Document and Entity Information
Document and Entity Information | 3 Months Ended |
Aug. 31, 2016 | |
Document And Entity Information | |
Entity Registrant Name | HISPANICA INTERNATIONAL DELIGHTS OF AMERICA, INC. |
Entity Central Index Key | 1,579,010 |
Document Type | S1 |
Document Period End Date | Aug. 31, 2016 |
Amendment Flag | false |
Current Fiscal Year End Date | --05-31 |
Is Entity a Well-known Seasoned Issuer? | No |
Is Entity a Voluntary Filer? | No |
Is Entity's Reporting Status Current? | Yes |
Entity Filer Category | Smaller Reporting Company |
Document Fiscal Year Focus | 2,016 |
Balance Sheets
Balance Sheets - USD ($) | Aug. 31, 2016 | May 31, 2016 | May 31, 2015 |
Current Assets: | |||
Cash and cash equivalents | $ 115,783 | $ 27,241 | $ 44,101 |
Accounts receivable | 264,353 | 1,692 | 1,206 |
Prepaid expenses | 14,740 | 15,000 | |
Inventory | 250,073 | 12,887 | 18,879 |
Total current assets | 630,209 | 56,560 | 79,186 |
Equipment, net of accumulated depreciation of $3,750 | 71,250 | ||
Other Assets: | |||
Intangibles, net of accumulated amortization of $6,250 | 368,750 | ||
Total Assets | 1,070,209 | 56,560 | 79,186 |
Current Liabilities | |||
Accounts payable and accrued expenses | 424,223 | 28,051 | 3,718 |
Customer advances | 20,880 | ||
Note payable | 18,500 | ||
Loans payable, net of capitalized financing costs of $95,525 and $ -0-, respectively | 335,225 | ||
Convertible note payable | 3,000 | 3,000 | 6,000 |
Loan payable - Stockholder | 10,000 | 10,000 | 20,000 |
Total current liabilities | 772,448 | 80,431 | 29,718 |
Convertible note payable, net of capitalized financing costs of $6,105 and $7,735, respectively | 42,573 | 55,025 | |
Line of credit, net of capitalized financing costs of $295,333 and $ -0-, respectively | 354,667 | ||
Total Liabilities | 1,169,688 | 135,456 | 29,718 |
Commitments and contingencies | |||
Stockholders' Equity (Deficiency): | |||
Series A Preferred stock, $0.001 par value; 10,000,000 shares authorized, 1,200,000 and 1,000,000 shares issued and outstanding | 1,200 | 1,200 | 1,000 |
Common stock, $0.001 par value; 100,000,000 shares authorized, 14,112,151 and 13,040,471 shares issued and outstanding, respectively | 14,112 | 13,040 | 12,169 |
Additional paid in capital | 1,727,017 | 721,413 | 450,641 |
Accumulated deficit during development stage | (1,841,808) | (814,549) | (414,342) |
Total stockholders' equity (deficiency) | (99,479) | (78,896) | 49,468 |
Total liabilities and stockholders' equity (deficiency) | $ 1,070,209 | $ 56,560 | $ 79,186 |
Balance Sheets (Parenthetical)
Balance Sheets (Parenthetical) - USD ($) | Aug. 31, 2016 | May 31, 2016 | May 31, 2015 |
Accumulated Depreciation | $ 3,750 | ||
Accumulated Amortization | $ 6,250 | ||
STOCKHOLDERS' EQUITY (DEFICIT) | |||
Preferred stock, par value | $ 0.001 | $ 0.001 | $ 0.001 |
Preferred stock, authorized shares | 10,000,000 | 10,000,000 | 10,000,000 |
Preferred stock, issued shares | 1,200,000 | 1,200,000 | 1,000,000 |
Preferred stock, outstanding shares | 1,200,000 | 1,200,000 | 1,000,000 |
Common stock, par value | $ 0.001 | $ 0.001 | $ 0.001 |
Common stock, Authorized | 100,000,000 | 100,000,000 | 100,000,000 |
Common stock, Issued | 14,112,151 | 13,040,471 | 12,168,905 |
Common stock, outstanding | 14,112,151 | 13,040,471 | 12,168,905 |
Loans Payable [Member] | |||
Capitalized financing costs | $ 95,525 | ||
Convertible Notes Payable [Member] | |||
Capitalized financing costs | 6,105 | $ 7,735 | |
Line of Credit [Member] | |||
Capitalized financing costs | $ 295,333 | $ 0 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations - USD ($) | 3 Months Ended | 12 Months Ended | ||
Aug. 31, 2016 | Aug. 31, 2015 | May 31, 2016 | May 31, 2015 | |
Income Statement [Abstract] | ||||
Product sales, net | $ 649,411 | $ 129,871 | $ 193,734 | $ 214,502 |
