The following table below sets forth the uses of proceeds assuming the sale of 25%, 50%, 75% and 100% of the securities offered for sale in this offering by the Company:
Dilution represents the difference between the offering price of the shares of Common Stock and the net tangible book value per share of common stock immediately after completion of thethis offering. “NetNet tangible book value”value is the amount that results from subtracting total liabilities and intangible assets from total assets. Dilution arises mainly as a result of our arbitrary determination of the offering price of the shares being offered. Dilution of the value of the shares you purchase is also a result of the lower book value of the shares held by our existing stockholders. The following tables compare the differences of your investment in our shares with the investment of our existing stockholders. All shares are on a post-split basis.
The price of the current offering is fixed at $0.25 per share. This price is significantly higher than the price paid by other investors for common equity since the Company’s inception on April 15, 2013. Hampton Bridge Advisors received 250,000 shares of common stock, with a par value of $0.001, from the Company on April 25, 2013, for $0.002 per share. Hampton Bridge Advisors also received 125,000 shares of common stock, with a par value of $0.001, from the Company on August 15, 2013, for $0.032 per share.
Trident Merchant Group also received 200,000 shares of common stock, with a par value of $0.001, from the Company on May 15, 2013, for $0.02375 per share. Trident Merchant Group received an additional 350,000 shares of common stock, with a par value of $0.001, from the Company on August 15, 2013, for $0.032 per share.
Sepod received 250,000 shares of common stock, with a par value of $0.001, from the Company on April 25, 2013, for $0.002 per share.
Other investors received 9,062,500 shares of common stock, with a par value of $0.001, from the Company on April 25, 2013, for $0.002 per share.
As of August 15, 2013, the net tangible book value of our shares of common stock was $46,906 or approximately $0.00458 per share based upon 10,237,500 sharesoutstanding.
Management is not expected to invest in the offering.
If 100% of the Shares Are Sold:
Upon completion of this offering, in the event all of the shares are sold, the net tangible book value of the 12,237,500 shares to be outstanding will be $531,906 or approximately $0.0435 per share. The net tangible book value per share prior to the offering is $0.00458. The net tangible book value of the shares held by our existing stockholders will be increased by $0.0388 per share without any additional investment on their part. Investors in the offering will incur an immediate dilution of $0.2065 from $0.25 per share to $0.0435 per share.
After completion of this offering, if 2,000,000 shares are sold, investors in the offering will own 16.3% of the total number of shares then outstanding for which they will have made cash investment of $500,000, or $0.25 per share. Our existing stockholders will own 83.7% of the total number of shares then outstanding.
If 75% of the Shares Are Sold
Upon completion of this offering, in the event 1,500,000 shares are sold, the net tangible book value of the 11,737,500 shares to be outstanding will be $406,906, or approximately $0.0347 per share. The net tangible book value per share prior to the offering is $0.00458. The net tangible book value of the shares held by our existing stockholders will be increased by $0.0301 per share without any additional investment on their part. Investors in the offering will incur an immediate dilution from $0.25 per share to $0.0347 per share.
After completion of this offering investors in the offering will own approximately 12.8% of the total number of shares then outstanding for which they will have made cash investment of $375,000, or $0.25 per share. Our existing stockholder will own approximately 87.2% of the total number of shares then outstanding.
If 50% of the Shares Are Sold
Upon completion of this offering, in the event 1,000,000 shares are sold, the net tangible book value of the 11,237,500 shares to be outstanding will be $281,906, or approximately $0.0251 per share. The net tangible book value per share prior to the offering is $0.00458. The net tangible book value of the shares held by our existing stockholders will be increased by $0.0205 per share without any additional investment on their part. Investors in the offering will incur an immediate dilution from $0.25 per share to $0.0251 per share.
After completion of this offering investors in the offering will own approximately 8.9% of the total number of shares then outstanding for which they will have made cash investment of $250,000, or $0.25 per share. Our existing stockholder will own approximately 91.1% of the total number of shares then outstanding.
If 25% of the Shares Are Sold
Upon completion of this offering, in the event 500,000 shares are sold, the net tangible book value of the 10,737,500 shares to be outstanding will be $156,906 or approximately $0.0146 per share. The net tangible book value per share prior to the offering is $0.00458. The net tangible book value of the shares held by our existing stockholders will be increased by $.0100 per share without any additional investment on their part. Investors in the offering will incur an immediate dilution from $0.25 per share to $0.0146 per share.
After completion of this offering investors in the offering will own 4.7% of the total number of shares then outstanding for which they will have made cash investmentof $125,000, or $0.25 per share. Our existing stockholders will own 95.3% of the total number of shares then outstanding.
Price per share | | $ | 0.25 | |
Net tangible book value per share before offering | | $ | 0.005 | |
Potential gain to existing shareholders | | | 500,000 | |
Net tangible book value per share after offering | | $ | 0.043 | |
Increase to present shareholders in net tangible book value per share after offering | | $ | 0.039 | |
Estimated offering expense | | $ | 15,000 | |
Number of shares outstanding before the offering | | | 10,237,500 | |
Number of shares after offering held by existing shareholders | | | 10,237,500 | |
Percentage of ownership after offering | | | 83.7 | % |
Shares outstanding after 100% offering | | | 12,237,500 | |
Shares outstanding after 75% offering | | | 11,737,500 | |
Shares outstanding after 50% offering | | | 11,237,500 | |
Shares outstanding after 25% offering | | | 10,737,500 | |
| | | | |
Purchasers of Shares in this Offering if all Shares Sold | | | | |
Price per share | | $ | 0.25 | |
Dilution per share | | $ | 0.2065 | |
Capital contributions | | $ | 500,000.00 | |
Post Offering Net Tangible Book Value | | $ | 531,906 | |
Percentage of capital contributions | | | 100 | |
Number of shares after offering held by public investors | | | 2,000,000 | |
Percentage of ownership after offering | | | 16.3 | % |
| | | | |
Purchasers of Shares in this Offering if 75% of Shares Sold | | | | |
Price per share | | $ | 0.25 | |
Dilution per share | | $ | 0.2153 | |
Capital contributions | | $ | 375,000.00 | |
Post Offering Net Tangible Book Value | | $ | 406,906 | |
Percentage of capital contributions | | | 75 | |
Number of shares after offering held by public investors | | | 1,500,000 | |
Percentage of ownership after offering | | | 12.8 | % |
| | Pre-Offering | | | Offering | | | Post Offering | |
| | | | | | | | | |
Offering Price Per Share | | $ | 0.25 | | | $ | 0.25 | | | $ | 0.25 | |
| | | | | | | | | | | | |
Estimated expenses of offering | | $ | 15,000.00 | | | $ | 0.00 | | | $ | 0.00 | |
| | | | | | | | | | | | |
Tangible assets | | $ | 15,200.00 | | | $ | 500,000.00 | | | $ | 515,200.00 | |
| | | | | | | | | | | | |
Liabilities | | $ | 9,523.00 | | | $ | 0.00 | | | $ | 9,523.00 | |
| | | | | | | | | | | | |
Tangible net worth | | $ | 5,677.00 | | | $ | 500,000.00 | | | $ | 505,677.00 | |
| | | | | | | | | | | | |
Outstanding shares | | | 10,237,500 | | | | 2,000,000 | | | | 12,237,500 | |
| | | | | | | | | | | | |
Book value per share | | $ | 0.00055 | | | $ | 0.25 | | | $ | 0.04132 | |
| | | | | | | | | | | | |
Dilution to investors | | | - | | | | - | | | $ | 0.20868 | |
| | | | | | | | | | | | |
Increase to pre-offering shareholders | | $ | 0.04077 | | | | - | | | | - | |
| | | | |
Purchasers of Shares in this Offering if 50% of Shares Sold | | | | |
Price per share | | $ | 0.25 | |
Dilution per share | | $ | 0.2249 | |
Capital contributions | | $ | 250,000.00 | |
Post Offering Net Tangible Book Value | | $ | 281,906 | |
Percentage of capital contributions | | | 50 | |
Number of shares after offering held by public investors | | | 1,000,000 | |
Percentage of ownership after offering | | | 8.9 | % |
| | | | |
| | | | |
Purchasers of Shares in this Offering if 25% of Shares Sold | | | | |
Price per share | | $ | 0.25 | |
Dilution per share | | $ | 0.2354 | |
Capital contributions | | $ | 125,000.00 | |
Percentage of capital contributions | | $ | 156,906 | |
Percentage of capital contributions | | | 25 | |
Number of shares after offering held by public investors | | | 500,000 | |
Percentage of ownership after offering | | | 4.7 | % |
PLAN OF DISTRIBUTION
Sales of Shares by Our Company
The Company plans to offer for sale on self-underwritten, best efforts, no minimum basis 2,000,000 common shares at a fixed price of $0.25 per share. There is no minimum number of common shares that we have to sell. There are no minimum purchase requirements. The offering will be for a period of 180 days from the effective date of this prospectus or terminated sooner at our sole discretion.
