 was zero and zero respectively.
NET
INCOME (LOSS) PER COMMON SHARE
Net
income (loss) per share is calculated in accordance with FASB ASC 260, “Earnings per Share.” Basic net income (loss)
per common share is based
on the
weighted average number
of shares of
common stock outstanding
at June 30, 2015
and 2014. Diluted
earnings per share
is calculated by dividing the Company’s net loss available to common shareholders by the diluted weighted average
number of shares outstanding during the year. The diluted weighted average number
of shares outstanding is the basic weighted number of shares adjusted for any
potentially dilutive debt or equity. At June 30, 2015, the Company had convertible
notes and warrants outstanding that could be converted into approximately 1,939,099,489
and 126,836,204 at December 31, 2014, common shares based up the closing bid price of the company’s
common stock at June 30, 2015 and December 31, 2014 respectively. These are
not presented in the statement of operations since the Company incurred a loss and the effect of these shares are anti-dilutive.
REVENUE
RECOGNITION
The
Company derives revenue
from the sale
of its products.
The Company follows
paragraph ASC 605-10-S99-1
of the FASB
Accounting Standards Codification for
revenue recognition. The
Company recognizes revenue
when it is
realized or
realizable and earned.
The Company considers revenue realized or realizable and earned when all of
the following criteria are met: (i) persuasive evidence of an arrangement exists, (ii) the
product has been
shipped or the
services have been
rendered to the
customer, (iii) the
sales price is
fixed or determinable,
and (iv) collectability is reasonably assured.
FRESH
PROMISE
FOODS, INC.
NOTES
TO THE
UNAUDITED CONSOLIDATED
FINANCIAL
STATEMENTS
June
30, 2015
SHARE-BASED
EXPENSE
ASC
718, Compensation –
Stock Compensation, prescribes
accounting and reporting
standards for all
share-based payment transactions
in which employee services are acquired. Transactions include incurring liabilities, or issuing or offering to issue shares, options,
and other equity instruments such
as employee stock
ownership plans and
stock appreciation rights.
Share-based payments to
employees, including grants
of employee stock options,
are recognized as
compensation expense in the
financial statements based
on their fair
values. That expense is recognized
over the period during which an employee is required to provide services in exchange for the award, known as the requisite service
period (usually the vesting period).
The
Company accounts for stock-based compensation issued to non-employees and consultants in accordance with the provisions of ASC
505- 50, Equity –
Based Payments to
Non-Employees. Measurement of
share-based payment transactions
with non-employees is
based on the
fair value of whichever
is more reliably
measurable: (a) the
goods or services
received; or (b)
the equity instruments
issued. The fair
value of
the share-based payment transaction is determined at the earlier of performance commitment date or performance completion
date.
WEBSITE
DEVELOPMENT COSTS
The
Company accounts for
website development costs
in accordance with
Accounting Standards Codification
350-50 “Website Development Costs”.
Accordingly, all costs incurred in the planning stage are expensed as incurred, costs incurred in the website application
and infrastructure development stage
that meet specific
criteria are capitalized
and costs incurred
in the day
to day operation
of the
website are expensed as incurred.
The
Company placed into service its main website (www.freshpromisefoods.com) in 2013. All costs associated with these websites are
subject to straight-line amortization over there expected useful life, a five year period.
RECENT
ACCOUNTING PRONOUNCEMENTS
Except
for rules and interpretive releases of the SEC under authority of federal securities
laws and a limited number of grandfathered standards, the FASB Accounting Standards
Codification™ (“ASC”) is the sole source of authoritative GAAP literature recognized by the FASB
and applicable to the
Company. Management has
reviewed the aforementioned
rules and releases
and believes any
effect will not
have a material impact on the Company’s
present or future financial statements.
INCOME
TAXES
The
Company accounts for
income taxes pursuant
to the provisions
of ASC 740-10,
“Accounting for Income
Taxes,” which requires,
among other things, an
asset and liability
approach to calculating
deferred income taxes.
The asset and
liability approach requires
the recognition of deferred
tax assets and
liabilities for the
expected future tax
consequences of
temporary differences between
the carrying amounts
and the tax bases of
assets and liabilities
A
valuation allowance is
provided to offset
any net deferred
tax assets for
which management believes
it is more
likely than not
that the net deferred asset will
not be realized.
The
Company follows the
provisions of the
ASC 740 -10
related to, Accounting
for Uncertain Income
Tax Positions. When
tax returns are filed,
it is highly
certain that some
positions taken would
be sustained upon
examination by the
taxing authorities, while
others are subject
to uncertainty about the
merits of the
position taken or
the amount of
the position that
would be ultimately
sustained. In accordance with
the guidance of ASC 740-10, the benefit of a tax position is recognized in the financial statements in the period during
which, based on all available evidence, management believes it is more likely than not that the position will be sustained upon
examination, including the resolution of appeals
or litigation processes,
if any. Tax
positions taken are
not offset or
aggregated with other
positions. Tax positions
that meet the more-likely-than-not recognition
threshold are measured as
the largest amount of tax
benefit that is more than 50 percent
likely of being realized upon settlement with the applicable taxing authority. The portion of the benefits associated with tax
positions taken that exceeds the amount
measured as described
above should be
reflected as a
liability for uncertain
tax benefits in
the accompanying balance
sheet along with any associated interest and penalties that would be payable
to the taxing authorities upon examination. The Company believes its tax positions will be highly certain of being upheld upon
examination. As such, the Company has not recorded a liability for uncertain tax benefits.
The
Company has adopted ASC 740-10-25 Definition of Settlement, which provides guidance on how an entity should determine whether
a tax position is effectively
settled for the
purpose of recognizing
previously unrecognized tax
benefits and provides
that a tax
position can be effectively settled
upon the completion of an examination by a taxing authority without being legally extinguished. For tax positions
considered effectively settled, an entity would recognize the full amount of tax
benefit, even if the tax position is not considered more likely than not to be sustained
based solely on
the basis of
its technical merits
and the statute
of limitations
remains open. Management
has not filed
tax returns for the year ended December
31, 2014. Tax years 2013, 2012 and 2011 remain open for examination.
NOTE
2 – PROPERTY AND EQUIPMENT
Property
and equipment is recorded at cost. The Company depreciates the equipment using the straight-line method over the useful lives
of the equipment. The
useful lives are
estimated to be
between 3 and
7 years. Depreciation
expense was $7,062 and $8,844
for the six
months ended June 30, 2015 and
year ended December 31,
2014, respectively. Property
and equipment consisted
of the following
at June 30, 2015
and December 31, 2014:
| |
June 30, 2015 | | |
December 31, 2014 | |
Furniture and fixtures | |
$ | 3,389 | | |
$ | 3,389 | |
Production equipment | |
| 127,912 | | |
| 97,342 | |
Total property and equipment | |
| 131,301 | | |
| 100,731 | |
Less: Accumulated depreciation | |
| (17,884 | ) | |
| (10,172 | ) |
Property and equipment, net. | |
$ | 113,417 | | |
$ | 90,559 | |
FRESH
PROMISE
FOODS, INC.
NOTES
TO THE
UNAUDITED CONSOLIDATED
FINANCIAL
STATEMENTS
June
30, 2015
NOTE
3 – RELATED PARTY TRANSACTIONS
At
the time of
his appointment Mr.
Canouse received the
1 share of
convertible Preferred B
stock previously issued
to a director.
Also, during the three
months ended June
30, 2013, the
Company issued 1
additional shares of
convertible preferred B
stock to Mr.
Quirk when he
joined the Company. The stock has no par value and is not traded publicly.
On
January 28, 2014,
the Company converted
$11,000 of
a $22,000 convertible
note to 24,445
common shares from
a related party.
The note had been purchased from a former officer of the Company based on the
contractual conversions terms per agreement.
During
the six months
ending June 30, 2015,
the Company received
proceeds of $74,726 and made repayments of $62,874 from a third party. That
increased the amount due to related parties to $30,452 from $23,600 in June 30, 2015 and December 31,2014 respectively.
NOTE
4 – FAIR VALUE MEASUREMENTS
The
Company has adopted
the guidance under
ASC Topic 820
for financial instruments
measured on a
fair value on
a recurring basis.
ASC Topic 820 establishes a fair value hierarchy, giving the highest priority to quoted prices in active markets and the
lowest priority to unobservable data and requires disclosures for assets and liabilities
measured at fair value based on their level in the hierarchy.
Further authoritative accounting guidance
(ASU No. 2009-05)
under ASC Topic
820, provides clarification
that in circumstances
in which a
quoted price in an active market for the identical liabilities is not available, a reporting entity is required to measure
fair value using one or more of
the techniques provided for in this update.
The
standard describes a
fair value hierarchy
based on three
levels of input,
of which
the first two
are considered observable
and the last unobservable, that
may be used to measure fair value, which are the following:
Level
1 – Quoted prices in active markets for identical assets and liabilities.
Level
2 – Input
other than Level
1 that are
observable, either directly
or indirectly, such
as quoted prices
for similar assets
of liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated
by observable market data for substantially the full term of the asset or
liabilities.
Level
3 – Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of
the assets or liabilities.
Our
assessment of
the significance of
a particular input
to the fair
value measurement in
its entirety requires
judgment, and considers
factors specific to the asset or liability.
