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EX-32.1 - EXHIBIT 32.1 - Rogue One, Inc.ex32-1.htm

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

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

 

For the quarterly period ended: June 30, 2014

 

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   (I.R.S. Employer
incorporation or organization)   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 8, 2014, there were 215,096,744 shares outstanding of the registrant’s common stock.

 

 

 

 
 

 

TABLE OF CONTENTS

 

      Page
  Part I. Financial Information    
       
Item 1. Condensed Consolidated Financial Statements    F-1
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations    3
Item 3. Quantitative and Qualitative Disclosures About Market Risk    6
Item 4. Controls and Procedures    6
       
  Part II. Other Information    
       
Item 1. Legal Proceedings    6
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds    7
Item 3. Defaults Upon Senior Securities    7
Item 4. Mine Safety Disclosure    7
Item 5. Other Information    7
Item 6. Exhibits    8
       
Signatures   9

 

2
 

   

PART I. FINANCIAL INFORMATION

 

ITEM I. FINANCIAL STATEMENTS

 

Fresh Promise Foods, Inc.

Consolidated Balance Sheet

Unaudited

 

   June 30, 2014   December 31, 2013 
Assets          
Current Assets          
Cash  $49,273   $33,335 
Current Assets   49,273    33,335 
           
Other current asset (Costs of inventory purchased for resale)   6,951    - 
Total Current Asset   56,224    33,335 
           
Property and Equipment   12,661    - 
Other Asset: Website Development & Software Purchased   3,417    - 
Total Assets  $72,302   $33,335 
           
Liabilities and Stockholder’s Deficit          
Liabilities          
Current Liabilities          
Account payable  $237,839   $236,797 
Other liabilities   6,968    9,600 
Accrued interest   13,606    23,358 
Convertible notes payable, net of unamortized discount and premiums   273,060    228,615 
Accrued salaries due officers   334,668    64,000 
Amounts due former officers under consulting agreements   -    47,000 
Convertible note derivative liability   368,240    156,549 
Loan due related parties   3,600    - 
Stock payable for acquisition   44,648    170,648 
Total Current Liabilities   1,282,629    936,567 
Other current liability   1,063    - 
Total Liabilities   1,283,692    936,567 
           
Common stock - par value $0.00001 975,000,000 shares authorized, 126,974,673 62,676,958 shares outstanding, respectively   1,270    627 
Preferred stock series C - par value $0.00001 100,000,000 shares authorized, 308,180 and 341,180 shares outstanding, respectively.   3    3 
Preferred stock series B - no par value, 10 shares authorized, and 2 and 1 share outstanding, respectively.          
Additional paid In Capital   6,881,526    6,704,649 
Accumulated deficit   (8,094,189)   (7,608,511)
Total Stockholders’ Deficit   (1,211,390)   (903,232)
Total Liabilities and Stockholders’ Deficit  $72,302   $33,335 

 

See accompanying notes to consolidated financial statements.

 

F-1
 

 

Fresh Promise Foods, Inc.

Consolidated Statement of Operations

Unaudited

 

   Three Month Ended   Six Month Ended 
   06 30 2014   06 30 2013   06 30 2014   06 30 2013 
Revenues  $-   $-   $   $64 
Cost of Goods Sold   1    1,834    3,136    2,515 
Gross Margin   (1)   (1,834)   (3,136)   (2,451)
                     
Operating Expenses                    
Rent   3,575    -    3,575   - 
Professional fees   133,359    58,819    133,359    83,333 
Consulting fees (legal)   622    -    601    - 
Office expense   222    185    222    9,417 
Investor and public relations   2,253    2,321    2,253    8,999 
Product development   -    -    525    - 
Compliance   -    -    2,653    - 
Communication   1,981    400    1,981    1,781 
shareholders related expense   -    -    6,675    - 
Bank services   98    30    140    666 
Travel and entertainment   7,313    2,634    7,313    3,168 
General and administrative expense   15,460    -    4,980    - 
Payroll and related expense   310,668    -    310,668    125 
Insurance - Liability   -    -    2,878    - 
Misc. expense   -    -    787    - 
License and permits   -    159    622    159 
Subcontractor   -    -    4,798    - 
Depreciation   -    100    -    200 
Marketing   -    -    7,277    - 
Stock based compensation   2,950    -    2,950    45,000 
Advertising and promotion   7,279    -    329    - 
Total Operating Expenses   485,780    64,648    494,586    152,848 
                     