Cost of goods sold | 501,257 | 127,501 | 215,997 | 240,017 |
Gross income | 148,154 | 2,370 | (22,263) | (25,515) |
Expenses: | ||||
Officers' compensation | 3,750 | 130,200 | ||
Salary & wages | 63,340 | |||
Repairs and Maintenance | 4,210 | |||
Advertising and promotion | 759 | 2,000 | 5,021 | 3,417 |
Insurance | 9,266 | |||
Professional fees | 595,888 | 21,711 | 184,081 | 152,900 |
Travel | 24,971 | 4,029 | 1,485 | |
Rent | 13,064 | 2,250 | 9,697 | 7,500 |
Other | 8,506 | 871 | 9,478 | 18,956 |
Total expenses | 723,754 | 26,832 | 342,506 | 184,258 |
Net loss before other expenses | (575,600) | (24,462) | (364,769) | (209,773) |
Other (expenses) | ||||
Interest and financing costs | (441,659) | (1,350) | (35,438) | (2,820) |
Depreciation and amortization | (10,000) | |||
Total other expenses | (451,659) | (1,350) | (35,438) | (2,820) |
Net income before provision for income taxes | (1,027,259) | (25,812) | (400,207) | (212,593) |
Provision for income taxes | ||||
Net loss | $ (1,027,259) | $ (25,812) | $ (400,207) | $ (212,593) |
Basic and diluted loss per share | $ (0.07) | $ 0 | $ (0.03) | $ (0.02) |
Basic and diluted weighted average number of shares outstanding | 13,710,632 | 12,194,242 | 12,723,476 | 11,704,133 |
Statements of Changes in Stockh
Statements of Changes in Stockholders Equity (Deficiency) - USD ($) | Common Stock [Member] | Series A Preferred Stock | Additional Paid-In Capital | Accumulated Deficit | Total |
Beginning Balance, Shares at May. 31, 2014 | 11,202,700 | 1,000,000 | |||
Beginning Balance, Amount at May. 31, 2014 | $ 11,203 | $ 1,000 | $ 207,057 | $ (201,749) | $ 17,511 |
Issuance of stock for cash, shares | 448,000 | ||||
Issuance of stock for cash, amount | $ 448 | 111,552 | 112,000 | ||
Issuance of stock for Services, shares | 518,205 | ||||
Issuance of stock Services, amount | $ 518 | 129,032 | 129,550 | ||
Contribution to additional paid-in capital | 3,000 | 3,000 | |||
Net loss | (212,593) | (212,593) | |||
Ending Balance, Shares at May. 31, 2015 | 12,168,905 | 1,000,000 | |||
Ending Balance, Amount at May. 31, 2015 | $ 12,169 | $ 1,000 | 450,641 | (414,342) | 49,468 |
Issuance of stock for cash, shares | 148,000 | ||||
Issuance of stock for cash, amount | $ 148 | 67,853 | 68,001 | ||
Issuance of stock for Services, shares | 680,300 | ||||
Issuance of stock Services, amount | $ 680 | 182,165 | 188,025 | ||
Issuance of common stock for investment, shares | 20,000 | ||||
Issuance of common stock for investment, amount | $ 20 | 9,980 | 10,000 | ||
Issuance of common stock for repayment of note, shares | 43,266 | ||||
Issuance of common stock for repayment of note, amount | $ 43 | 10,774 | 10,817 | ||
Net loss | (400,207) | (400,207) | |||
Ending Balance, Shares at May. 31, 2016 | 13,040,471 | 1,200,000 | |||
Ending Balance, Amount at May. 31, 2016 | $ 13,040 | $ 1,200 | 721,413 | (814,549) | (78,896) |
Beginning Balance, Shares at May. 31, 2015 | 12,168,905 | 1,000,000 | |||
Beginning Balance, Amount at May. 31, 2015 | $ 12,169 | $ 1,000 | 450,641 | (414,342) | 49,468 |
Net loss | (400,207) | ||||
Ending Balance, Amount at Aug. 31, 2016 | (99,479) | ||||
Beginning Balance, Shares at May. 31, 2016 | 13,040,471 | 1,200,000 | |||
Beginning Balance, Amount at May. 31, 2016 | $ 13,040 | $ 1,200 | $ 721,413 | $ (814,549) | (78,896) |
Net loss | (1,027,259) | ||||
Ending Balance, Amount at Aug. 31, 2016 | $ (99,479) |
Statements of Changes in Stock6
Statements of Changes in Stockholders Equity (Deficiency) (Parenthetical) - $ / shares | May 31, 2016 | May 31, 2015 |
Share price | $ 0.25 | |
Common Stock [Member] | Cash #1 [Member] | ||
Share price | $ 0.25 | |
Common Stock [Member] | Cash #2 [Member] | ||
Share price | 0.50 | |
Common Stock [Member] | Services #1 [Member] | ||
Share price | 0.25 | |
Common Stock [Member] | Services #2 [Member] | ||