The
Company analyzes all
financial instruments with
features of both
liabilities and equity
under ASC 480,
“Distinguishing Liabilities from
Equity” and ASC 815, “Derivatives and Hedging”. Derivative liabilities are adjusted to reflect fair value at
each period end, with any increase or decrease
in the fair
value being recorded
in results of
operations as adjustments
to fair value
of derivatives. The
effects of interactions between
embedded derivatives are
calculated and accounted for
in arriving at
the over- all fair
value of the financial
instruments. In addition, the fair
value of free standing derivative instruments such as warrant and option derivatives are valued using the Black-Scholes modes.
The
Company uses Level
3 inputs for
its valuation methodology
for the embedded
conversion option liabilities
as their fair
value were determined by
using the Black
Scholes option-pricing model
based on various
assumptions. The Company’s
derivative liabilities are
adjusted to reflect fair
value at each period
end, with any
increase or decrease in
the fair value
being recorded in
results of operations as
adjustments to fair value of derivatives.
The
following table sets forth the liabilities at June 30, 2015, which is recorded on the balance sheet at fair value on a recurring
basis by level within the fair value hierarchy. As required, these are classified based
on the lowest level of input that is significant to the fair value measurement:
| |
| | |
Fair
Value Measurements at Reporting Date Using |
| |
| | |
Quoted prices in | |
Significant Other | | |
Significant | |
| |
| | |
Active Markets for | |
Observable | | |
Unobservable | |
| |
| | |
Identical Assets | |
Inputs | | |
Inputs | |
Description
| |
6/30/2015 | | |
(Level
l) | |
(Level
2) | | |
(Level
3) | |
Convertible promissory notes with embedded conversion option | |
$ | 969,212 | | |
-0- | |
| -0- | | |
$ | 969,212 | |
Total | |
$ | 969,212 | | |
-0- | |
| -0- | | |
$ | 969,212 | |
The
following table sets forth a summary of change in fair value of our derivative liabilities for the period ended June 30, 2015:
Beginning balance | |
$ | 862,485 | |
Change in fair value of embedded conversion features of convertible promissory notes and warrants
included in earnings | |
$ | (394,020 | ) |
Embedded conversion option & warrant
liability recorded in connection with the issuance of convertible promissory notes | |
$ | 496,314 | |
Change in fair value of embedded conversion features of convertible promissory
notes due to conversion | |
$ | 4,433 | |
Ending balance | |
$ | 969,212 | |
FRESH
PROMISE
FOODS, INC.
NOTES
TO THE
UNAUDITED CONSOLIDATED
FINANCIAL
STATEMENTS
June
30, 2015
NOTE
5 – NOTES AND CONVERTIBLE NOTES PAYABLE
Convertible
notes payable consist of the following at June 30, 2015 and December 31,
2014:
All
common share data in this table have been adjusted for the reverse stock split.
| |
June
30, 2015 | | |
December
31, 2014 | |
On January 16, 2012 the Company executed a promissory note for $50,000. The note
bears interest at 10 % and is secured by common stock of the Company. The note is convertible into common stock of the Company
at $0.05 per share. In 2012, $30,000 of the note was converted to 17,595 shares of common stock of the Company. In 2013 the
note maturity date was extended to September 30, 2015. Due to the features in this note, the Company could not determine if
sufficient shares in the Company stock would be available to fulfill all conversion obligations .Accordingly a derivative
liability was recorded for this note using the Black Scholes Method to value the derivative liability with the following assumptions:
Risk Free Interest rate of .025, volatility of 882%, and an assumed dividend rate of 0%: with the expected term of 92 days. | |
| 20,000 | | |
| 20,000 | |
| |
| | | |
| | |
On March 5, 2013 the Company executed a promissory note for $45,000. In 2014 the note was modified
into three notes of $15,000 each. The notes bear interest at 8 % are unsecured. The notes matured March 5, 2014 but were extended
to September 30, 2015. One of the notes was sold to a third party and amended. Due to the amended features the Company has
recorded a derivative liability for this note using the Black Scholes Method to value the derivative liability with the following
assumptions: Risk Free Interest rate of .025, volatility of 765%, and an assumed dividend rate of 0%: with the expected term
of 92 days. The remaining two $15,000 notes are also convertible into common stock at the market price but no derivative liability
was recorded. In February 2014, the third party converted $5,000 of note into 16,955 shares of common stock of the Company.
During the first quarter of 2015, the third party converted $1,764 of the note into 352,941 shares of common stock of the
Company. During the second quarter of 2015, the third party converted $6,246 of the note into 2,621,621 shares of common stock
of the Company. | |
| 2,004 | | |
| 10,015 | |
| |
| | | |
| | |
On March 5, 2013 the Company executed a promissory note for $45,000. In 2014 the note was modified
into three notes of $15,000 each. The notes bear interest at 8 % are unsecured. The notes matured March 5, 2014 but were extended
to September 30, 2015. One of the notes was sold to a third party and amended. Due to the amended features the Company has
recorded a derivative liability for this note using the Black Scholes Method to value the derivative liability with the following
assumptions: Risk Free Interest rate of .025, volatility of 765%, and an assumed dividend rate of 0%: with the expected term
of 92 days. The remaining two $15,000 notes are also convertible into common stock at the market price but no derivative liability
was recorded. On February 10, 2015, the note was purchased and the terms and the maturity date were changed. The new terms
beared a 12% interest rate. The note can be converted into common stock at a discount of 55% off the conversion price. The
conversion price is the average 3 day lowest closing sales price during a 10 day period prior to conversion, but no less than
$0.0001. A debt extinguishment was booked due to the changes in terms. The note matures on February 10, 2016. | |
| 15,000 | | |
| 15,000 | |
| |
| | | |
| | |
On September 11, 2013 the Company executed a promissory note for $15,000 as payment to a service
provider. The note matured September 11, 2014 but was extended to September 30, 2015. The note is convertible into common
stock of the Company at a discount of 35% off the average one day bid price the day prior to conversion with the expected
term of 225 days. Due to the discount feature we have recorded a liability of $8,077, or put premium, as part of the carrying
value of this note. The note is convertible at any time prior to maturity and bears interest at 6% per annum. During the second
quarter of 2015, the third party converted $4,257 of the note into 7,740,600 shares of common stock of the Company. | |
| 8,738 | | |
| 15,000 | |
| |
| | | |
| | |
On October 29, 2013 the Company executed a promissory note for $2,500. The note bears interest
at 6% and is secured by common stock of the Company. The loan matures April 29, 2014 but was extended to September 30, 2015.
The note is convertible at the lower of a day’s discount of 35% off the prior closing bid price or $0.01. The note also
provided for purchase of 133,334 shares by execution of a warrant agreement. The agreement expires two years from the date
of the note. Under this agreement shares can be purchased for $0.02 unless the Company sells stock at a price below that level.
Should this occur the conversion price is reduced to that lower price. The Company used the Black Scholes Method to value
the derivative liability with the following assumptions: Risk Free Interest rate of .025, volatility of 599%, and an assumed
dividend rate of 0% with the expected term of 92 days. | |
| 2,500 | | |
| 2,500 | |
On January 01, 2014 the Company executed a promissory note for $20,000 as payment
to a service provider. The note is convertible into common stock of the Company at a discount of 35% off the average one day
bid price the day prior to conversion. Due to the discount feature we have recorded a liability of $10,769, or put premium,
as part of the carrying value of this note. The note is convertible at any time prior to maturity and bears interest at 6%
per annum. The note matured on January 01, 2015 but was extended to September 30, 2015. The note is considered a stock settled
debt instrument. The expected term is 92 days. | |
| 20,000 | | |
| 20,000 | |
| |
| | | |
| | |
In February 2014, a note with a face value of $22,000 was sold to a third party. In February
2014, the third party converted $11,000 of the note into 24,445 shares of common stock of the Company. During the first quarter
of 2015, the third party converted $2,738 of the note into 730,000 shares of common stock of the Company. The note matured
on January 01, 2015 but was extended to September 30, 2015. The note is considered a stock settled debt instrument. The expected
term is 92 days. | |
| 8,263 | | |
| 11,000 | |
| |
| | | |
| | |
On January 23, 2014 the Company executed a promissory note for $6,000. The note bears interest
at 9.875 % and is secured by common stock of the Company. The note can be converted into common stock at a discount of 30%
off the conversion price. The conversion price is the average 3 day lowest closing sales price during a 10 day period prior
to conversion, but no less that $0.0001. The Company has recorded a derivative liability for this note using the Black Scholes
Method to value the derivative liability with the following assumptions: Risk Free Interest rate of .025, volatility of 321%,
and an assumed dividend rate of 0% with the expected term of 92 days. The note matured on January 23, 2015 but was extended
to September 30, 2015. | |
| 6,000 | | |
| 6,000 | |
| |
| | | |
| | |
On March 17, 2014 the Company executed a promissory note for $25,000. The note bears interest
at 12 % and is secured by common stock of the Company. The note can be converted into common stock at a discount of 40% off
the conversion price. The conversion price is the average of the lowest 3 day trading price during a 10 day period prior to
conversion, unless the Company sells or issues stock at a price lower than the conversion price. Should this occur the conversion
price is reduced to that lower price. The Company has recorded a derivative liability for this note using the Black Scholes
Method to value the derivative liability with the following assumptions: Risk Free Interest rate of .025, volatility of 296%,
and an assumed dividend rate of 0% with the expected term of 92 days. In November 2014, the third party converted $7,135 of
note into 366,598 shares of common stock of the Company. During the first quarter of 2015, the third party converted $6,612
of the note into 1,569,580 shares of common stock of the Company. During the second quarter of 2015, the third party converted
$10,683 of the note into 13,427,276 shares of common stock of the Company. The note matured on March 17, 2015 but was extended
to September 30, 2015. | |
| 569 | | |
| 17,865 | |
| |
| | | |
| | |
On June 9, 2014 the Company executed a promissory note for $30,000. The note bears interest at
8% and is secured by common stock of the Company. The note can be converted into common stock at a discount of 42% off of
the conversion price. The conversion price is the average lowest 3 day trading price during a 10 day period prior to conversion.