Currently, we plan to sell the shares in our Company’s offering through solicitations made by our officers and directors; they will not receive any commission from the sale of any shares. They do not intend to make any general advertisements. The officers and directors intend to utilize their personal network of contacts to solicit purchases of the common stock. They do not intend to utilize any materials other than the registration statement and prospectus contained therein in connection with any offers or sales of securities. The officers and directors will not register as a broker/dealer under Section 15 of the Securities Exchange Act of 1934 (the “Act”) in reliance upon Rule 3a4-1. Rule 3a4-1 sets-31a4sets forth those conditions under which a person associated with an issuer may participate in the offering of the issuer’s securities and not be deemed to be a broker-dealer. These conditions are as follows:
The person is not subject to a statutory disqualification, as that term is defined in Section 3(a)(39) of the Act, at the time of his participation;
The person is not compensated in connection with his participation by the payment of commissions or other remuneration based either directly or indirectly on transactions in securities;
The person is not, at the time of his participation, an associated person of a broker-dealer; and
The person meets the conditions of paragraph (a)(4)(ii) of Rule 3a4-1 of the Act in that he (a) primarily performs, or is intended to primarily perform at the end of the offering, substantial duties for or on behalf of the Issuer other than in connection with transactions in securities; and (b) is not a broker-dealer, or an associated person of a broker-dealer, within the preceding twelve (12) months; and (c) does not participate in selling an offering of securities for any Issuer more than once every twelve (12) months other than in reliance on paragraphs (a)(4)(i) (iii) of the Act, except that for securities issued pursuant to Rule 415 under the Securities Act of 1933, the 12 months shall begin with the last sale of any security included within one Rule 415 registration.. Our officers and directors have not, during the last twelve months, and will not, during the next twelve months, offer or sell securities for any other Issuerissuer more than once every 12 months other than in reliance on paragraphs (a)(4)(i) or (a)(4)(iii) of the Act.
Our Company’s officers and directors do not intend to purchase shares in this offering. Previously Fernando Leonzo purchased 3,500,000 shares for $7000 for an effective cost of $0.002 per share. Jerry Gruenbaum purchased 200,000 shares for $400 or $0.002 per share. Robert Gunther purchased, 600,000 shares for $1,200 or $0.002 per share. This compares to a current offering price of $0.25.
We are subject to applicable provisions of the Exchange Act and the rules and regulations thereunder including, without limitation, Rule 10b-5 and insofar as we, under certain circumstances, may be a distribution participant under Regulation M. As a distribution participant, it would be unlawful for us, or any affiliated purchaser, to directly or indirectly bid for, purchase, or attempt to induce any person to bid for or purchase, a covered security during the applicable restricted period. Note that Regulation M does not prohibit us from offering to sell or soliciting offers to buy our securities pursuant to this offering.
The direct offering of our shares will start on the effective date of this prospectus and continue for a period of up to 180 days unless earlier terminated at our sole discretion. Our direct offering will commence on the date the Securities and Exchange Commission declares this registration statement effective. After the declaration of effectiveness, if you decide to subscribe for any shares in this offering, you must do the following:
| 1. | 1. execute and deliver a subscription agreement; and |
| 2. | deliver a check or US$ denominated funds to us for acceptance or rejection. All checks for subscriptions must be made payable to “Hispanica International Delights of America, Inc.” |
2. deliver a check or US$ denominated funds to us for acceptance or rejection. All checks for subscriptions must be made payable to “Hispanica International Delights of America, Inc.”
If an underwriter is used in the resale of the shares, the Company will file a post-effective amendment to disclose the name of the underwriter and the material terms of any agreement.
We reserve the right to accept or reject subscriptions in whole or in part, for any reason or for no reason. All funds from any rejected subscriptions will be returned immediately by us to the subscriber, without deductions. Any incidental interest on a returned subscription will also be submitted to the rejected subscriber with a statement of calculation thereof based upon interest paid by our bank. Subscriptions for securities will be accepted or rejected within five business days after receipt by us.
SELLING SECURITY HOLDERS
The persons listed in the following table plan to offer the shares shown opposite their respective names by means of this prospectus. The owners of the shares to be sold by means of this prospectus are referred to as the “selling shareholders”. Each Selling Stockholder purchased the securities registered hereunder in the ordinary course of business of the Company. Other than registration rights granted by the Company in connection with the issuance of such securities at the time of purchase of the securities to be resold, no Selling Stockholder had any agreement or understanding, directly or indirectly with any person to distribute the securities. The Selling Stockholders and any underwriters, broker-dealers or agents participating in the distribution of the shares of our common stock may be deemed to be “underwriters” within the meaning of the Securities Act of 1933, and any profit from the sale of such shares by the Selling Stockholders and any compensation received by any underwriter, broker-dealer or agent may be deemed to be underwriting discounts under the Securities Act. The Selling Stockholders may agree to indemnify any underwriter, broker-dealer or agent that participates in transactions involving sales of the shares against certain liabilities, including liabilities arising under the Securities Act.
In competing sales, brokers or dealers engaged by the selling shareholders may arrange for other brokers or dealers to participate. Brokers or dealers may receive commissions or discounts from selling shareholders in amounts to be negotiated. As to any particular broker-dealer, this compensation might be in excess of customary commissions. Neither, we nor the selling stockholders can presently estimate the amount of such compensation.
The selling shareholders and any broker/dealers who act in connection with the sale of the shares will be deemed to be “underwriters” within the meaning of the Securities Acts of 1933, and any commissions received by them and any profit on any resale of the shares as a principal might be deemed to be underwriting discounts and commissions under the Securities Act.
If any selling shareholders enters into an agreement to sell his or her shares to a broker/dealer as principal and the broker/dealer is acting as an underwriter, we will file a post-effective amendment to the registration statement, of which this prospectus is a part, identifying the broker/dealer, providing required information concerning the plan of distribution, and otherwise revising the disclosures in this prospectus as needed. We will also file the agreement between the selling shareholder and the broker/dealer as an exhibit to the post-effective amendment to the registration statement.
We have advised the selling shareholders that they and any securities broker/dealers or others who will be deemed to be statutory underwriters will be subject to the prospectus delivery requirements under the Securities Act of 1933. We have advised each selling shareholder that in the event of a “distribution” of the shares owned by the selling shareholder, such selling shareholder, any “affiliated purchasers”, and any broker/dealer or other person who participates in the distribution may be subject to Rule 102 of Regulation M under the Securities Exchange Act of 1934 (“1934 Act”) until their participation in that distribution is complete. Rule 102 makes it unlawful for any person who is participating in a distribution to bid for or purchase stock of the same class, as is the subject of the distribution. A “distribution” is defined in Rule 102 as an offering of securities “that is distinguished from ordinary trading transaction by the magnitude of the offering and the presence of special selling efforts and selling methods”. We have advised the selling shareholders that Rule 101 of Regulation M under the 1934 Act prohibits any “stabilizing bid” or “stabilizing purchase” for purpose of pegging, fixing or stabilizing the price of the common stock in connection with this offering.