Share price | 0.50 | |
Common Stock [Member] | Services #3 [Member] | ||
Share price | 1 | |
Common Stock [Member] | Investment[Member] | ||
Share price | 0.50 | |
Common Stock [Member] | Repay Note[Member] | ||
Share price | 0.25 | |
Preferred Stock [Member] | Services #1 [Member] | ||
Share price | $ 0.001 |
Condensed Consolidated Stateme7
Condensed Consolidated Statements of Cash Flows - USD ($) | 3 Months Ended | 15 Months Ended | ||
Aug. 31, 2016 | Aug. 31, 2015 | Aug. 31, 2016 | Aug. 31, 2015 | |
Cash flows from operating activities: | ||||
Net loss | $ (1,027,259) | $ (25,812) | $ (400,207) | $ (212,593) |
Adjustments to reconcile net loss to net cash (used in) operating activities: | ||||
Stock based compensation | 656,676 | 4,826 | 193,025 | 129,550 |
Depreciation and amortization | 10,000 | 4,765 | ||
Amortization of capitalized financing costs | 169,152 | |||
Accounts receivable | (262,661) | (1,982) | (486) | 52,241 |
Prepaid expenses | 14,740 | 15,000 | 260 | (15,000) |
Inventory | (237,186) | 8,897 | 5,992 | (1,758) |
Accounts payable and accrued expenses | 396,172 | 18,598 | 25,150 | (57,475) |
Customer advances | (20,880) | 20,880 | ||
Net cash (used in) provided by operating activities | (301,246) | 19,527 | (150,621) | (105,035) |
Cash flows from financing activities: | ||||
Proceeds from issuance of common stock | 6,000 | 68,001 | 112,000 | |
Repayment of notes payable | (18,500) | 18,500 | ||
Proceeds form convertible notes payable, , net of financing costs of $12,500 | 75,000 | 6,000 | ||
Repayment of convertible notes payable | (14,082) | (27,740) | ||
Proceeds from loans payable | 364,820 | |||
Repayment of loans payable | (49,450) | |||
Proceeds from line of credit | 557,000 | |||
Proceeds from loan payable - stockholder | 10,000 | 20,000 | ||
Repayment of loan payable - stockholder | (10,000) | (10,000) | ||
Net cash provided by financing activities | 839,788 | 6,000 | 133,761 | 128,000 |
Cash flows (used in) investment activities: | ||||
Fixed assets acquired | (75,000) | |||
Intangible assets acquired | (375,000) | |||
Net cash (used in) investment activities | (450,000) | |||
Net increase in cash and cash equivalents | 88,542 | 25,527 | (16,860) | 22,965 |
Cash and cash equivalents at beginning of period | 27,241 | 44,101 | 44,101 | |
Cash and cash equivalents at end of period | 115,783 | 69,628 | 115,783 | 69,628 |
Supplemental cash flow information: | ||||
Cash paid during the period for: Interest | 36,374 | 1,341 | 8,483 | 1,500 |
Non-cash transactions: Supplemental Schedule of non-cash investing and financing activities: | ||||
Forgiven rent converted to additional paid in capital | 3,000 | |||
Conversion of debt to common stock and additional paid in capital | 27,500 | $ 10,817 | ||
Shares issued for financing costs | $ 350,000 |
Condensed Consolidated Stateme8
Condensed Consolidated Statements of Cash Flows (Parenthetical) - USD ($) | 15 Months Ended | |
Aug. 31, 2016 | Aug. 31, 2015 | |
Statement of Cash Flows [Abstract] | ||
Financing costs | $ 12,500 |
NATURE OF OPERATIONS AND SUMMAR
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 3 Months Ended | 12 Months Ended |
Aug. 31, 2016 | May 31, 2016 | |
Accounting Policies [Abstract] | ||
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | Note 1. NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Nature of Operations Organization The accompanying consolidated financial statements include the financial statements of Hispanica International Delights of America, Inc. (HISP) and its wholly owned subsidiary, Energy Source Distributors Inc., (ESD) (collectively , the Company). All intercompany balances and transactions have been eliminated in consolidation. HISP was incorporated in Delaware in April 2013 and acquired ESD during July 2016. The Company currently markets and sells traditional