The Company has recorded the derivitive liability for this note using the Black Scholes Method to value the derivitive liabiltiy
with the following assumptions: Risk free interest rate of .025, volitility of 276% and an assumed dividend of 0% with the
expected term of 92 days. During the first quarter of 2015, the third party converted $12,098 of the note into 2,656,309 shares
of common stock of the Company. During the second quarter of 2015, the third party converted $12,011 of the note into 21,721,132
shares of common stock of the Company. The note matured on June 9, 2015 but was extended to September 30, 2015. | |
| 5,892 | | |
| 30,000 | |
| |
| | | |
| | |
On June 11, 2014 the Company executed a promissory note for $86,500. The note bears interest
at 12% and is secured by common stock of the Company. The note can be converted into common stock at a discount of 45% off
of the conversion price. The conversion price is the average lowest 3 day trading price during a 10 day period prior to conversion.
The conversion price is the average lowest 3 day trading price during a 10 day period prior to conversion, or $0.0135 whichever
is greater. The Company has recorded the derivitive liability for this note using the Black Scholes Method to value the derivitive
liabiltiy with the following assumptions: Risk free interest rate of .025, volitility of 276% and an assumed dividend of 0%
with the expected term of 92 days. During the first quarter of 2015, the third party converted $40,040 of the note into 6,860,160
shares of common stock of the Company. During the second quarter of 2015, the third party converted $43,098 of the note into
54,315,828 shares of common stock of the Company. The note matured on June 11, 2015 but was extended to September 30, 2015. | |
| 3,361 | | |
| 86,500 | |
On June 11, 2014 the Company executed a promissory note for $86,291 for the note
plus interest on the note executed March 13, 2013. The note bears interest at 12% and is secured by common stock of the Company.
The note can be converted into common stock at a discount of 45% off of the conversion price. The conversion price is the
average lowest 3 day trading price during a 10 day period prior to conversion, or $0.0135 whichever is greater. The Company
has recorded the derivitive liability for this note using the Black Scholes Method to value the derivitive liabiltiy with
the following assumptions: Risk free interest rate of .025, volitility of 276% and an assumed dividend of 0%. In June 2014,
the third party converted $13,319 of note into 56,000 shares of common stock of the Company. In July 2014, the third party
converted $4,510 of note into 40,000 shares of common stock of the Company. In August 2014, the third party converted $5,077
of note into 93,334 shares of common stock of the Company. In September 2014, the third party converted $12,311 of note into
420,000 shares of common stock of the Company. In October 2014, the third party converted $14,111 of note into 655,334 shares
of common stock of the Company. In November 2014, the third party converted $13,816 of note into 753,334 shares of common
stock of the Company. In December 2014, the third party converted $4,670 of note into 626,667 shares of common stock of the
Company. During the first quarter of 2015, the third party fully converted the remaining balance of the note into 1,170,667
shares of common stock of the Company. | |
| - | | |
| 5,542 | |
| |
| | | |
| | |
On June 30, 2014 the Company executed a promissory note for $88,500. The note bears interest
at 6% and is secured by common stock of the Company. The note can be converted into common stock at the bid price on day prior
to conversion. On February 10, 2015, the note was purchased and the terms and maturity date were changed. The note matures
on February 10, 2016. The new terms beared a 8% interest rate. The note can be converted into common stock at a discount of
55% off the conversion price. The conversion price is the average 3 day lowest closing sales price during a 10 day period
prior to conversion, but no less that $0.0001. A debt estinguishment was booked due to the changes in terms. During the first
quarter of 2015, the third party converted $9,382 of the note into 1,834,300 shares of common stock of the Company. During
the second quarter of 2015, the third party converted $16,601 of the note into 13,758,452 shares of common stock of the Company.
The expected term is 225 days. | |
| 64,521 | | |
| 88,500 | |
| |
| | | |
| | |
On August 8, 2014 the Company executed a promissory note for $50,000. The note bears interest
at 6% and is secured by common stock of the Company. The note can be converted into common stock at a discount of 35% off
of the conversion price. The conversion price is the average bid price on the 3 days prior to the date of conversion. Or the
closing price of the issuer on the date of this note of $.001, whichever is lower. On April 8, 2015 the note was modified
by $15,000. The terms of that portion of the note has changed and bears interest at 6% are unsecured. The note has a maturity
date of August 8, 2015. The expected term of the note is 39 days. | |
| 35,000 | | |
| 50,000 | |
| |
| | | |
| | |
On April 3, 2014 the Company executed a promissory note for $42,500. The note bears
interest at 22% and is secured by common stock of the Company. The note can be converted into common stock at a discount of
45% off of the conversion price. The conversion price is the average lowest 3 day trading price during a 10 day period prior
to conversion, unless the Company sells or issues stock at a lower price than the conversion price. Should this occur the
conversion prices is reduced to the lower price. The Company has recorded the derivitive liability for this note using the
Black Scholes Method to value the derivitive liabiltiy with the following assumptions: Risk free interest rate of .025, volitility
of 292% and an assumed dividend of 0% with the expected term of 92 days. During the first quarter of 2015, the third party
converted $17,525 of the note into 3,728,015 shares of common stock of the Company. During the second quarter of 2015, the
third party converted $19,671 of the note into 29,078,917 shares of common stock of the Company. The note matured on April
3, 2015 but was extended to September 30, 2015 | |
| 5,304 | | |
| 42,500 | |
| |
| | | |
| | |
On July 8, 2014 the Company executed a promissory note for $42,500. The note bears interest at
22% and is secured by common stock of the Company. The note can be converted into common stock at a discount of 45% off of
the conversion price. The conversion price is the average lowest 3 day trading price during a 10 day period prior to conversion,
unless the Company sells or issues stock at a lower price than the conversion price. Should this occur the conversion prices
is reduced to the lower price. The Company has recorded the derivitive liability for this note using the Black Scholes Method
to value the derivitive liabiltiy with the following assumptions: Risk free interest rate of .025, volitility of 270% and
an assumed dividend of 0% with the expected term of 7 days. The note matured on July 8, 2015 but was extended to September
30, 2015. | |
| 42,500 | | |
| 42,500 | |
On September 5, 2014 the Company executed a promissory note for $52,500. The note
bears interest at 12% and is secured by common stock of the Company. The note can be converted into common stock at a discount
of 55% off of the conversion price. The conversion price is the average lowest 3 day trading price during a 10 day period
prior to conversion, or the stock can be converted at $0.0135, whichever is greater. This note matures on September 5, 2015.
he Company has recorded a derivative liability for this note using the Black Scholes Method to value the derivative liability
with the following assumptions: Risk Free Interest rate of .025, volatility of 425%, and an assumed dividend rate of 0%. | |
| 52,500 | | |
| 52,500 | |
| |
| | | |
| | |
On October 27, 2014 the Company executed a promissory note for $52,500. The note bears interest
at 12% and is secured by common stock of the Company. The note can be converted into common stock at a discount of 55% off
of the conversion price. The conversion price is the average lowest 3 day trading price during a 10 day period prior to conversion,
or the stock can be converted at $0.0135, whichever is greater. This note matures on October 27, 2015. The Company has recorded
a derivative liability for this note using the Black Scholes Method to value the derivative liability with the following assumptions:
Risk FreeInterest rate of .025, volatility of 373%, and an assumed dividend rate of 0% with the expected term of 77 days. | |
| 52,500 | | |
| 52,500 | |
| |
| | | |
| | |
On December 11, 2014 the Company executed a promissory note for $40,000. The note bears interest
at 6% and is secured by common stock of the Company. The note can be converted into common stock at a discount of 35% off
of the conversion price. The conversion price is the average bid price on the 3 days prior to the date of conversion. Or the
closing price of the issuer on the date of this note of $.001. On June 11, 2015, the note was purchased and the terms and
maturity date were changed. The new terms beared a 6% interest rate. The note can be converted into common stock at a discount
of 50% off the conversion price. The conversion price is the average 3 day lowest closing sales price during a 10 day period
prior to conversion. A debt estinguishment was booked due to the changes in terms. The note matures on June 11, 2016. The
Company has recorded a derivative liability for this note using the Black Scholes Method to value the derivative liability
with the following assumptions: Risk Free Interest rate of .025, volatility of 337%, and an assumed dividend rate of 0% with
the expected term of 164 days. | |
| 40,000 | | |
| 40,000 | |
| |
| | | |
| | |
On January 5, 2015 the Company executed a promissory note for $20,000. The note bears
interest at 6% and is secured by common stock of the Company. The note can be converted into common stock at a discount of
70% off of the conversion price. The conversion price is the average bid price on the 3 days prior to the date of conversion.