To our knowledge, there are currently no plans, arrangements or understandings between any Selling Stockholder and any underwriter, broker-dealer or agent regarding the sale of shares of our common stock by the Selling Stockholders. The Selling Stockholders will pay all fees, discounts and brokerage commissions in connection with any sales, including any fees to finders.
Any shares of common stock covered by this prospectus that qualify for sale under Rule 144 of the Securities Act may be sold under Rule 144 rather than under this prospectus. The shares of our common stock may be sold in some states only through registered or licensed brokers or dealers. In addition, in some states, the shares of our common stock may not be sold unless they have been registered or qualified for sale or the sale is entitled to an exemption from registration.
Under applicable rules and regulations under Regulation M under the Exchange Act, any person engaged in the distribution of the common stock may not simultaneously engage in market making activities, subject to certain exceptions, with respect to the common stock for a specified period set forth in Regulation M prior to the commencement of such distribution and until its completion. In addition and with limiting the foregoing, the Selling Stockholders will be subject to the applicable provisions of the Securities Act and the Exchange Act and the rules and regulations thereunder, including, without limitation, Regulation M, which provisions may limit the timing of purchases and sales of shares of the common stock by Selling Stockholders. The foregoing may affect the marketability of the common stock offered hereby. There can be no assurance that any Selling Stockholders will sell any or all of the common stock pursuant to this prospectus.
We will pay all expenses of preparing and reproducing this prospectus with respect to the offer and sale of the shares of common stock registered for sale under this prospectus, including expenses or compliance with state securities laws and filing fees with the SEC. We expect such expenses related to the issuance and distribution of the shares of common stock offered by us and the Selling Stockholders to be approximately $15,000.
The Company is registering for offer and sale by the holders thereof 1,562,500 of common stock held by such shareholders. All the Selling Shareholders’ Shares registered hereby will become tradable on the effective date of the registration statement of which this prospectus is a part.
The following table sets forth ownership of the shares held by each person who is a selling shareholder.
Name | Shares Beneficially Owned Prior To Offering(1) | Percent Beneficially Owned Before Offering | Shares to be Offered | Amount Beneficially Owned After Offering | Percent Beneficially Owned After Offering | |
Andrea Raab | 100,000 | * | 50,000 | 50,000 | * | |
Irma Rochin-Campus | 50,000 | * | 25,000 | 25,000 | * | |
Jorge Iraheta | 50,000 | * | 25,000 | 25,000 | * | |
Jose Orellana | 150,000 | 1.4% | 75,000 | 75,000 | * | |
Michael Gunther | 3,000,000 | 29.0% | 900,000 | 2,100,000 | 21.0% | |
Chris H. Giordano | 375,000 | 3.6% | 93,750 | 281,250 | 2.7% | |
Hampton Bridge Advisors, LLC | 375,000 | 3.6% | 93,750 | 281,250 | 2.7% | |
Sepod, Inc. | 250,000 | 2.4% | 62,500 | 187,500 | 1.8% | |
Michael Zaki | 50,000 | * | 12,500 | 37,500 | * | |
Teresa Grueber | 25,000 | * | 6,250 | 18,750 | * | |
Trident Merchant Group, Inc. | 550,000 | 5.3% | 137,500 | 412,500 | 4.0% | |
Michael Robbins | 12,500 | * | 6,250 | 6,250 | * | |
Jose Cerritos | 150,000 | 1.4% | 75,000 | 75,000 | * | |
Total | 5,137,500 | | 1,562,500 | | | |
* | Less than one percent (1%). |
| | |
Section 15(g) of the Exchange Act
Our shares are “penny stocks” covered by Section 15(g) of the Exchange Act, and Rules 15g-1 through 15g-6 and Rule 15g-9 promulgated thereunder. They impose additional sales practice requirements on broker/dealers who sell our securities to persons other than established customers and accredited investors (generally institutions with assets in excess of $5,000,000 or individuals with net worth in excess of $1,000,000 or annual income exceeding $200,000 or $300,000 jointly with their spouses). While Section 15(g) and Rules 15g-1 through 15g-6 apply to brokers-dealers, they do not apply to us.
Rule 15g-1 exempts a number of specific transactions from the scope of the penny stock rules.
Rule 15g-2 declares unlawful broker/dealer transactions in penny stocks unless the broker/dealer has first provided to the customer a standardized disclosure document.
Rule 15g-3 provides that it is unlawful for a broker/dealer to engage in a penny stock transaction unless the broker/dealer first discloses and subsequently confirms to the customer current quotation prices or similar market information concerning the penny stock in question.
Rule 15g-4 prohibits broker/dealers from completing penny stock transactions for a customer unless the broker/dealer first discloses to the customer the amount of compensation or other remuneration received as a result of the penny stock transaction.
Rule 15g-5 requires that a broker/dealer executing a penny stock transaction, other than one exempt under Rule 15g-1, disclose to its customer, at the time of or prior to the transaction, information about the sales persons compensation.
Rule 15g-6 requires broker/dealers selling penny stocks to provide their customers with monthly account statements.
Rule 15g-9 requires broker/dealers to approved the transaction for the customer's account; obtain a written agreement from the customer setting forth the identity and quantity of the stock being purchased; obtain from the customer information regarding his investment experience; make a determination that the investment is suitable for the investor; deliver to the customer a written statement for the basis for the suitability determination; notify the customer of his rights and remedies in cases of fraud in penny stock transactions; and, FINRA’s toll free telephone number and the central number of the North American Administrators Association, for information on the disciplinary history of broker/dealers and their associated persons. The application of the penny stock rules may affect your ability to resell your shares.
FINRA has adopted rules that require that in recommending an investment to a customer, a broker/dealer must have reasonable grounds for believing that the investment is suitable for that customer. Prior to recommending speculative low priced securities to their non-institutional customers, broker-dealers must make reasonable efforts to obtain information about the customer's financial status, tax status, investment objectives and other information. Under interpretations of these rules, FINRA believes that there is a high probability that speculative low priced securities will not be suitable for at least some customers. FINRA requirements make it more difficult for broker/dealers to recommend that their customers buy our common stock, which may have the effect of reducing the level of trading activity and liquidity of our common stock. Further, many brokers charge higher transactional fees for penny stock transactions. As a result, fewer broker/dealers may be willing to make a market in our common stock, reducing a stockholder's ability to resell shares of our common stock.
Again, the foregoing rules apply to broker/dealers. They do not apply to us in any manner whatsoever. Since our shares are covered by Section 15(g) of the Exchange Act, which imposes additional sales practice requirements on broker/dealers, many broker/dealers may not want to make a market in our shares or conduct any transactions in our shares. As such, your ability to dispose of your shares may be adversely affected.
DESCRIPTION OF SECURITIES
We have 10,237,500 shares of our common stock issued and outstanding subsequent to a 1 for 2 reverse split effected on August 1, 2013. The reverse split occurred subsequent to the date of the financial statements included in this registration statement. There is currently no public market for our common stock and there can be no guarantee that any such market will ever develop.