Hispanic beverages and ethnic food packaged products and will license and/or acquire existing brands and distributors of Hispanic products. Basis of Presentation The accompanying interim condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP"). In the opinion of management, all adjustments considered necessary for a fair presentation of the interim periods presented have been included. All such adjustments are of a normal recurring nature. The accompanying condensed financial statements and the information included under the heading Management's Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with the Company's audited financial statements and related notes included in the Company's Form 10-K as of May 31, 2016. Interim results are not necessarily indicative of the results of a full year. Revenue Recognition In general, the Company records revenue when persuasive evidence of an arrangement exists, services have been rendered or product delivery has occurred, the sales price to the customer is fixed or determinable, and collectability is reasonably assured. The following policies reflect specific criteria for the various revenue streams of the Company: Revenue is recognized at the time the product is delivered. Provision for sales returns is estimated based on the Company's historical return experience. Revenue is presented net of returns. Use of Estimates The preparation of condensed financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the dates of the condensed balance sheets and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. Net Loss Per Common Share The Company calculates net income (loss) per share based on the authoritative guidance. Basic earnings (loss) per share is calculated by dividing net income (loss) by the weighted average number of common shares outstanding for the period. Diluted earnings (loss) per share is calculated by dividing net income (loss) by the weighted average number of common shares and dilutive common stock equivalents outstanding. During periods in which the Company incurs losses common stock equivalents, if any, are not considered, as their effect would be anti-dilutive. As of August 31, 2016, the convertible notes payable, which could be converted into approximately 52,000 shares of common stock, were outstanding. Income Taxes The Company utilizes the accrual method of accounting for income taxes. Under the accrual method, deferred tax assets and liabilities are determined based on the differences between the financial reporting basis and the tax basis of the assets and liabilities, and are measured using enacted tax rates and laws that will be in effect when the differences are expected to reverse. An allowance against deferred tax assets is recognized, when it is more likely than not, that such tax benefits will not be realized. The Company recognizes the financial statement benefit of an uncertain tax position only after considering the probability that a tax authority would sustain the position in an examination. For tax positions meeting a more-likely-than-not threshold, the amount recognized in the financial statements is the benefit expected to be realized upon settlement with the tax authority. For tax positions not meeting the threshold, no financial statement benefit is recognized. The Company recognizes interest and penalties, if any, related to uncertain tax positions in income tax expense. The Company did not have any unrecognized tax benefits as of August 31, 2016, and does not expect this to change significantly over the next 12 months. Stock-Based Compensation The Company accounts for equity instruments issued to employees in accordance with ASC 718, Compensation - Stock Compensation. ASC 718 requires all share-based compensation payments to be recognized in the financial statements based on the