Or the closing price of the issuer on the date of this note of $.001. The note matures on January 5, 2016. The Company has
recorded a derivative liability for this note using the Black Scholes Method to value the derivative liability with the following
assumptions: Risk FreeInterest rate of .025, volatility of 328%, and an assumed dividend rate of 0% with the expected term
of 189 days. | |
| 20,000 | | |
| - | |
| |
| | | |
| | |
On January 31, 2015 the Company executed a promissory note for $176,267. The note bears interest
at 6% and is secured by common stock of the Company. The conversion price is the bid price on the day prior to the date of
conversion. Or the closing price of the issuer on the date of this note of $.001. The note matures on January 31, 2016. The
Company has recorded a derivative liability for this note using the Black Scholes Method to value the derivative liability
with the following assumptions: Risk FreeInterest rate of .025, volatility of 317%, and an assumed dividend rate of 0% with
the expected term of 185 days. | |
| 176,268 | | |
| - | |
| |
| | | |
| | |
On February 10, 2015 the Company executed a promissory note for $52,500. The note bears interest
at 8% and is secured by common stock of the Company. The note can be converted into common stock at a discount of 55% off
of the conversion price. The conversion price is the average bid price on the 3 days prior to the date of conversion. Or the
closing price of the issuer on the date of this note of $.001. The note matures on February 10, 2016 The Company has recorded
a derivative liability for this note using the Black Scholes Method to value the derivative liability with the following assumptions:
Risk Free Interest rate of .025, volatility of 285%, and an assumed dividend rate of 0% with the expected term of 225 days.. | |
| 52,500 | | |
| - | |
On February 13, 2015 the Company executed a promissory note for $30,000. The note
bears interest at 8% and is secured by common stock of the Company. The note can be converted into common stock at a discount
of 42% off of the conversion price. The conversion price is the average bid price on the 3 days prior to the date of conversion.
Or the closing price of the issuer on the date of this note of $.001. The note matures on February 13, 2016. The Company has
recorded a derivative liability for this note using the Black Scholes Method to value the derivative liability with the following
assumptions: Risk FreeInterest rate of .025, volatility of 269%, and an assumed dividend rate of 0% with the expected term
of 228 days. | |
| 30,000 | | |
| - | |
| |
| | | |
| | |
On February 13, 2015 the Company executed a promissory note for $50,000. The note bears interest
at 8% and is secured by common stock of the Company. The note can be converted into common stock at a discount of 70% off
of the conversion price. The conversion price is the average bid price on the 3 days prior to the date of conversion. Or the
closing price of the issuer on the date of this note of $.001. The note matures on February 13, 2016 The Company has recorded
a derivative liability for this note using the Black Scholes Method to value the derivative liability with the following assumptions:
Risk FreeInterest rate of .025, volatility of 269%, and an assumed dividend rate of 0% with the expected term of 228 days. | |
| 50,000 | | |
| - | |
| |
| | | |
| | |
On January 26, 2015 the Company executed a promissory note for $28,000. The note bears interest
at 12% and is secured by common stock of the Company. The note can be converted into common stock at 50% of the Market price.
The note matures on January 26, 2016. The note is considered a stock settled debt instrument. The expected term is 210 days. | |
| 28,000 | | |
| - | |
| |
| | | |
| | |
On March 17, 2015 the Company executed a promissory note for $28,000. The note bears interest
at 12% and is secured by common stock of the Company. The note can be converted into common stock at 50% of the Market price.
The note matures on March 17, 2016. The note is considered a stock settled debt instrument. The expected term is 261 days. | |
| 28,000 | | |
| - | |
| |
| | | |
| | |
On June 30, 2015, the Company executed a promissory note for $150,333. The note bears interest
at 6% and is secured by common stock of the Company. The note can be converted into common stock at bid price on the day prior
to conversion . The note matures on June 30, 2016. The Company has recorded a derivative liability for this note using the
Black Scholes Method to value the derivative liability with the following assumptions: Risk Free Interest rate of .025, volatility
of 46%, and an assumed dividend rate of 0% with the expected term of 366 days. | |
| 150,333 | | |
| - | |
| |
| | | |
| | |
On June 30, 2015, the Company executed a promissory note for $62,229. The note bears interest
at 6% and is secured by common stock of the Company. The note can be converted into common stock at bid price on the day prior
to conversion . The note matures on June 30, 2016. The Company has recorded a derivative liability for this note using the
Black Scholes Method to value the derivative liability with the following assumptions: Risk Free Interest rate of .025, volatility
of 46%, and an assumed dividend rate of 0% with the expected term of 366 days. | |
| 62,229 | | |
| - | |
| |
| | | |
| | |
On June 12, 2015, the Company executed a promissory note for $40,000. The note bears interest
at 6% and is secured by common stock of the Company. The note can be converted into common stock at average closing price
of the previous 3 days . The note matures on June 12, 2016. The Company has recorded a derivative liability for this note
using the Black Scholes Method to value the derivative liability with the following assumptions: Risk Free Interest rate of
.025, volatility of 89%, and an assumed dividend rate of 0% with the expected term of 348 days. | |
| 40,000 | | |
| - | |
| |
| | | |
| | |
On April 10, 2015, the Company executed a promissory note for $31,500. The note bears interest
at 6% and is secured by common stock of the Company. The note can be converted into common stock at 60% of the average of
the two lowest closing prices in the 25days price to convesion. The note matures April 10, 2015. The note is considered a
stock settled debt instrument. The expected term is 285 days. | |
| 31,500 | | |
| - | |
On April 4, 2015, the Company executed a promissory note for $25,000. The note bears
interest at 6% and is secured by common stock of the Company. The note can be converted into common stock at average closing
price of the previous 3 days . The note matures on April 4, 2016. The Company has recorded a derivative liability for this
note using the Black Scholes Method to value the derivative liability with the following assumptions: Risk Free Interest rate
of .025, volatility of 185%, and an assumed dividend rate of 0% with the expected term of 279 days. | |
| 25,000 | | |
| - | |
| |
| | | |
| | |
On May 13, 2015, the Company executed a promissory note for $25,000. The note bears interest
at 6% and is secured by common stock of the Company. The note can be converted into common stock at average closing price
of the previous 3 days . The note matures on May 13, 2016. The Company has recorded a derivative liability for this note using
the Black Scholes Method to value the derivative liability with the following assumptions: Risk Free Interest rate of .025,
volatility of 135%, and an assumed dividend rate of 0% with the expected term of 318 days. | |
| 25,000 | | |
| - | |
| |
| | | |
| | |
On June 23, 2015, the Company executed a promissory note for $25,000. The note bears interest
at 6% and is secured by common stock of the Company. The note can be converted into common stock at average closing price
of the previous 3 days . Then note matures on June 23, 2016. The Company has recorded a derivative liability for this note
using the Black Scholes Method to value the derivative liability with the following assumptions: Risk Free Interest rate of
.025, volatility of 68%, and an assumed dividend rate of 0% with the expected term of 359 days. | |
| 25,000 | | |
| - | |
| |
| | | |
| | |
On June 16, 2015, the Company executed a promissory note for $25,000. The note bears interest
at 6% and is secured by common stock of the Company. The note can be converted into common stock at average closing price
of the previous 3 days. The note matures on June 16, 2016. The Company has recorded a derivative liability for this note using
the Black Scholes Method to value the derivative liability with the following assumptions: Risk Free Interest rate of .025,
volatility of 86%, and an assumed dividend rate of 0% with the expected term of 352 days. | |
| 25,000 | | |
| - | |
| |
| | | |
| | |
On May 28, 2015, the Company executed a promissory note for $23,000. The note bears interest
at 12% and is secured by common stock of the Company. The note can be converted into common stock at 55% of the Conversion
price. The conversion price is the average closing bid price on the 3 days prior to the date of conversion. The note matures
on May 28, 2016. The Company has recorded a derivative liability for this note using the Black Scholes Method to value the
derivative liability with the following assumptions: Risk Free Interest rate of .025, volatility of 110%, and an assumed dividend
rate of 0% with the expected term of 333 days. | |
| 23,000 | | |
| - | |
| |
| | | |
| | |
On April 1, 2015, the Company executed a promissory note for $12,000. The note bears interest
at 12% and is secured by common stock of the Company. The note can be converted into common stock at average closing price
of the previous 3 days . The note matures on April 1, 2016. The Company has recorded a derivative liability for this note
using the Black Scholes Method to value the derivative liability with the following assumptions: Risk Free Interest rate of
.025, volatility of 185%, and an assumed dividend rate of 0% with the expected term of 276 days. | |
| 12,000 | | |
| - | |
| |
| | | |
| | |
On April 30, 2015, the Company executed a promissory note for $7,500. The note bears interest
at 6% and is secured by common stock of the Company. The note can be converted into common stock at 50% of the Market price.