Date | | Number of Shares Sold (1) | | Type of Shares | | Number of Shareholders | | Exemption | | Proceeds |
| | | | | | | | | | |
April 15 to April 25, 2013 | | | 5,900,000 (2) | | Common Stock | | | 12 Investors | | Section 4(a)(2) of the Securities Act of 1933 | | $0.002 per share for a total of $11,800.00 |
April 25, 2013 | | | 1,000,000 | | Preferred Stock | | | 3 Founders | | Section 4(a)(2) of the Securities Act of 1933 | | $0.001 per share for services rendered. |
May 15, 2013 | | | 3,000,000 | | Common Stock | | | 1 Investor | | Section 4(a)(2) of the Securities Act of 1933 | | $00572 per sahre for a total of $17,160.00 |
May 15, 2013 | | | 200,000 | | Common Stock | | | 1 Investor | | Section 4(a)(2) of the Securities Act of 1933 | | $0.02376 per share for services rendered. |
May 29, 2013 | | | 100,000 | | Common Stock | | | 1 Investor | | Section 4(a)(2) of the Securities Act of 1933 | | $0.10 per share for a total of $10,000.00 |
June 3, 2013 | | | 250,000 | | Common Stock | | | 1 Investor | | Section 4(a)(2) of the Securities Act of 1933 | | $0.10 per share for a total of $25,000.00 |
June 4, 2013 | | | 12,500 | | Common Stock | | | 1 Investor | | Section 4(a)(2) of the Securities Act of 1933 | | $0.10 per share for a total of $12,500.00 |
July 17, 2013 | | | 150,000 | | Common Stock | | | 1 Investor | | Section 4(a)(2) of the Securities Act of 1933 | | $0.10 per share for a total of $15,000.00 |
August 15, 2013 | | | 625,000 | | Common Stock | | | 1 Investor | | Section 4(a)(2) of the Securities Act of 1933 | | $0.064 per share for services rendered. |
(1) Subsequent to August 1, 2013 1 for 2 reverse split of the common stock.
(2) Of the 5,900,000 sharers post reverse split sold above, 4,300,000 common shares were sold to the three founders on April 15, 2013, 3,500,000 to Fernando Oswaldo Leonzo, 600,000 to Robert Gunther and 200,000 to Jerry Gruenbaum for a toal consideration of $8,600.00.
Common Stock
The Company is authorized to issue up to 100,000,000 shares of common stock, par value $0.001. Holders of our common stock are entitled to one vote for each share in the election of directors and on all matters submitted to a vote of stockholders. There is no cumulative voting in the election of directors.
The holders of the common stock are entitled to receive dividends, when and as declared, from time to time, by our board of directors, in its discretion, out of any assets of the Company legally available.
Upon the liquidation, dissolution or winding up of the Company, the remaining assets of the Company available for distribution to stockholders will be distributed among the holders of common stock, pro rata based on the number of shares of common stock held by each.
Holders of common stock generally have no preemptive, subscription, redemption or conversion rights. The outstanding shares of common stock are, when issued, fully paid and non-assessable.
Preemptive Rights
No holder of any shares of Hispanica International Delights of America’s stock has preemptive or preferential rights to acquire or subscribe for any unissued shares of any class of stock or any unauthorized securities convertible into or carrying any right, option or warrant to subscribe for or acquire shares of any class of stock not disclosed herein.
Non-Cumulative Voting
Holders of our common stock do not have cumulative voting rights, which means that the holders of more than 50% of the outstanding shares voting for the election of directors can elect all of the directors to be elected, if they so choose, and, in such event, the holders of the remaining shares will not be able to elect any of AEP’sour directors.
Preferred Stock
The Company is authorized to issue 10,000,000 shares of Preferred Stock authorized at $0.001 per share. As of the date hereof, the Company has issued 1,000,000 shares of Series A Preferred pursuant to a Consulting Agreement between the Company and the Company’s founders. The Company's founders are Fernando Oswaldo Leonzo, Robert Gunther, and Jerry Gruenbaum. Each preferred share has 50 votes per share on all corporate matters.
Anti-Takeover Provisions
Stockholders’ rights and related matters are governed by Delaware corporate law, our articles of incorporation and our bylaws. Certain provisions of the General Corporation Law of Delaware may discourage or have the effect of delaying or deferring potential changes in control of the Company. The cumulative effect of these terms may be to make it more difficult to acquire and exercise control of the Company and to make changes in management. Furthermore, these provisions may make it more difficult for stockholders to participate in a tender or exchange offer for common stock and in so doing may diminish the market value of the common stock.
One of the effects of the existence of authorized but unissued shares of our common stock may be to enable our board of directors to render it more difficult or to discourage an attempt to obtain control of the Company and thereby protect the continuity of or entrench our management, which may adversely affect the market price of our common stock. If in the due exercise of its fiduciary obligations, for example, our board of directors were to determine that a takeover proposal were not in the best interests of the Company, such shares could be issued by the board of directors without stockholder approval in one or more private placements or other transactions that might prevent or render more difficult or make more costly the completion of any attempted takeover transaction by diluting voting or other rights of the proposed acquirer or insurgent stockholder group, by creating a substantial voting block in institutional or other hands that might support the position of the incumbent board of directors, by effecting an acquisition that might complicate or preclude the takeover, or otherwise.
Our bylaws provide that special meetings of stockholders may be called only by our board of directors, the chairman of the board, or our president, or as otherwise provided under Delaware law.
Dividend Policy
The payment by us of dividends, if any, in the future rests within the discretion of our Board of Directors and will depend, among other things, upon our earnings, capital requirements and financial condition, as well as other relevant factors. We have not paid any dividends since our inception and we do not intend to pay any cash dividends in the foreseeable future, but intend to retain all earnings, if any, for use in our business.
Transfer Agent
Our transfer agent is Signature Stock Transfer, Inc. located at 2632 Coachlight Court, Plano Texas 75093. Telephone (972) 612-4120.
INTERESTS OF NAMED EXPERTS AND COUNSEL
No expert or counsel named in this prospectus as having prepared or certified any part of this prospectus or having given an opinion upon the validity of the securities being registered or upon other legal matters in connection with the registration or offering of the common stock was employed on a contingency basis, or had, or is to receive, in connection with the offering, a substantial interest, direct or indirect, in the registrant or any of its parents or subsidiaries. Nor was any such person connected with the registrant or any of its parents or subsidiaries as a promoter, managing or principal underwriter, voting trustee, director, officer, or employee.
The law office of JoeJoseph R. Sanchez, Esq.Esquire, an independent legal counsel, has provided an opinion and consent on the validity of Hispanica International Delights of America’sAmerica issuance of common stock and is presented as an exhibit to this filing.
The financial statements included in this Prospectus and in the Registration Statement have been audited by David A. Aronson, CPA, P.A. to the extent and for the period set forth in their report (which contains an explanatory paragraph regarding the Company’s ability to continue as a going concern) appearing elsewhere herein and in the Registration Statement, and are included in reliance upon such report given upon the authority of said firm as experts in auditing and accounting.
DESCRIPTION OF BUSINESS
Background
Hispanica International Delights of America, Inc. (“HIDA”) is a Delaware corporation and is a development stage business which has commenced initial operations pursuant to an exclusive brand licensea non-exclusive distribution agreement with Gran Nevada Beverage, Inc. (“GN”). Mr. Fernando Oswaldo Leonzo is currently President of GRAN NEVADA Beverage, Inc. (GN) as well as current Chairman & CEO of Hispanica International Delights of America, Inc.(HIDA) He currently only owns an equity stake in HIDA but none in GN. He serves on the management team of both companies. For further details please refer to the Bio Section of the Registration Statement on page 31.
Currently, the Company has three directors who have assumed responsibility for all planning, development and operational duties and will continue to do so throughout the beginning stages of the
Company. Although there are no employees at this time, we do anticipate hiring them as the need arises.
HIDA has never declared bankruptcy, it has never been in receivership, and it has never been involved in any legal action or proceedings. Since becoming incorporated, HIDA has not made any significant purchase or sale of assets, nor has it been involved in any mergers, acquisitions or consolidations. HIDA is not a blank check registrant as that term is defined in Rule 419(a)(2) of Regulation C of the Securities Act of 1933, since it has a specific business plan or purpose.
HIDA currently has no intention to engage in a merger with an unidentified company. We may pursue strategic acquisitions of additional branded products that complement our current business modelmod within the beverage and food industry which may allow us to expand our operations on a national basis.
HIDA’s fiscal year end is JulyMay 31.