Loss from operations   (485,780)   (66,482)   (497,722)   (155,299)
                     
Other expenses                    
(Gain) loss on note settlement   -    -    -    - 
Debt forgiveness   -    -    (22,000)   - 
(Gain) on Change in value of derivative liability   (371,640)   (66,467)   (371,640)   (80,249)
Derivative liability expense   233,293    -    233,293    - 
(Gain) loss on note conversion   5,321    -    5,321    - 
Other expense - other   -    -    (97)   - 
(Gain) Loss on stock issuance   (51,000)   11,700    (51,000)   29,700 
Interest/financing expense   10,753    108,313    194,080    137,807 
Total other expenses   (173,273)   53,546    (12,043)   87,258 
                     
Loss before provision for income tax   (312,507)   (120,028)   (485,679)   (242,557)
                     
Provision for income tax   -    -    -    - 
                     
Net Loss  $(312,507)  $(120,028)   (485,679)  $(242,557)
                     
Net Loss per share: Basic and diluted  $(0.00)  $(0.00)   (0.00)  $(0.01)
                     
Weighted Average Number of Shares Outstanding: Basic and diluted   

102,811,794

    31,322,242    87,645,892    31,885,864 

 

See accompanying notes to consolidated financial statements.

 

F-2
 

 

Fresh Promise Foods, Inc.

Consolidated Statements of Cash Flows

 

   June 30, 2014   June 30, 2013 
OPERATING ACTIVITIES          
Net loss from operations  $(485,679)  $(242,557)
Adjustments to reconcile net loss to net cash used in operating activities:          
Amortization of debt discount   150,558    83,293 
Change in value of derivative liability   (371,640)   (80,249)
Derivative liability expense   233,293    33,402 
Other expenses   (97)   - 
Adjustment to prior period   -    (826)
Loss on note conversions   5,321    - 
(Gain) Loss on stock issuance   (51,000)   29,700 
Penalty on convertible note   -    16,250 
Other current asset   6,951      
Stock-based compensation   2,950    29,570 
accrued salary   -    - 
Other current liability   1,063    - 
Amount due current and former officer   (31,062)   - 
Depreciation & Amortization   -    200 
Changes in working capital items          
(increase) in accounts receivable   -    (2,816)
Increase in accrued interest   -    3,712 
Accrued salaries   270,668    - 
Increase in other liability   -    31,534 
Decrease in other liabilities   (2,632)   - 
Decrease in rental deposit   -    1,700 
Advances from related parties   3,600    - 
Decrease in accounts payable   1,042    3,738 
Decrease in accrued interest   (9,752)   - 
Cash flow from operating activities   (276,416)   (93,349)
           
INVESTING ACTIVITIES          
PP&E   (12,661)   - 
Website development  (3,417)    - 
    (16,078)   - 
FINANCING ACTIVITIES          
Repayment of convertible notes          
Proceeds from note payable  308,432    91,750 
Proceeds from stock sale   -    5,000 
Cash flow from financing   308,432    96,750 
           
Net change in cash  15,938    3,401 
Beginning cash  33,335    338 
Ending Cash   49,273    3,739 
           
Non-Cash Investing and Financing Activities:         
Record derivative liability on notes  $73,344   $115,286 
Conversion of note to common stock  $-   $46,600 
Stock issued under financing agreement   -    69,300 
Issuance of promissory note for accrued expenses  $-   $45,000 
Issuance of shares under stock payable agreement  $126,000   $- 

 

See accompanying notes to consolidated financial statements.

 

F-3
 

 

FRESH PROMISE FOODS, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2014

 

NOTE 1 – 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 will be launching a new brand and category 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 29,039,066. 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 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.

 

ACCOUNTING BASIS

 

The Company uses the accrual basis of accounting and accounting principles generally accepted in the United States of America (“GAAP accounting”). The Company has adopted a December 31 fiscal year end.