The Market price is the average closing bid price on the 3 days prior to the date of conversion. The note matures on April
30. 2016. The note is considered a stock settled debt instrument. The expected term is 305 days. | |
| 7,500 | | |
| - | |
| |
| | | |
| | |
On April, 8 2015, the Company executed a promissory note for $7,408. The note bears interest
at 6% and is secured by common stock of the Company. The note can be converted into common stock at 50% of the Market price.
The Market price is the average closing bid price on the 3 days prior to the date of conversion. During the second quarter
of 2015, the third party converted $7,592 of the note into 8,633,577 shares of common stock of the Company. The note matures
on April 8, 2016. The note is considered a stock settled debt instrument. The expected term is 283 days | |
| 7,406 | | |
| - | |
| |
| | | |
| | |
Premium liability | |
| 29,846 | | |
| 29,846 | |
| |
| | | |
| | |
Unamortized debt discount on derivative liabilities | |
| (426,759 | ) | |
| (248,811 | ) |
| |
| | | |
| | |
Total convertible notes outstanding, net of unamortized discounts | |
| 806,475 | | |
| 388,957 | |
FRESH
PROMISE
FOODS, INC.
NOTES
TO THE
UNAUDITED CONSOLIDATED
FINANCIAL
STATEMENTS
June
30, 2015
NOTE
6 – STOCKHOLDERS’ EQUITY (DEFICIT)
The
authorized common stock of the Company consist of 2,000,000,000 shares with a par value $0.00001. The Company also has
100,000,000 shares of par
value $0.00001 Preferred
C stock authorized
and 10 shares
of par value $0.00001 Preferred
B stock authorized.
Series
A Preferred stock has been cancelled.
Series
B Preferred
Designation
This
class of stock of this Corporation shall be named and designated "Series B Preferred Stock". It shall have 10 shares
authorized at $0.00001 par value per-share.
Conversion
Rights
a.
If at least one share of Series B Preferred Stock is issued and outstanding, then the total aggregate issued shares of Series
B Preferred Stock at any given time, regardless of their number, shall be convertible into the number of shares of Common Stock
which equals four times the sum of; i) the total number of shares of Common Stock which are issued and outstanding at the time
of conversion, plus ii) the total number of shares of Series B and Series C Preferred Stocks which are issued and outstanding
at the time of conversion. The stock certificate(s) evidencing the Common Stock shall be issued with a restrictive legend indicating
that it was issued in a transaction exempt from registration under the Seourities Act of 1933, as amended (the "Securities
Act"), and that it cannot be transferred unless it is so registered, or an exemption from registration is available,
in the opinion of counsel to the Corporation.
b.
Each individual share of Series B Preferred Stock shall be convertible into the number of shares of Common Stock equal to:
[four
times the sum of (all shares of Common Stock issued and outstanding at time of conversion + all shares of Series B and Series
C Preferred Stock issued and outstanding at'time of conversion)]
divided
by:
[the
number of shares of Series B Preferred Stock issued and outstanding at the time of conversion]
Issuance
Shares
of Series B Preferred Stock may only be issued in exchange for the partial or full retirement of debt held by Management, employees
or consultants, or as directed by a majority vote of the Board of Directors. The number of shares of Series B Preferred Stock
to be issued to each qualified person (member of Management, employee or consultant) holding a Note shall be determined by the
following formula:
For
retirement of debt:
number
of shares of Series B Preferred Stock to be issued
where
x1+ x2+ x3 ... + ... xn represent the discrete notes and
other obligations owed the lender (holder), which are being retired.
Voting
Rights
a.
If at least one share of Series B Preferred Stock is issued and outstanding, then the total aggregate issued shares of Series
B Preferred Stock at any given time, regardless of their number, shall have voting rights equal to four times the sum of: i) the
total number of shares of Common Stock which are issued and outstanding at the time of voting, plus ii) the total number of shares
of Series B and Series C Preferred Stocks whicli are issued and outstanding at the time of voting.
b.
Each individual share of Series B Preferred Stock shall have the voting rights equal to:
[four
times the sum of (all shares of Common Stock issued and outstanding at time of voting + all shares of Series B and Series C Preferred
Stocks issued and outstanding at time of voting)]
divided
by
[the
number of shares of Series B Preferred Stock issued and outstanding;at the time of voting]
Series
C Preferred
Designation
This
class of stock of this Corporation shall be named and designated "Series C Preferred Stock'. It shall have 30,000,000 shares
authorized at $0.00001 par value per share.
Dividends
The
holders of Series C Preferred Stock shall be entitled to receive dividends when, as and if declared by the Board of Directors,
in its sole discretion.
The Board of Directors has not designated
a % of dividends to be paid and as such no dividends have been accumulated to date. The Board has not declared any dividends to
be paid therefore no accrual has been recorded.
Liquidation
Rights
Upon
any liquidation, dissolution or winding up of the Corporation, whether voluntary or involuntary, before any distribution or payment.
shall be made to the holders of any stock ranking junior to the Series C Preferred Stock, the holders of the Series C Preferred
Stock shall be entitled to be paid out of the assets of the Corporation an amount equal to $1.00 per share or, in the event of
an aggregate subscription by a single subscriber for Series C Preferred Stock in excess of $100,000, $0.997 per share (as adjusted
for any stock dividends, combinations, splits, recapitalizations and the like with respect to such shares) (the "Preference
Value"), plus all declared but unpaid dividends, for each share of Series C Preferred Stock held by them. After the
payment of the full applicable Preference Value of each share of the Series C Preferred Stock as set forth herein, the remaining
assets of the Corporation legally available for distribution, if any, shall be distributed ratably to the holders of the Corporation's
Common Stock.
Conversion
and Anti Dilution
(a)
Each share of Series C Preferred Stock shall be convertible, at any time, and/or from time to time, into the number of shares
of the Corporation's Common Stock, par value $0.00001 per share, equal to the price of the Series C Preferred Stock, divided
by the par value of the Common Stock, subject to adjustment as may be determined by the Board of Directors from time to time (the
"Conversion Rate"). For example, assuming a $2.50, price per share of Series C Preferred Stock and a per
value or $0.00001 per share for Common Stock, each share of Series C Preferred Stock would be convertible into 250,000 sheres
of Common Stock. Such conversion shall be deemed to be effective on the business day (the "Conversion Date") following
the receipt by the Corporation of written notice frorn the holder or the Series C Preferred Stock of the holder's intention to
convert the shares of Series C Stock, together with the holder's stock certificate or certificates evidencing the Series C Preferred
Stock to be converted.
(b)
Promptly after the Conversion Date, the Corporation shall issue and deliver to such holder a certificate or certificates
for the number of full shares of Common Stock issuable to the holder pursuant to the holder's conversion of Series C Preferred.
Shares in accordance with the provisions of this Section. The stock certificate(s) evidencing the Common Stock shall be issued
with a restrictive legend indicating that it was issued in a transaction exempt from registration under the Securities Act, and
that it cannot be transferred unless it is to registered, or an exemption from registration is available, in the opinion of counsel
to the Corporation. The Common Stock shall be issued in the same name as the person who is the holder of the Series
C Preferred Stock unless, in the opinion of counsel to the Corporation, such transfer can be made in compliance with applicable
securities laws. The person in whose name the eertificate(s) of Common Stock are so registered shall be treated as a holder of
shares of Common Stock, of the Corporation on the date the Common Stock certificates) are so issued.
All
shares of Common Stock delivered upon conversion of the Series C Preferred Shares as provided herein shall be duly and validly
issued and fully paid and non-assessable. Effective as of the Conversion Date, such converted Series C Preferred Shares shall
no longer be deemed to be outstanding and all rights of the holder with respect to such shares shall immediately terminate except
the right to receive the shares of Common Stock issuable upon such conversion.
(c)
The Corporation covenants that, within 30 days of receipt of a conversion notice from any holder.of shares of Series C Preferred
Stock wherein which such conversion would create more shares of Common Stock than are authorized, the Corporation will increase
the authorized number of shares of Common Stock sufficient to satisfy such holder of shares of Series C submitting such conversion
notice.
(d)
Shares of Series C Preferred Stock are anti-dilutive to reverse splits, and therefore in the case of a reverse split, are convertible
to the number of Common Shares after the reverse split as would have been equal, to the ratio established prior to the reverse
split. The conversion rate of shares of Series C Preferred Stock, however, would increase proportionately in the case of forward
splits, and may not be diluted by a reverse split following a forward split.
Voting
Rights
Each
share of Series C Preferred Stock shall have ten votes for any election or other vote placed before the shareholders of the Corporation.
Price
(a)
The initial price of each share of Series C Preferred Stock shall be $2.50.
(b)
The price of each share of Series C Preferred Stock may be changed either through a majority vote of the Board of Directors through
a resolution at-a meeting of the Board, or through a resolution passed at an Action Without Meeting of the unanimous Board, until
such time as a listed secondary and/or listed public market develops for the shares.
Common
Stock
The
Company used Extinguishment Accounting for convertible notes with embedded derivatives, wherein on conversion of debt, the amount
of debt converted is debited, equity is credited for the fair value of shares issued, related derivative is reversed and any remaining
balance is recognized as a gain or loss on conversions.
During the six months ended June 30,
2015, a note dated 1/21/2014, with a face value of $13,500, was partially converted into 2,974,562 shares, representing $8,011
of principal. This was exempt from registration under rule 144.