Business of Issuer
Hispanica International Delights of America, Inc. (the “Company” or “HIDA”) is an operatinga Delaware company with an exclusive brand licensingthat will engage in the business of Hispanic and Ethnic Packaged Foods Distribution. The company has entered into a distribution agreement with GRAN NEVADAGran Nevada Beverage, Inc. (“GRAN NEVADA”Gran Nevada”). Pursuant to exclusive license,the non-exclusive distribution agreement, the Company has the right to distribute Gran Nevada 16oz Glass bevarage products (such as Mango, Guava, Tamarind, Hibiscus, Pineapple, and Limeade Juices and Nectars) in North America with a focus on California and Texas . Gran Nevada will continue to service its current distribution network of Ethnic Grocer Distributors. Though HIDA has not yet commenced full operations, it has begun to seek out warehouse and leasing locations in CA and TX for the purpose of doing DSD (Direct Store Distribution) in those regions. HIDA will be given the territory of North America (excluding Central America) for the GN beverage line. The Distribution Agreement allows HIDA the right to purchase all GN products from GRAN NEVADAat distribution pricing and it is for a sliding scale royalty fee starting at five percent (5%).term of Sixty Months with an automatic renewal. GN will retain the right to distribute its products to other parties in Central America as well as develop and sell other food items under the GN brand. The GRAN NEVADAGran Nevada brand products generated estimated revenues of $500,000 during 2012 and have focused its product sales on the Hispanic market which represents the largest growing segment of the U.S. population. We have never earned any revenues to date, and Gran Nevada's revenues are not indicative of our current or future revenue.
Our principal executive offices are located at 1311 Jackson Avenue, Suite 5D, Long Island City, NY 11101 and our telephone number is (516) 867-8383.
The Market
The expanding appetite for Latino cuisine among non-Hispanic Americans, combined with the rapid increase in the U.S.’s Hispanic population, will be a boom for the $7 billion Hispanic food and beverage market in 2010, helping to drive sales to $10 billion in 2014, according to Hispanic Food and Beverages in the U.S.: Market and Consumer Trends in Latino Cuisine, 4th4th Edition, the latest market research study by publisher Packaged Facts.Facts.1 This is a compound annual growth rate (CAGR) of 9.33%.
Along with population growth, buying power within the Hispanic population is expected to increase significantly in the next four to five years. Packaged Facts projects that the buying power of Latinos will reach $1.3 trillion in 2013, up from $984 billion in 2008, representing a CAGR of 5.73% and a cumulative growth rate of 31%. In addition, Hispanic shoppers spend more than other groups on food consumed at home, due to the importance of family mealtime and larger family units.
· | The $7 billion Hispanic food market is expected to reach $10 billion by 2014 |
· | In addition to sales, the buying power within the Hispanic population is expected to reach $1.3 trillion in 2013, up from $984 million in 2008, an increase of 31% |
· | Hispanic shoppers spend significantly more on foods consumed at home due to larger family units and an emphasis on the importance of family mealtime. |
· | The three “groups” of products—Authentic Mexican, Nuevo Latino and Mainstream Mexican are all expected to see sale growth. However, the most significant growth is predicted to be non—Hispanic consumption in the Authentic Mexican and Nuevo Latino categories. Whereas some traditional drinks of South America like Yerba Mate lack desirability to mainstream, GRAN NEVADAGran Nevada has formulated its beverages to have a certain wide mass appeal. |
Packaged Facts foodservice coverage focuses on outlets that are owned and operated or founded by immigrants from Latin American countries or Hispanic-Americans and which feature exclusively or predominantly Hispanic menus. The report also includes coverage of the expanding presence of Hispanic foods and beverages in traditional American foodservice outlets.
The variety of starters on menus is one of the hottest trends on the restaurant scene right now—so much so that entrees are taking a back seat to small plates, according to 2011 National Restaurant Association, Menu Insights. Ethnic/street food-inspired appetizers like tempura, taquitos, kabobs, dumplings, dim sum and hummus are growing increasingly popular among consumers. This opens the door for trying new beverages such as those offered by the GRAN NEVADA brand.
Demographic Trends
Hispanics accounted for more than half of the U.S. population increase over the last decade, exceeding estimates in most states, reported the Associated Press March 24, 2011. “Pulled by migration to the Sun Belt, America’s population center edged westward on a historic path to leave the Midwest.”
Market Trends
Hispanic foods and beverages achieved sales close to $7 billion in 2009, according to “Hispanic Food and Beverages in the U.S.: Market and Consumer Trends in Latino Cuisine, 4th4th Edition.” This represented an increase of 28.7% from $5.4 billion in 2005. Analysts predict continued aggressive growth through 2014, with sales projected to top $9.5 billion in 2014.
HIDA is growing by filling unmet demand by an increasing number of Hispanic consumers. The U.S. population of Hispanic consumers wields a formidable combination of fiscal optimism and buying power in excess of $1 trillion, making progressively more acculturated Latinos a demographic capable of shaping the nation’s future economic and marketing trajectory, according to a new report, “Latino Shoppers: Demographic Patterns and Spending Trends Among Hispanic Americans, 8th8th Edition,” by Packaged Facts. Hispanic buying power is projected to reach $1.3 trillion in 2015, a cumulative increase of around 25%.
1http://www.hispanicprblog.com/hispanic-market-white-papers-research/hispanic-food-and-beverages-in-the-u-s-market-and-consumer-trends-in-latino-cuisine-4th-edition-market-report-released.html
The U.S. refreshment beverage market grew by 1.2% in 2010, based on preliminary data from Beverage Marketing Corporation. This represented a significant improvement from the back-to-back declines of the previous two years. Just as the weakened economy hampered beverages’ performance in 2008 and 2009, improved conditions contributed to their rebound. Total liquid refreshment beverage volume exceeded 29 billion gallons in 2010. The market targeted by HIDA, however, remain robust and relatively lower valuation ratios enable the Company to make acquisitions less expensively.
Market Segmentation
Packaged Facts separates the Hispanic food and beverage market into three segments:
· | Mainstream Mexican (tortillas, salsa, tacos, burritos, nachos, refried beans, Tex-Mex cuisine, and other products that have become part of the American culture); |
· | Authentic Hispanic (products either imported from Hispanic countries to the U.S. or products made domestically that use traditional recipes)• Mainstream Mexican (tortillas, salsa, tacos, burritos, nachos, refried beans, Tex-Mex cuisine, and other products that have become part of the American culture); and |
· |
• Authentic Hispanic (products either imported from Hispanic countries to the U.S. or products made domestically that use traditional recipes); and
• Nuevo Latino (products with south-of-the border flair, including traditional American foods made with Hispanic ingredients, as well as unique new creations that melt a variety of Hispanic flavors and food traditions). |
In particular, Authentic Hispanic and Nuevo Latino are garnering substantial salves boosts from America’s population of adventurous food enthusiasts known as “foodies.” The demand has caused new Hispanic food products to be produced by manufacturers seeking to increase variety to meet the American appetite for new and different options. Foodservice operators are also creating innovative and exciting dishes to keep up with consumer demand.
“All three segments of Hispanic food are becoming increasingly available throughout the U.S. due to expanded distribution through both retail and foodservice outlets and expanded awareness of these products as a result of mass communications on television and the Internet about Hispanic foods and cooking techniques,” says Don Montuori, publisher ofPackaged Facts.
Mexicans are by far the largest Hispanic-origin population in the U.S., accounting for nearly two thirds (64%) of the U.S. Hispanic population in 2012. It is a “powerhouse consumer demographic.” A record 33.7 million Hispanics of Mexican origin resided in the U.S. in 2012, according to an analysis of Census Bureau data by Pew Research Center. HIDA is responding to this by creating product lines that are in the highest demand by this demographic.
The US census reported the number of Hispanics grew to 52 million as of 2011, making people of Hispanic origin the nations’ largest race or ethnic minority. The projected Hispanic population of the
United States is projected to reach 102.6 million on July 1, 2050. According to this projection, Hispanics will constitute 24 percent of the nation’s total population on that date.
HIDA’s salesHIDA is negotiating, but has not finalized terms yet, for assets such as Established Delivery Routes, Vehicles, Sales Personnel, and Distribution Agreements of other Packaged Food Brands which will jumpincrease its channels of distribution after financing. HIDA has a Letter of Intent (LOI) to acquire certain assets from a company called Pacific Pride Bakery Dist. in Van Nuys, California. Pacific Pride is the acquisition of a distributor shortly after financing; however long-run revenue dominance is expected from distribution acquisitions.“distribution” for third party bread brands into retail and institutional accounts (i.e. schools and municipalities).