 

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.

 

F-4
 

  

FRESH PROMISE FOODS, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2014

 

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

 

CASH AND CASH EQUIVALENTS

 

Fresh Promise Foods Inc. considers all highly liquid investments with maturities of three months or less to be cash equivalents.

 

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.

 

FAIR VALUE OF FINANCIAL INSTRUMENTS

 

The Company’s financial instruments are carried at the approximate fair value due either to length of maturity or interest rates that approximate prevailing market rates unless otherwise disclosed in these consolidated financial statements.

 

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 consist of bottles, closures, labels and boxes as well as certain raw materials that go into the production of the final product. Inventory is stated at the lower of the cost or market. Cost was determined on the average cost method. Inventories are reviewed and reconciled periodically.

 

F-5
 

 

FRESH PROMISE FOODS, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2014

 

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

 

ACCOUNTS RECEIVABLE

 

The Company’s has no Accounts Receivables. 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, 2014 and 2013. Bad debt expense related to customer receivables for the period ended June 30, 2014 and the year ended December 31, 2013, 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, 2014 and 2013. 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, 2014 and 2013, the Company had convertible notes and warrants outstanding that could be converted into approximately 145,556,411 common shares based up the closing bid price of the company’s common stock at June 30, 2014.

 

REVENUE RECOGNITION

 

The Company derives revenue from the sale of its products. The Company follows paragraph 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.

 

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.

 

Share-based expense for the years ended June 30, 2014 and 2013 totaled $2,950 and $29,570, respectively.

 

F-6
 

 

FRESH PROMISE FOODS, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2014

 

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

 

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.

 

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 zero and $100 for the quarters ended June 30, 2014 and 2013, respectively. Property and equipment consisted of the following at June 30, 2014 and June 30, 2013:

 

   June 30, 2014   December 31, 2013 
Furniture and fixtures  $1,978   $1,841 
Production equipment   12,661      
Total property and equipment   14,639    1,841 
Less: Accumulated depreciation   (1,978)   (1,213)
Property and equipment, net.  $12,661   $628 

 

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 3,666,667 common shares from a related party. The note had been purchased from a former officer of the Company.

 

NOTE 4 – STOCK PAYABLE

 

On April 26, 2012, The Company entered into an agreement with Ironridge Global to settle $284,917 in liabilities. Pursuant to an order approving stipulation for settlement of claims between Ironridge and the Company, Ironridge is entitled to receive 1 million common shares plus that number of shares with an aggregate value equal to $332,748, divided by 70% of the following: the volume weighted average price of the issuer’s common stock over that number of consecutive trading days following the date of receipt required for the aggregate trading volume to exceed $1.75 million, not to exceed the arithmetic average of the individual daily volume weighted average prices of any five trading days during such period.

 

Ironridge is prohibited from receiving any shares of common stock that would cause it to be deemed to beneficially own more than 9.99% of the Company’s total outstanding shares at any one time. Ironridge received an initial issuance of 97,150 shares, and may be required to return or be entitled to receive shares, based on the calculation summarized in the prior paragraph. For purposes of calculating the percent of class, the initial issuance to Ironridge was based upon a total of 875,491 shares of common stock outstanding immediately prior to the issuance of shares to Ironridge, such that 97,150 shares issued would represent approximately 9.99% of the outstanding common stock after such issuance.

 

For the six months ended June 30, 2014 and 2013, Ironridge received 18,000,000 and 3,000,000 shares respectively, which were recorded at $126,000 and $21,000 respectively. For the same periods the company recorded a gain of $16,000 on the shares issued in 2014 and a loss of $9,000 on the shares issued in 2013. At June 30, 2014 and 2013, the balance of shares due Ironridge Global was 16,378,310 and 39,178,310 respectively, which was recorded at values of $114,648 and 274,248, respectively. Carrying value of amounts due under this agreement are computed by multiplying the percentage of total shares due issued to Ironridge times the initial value of the obligation recorded in 2012. In connection with the transaction, Ironridge agreed not to hold any short position in the issuer’s common stock, and not to engage in or affect, directly or indirectly, any short sale until at least 180 days after the end of the calculation period.