During the six months ended June 30,
2015, a note dated 1/15/2014, with a face value of $22,000, was partially converted into 730,000 shares, representing $2,738 of
principal. This was exempt from registration under rule 144.
During the six months ended June 30,
2015, a note dated 3/17/2014, with a face value of $25,000, was partially converted into 14,996,856 shares, representing $17,296
of principal. This was exempt from registration under rule 144.
During the six months ended June 30,
2015, a note dated 4/3/2014, with a face value of $42,500, was partially converted into 32,806,932 shares, representing $37,197
of principal. This was exempt from registration under rule 144.
During the six months ended June 30,
2015, a note dated 4/8/2015, with a face value of $15,000, was partially converted into 8,633,577 shares, representing $7,592
of principal. This was exempt from registration under rule 144.
During the six months ended June 30,
2015, a note dated 6/5/2014, with a face value of $86,500, was partially converted into 61,175,988 shares, representing $83,138
of principal. This was exempt from registration under rule 144.
During the six months ended June 30,
2015, a note dated 6/9/2015, with a face value of $30,000, was partially converted into 24,377,441 shares, representing $24,109
of principal. This was exempt from registration under rule 144.
During the six months ended June 30,
2015, a note dated 6/11/201, with a face value of $86,292, fully converted the remaining principal of $8,616 into 1,170,667 shares.
This was exempt from registration under rule 144.
During the six months ended June 30,
2015, a note dated 2/10/2015, with a face value of $88,500, was partially converted into 15,228,159 shares, representing $23,978
principal. This was exempt from registration under rule 144.
During the six months ended June 30,
2015, a note dated 2/10/2015, with a face value of $15,000, was partially converted into 8,105,193 shares, representing $6,263
of principal. This was exempt from registration under rule 144.
FRESH
PROMISE
FOODS, INC.
NOTES
TO THE
UNAUDITED CONSOLIDATED
FINANCIAL
STATEMENTS
June
30, 2015
Common
Stock Warrants
The
Company did not issue any warrants during the quarter ending June 30, 2015.
The
following table sets forth common share purchase warrants outstanding as of June 30, 2015 and December 31, 2014:
| |
Exercise
Price | |
Outstanding warrants December 31, 2014 | |
| 4,533,334 | | |
| 0.02 | |
Outstanding warrants June 30, 2015 | |
| 4,533,334 | | |
| 0.02 | |
| |
| | | |
| | |
Common stock issuable upon exercise
of warrants | |
| 4,533,334 | | |
| 0.02 | |
Outstanding
warrants at June 30,
2015 have a
weighted average remaining
contractual life of 3 months. All warrants have an average weighted exercise price of $0.02. The warrants had an intrinsic
value of $0 at June 30, 2015 and December 31, 2014.
NOTE
7 – GOING CONCERN
The
Company’s consolidated financial statements are prepared using accounting principles generally accepted in the United States
of America applicable to
a going concern
which contemplates the
realization of assets
and liquidation of
liabilities in the
normal course of
business. The Company has
not yet established
an ongoing source
of revenues
sufficient to cover
its operating cost
and allow it
to continue as
a going concern. The ability of the Company to continue as a going concern is
dependent on the Company obtaining adequate capital to fund operating losses until it becomes profitable. If the Company is unable
to obtain adequate capital, it could be forced to cease operations.
The
Company has incurred
a net loss
of $515,175 for
the quarter ending
June 30, 2015 and
the Company had
an accumulated deficit
of $9,689,327 and a working capital
deficit of $2,212,030
at June 30, 2015.
These conditions raise
substantial doubt about
the Company’s ability to continue as a going
concern.
In
order to continue as a going concern, the Company will need, among other things, additional capital resources. Management’s
plan to obtain such resources
for the Company
include, obtaining capital
from management and
significant stockholders sufficient
to meet its
minimal operating expenses. However, management cannot provide any assurance that the Company will be successful in accomplishing
any of its plans.
There
is no assurance
that the Company
will be able
to obtain sufficient
additional funds when
needed or that
such funds, if
available, will be obtainable
on terms satisfactory
to the Company.
In addition, profitability
will ultimately depend
upon the level
of revenues received
from business operations. However, there is no assurance that the Company will attain profitability. The accompanying consolidated
financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going
concern
NOTE
8 – SUBSEQUENT EVENTS
On
May 8, 2015, the Company entered into an agreement with Optimum Sales a Company based
in El Dorado Hills, CA with Optimum Sales becoming the west coast broker of Harvest
Soul Chewable Juices.
The
Company had conversions of notes payable into 403,043,898 shares of common stock. The total principal converted was $448,872.
The conversions were done at the contractual terms per the agreements.
On
July 9th, 2015, the Company entered a consulting agreement with a third party. The agreement carries a convertible note valued
at $84,000.
ITEM
2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Forward-Looking
Statements
This
quarterly report on
Form 10-Q and
other reports filed
by Fresh
Promise Foods, Inc.
formally StaKool, Inc.
(“we,” “us,” “our,”
or the “Company”) from
time to time
with the U.S.
Securities and Exchange
Commission (the “SEC”)
contain or may
contain forward-looking statements (collectively
the “Filings”) and
information that are based upon
beliefs of, and information
currently available to, the Company’s management
as well as
estimates and assumptions made by Company’s
management. Readers are cautioned
not to place undue reliance on these forward-looking
statements, which are only
predictions and speak only
as of the date
hereof. When used in
the Filings, the
words “anticipate”, “believe”, “estimate”, “expect”, “future”,
“intend”, “plan”, or the negative of these terms and similar
expressions as they relate to the Company or
the Company’s management identify
forward-looking statements. Such statements
reflect the current
view of
the Company with respect to
future events and
are subject to risks, uncertainties,
assumptions, and other
factors. Should one
or more of
these risks or uncertainties materialize,
or should the underlying assumptions prove incorrect, actual results may differ
significantly from those anticipated, believed, estimated, expected, intended, or planned.
Although
the Company believes that the expectations reflected in the forward-looking statements are reasonable, the Company
cannot guarantee future results, levels of activity, performance, or achievements. Except as required by
applicable law, including the securities laws of the United States, the Company
does not intend to update any of the forward-looking statements to conform these statements to actual
results.
Our
financial statements are
prepared in accordance
with accounting principles
generally accepted in
the United States
(“GAAP”). These accounting principles require us to make certain
estimates, judgments and assumptions. We believe that the estimates, judgments and
assumptions upon which
we rely are
reasonable based upon
information available to
us at the
time that these
estimates, judgments and assumptions
are made. These estimates, judgments and assumptions can affect the reported amounts of assets and liabilities as of the date
of the financial statements as well as the reported amounts of revenues and expenses
during the periods presented. Our financial statements would be affected
to the extent
there are material differences between these
estimates and actual
results. In many cases, the accounting
treatment of a particular transaction is specifically dictated by GAAP and does not
require management’s judgment in its application. There are also areas in which
management’s judgment in selecting any available alternative would not produce a materially different result. The following
discussion should be read in conjunction with our financial statements and notes thereto appearing elsewhere in this report.
Management’s
Discussion and Analysis of Financial Condition and Results of
Operations
Plan
of Operations
Under
the direction of Kevin Quirk, the Company’s Chief Executive Officer, the Company’s primary goal continues to be the
leveraging of management’s experience and knowledge of the natural food and beverage industry to better deploy the Company’s
“Natural plus Energy” product line and to allow for a more comprehensive understanding of the distribution channels
and retail positioning. The Company believes the natural food and beverage market will continue to grow at a relatively substantial
pace, allowing for the introduction of many functional food and beverage products.
The
Company plans to continue to initiate growth measures for the Harvest Soul brand by introducing two new flavors of Harvest Soul
chewable juices in the next quarter. In addition to the planned launch of these new products, the Company is exploring options
to expand its productivity by moving into a new state-of-the-art production facility located in the metro-Atlanta area. The new
facility is expected to increase the production capacity of the Company and this initiative is extremely important to our ability
to meet increased demand for our product.
Our
management team feels confident that its understanding of the market will allow for the addition of several functional food and
beverage products within the next 24-36 months that could be capable of developing velocity throughout the all-natural retail
market space.
In
2015 the Company remains focused on finding additional capital to fund expansion to additional markets in the United States.
Recent developments include the
following:
● |
We
have obtained USDA Organic and Non GMO certifications for all Harvest Soul products. |
|
|
● |
We
have developed and had certified two new flavors of Harvest Soul Chewable juices. |
|
|
● |
We
have partnered with a brokerage firm out of California to represent Harvest Soul in the
west. |
|
|
● |
We
continue to seek companies that would be viable acquisition candidate. |
Results
of Operations
For
the Three and Six Months Ended June 30, 2015 Compared to the Three and Six Months Ended June 30
2014
Revenue
Total
revenue for the three and six months ended June 30, 2015 was $19,093 and $27,030 respectively compared to zero for the same period
in 2014. Total revenues were the result of orders sold both through the Harvest Soul e-commerce website and to the UNFI
distribution.