Our Products
The first offline of products IITDA will distribute will be a line of beverages called Gran Nevada. We have signed an exclusive licensea non-exclusive agreement to manufacture, sell, and distribute all products from GRAN NEVADAGran Nevada Beverage, Inc. As of October 5, 2013, Gran Nevada had eight (8) SKUs. It has a line of all natural drinks that are manufactured in North America.
GRAN NEVADA offers the only alThe Gran Nevada products to be distributed are all natural, not from concentrate, preservative-free brand of Aguas Frescas (Mexican Horchata, Horchata de Morro, Tamarindo, Hibiscus, Mango, Guava, Pineapple, and Limeade) available in the U.S. today. The GRAN NEVADA brand is. These products are geared heavily towards the Hispanic market, but its delicious flavorsmay appeal to almost any palate.
GRAN NEVADA drinks emulate the flavors, which have been known for generations among the Hispanic, Asian, andIITDA continues to seek distribution agreements with other world cultures, which we are now bringing to the mass marketsbrands in the United States
GRAN NEVADA is dedicated to building long-term relationships with its consumers through superior products and high quality packaging. Its first line of beverages is known as Aguas Frescas and consists of a refreshing array of nostalgic flavors! As seen below, GRAN NEVADA has a variety of frescas fruit flavors, Hibiscus tea, Tamarind and the irresistible, rice and cinnamon, milk, and sugar Horchata.
GRAN NEVADA’s Rosa de Jamaica is made using dried flower petals from the flower Hibiscus sabdariffa. Jamaica (pronounced “ha-my-kah”) or hibiscus sabdariffa, is also known as roselle in some parts of the world. These flowers grow naturally in Latin America and are renowned for their deep scarlet hue, which in turn give the Rosa de Jamaica its distinctive red color. Hibiscus is also a natural antioxidant and diuretic which helps the body process vitamins and minerals properly.
Tamarind is made by using the pulp of the exotic tamarind fruit; an ice-cold bottle of GRAN NEVADA Aguas Frescas Tamarindo is perfect for quenching the deepest of thirsts. The Tamarind (Tamarindus indica) is a tropical tree, native to eastern Africa, but was introduced into most of tropical Asia as well as Latin America and the Caribbean. The tree’s fruit is a brown pod-like legume, which contains a soft pulp and many hard-coated seeds. GRAN NEVADA Agua de Tamarindo is not just delicious but also very high in Vitamin C—which some studies have shown helps to bolster the immune system.
Horchata Mexicana
This ancient cold refreshing Latin drink dates back over 1000 years. Horchata is a rice based drink made with fresh milk, water, and the right blend of authentic flavors and spices. We have honored the tradition of this popular Mexican and Central American drink by using only the best quality ingredients. We invite you to enjoy this delicious, cold, refreshing drink that has been embedded in the Latin American culture for generations.
Horchata de Morro
A Ready to Drink (RTD-Shelf Stable) Horchata de Morro was first introduced by GRAN NEVADA in 2011, and is manufactured by one of the only three companies in the country capable of producing such a beverage. Horchata is milk based with flavorings of rice, cinnamon, sesame, vanilla, and the exotic natural morro flavor which is best known and traditional the Central American market. As seen in our Google search, horchata is gaining popularity. The retail price – point for the product is competitive and ranges from $1.39 to $1.59 per can.North America.
Hibiscus
One of the ingredients that define an authentic Hispanic beverage is hibiscus. It is one out of eight initial GRAN NEVADA SKUs. Hibiscus sabdariffa, or roselle, as it is known in some parts of the world, also has a long list of attractive characteristics. Recent studies note that the flower is rich in riboflavin, niacin, calcium and iron and that it contains antioxidants including flavonoids, gossypetine, hibiscetine and sadderetine. Hibiscus may “be like pomegranate waiting to happen…the next big thing in juice.”
Forbes published “Hibiscus Flowers Help Your Heart” in Sept. 2004, and internet searches for hibiscus follow a consistent cycle of peaking mid-year, and having the fewest internet searches around New Years. The Telegraph in UK reported in 2009, “Hibiscus could cut blood pressure.” Marketing the botanical’s health properties has brought consumers and competitors into the hibiscus beverage industry
Business Growth Objectives
HIDA does not currently have any distribution or business relationships with regional or nationwide distributions. HIDA intends to consolidate food and beverage brands into a single distribution entity designed for retailers targeting Hispanic consumers and other demographics with a growing appreciation for Latin American cuisine. Brands sought by HIDA are primarily engaged in the business of developing, manufacturing, marketing and selling unique, premium, non-alcoholic beverages as well as all natural food products that targeted toward Hispanic and ethnic-neutral consumers.
The potential success of a product focused on a certain ethnic demographic can be demonstrated with Greek yogurt. It had always been around only in “ethnic” supermarkets. On March 16, 2012, the Chicago Tribune reported “In each of the last three years, sales of Greek yogurt have surged more than 100 percent, while non-Greek yogurt has grown at a single-digit pace, according to consumer data tracker Nielsen.” In 2011, Greek yogurt accounted for 20 percent of total yogurt sales, according to market researcher SymphonyIRI.
This is exactly what Vita Coco has done in the coconut water category under the emphasis of functional food. HIDA’s hibiscus distributed product also has a “functional food story.” HIDA is aiming to replicate the success of some of the great food and beverage product introductions by capitalizing on the shift from distributing with only ethnic grocer distributorsgrocers to “mainstream beverage” distributors.“mainstream” beverage, snack foods, and all natural food retailers.
The Company’s successHIDA does not manufacture the Grand Nevada product line nor any other products. HIDA is only depends on distribution but also the product flavors, blends, tastes and the quality of ingredients, in addition to the Company’s ability to control input costs, manufacturing expense and deliver a consistent product.distributor.
Strategies
1. | Identify, research, evaluate, and negotiate for a controlling position in a distributorship with established sales between $1.2M-$1.8M. |
2. | Increase licensed and acquired brand sales.Cross market brands between distribution channels. |
3. | Enhance marketing of beverages in a ready-to-drink mode. Many of the Hispanic beverages are sold as flavored powders, which are mixed with milk or water to prepare a drink. However in the U.S there has been a trend toward completely prepared foods and ready-to-drink beverages; this is particularly true of younger consumers. The Hispanic population tends to be younger than the general population. |
4. | Marketing beverages that require no refrigeration. This allows HIDA’s brands to be stocked anywhere in a store, rather than needing to be in the refrigerated section. |
5. | Setting retail price points at levels which are competitive with competing drinks |
6. | Selling directly to retail POS through wholly owned distributors and to distributors that already sell products to the Hispanic market. A few regional distributors have been selected that already have established large number of strategically located POS (points of sales.) These distributors have distribution channels in the New York City and Washington, D.C. metropolitan regions. |
7. | Supporting product introduction at significant retail outlets with temporary in-store personnel displaying the HIDA brands and offering “tastings.” |
8. | Point-of-sale promotional materials, signs on vehicles, and on t-shirts for in-store demonstration personnel and consumer sales. |
Marketing Strategy
Ser Padres, a magazine distributed to over 3.4 million Spanish speaking Latinos, dedicates 20% of its editorial space to food. There is no category larger.
HIDA has vast marketing and distribution experience, and this could manifest a relationship with management’s decision to enter into a contract with or as a consulting firm. However, no such revenue is projected, nor is management precluded from such activity independently.
Food services and drinking places spend about 2.26% of revenue on advertising. On average, across all industries businesses spend about 3% of revenue on advertising. In some cases, the Company may associate its products with icon entertainers, sports figures, celebrities and destinations to improve the effectiveness of its marketing efforts.
The Company expects that its products will have tremendous crossover appeal with different ethnic groups, particularly the Asian-American community. This is not surprising, as Asians own many of the medium-size grocers in the Hispanic communities.