 

F-7
 

 

FRESH PROMISE FOODS, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2014

 

NOTE 5 – NOTES AND CONVERTIBLE NOTES PAYABLE

 

Convertible notes payable consist of the following at June 30, 2014 and 2013. All common share data in this table has been adjusted for the reverse stock split.

 

All common share data in this table have been adjusted for the reverse stock split.

 

   June 30, 2014   December 31, 2013 
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 2,639,237 shares of common stock of the Company. In 2013 the note maturity date was extended to September 30, 2014. 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 .0013, volatility of 597%, and an assumed dividend rate of 0%.  $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 June 30, 2014. 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 .0013, volatility of 536 %, and an assumed dividend rate of 20%. 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 2,543,235 shares of common stock of the Company.  $10,000   $45,000 
           
On March 13, 2013 the Company executed three promissory notes for services provided totaling $109,500. The notes are payable upon demand and bear interest at 12 % and can be converted into common stock of the company at the average five day closing bid price multiplied by three. Note Amount Converted / (Average price x 3). On June 11, 2014 these notes were sold to Carebourn Capital. The new 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, unless the company sells or issues stack 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 .0013, volitility of 65% and an assumed dividend of 0%.  $-   $109,500
           
On September 11, 2013 the Company executed a promissory note for $15,000 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 $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.  $15,000   $15,000 

 

F-8
 

 

FRESH PROMISE FOODS, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2014

 

NOTE 5 – NOTES AND CONVERTIBLE NOTES PAYABLE (CONTINUED)

 

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. The note is convertible at the lower of a discount of 35% off the prior day’s 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 .0011, volatility of 599%, and an assumed dividend rate of 0%.  $2,500   $2,500 
           
On December 12, 2013 the Company executed a promissory note for $53,000. The note bears interest at 8 % and is secured by common stock of the Company. The note can be converted into common stock 180 days after issuance at a discount of 45% 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 .0012, volatility of 586%, and an assumed dividend rate of 0%. On June 25, 2014, $11,000 of the note was converted into 8,000,000 common shares.  $41,000   $53,000 
           
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.  $20,000   $- 
           
In February 2014, one of these notes with a face value of $35,000 was sold to a third party. The accrued interest on the note of $4,710 was added to the principal amount purchased. The note was amended and the Company has recorded a derivative liability based upon the amended features. The Company used the Black Scholes Method to value the derivative liability with the following assumptions: Risk Free Interest rate of .0013%, volatility of 526 %, and an assumed dividend rate of 0%.  $39,710   $- 

 

F-9
 

 

FRESH PROMISE FOODS, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2014

 

NOTE 5 – NOTES AND CONVERTIBLE NOTES PAYABLE (CONTINUED)

 

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 .0013, volatility of 536%, and an assumed dividend rate of 0%.  $6,000   $- 
           
On February 04, 2014 the Company executed a promissory note for $53,000. The note bears interest at 8 % and is secured by common stock of the Company. The note can be converted into common stock 180 days after issuance at a discount of 45% 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 .0013, volatility of 536%, and an assumed dividend rate of 0%.  $53,000   $- 
           
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 .0013, volatility of 536%, and an assumed dividend rate of 0%. On April 10. May 8 and June 23, 2014, a compbined $19,801 of the note was converted into 3,699,000, 4,280,000, & 5,288,000 of common shares respectively.  $5,199   $- 
           
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, 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 .0013, volitility of 61% and an assumed dividend of 0%.  $30,000   $- 

 

F-10
 

 

FRESH PROMISE FOODS, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2014

 

NOTE 5 – NOTES AND CONVERTIBLE NOTES PAYABLE (CONTINUED)

 

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, 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 .0013, volitility of 65% and an assumed dividend of 0%. On June 18, 2014, $4,132.44 of the note was converted into 3,000,000 common shares.  $82,368   $- 
           
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, 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 .0013, volitility of 63% and an assumed dividend of 0%.  $86,291   $- 
           
Premium liability  $29,846   $8,077 
           
Unamortized debt discount on derivative liabilities  $(167,854)  $(54,962)
           
Total convertible notes outstanding, net of unamortized discounts  $273,060   $228,615 

 

NOTE 6 – STOCKHOLDERS’ EQUITY (DEFICIT)

 

The authorized common stock of the Company consist of 975,000,000 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 and 30,000,000 par value $0.00001 par value Preferred C stock authorized. The Company adjusted the par value and additional paid in capital accounts on its balance sheet at March 30, 2013 for common and Preferred A stocks.