Gross
Margin
Gross
margin for the
three and six months ended June 30, 2015
was $8,258 and $3,382 respectively. The increase was due
to an increase in revenues and lower
production cost. Revenue increased
from $0 to
$19,093 for the three month period ending and $27,030 for the six month period ending June 30, 2015 compared to June 30,
2014. The increase was due to greater sales volume related to Harvest Soul Chewable Juices.
Operating
Expenses
For
the three and six month periods ending
June 30, 2015 operating
expenses decreased ($219,083) from $485,750 for the three month ending June
30, 2015 compare to the same three months in 2014. Operating expenses decreased by ($7,802) from $494,586 for the six months ending
June 30, 2015 compared to 2014. The decrease was due in part to lower payroll related expenses in 2015.
Loss
from Operations
Loss
from operations were $258,439 and $483,402 for three and six months ending June 30, 2015 compared to $485,780 and $497,722 in
2014. Lower operating cost contributed to the decease in the loss.
Other
Income (Expense)
Other
Expenses increased $430,009, from
($173,273) in 2014
to $256,736 for
the three
month periods
ended June
30, 2015.
Other Expense included $2,409 in derivative liability expense, $229,491 in interest
expense, and a gain of ($7,086) in on note extinguishment.
These expenses were offset by a loss on change in value of our derivative liabilities of
$30,563.
Net
Loss
Net
Loss for the
six months ended
June 30, 2015, was
$932,760. The net
loss was primarily
attributable to a
lack of
revenue and the operating expenses
and other expenses as described above.
Inflation
did not have
a material impact
on the Company’s
operations for the
period. Other than
the foregoing, management
knows of no trends, demands, or
uncertainties that are reasonably likely to have a material impact on the Company’s results of
operations.
Liquidity
& Capital Resources
The
following table summarizes total current assets, liabilities and working capital at June 30, 2015 and December 31,
2014.
| |
6/30/2015 | | |
12/31/2014 | |
| |
| | | |
| | |
Current assets | |
$ | 101,875 | | |
$ | 23,112 | |
Current liabilities | |
$ | 2,313,905 | | |
$ | 1,703,458 | |
Working capital deficit | |
$ | (2,212,030 | ) | |
$ | (1,680,346 | ) |
At
June 30, 2015, we
had a working
capital deficit of $2,212,030 as
compared to a working capital deficit of $1,680,346, at December 31, 2014, an increase in the deficit of $531,684. The increase
is primarily related to an increase in convertible notes payable issued in order to fund operating activities.
The
accompanying consolidated financial
statements have been
prepared assuming that
the Company will
continue as a
going concern which contemplates,
among other things, the realization of assets and satisfaction of liabilities in the ordinary course of
business.
The
Company sustained a net loss of $936,728 for the six months ended June 30, 2015. Because of
the absence of positive cash flows from operations, the Company requires additional
funding for continuing the development and marketing of products. These factors raise substantial
doubt about the
Company’s ability to
continue as a
going concern. The
accompanying consolidated financial
statements do not
include any adjustments that might result from the outcome of this
uncertainty.
At
June 30, 2015 we had minimal assets and a working capital deficit of $2,212,030. Our working capital deficit is due to the results
of operations. However we are presently able to meet our short term obligations through the sale of convertible notes.
Net
cash used in operating activities for the six months ended June 30, 2015 was ($394,237). Net cash provided by financing activities
for the six months ended June 30, 2015 was $400,452. Net cash provided by financing activities for this period consists primarily
of the issuance of a convertible notes. Net cash
used in investing
activities was ($29,920).
We
anticipate that our
future liquidity requirements
will arise from
the need to
fund operations, pay
current obligations and
future capital expenditures. The primary sources of funding for such requirements
are expected to be cash generated raising additional funds from the private equity
sources and debt financing. However, we can provide no assurances that we will be able to generate sufficient cash flow from
operations and obtain additional financing on terms satisfactory to us, if at all, to remain a going concern. Our continuation
as a going concern is dependent upon
our ability to
generate sufficient cash
flow to meet
our obligations on
a timely basis
and ultimately to
attain profitability. In addition,
our Plan of Operation for the next twelve months is to raise capital to continue to expand our operations. We are presently engaged
in capital raising activities through several private offerings of our company’s
securities. See “Note 7 – Going Concern” in our financial statements for additional information as to the possibility
that we may not be able to continue as a “going concern.”
Off-Balance
Sheet Arrangements
As
of June 30, 2015,
we do not
have any 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 investors.
Item
3. Quantitative and Qualitative Disclosures About Market Risk.
We
do not hold any derivative instruments and do not engage in any hedging
activities.
Item
4. Controls and Procedures.
(a)
Evaluation of Disclosure Controls and Procedures.
In
connection with the
preparation of this
Quarterly Report on
Form 10-Q for
the quarter ended
June 30, 2015, our
Principal Executive Officer (“PEO”) and Principal Financial Officer
(“PFO”) evaluated the effectiveness of our disclosure controls and procedures
as of the end of the period
covered by this
report. Based on
that evaluation, our
PEO and PFO
concluded that our
disclosure controls and
procedures as of
the end of the period covered by this
report were not effective such that the information
required to be disclosed by us
in reports filed under the Exchange Act
is (i) recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and (ii)
accumulated and communicated to our Chief Executive Officer and Principal Financial Officer, as appropriate to allow timely decisions
regarding disclosure. A controls system cannot provide absolute assurance, however, that the objectives of the controls system
are met, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any,
within a company have been detected.
(b)
Changes in Internal Control over Financial Reporting.
No
significant changes that
have materially affected,
or are reasonably
likely to materially
affect, our internal
control over financial
reporting were made in
our internal control
over financial reporting
during the three
month period ended
June 30, 2015, as
defined in Rules
13a-15(f) and 15d-15(f) under the Exchange Act.
PART
II - OTHER INFORMATION
Item
1. Legal Proceedings.
We,
together with certain
other parties (collectively,
the “Defendants”), are
currently involved in
litigation against Kyle
Gotshalk, Leonard Gotshalk, Clinton
Hall, LLC, Richard
Maher and Patrick
O’Loughlin (collectively, the
“Plaintiffs”). On April
25, 2013, the
Plaintiffs filed a complaint with
the United States District Court for the District of Nevada alleging claims including
securities fraud and breach of contract. The Company believes these claims to
be unfounded and the
Company is prepared to
file an answer with
the United States District
Court for the District of Nevada, together with counterclaims against the Plaintiffs.
The Company is continuing to vigorously defend itself against this lawsuit. On September 9, 2014, the Court granted the Defendants’
motion to set aside any entry of default judgment.
Except
as set forth above, we are not currently involved in any litigation that we believe could have a materially adverse effect on
our financial condition or results of operations. Except as set forth above, there
is no action, suit, proceeding, inquiry or investigation before or by any court, public
board, government agency, self-regulatory organization or body pending or, to the knowledge of the executive officers of our
Company or any of our subsidiaries, threatened against or affecting our Company, our common stock, any of our subsidiaries
or of our Company’s or our Company’s subsidiaries’ officers or directors
in their capacities as such, in which an adverse decision could have a material adverse
effect.
Item
1A. Risk Factors.
Our
business is subject to numerous risks. We caution you that the following important factors, among others, could cause our actual
results to differ materially
from those expressed
in forward-looking statements
made by us
or on our
behalf in filings
with the SEC,
press releases, communications with investors and oral statements. Any or
all of our forward-looking statements in this and in any other public statements we
make may turn out to be wrong. They can be affected by inaccurate assumptions we might make or by known or unknown risks
and uncertainties. Many factors mentioned in the discussion below will be important in determining future results. Consequently,
no forward- looking statement can be guaranteed.
Actual future results may vary materially from those anticipated in forward-looking statements.
We undertake no obligation to update any forward-looking statements, whether as a result of new information, future events
or otherwise. You are advised, however, to consult any further disclosure we make in
our reports filed with the SEC.
An
investment in our
Company involves a
substantial risk of
loss. You should
carefully consider the
risks described below,
before you make any investment decision
regarding our Company. Additional risks and uncertainties, including those generally affecting the market in which
we operate or that
we currently deem
immaterial, may also
impair our business.
If any such
risks actually materialize,
our business, financial condition
and operating results could be adversely affected. In such case, the trading price of our common stock could
decline.
The
following risk factors are not exhaustive and the risks discussed herein do not purport to be inclusive of all possible risks
but are intended only as
examples of possible
investment risks. To
facilitate understanding of
the various business
risks applicable to
our Company and
the strategic alliance companies
through which we
intend to operate
our business during
the foreseeable future,
the risk factors
discussed herein address our Company together with the risks applicable to
our operations that we intend to conduct with our strategic alliance partners.
Item
2. Unregistered Sales of Equity Securities and Use of
Proceeds.
During
the six months ended June 30, 2015, a note dated 1/21/2014, with a face value of $13,500, was partially converted into 2,974,562
shares, representing $8,011 of principal. This was exempt from registration under rule 144.
During
the six months ended June 30, 2015, a note dated 1/15/2014, with a face value of $22,000, was partially converted into 730,000
shares, representing $2,738 of principal. This was exempt from registration under rule 144.
During
the six months ended June 30, 2015, a note dated 3/17/2014, with a face value of $25,000, was partially converted into 14,996,856
shares, representing $17,296 of principal. This was exempt from registration under rule 144.
During
the six months ended June 30, 2015, a note dated 4/3/2014, with a face value of $42,500, was partially converted into 32,806,932
shares, representing $37,197 of principal. This was exempt from registration under rule 144.