The milk industry spent just two cents per gallon on advertising in 2002, while soft drinks spent four cents a gallon, and sports drinks spent 17 cents a gallon. These ratios are not expected to be significantly different today. Bottled water spends just 1 cent per gallon, according to MilkDelivers.org.
In the 2009 Mercury Media Hispanic Index ™,™, brands that allocated, on average, 24% of their media spend to a separate and unique Hispanic campaign, saw their overall sales revenue increase by an average of 47% and their revenue net of media spend grow by 71%. The decision to target Hispanics is not a zero sum allocation, reports Mercury Media. Incremental spending against this segment will result in a return above and beyond initial investment.
WidespreadHIDA, as a distributor of ethnic foods and beverages will allocate to marketing and advertising the industry norm, in regards to the percentage of sales for each category products it markets, sells, and distributes. In the case of the beverage line it carries- it will base the percentage both in terms of a percentage of sales and in cents per gallons to stay within the guidelines of the sub segments of the beverage industry as a whole. Also as a distributor the budget set aside for advertising and marketing will be for widespread use of “in-store demos,” in which the Company’s brand gives samples support to store customers, have been used by management in the past to initiate sales in new markets.customers. Consumers are attracted to the health benefits of hibiscus and nectars, however presenting employees are given strict instructions regarding the health claims that can be made regarding hibiscus. The net result should be increased brand recognition over a six month time frame. The Company estimates that it will spend approximately 5% percent of its revenues to present at food expos, and use focus groups to help market the best products.
Competition
As a distributor of Hispanic and Ethnic packaged food products the company expects to have a portfolio of products that will not only include beverages. The main competitors of the Company include Klass, Rosa’s,Goya Foods, Marquez Brothers International, Diaz Foods, La Fe Foods International, Grace Foods, as well as other regional Ethnic Food Distributors. HIDA will focus on selecting brands of All Natural packaged foods. Although some competitors are selling and Casa del Soldistributing similar products, they use different packaging options and in particular foods that have high contents of artificial flavors, colors, and sweeteners as well high sodium contents. For instance, our competitors import the majority of the products they distribute which are locatedmade with lower price point raw materials and quality. The Company is currently working on adding more products to distribute. After signing a distribution Agreement with Gran Nevada, HIDA is negotiating with Racor, LLC to distribute the Racor line of products, including Tamal De Elote, Maranon, Horchata De Moro, and Cebada from El Salvador in Texas, upper Midwest, and California. These companies have greater resources than thosethe United States.” No distribution Agreement has been signed as of this filing. The terms of such agreements will be disclosed once Distribution Agreements are signed. Such products will be in other categories besides the Company which could adversely affectbeverage space. HIDA will focus on distributing products that focus on the Company’s potential profitability in thisall natural nature of their ingredients as well as look to partner with brands that can manufacture products closer to its U.S. market space.base.
Employees
Other than our current management team, there are no employees of the Company. Human resource planning will be part of an ongoing process that will include constant evaluation of operations and revenue realization.
Board Committees
HIDA has not yet implemented any board committees as of the date of this Prospectus.
Directors
There is no maximum number of directors HIDA is authorized to have. However, in no event may HIDA have less than one director. AlthoughThe company has three members on the Company anticipates appointing additional directors, it has not identified any such person.Board of Directors and they are: Mr. Fernando “Oswaldo” Leonzo, Mr. Robert Gunther, and Mr. Jerry Gruenbaum.
DESCRIPTION OF PROPERTY
The Company’s office isCompany currently leases its offices located at 1311 Jackson Avenue, Suite 5D, Long Island City, NY 11101.11101 on a month to month basis from the Conpany's President and stockholder for $500.00 per month, but will soon seek a larger facility to function as its administrative headquarters.
HIDA management does not currently have policies regarding the acquisition or sale of real estate assets primarily for possible capital gain or primarily for income. HIDA does not presently hold anyan investments or interests in real estate, investments in real estate mortgages or securities of or interests in persons primarily engaged in real estate activities.
LEGAL PROCEEDINGS
We are not currently a party to any legal proceedings. HIDA’s officers and directors have not been convicted in a criminal proceeding nor have they been permanently or temporarily enjoined, barred, suspended or otherwise limited from involvement in any type of business, securities or banking activities.
The Company’s officers and directors have not been convicted of violating any federal or state securities or commodities law.
There are no known pending legal or administrative proceedings against the Company.
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
This section must be read in conjunction with the Audited Financial Statements included in this prospectus.
Plan of Operation
We are a development stage company, incorporated on April 15, 2013 and have not started operations pursuant to an exclusive brand licensingdistribution agreement entered into with GRAN NEVADAGran Nevada Beverage, Inc. See “Description of Business” contained herein.
Our auditors have issued a going concern opinion. This means that our auditors believe there is substantial doubt that we can continue as an on-going business for the next twelve (12) months. Our auditors’ opinion is based on the uncertainty of our ability to establish profitable operations. The opinion results from the fact that we have not generated any revenues. Accordingly, we must raise cash from sources other than operations. Our only other source for cash at this time is investments by others in our Company. We must raise cash to implement our project and begin our operations. The money we raise in thisIf the maximum offering of $500,000 is complete, the Company estimates the funds will last 12 months, however we will require additional capital beyond the proceeds raised in this offering to get to a level of operations.reach growth objectives.
Our board of directors is responsible for our managerial and organizational structure which will include preparation of disclosure and accounting controls under the Sarbanes Oxley Act of 2002. When these controls are implemented, they will be responsible for the administration of the controls. Should they not have sufficient experience, they may be incapable of creating and implementing the controls which may cause us to be subject to sanctions and fines by the Securities and Exchange Commission which ultimately could cause you to lose your investment.
We must raise cash to implement our business plan. The minimum amount of funds raised from the offering that we feel will allow us to begin to implement our business strategystart distribution operations is $125,000. We feel if we can raise the maximum amount of the offering, $500,000, the Company will be able to accelerate the implementation of its business strategy. Financing raised to-date has been through friends and family, who also referred us to all three institutional investors. No commissions were paid or are due to be paid on funds raised. As of February 18, 2014, , we have raised over $78,000. However, there can be no assurance provided that even if we do raise the maximum from this offering that we will ever get to a level of operations or generate a profit.
Since incorporation, the Company has financed its operations through minimal initial capitalization. As of May 31,November 30th, 2013 we had $15,200$8,514 cash on hand. WeFor the period from April 15, 2013 (inception) to November 30, 2013 we had total expenses of $26,273$68,286 which were related to start-up costs.
To date, the Company has commenced implementation of its fully planned principal operations and strategic business plan Pursuant to an exclusive license agreement with GRAN NEVADA Beverage, Inc.
The Company’s ability to grow its operations is entirely dependent upon the proceeds to be raised in this offering. If HIDA does not raise at least the minimum offering amount,$125,000, it will be unable to establish a base of operations,operation, without which it will be unable to begin to generate any revenues in the future..future. Over $78,000 has been raised to-date. If HIDA does not produce sufficient cash flow to support its operations over the next 12 months, the Company will need to raise additional capital by issuing capital stock in exchange for cash in order to continue as a going concern. There are no formal or informal agreements to attain such financing. HIDA cannot assure any investor that, if needed, sufficient financing can be obtained or, if obtained, that it will be on reasonable terms. Without realization of additional capital,cap it would be unlikely for operations to continue and any investment made by an investor would be lost in its entirety. Although HIDA has taken steps to secure logistical arrangements in the State of California there is currently no contract, leases signed, nor products purchased for the purpose of commencing its distribution operations. The Company needs the funding necessary in order to secure such arrangements.
HIDA currently does not own any significant plant or equipment that it would seek to sell in the near future. The Company has no material commitments for capital expenditures as of August 31, 2013.
HIDA management anticipates hiring employees over the next twelve (12) months as needed. Currently, the Company believes the services provided by its officers and directors appear sufficient at this time.
The Company has not paid for expenses on behalf of any director. Additionally, HIDA believes that this policy shall not materially change within the next twelve months.