 

During the six months ended June 30, 2014, the Company converted notes payable from non-related parties along with the accrued interest for a total of $36,848 into 17,864,048 shares of its common stock.

 

The Company also issued 500,000 shares of common stock to a service provider which was recorded at fair market value of $2,950.

 

During the period ended June 30, 2014, the Company issued 3,699,000 shares of common stock in conjunction with the conversion of promissory note with a face value of $25,000 plus accrued interest of $197.27. This was exempt from registration under rule 144.

 

During the period ended June 30, 2014, the Company issued 4,280,000 shares of common stock in conjunction with the conversion of promissory note with a face value of $25,000 plus accrued interest of $323.06. This was exempt from registration under rule 144.

 

During the period ended June 30, 2014, the Company issued 10,000,000 shares of common stock in conjunction with the settlement agreement with Ironridge Global, previous discussed. The stock was recorded at $34,900 but had a fair market value of 70,000. The Company recorded a loss on this issuance of $35,000. This was exempt from registration under rule 144.

 

During the period ended June 30, 2014, the Company issued 3,000,000 shares of common stock in conjunction with the conversion of promissory note with a face value of $86,500 plus accrued interest of $367.56. This was exempt from registration under rule 144.

 

During the period ended June 30, 2014, the Company issued 5,288,000 shares of common stock in conjunction with the conversion of promissory note with a face value of $25,000 plus accrued interest of $399.23. This was exempt from registration under rule 144.

 

During the period ended June 30, 2014, the Company issued 8,000,000 shares of common stock in conjunction with the conversion of promissory note with a face value of $53,000 plus accrued interest of $2,265.21. This was exempt from registration under rule 144.

 

The Company also converted $11,000 of a $22,000 convertible note to 3,666,667 common shares from a related party. The note had been purchased from a former officer of the Company.

 

F-11
 

 

FRESH PROMISE FOODS, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2014

 

NOTE 6 – STOCKHOLDERS’ EQUITY (DEFICIT) (CONTINUED)

 

The following table sets forth common share purchase warrants outstanding as of June 30, 2014:

 

   Warrants   Weighted Average
Exercise Price
 
Outstanding warrants December 31, 2012   -0-      
           
Warrant granted September 26, 2013   4,000,000   $0.02 
           
Warrant granted October 21, 2013   400,000   $0.02 
           
Warrant granted October 29, 2013   133,334   $0.02 
           
Outstanding warrants June 30, 2014   4,533,334   $0.02 
           
Common stock issuable upon exercise of warrants   4,533,334   $0.02 

 

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.

 

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 financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

 

NOTE 8 – 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.

 

F-12
 

 

FRESH PROMISE FOODS, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2014

 

NOTE 8 – INCOME TAXES (CONTINUED)

 

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, 2013.

 

As of June 30, 2014, the Company had net operating loss carry forwards of approximately $8,355,780 that may be available to reduce our tax liability in future years. We estimate the benefits of this loss carry forward at $3,042,780 if the Company produces sufficient taxable income. No adjustments to the financial statements have been recorded for this potential tax benefit.

 

The provision for Federal income tax consists of the following for the years 2014 and 2013:

 

A reconciliation of the federal statutory rate of 34% to the Company’s effective tax rate is as follows:

 

The Company’s valuation allowance increased by $175,823 in 2013. Tax net operating loss carryforwards may be limited pursuant to the IRS Section 382 in the event of certain ownership changes.

 

NOTE 9 – 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.

 

F-13
 

 

FRESH PROMISE FOODS, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2014

 

NOTE 9 – FAIR VALUE MEASUREMENTS (CONTINUED)

 

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.