During
the six months ended June 30, 2015, a note dated 4/8/2015, with a face value of $15,000, was partially converted into 8,633,577
shares, representing $7,592 of principal. This was exempt from registration under rule 144.
During
the six months ended June 30, 2015, a note dated 6/5/2014, with a face value of $86,500, was partially converted into 61,175,988
shares, representing $83,138 of principal. This was exempt from registration under rule 144.
During
the six months ended June 30, 2015, a note dated 6/9/2015, with a face value of $30,000, was partially converted into 24,377,441
shares, representing $24,109 of principal. This was exempt from registration under rule 144.
During
the six months ended June 30, 2015, a note dated 6/11/201, with a face value of $86,292, fully converted the remaining principal
of $8,616 into 1,170,667 shares. This was exempt from registration under rule 144.
During
the six months ended June 30, 2015, a note dated 2/10/2015, with a face value of $88,500, was partially converted into 15,228,159
shares, representing $23,978 principal. This was exempt from registration under rule 144.
During
the six months ended June 30, 2015, a note dated 2/10/2015, with a face value of $15,000, was partially converted into 8,105,193
shares, representing $6,263 of principal. This was exempt from registration under rule 144.
Item
3. Defaults upon Senior Securities.
There
were no defaults upon senior securities during the quarter ended June 30, 2015.
Item
4. Mine Safety Disclosure.
Not
applicable
Item
5. Other Information.
There
is no other information required to be disclosed under this item which was not previously
disclosed.
Item
6. Exhibits.
Exhibit
No. |
|
Description |
|
|
|
31.1 |
|
Certification
by the Principal Executive Officer of Registrant pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
(Rule 13a-14(a) or Rule 15d-14(a)).* |
|
|
|
31.2 |
|
Certification
by the Principal
Accounting Officer of
Registrant pursuant to
Section 302 of
the Sarbanes-Oxley Act
of 2002 (Rule 13a-14(a) or Rule 15d-14(a)).* |
|
|
|
32.1 |
|
Certification
by the Principal Executive Officer pursuant to 18 U.S.C. 1350 as adopted pursuant
to Section 906 of the Sarbanes- Oxley Act of
2002.* |
|
|
|
32.2 |
|
Certification
by the Principal Accounting Officer pursuant to 18 U.S.C. 1350 as adopted pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002.* |
|
|
|
101.INS |
|
XBRL
Instance Document* |
101.SCH |
|
XBRL
Taxonomy Extension Schema* |
101.CAL |
|
XBRL
Taxonomy Extension Calculation
Linkbase* |
101.DEF |
|
XBRL Taxonomy
Extension Definition Linkbase* |
101.LAB |
|
XBRL
Taxonomy Extension Label Linkbase* |
101.PRE
|
|
XBRL
Taxonomy Extension
Presentation Linkbase*
|
*
Filed Herewith.
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.
Dated:
August 17, 2015 |
FRESH
PROMISE FOODS, INC. |
|
|
|
/s/
Kevin P. Quirk |
|
Kevin
P. Quirk |
|
Principal
Executive Officer |
Exhibit
31.1
CERTIFICATION
OF PRINCIPAL EXECUTIVE OFFICER
PURSUANT TO
18
U.S.C. SECTION 1350,
AS
ADOPTED PURSUANT TO SECTION 302 OF
THE SARBANES-OXLEY ACT OF 2002
I, Kevin
P. Quirk, certify that:
1. |
I
have reviewed this Form 10-Q of Fresh Promise Foods, Inc.; |
|
|
2. |
Based
on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect
to the period covered by this report; |
|
|
3. |
Based
on my knowledge, the financial statements, and other financial information included in this report, fairly present in all
material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods
present in this report; |
|
|
4. |
Along
with the Principal Financial Officer, I am responsible for establishing and maintaining disclosure controls and procedures
(as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange
Act Rules 13-a-15(f) and 15d-15(f)) for the registrant and have: |
|
a) |
Designed
such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision,
to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to
us by others within those entities, particularly during the period in which this report is being prepared; |
|
|
|
|
b) |
Designed
such internal control over financial reporting, or caused such internal control over financial reporting to be designed under
our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with generally accepted accounting principles; |
|
|
|
|
c) |
Evaluated
the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions
about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based
on such evaluation; and |
|
|
|
|
d) |
Disclosed
in this report any change in the registrant’s internal control over financing reporting that occurred during the registrant’s
most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially
affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting;
and |
5. |
I
have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s
auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
|
a) |
All
significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which
are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial
information; and |
|
|
|
|
b) |
Any
fraud, whether or not material, that involved management or other employees who have a significant role in the registrant’s
internal control over financial reporting. |
Date:
August 17, 2015 |
By: |
/s/ Kevin P. Quirk |
|
|
Kevin
P. Quirk |
|
|
Principal
Executive Officer |
|
|
Fresh Promise Foods, Inc. |
Exhibit
31.2
CERTIFICATION
OF PRINCIPAL FINANCIAL OFFICER
PURSUANT TO
18
U.S.C. SECTION 1350,
AS
ADOPTED PURSUANT TO SECTION 302 OF
THE SARBANES-OXLEY ACT OF 2002
I, Kevin
P. Quirk, certify that:
1. |
I
have reviewed this Form 10-Q of Fresh Promise Foods Inc.; |
|
|
2. |
Based
on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect
to the period covered by this report; |
|
|
3. |
Based
on my knowledge, the financial statements, and other financial information included in this report, fairly present in all
material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods
present in this report; |
|
|
4. |
Along
with the Principal Executive Officer, I am responsible for establishing and maintaining disclosure controls and procedures
(as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange
Act Rules 13-a-15(f) and 15d-15(f)) for the registrant and have: |
|
a) |
Designed
such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision,
to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to
us by others within those entities, particularly during the period in which this report is being prepared; |
|
|
|
|
b) |
Designed
such internal control over financial reporting, or caused such internal control over financial reporting to be designed under
our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with generally accepted accounting principles; |
|
|
|
|
c) |
Evaluated
the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions
about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based
on such evaluation; and |
|
|
|
|
d) |
Disclosed
in this report any change in the registrant’s internal control over financing reporting that occurred during the registrant’s
most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially
affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting;
and |
5. |
I
have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s
auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
|
a) |
All
significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which
are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial
information; and |
|
|
|
|
b) |
Any
fraud, whether or not material, that involved management or other employees who have a significant role in the registrant’s
internal control over financial reporting. |
Date:
August 17, 2015 |
By:
|
/s/ Kevin P. Quirk |
|
|
Kevin
P. Quirk |
|
|
Principal
Financial Officer
Fresh Promise Foods, Inc. |
Exhibit
32.1
CERTIFICATION
PURSUANT TO
18 U.S.C. SECTION 1350,
AS
ADOPTED PURSUANT TO SECTION 906 OF
THE SARBANES-OXLEY ACT OF 2002
In
connection with this Quarterly Report of Fresh Promise Foods, Inc. (the “Company”), on Form 10-Q for the period ended
June 30, 2015, as filed with the U.S. Securities and Exchange Commission on the date hereof, I, Kevin P. Quirk, Principal Executive
Officer of the Company, certify to the best of my knowledge, pursuant to 18 U.S.C. Sec. 1350, as adopted pursuant to Sec. 906
of the Sarbanes-Oxley Act of 2002, that:
|
(1) |
Such
Quarterly Report on Form 10-Q for the period ended June 30, 2015, fully complies with the requirements of section 13(a) or
15(d) of the Securities Exchange Act of 1934; and |
|
|
|
|
(2) |
The
information contained in such Quarterly Report on Form 10-Q for the period ended June 30, 2015, fairly presents, in all material
respects, the financial condition and results of operations of the Company. |
Date:
August 17, 2015 |
By: |
/s/ Kevin P. Quirk |
|
|
Kevin
P. Quirk |
|
|
Principal
Executive Officer
Fresh Promise Foods, Inc. |
Exhibit
32.2
CERTIFICATION
PURSUANT TO
18 U.S.C. SECTION 1350,
AS
ADOPTED PURSUANT TO SECTION 906 OF
THE SARBANES-OXLEY ACT OF 2002
In
connection with this Quarterly Report of Fresh Promise Foods, Inc. (the “Company”), on Form 10-Q for the period ended
June 30, 2015, as filed with the U.S. Securities and Exchange Commission on the date hereof, I, Kevin P. Quirk, Principal Financial
Officer of the Company, certify to the best of my knowledge, pursuant to 18 U.S.C. Sec. 1350, as adopted pursuant to Sec. 906
of the Sarbanes-Oxley Act of 2002, that:
|
(1) |
Such
Quarterly Report on Form 10-Q for the period ended June 30, 2015, fully complies with the requirements of section 13(a) or
15(d) of the Securities Exchange Act of 1934; and |
|
|
|
|
(2) |
The
information contained in such Quarterly Report on Form 10-Q for the period ended June 30, 2015, fairly presents, in all material
respects, the financial condition and results of operations of the Company. |
Date:
August 17, 2015 |
By: |
/s/ Kevin P. Quirk |
|
|
Kevin
P. Quirk |
|
|
Principal
Financial Officer
Fresh Promise Foods, Inc. |