The Company has no plans to seek a business combination with another entity in the foreseeable future, however, may entertain strategic acquisitions of food and beverage distributors.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table lists, as of the date of this prospectus, the number of shares of common stock of our Company that are beneficially owned by (i) each person or entity known to our Company to be the beneficial owner of more than 5% of the outstanding common stock; (ii) each officer and director of our Company; and (iii) all officers and directors as a group. Information relating to beneficial ownership of common stock by our principal shareholders and management is based upon information furnished by each person using “beneficial ownership” concepts under the rules of the Securities and Exchange Commission. Under these rules, a person is deemed to be a beneficial owner of a security if that person has or shares voting power, which includes the power to vote or direct the voting of the security, or investment power, which includes the power to vote or direct the voting of the security. The person is also deemed to be a beneficial owner of any security of which that person has a right to acquire beneficial ownership within 60 days. Under the Securities and Exchange Commission rules, more than one person may be deemed to be a beneficial owner of the same securities, and a person may be deemed to be a beneficial owner of securities as to which he or she may not have any pecuniary beneficial interest. Except as noted below, each person has sole voting and investment power.
The percentages below are calculated based on 10,237,500 shares of our common stock issued and outstanding as of the date of this prospectus. We do not have any outstanding warrant, options or other securities exercisable for or convertible into shares of our common stock.
Title of class | | Name and address of beneficial owner | | Amount of beneficial ownership | | Percent of class |
| | | | | | |
Common Stock | | Fernando Oswaldo Leonzo, Director - 20 Lindberg Lane, New City NY 10956 | | 3,500,000 | | 34% |
| | | | | | |
Common Stock | | Robert Gunther, Director - 3536 Daniel Crescent, Baldwin NY 11510 | | 600,000 | | 6% |
| | | | | | |
Common Stock | | Jerry Gruenbaum, Director - 116 Court St. Suite 707, New Haven CT. 06520 | | 200,000 | | 2% |
| | | | | | |
Common Stock | | Trident Merchant Group, Inc - 264 Union Blvd., Totowa, NJ 07512 | | 550,000 | | 5.4% |
| | | | | | |
Common Stock | | Michael Gunther - 100 Colt Rd., Submit NJ 07901 | | 3,000,000 | | 29.3% |
| | | | | | |
All Executive Officers and Directors as a group consisting of three individuals | | | | 4,300,000 | | 42% |
The percent of class is based on 10,237,500 shares of common stock issued and outstanding as of February 18, 2014.
The following table provides the names and addresses of each person known to HIDA who own more than 5% of the outstanding commonpreferred stock as of the date of this prospectus, and by the officers and directors, individually and as a group. Except as otherwise indicated, all shares are owned directly.
Title of class | | Name and address of beneficial owner | | Amount of beneficial ownership | | Percent of class |
Common Stock | | Fernando Oswaldo Leonzo | | 3,500,000 | | 34% |
| | | | | | |
Common Stock | | Robert Gunther | | 600,000 | | 6% |
| | | | | | |
Common Stock | | Jerry Gruenbaum | | 200,000 | | 2% |
Title of class | | Name and address of beneficial owner | | Amount of beneficial ownership | | Percent of class |
| | | | | | |
Preferred Stock | | Fernando Oswaldo Leonzo - 20 Lindberg Lane, New City NY 10956 | | 600,000 | | 60% |
| | | | | | |
Preferred Stock | | Robert Gunther - 3536 Daniel Crescent, Baldwin NY 11510 | | 300,000 | | 30% |
| | | | | | |
Preferred Stock | | Jerry Gruenbaum - 116 Court St. Suite 707, New Haven CT. 06520 | | 100,000 | | 10% |
| | | | | | |
All Executive Officers and Directors as a group consisting of three individuals | | | | 1,000,000 | | 100% |
The percent of class is based on 10,237,5001,000,000 shares of common stock issued and outstanding as of August 20, 2013.February 18, 2014.
OFF-BALANCE SHEET ARRANGEMENTS
AEPHIDA does not have any off-balance sheet arrangements.
EXECUTIVESUMMARY COMPENSATION TABLE
The table below sets forthsummarizes all cash compensation awarded to, earned by, or paid or proposed to be paid by us to the chief executive officer and the most highly compensated executive officers, and key employeesour Officers for all services rendered in all capacities to the Companyus during fiscal yearall of 2013.
Summary Compensation Table
Name and principal position | | | Year | | Salary ($) | | Bonus ($) | | Stock Awards ($) | | Option Awards ($) | | Non-Equity Incentive Plan Compensation ($) | | All Other Compensation (1) ($) | | Total ($) | |
Fernando Oswaldo Leonzo | | | | 2013 | | | $ | 0.00 | | | $ | 0.00 | | | $ | --- | | | $ | — | | | $ | — | | | $ | 600.00 | | | $ | 600.00 | |
Chief Executive Officer & Chairman of the Board | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Robert Gunther | | | | 2013 | | | $ | 0.00 | | | $ | 0.00 | | | $ | --- | | | $ | — | | | $ | — | | | $ | 300.00 | | | $ | 300.00 | |
Vice-President, Chief Financial Officer & Director | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Jerry Gruenbbaum | | | | 2013 | | | $ | 0.00 | | | $ | 0.00 | | | $ | --- | | | $ | — | | | $ | — | | | $ | 100.00 | | | $ | 100.00 | |
Chief General Counsel, Secretary & Director | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Long-Term Compensation Awards | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Name and Principal Position | | | | Other Annual Compensation ($) | Securities Underlying Options (#) | |
Fernando Oswaldo Leonzo | 2013 | $0.00 | None | |
Robert Gunther | 2013 | $0.00 | None | |
Jerry Gruenbaum | 2013 | $0.00 | None | |
(1) The three individuals shown above, who represent the founders of the Company, received a combined total of 1,000,000 shares of the Company’s Series A Preferred stock, which was valued at its fair market value of $1,000.
Compensation Policy. Because we are still in the early stages of formation and development, our directors and officers are not currently receiving any compensation.
Stock Option. Because we are still in the early stages of formation and development, our directors and officers have not received any stock options or freestanding SARs.
Other Compensation – The three individuals shown above, who represent the founders of the Company, received a combined total of 1,000,000 shares of the Company’s Series A Preferred stock, which was valued at its fair market value of $1,000 at the date of issuance. These shares were issued for services as Officers and Directors of HIDA for services performed as of April 30, 2013.
Bonuses. To date no bonuses have been granted. Any bonuses granted in the future will relate to meeting certain performance criteria that are directly related to areas within the executive’s responsibilities with the Company. As the Company continues to grow, more defined bonus programs will be created to attract and retain our employees at all levels.
Stock Option Plans
Our board of directors has not adopted any Stock Option Plans as of the date of this prospectus.
Compensation of Directors
Because we are still inOur Directors have not received monetary compensation since our inception to the development stage, our director is not receiving any compensationdate of this prospectus other than reimbursement for expenses incurred during hisin performing their duties.
We currently do not pay any compensation to Directors serving on our Board of Directors.
The Company does not have a standing compensation committee, audit committee, nomination committee, or committees performing similar functions. We anticipate that we will form such committees of the Board of Directors once we have a full Board of Directors.
Employment Contracts; Termination of Employment and Change-in-Control Arrangements
We do not have employment agreements with any of our employees, however, we intend to enter into employment agreements with members of management as the business grows.
DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
Executive Officers and Directors
Name | Age | OfficePosition with the Company | Since | Weekly hours works for the Company |
| | | | |
| | Chief Executive officer, Chairman of the Board of Directors | April 15, 2013 (inception) | over 40 |
| | | | |
| | Vice-President, Treasurer, Director | April 15, 2013 (inception) | around 20 |
| | | | |
| | Chief Legal Officer, Secretary, Director | April 15, 2013 (inception) | under 10 |
The term of office for each director is one year, or until the next annual meeting of the shareholders.
Set forth below is a brief description of the background and business experience of our executive officer and director.