 

NOTE 10 – SUBSEQUENT EVENTS

 

As of August 12, 2014 the Company issued 88,122,071 shares of common stock in conjunction with the partial conversion of certain promissory notes. The company has 215,096,744 outstanding shares.

 

In accordance with ASC 855-10, the Company has analyzed its operations subsequent to June 30, 2014 to the date these consolidated financial statements were issued, and has determined that it does not have any material subsequent events to disclose in these consolidated financial statements.

 

F-14
 

 

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. f/k/a 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 is continuing its efforts to leverage management’s experience and knowledge of the natural and organic food and beverage industry to better deploy the Company’s product lines through our wholly-owned subsidiary and to allow for a more comprehensive understanding of the distribution channels and retail positioning. In addition, the natural food and beverage market continues to grow at a relatively substantial pace and allows for the introduction of many functional food and beverage products.

 

Our management team is continuing to explore all aspects of the all-natural functional food and beverage industry, in efforts to effectively integrate and develop products tailored to those markets. The 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 effectively capitalize on our knowledge and experience, and are capable of developing velocity throughout the all-natural retail market space. The Company has access to a talented packaging and design team that will assist in the future development of well-conceived products and the appropriate consumer packaging that will allow for consumer interest, appeal and rapid adoption.

 

The Company’s primary goal is to participate in the fast growing and high margin all-natural and organic consumer products market, specifically organic fruit and vegetable juices that are both blended and pressed. We will launch our own line under the brand name Harvest Soul through our wholly owned subsidiary, Harvest Soul Inc. Further to this, we will continue to look for acquisition opportunities among companies that share our values and our vision.

 

3
 

 

Current developments include the following:

 

The Company moved into its pilot production facility at the end of May 2014. We have completed moving all of our commercial production equipment into this facility and are currently completing the connection of wiring to our control panels which are specially designed for the 100 gallon liquifyer/blender.

 

The Company is establishing operations through its wholly-owned subsidiary, Harvest Soul, Inc. (“Harvest Soul”). Harvest Soul will focus on organic 100% chewable fusion, blended and pressed juices. Harvest Soul anticipates receiving the results for its required product challenge study, performed by a third-party laboratory, by the end of August 2014, and anticipates receiving approval from the U.S. Department of Agriculture approval shortly thereafter. The challenge study is a new requirement for products such as ours, which utilize a new technology, high pressure processing (HPP), as its final process stage or “kill-step” which is required for certification and satisfying Juice Hazard Analysis & Critical Control Points (HACCP) regulations. Because this process is new, many of the regulatory agencies are unfamiliar with it and therefore additional time and cost are incurred in obtaining regulatory approvals. Harvest Soul has been working on obtaining such approvals since June.

 

While launching our own brands is our number one priority, we continue to look for companies that would be viable acquisition candidates.

 

Results of Operations

 

Summary of Statements of Operations for the Six Months Ended June 30, 2014 and 2013

 

   June 30, 2014   June 30, 2013 
Revenue  $0  $64.00 
Gross Profit  $(3,136)  $(2,451)
Operating expenses  $494,586   $152,848 
Income (loss) from operations  $(497,722)  $(155,299)
Other income (expenses)  $(12,043)  $87,258 
Net income (loss) attributable to common shareholder  $(487,679)  $(242,557)
Income (loss) per common on share - basic & diluted   (0.00)   (0.01)

 

Revenue

 

Total revenue for the six months ended June 30, 2014 was $0 compared to $64 for the same period in 2013. Decrease is due to ceasing operations of Anthus Life.

 

Gross Margin

 

Gross margin for the six months ended June 30, 2014 was $(3,136) representing an decrease from ($2451) for same period last year ending June 30, 2013.

 

Operating Expenses

 

For the six month period ending June 30, 2014, operating expenses increased from $152,848 in 2013 to $494,586 for same period 2014. This increase is mainly due to accrued salaries of executive officers and consultants. Stock based compensation was reduced dramatically as the company is utilizing more convertible debt instruments versus stock,

 

Loss from Operations

 

Loss from operations for the six months ended on June 30, 2014 was $497,722 representing an increase from $155,299 for same period in 2013. The loss was primarily due to expenses due to launching Harvest Soul and professional services associated with building the juice pilot production facility and certification cost.

 

Other Income (Expense)

 

For the six month periods ended June 30, 2014, Other Expenses increased from $87,258 in 2013 to ($12,043) in 2014. In 2014, Other Expenses included $233,293 in derivative liability expense which was more than offset by a gain on change in value of our derivative liabilities of $371,640.

 

4
 

 

Net Loss

 

Net Loss for the six months ended June 30, 2014, was $485,679. 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, 2014 and December 31, 2013.

 

   June 30, 2014   December 31, 2013 
Current Assets  $56,224   $33,335 
Current Liabilities  $1,282,692   $936,567 
Working Capital Deficit  $(1,227,468)  $(903,232)

 

At June 30, 2014, we had a working capital deficit of $1,227,468 as compared to a working capital deficit of $903,232 at December 31, 2013 an increase in the deficit of $324,236. 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 loss of $485,679 for the six months ended June 30, 2014. Because of the absence of positive cash flows from operations, the Company requires additional funding for continuing the building of facilities and the development and marketing of products. These factors raise doubt about the Company’s ability to continue as a going concern. The accompanying financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 

At June 30, 2014 we had minimal assets and a working capital deficit of $1,227,468. Our working capital deficit is due to the results of operations. However we are building long-term assets as a result of building a pilot production facility and 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, 2014 was ($292,354). Net cash provided by financing activities for the six months ended June 30, 2014 was $308,432. 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 ($16,078), which represented funds advanced to Harvest Soul, our new subsidiary company.

 

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 offering of our company’s securities. See “Note 6 – 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.”

 

5
 

 

Off-Balance Sheet Arrangements

 

As of June 30, 2014, 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, 2014, 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 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.

 

Although there has been a recent change in the Company’s Chief Financial Officer, 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, 2014, 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 has filed 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.

 

Except as described above, we are currently not involved in any litigation that we believe could have a material adverse effect on our financial condition or results of operations and 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 companies or our subsidiaries’ officers or directors in their capacities as such, in which an adverse decision could have a material adverse effect.

 

Item 1A. Risk Factors.

 

We believe there are no changes that constitute material changes from the risk factors previously disclosed in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2013, filed with the SEC on April 15, 2014.

 

6
 

 

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

 

During the period ended June 30, 2014, the Company issued 3,699,000 shares of common stock in conjunction with the conversion of promissory note with a face value of $25,000 plus accrued interest of $197.27. This was exempt from registration under rule 144.

 

During the period ended June 30, 2014, the Company issued 4,280,000 shares of common stock in conjunction with the conversion of promissory note with a face value of $25,000 plus accrued interest of $323.06. This was exempt from registration under rule 144.

 

During the period ended June 30, 2014, the Company issued 10,000,000 shares of common stock in conjunction with the settlement agreement with Ironridge Global, previous discussed. The stock was recorded at $34,900 but had a fair market value of 70,000. The Company recorded a loss on this issuance of $35,000. This was exempt from registration under rule 144.

 

During the period ended June 30, 2014, the Company issued 3,000,000 shares of common stock in conjunction with the conversion of promissory note with a face value of $86,500 plus accrued interest of $367.56. This was exempt from registration under rule 144.

 

During the period ended June 30, 2014, the Company issued 5,288,000 shares of common stock in conjunction with the conversion of promissory note with a face value of $25,000 plus accrued interest of $399.23. This was exempt from registration under rule 144.

 

During the period ended June 30, 2014, the Company issued 8,000,000 shares of common stock in conjunction with the conversion of promissory note with a face value of $53,000 plus accrued interest of $2,265.21. 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, 2014.

 

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

 

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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.

** In accordance with Regulation S-T, the XBRL-formatted interactive data files that comprise Exhibit 101 in this Quarterly Report on Form 10-Q shall be deemed “furnished” and not “filed”.

 

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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.

 

  FRESH PROMISE FOODS, INC.
   
Dated: August 18, 2014 /s/ Kevin P. Quirk
  Kevin P. Quirk
  Principal Executive Officer

 

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