fair value on the issuance date. Equity instruments granted to non-employees are accounted for in accordance with ASC 505, Equity. The final measurement date for the fair value of equity instruments with performance criteria is the date that each performance commitment for such equity instrument is satisfied or there is a significant disincentive for non-performance. Cash and Cash Equivalents The Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents. Accounts Receivable The Company extends credit to its customers in the normal course of business and performs ongoing credit evaluations of its customers, maintaining an allowance for potential credit losses. Uncollectible accounts are written off at the time they are deemed uncollectible. Accounts receivable is reported net of the allowance for doubtful accounts. The allowance is based on management's estimate of the amount of receivables that will actually be collected. As of February 29, 2016 and May 31, 2015, an allowance for doubtful accounts was not necessary. Inventory Inventory consists of finished goods and is stated at the lower of cost (first-in, first-out) or market value. Recent Pronouncements Management does not believe that any recently issued, but not yet effective accounting pronouncement, if adopted, would have a material effect on the accompanying condensed consolidated financial statements. | Note 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Organization Hispanica International Delights of America, Inc. ("HISP" or the "Company") was incorporated in Delaware in April 2013. The Company has not generated significant sales to date. The Company currently markets and sells traditional Hispanic beverages and ethnic food packaged products and will license and/or acquire existing brands and distributors of Hispanic products. Revenue Recognition In general, the Company records revenue when persuasive evidence of an arrangement exists, product delivery has occurred, the sales price to the customer is fixed or determinable, and collectability is reasonably assured. The following policies reflect specific criteria for the various revenues streams of the Company: Revenue is recognized at the time the product is delivered. Provision for sales returns is estimated based on the Company's historical return experience. Revenue is presented net of returns. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (GAAP) requires management to make estimates that affect certain reported amounts and disclosures. Actual results could differ from those estimates. Net Loss Per Common Share The Company calculates net income (loss) per share based on the authoritative guidance. Basic earnings (loss) per share is calculated by dividing net income (loss) by the weighted average number of common shares outstanding for the period. Diluted earnings (loss) per share is calculated by dividing net income (loss) by the weighted average number of common shares and dilutive common stock equivalents outstanding. During periods in which the Company incurs losses common stock equivalents, if any, are not considered, as their effect would be anti-dilutive. As of May 31, 2016, the convertible notes payable could be converted into approximately 101,000 shares of common stock. Income Taxes The Company utilizes the accrual method of accounting for income taxes. Under the accrual method, deferred tax assets and liabilities are determined based on the differences between the financial reporting basis and the tax basis of the assets and liabilities and are measured using enacted tax rates and laws that will be in effect, when the differences are expected to reverse. An allowance against deferred tax assets is recognized, when it is more likely than not, that such tax benefits will not be realized. The Company recognizes the financial statement benefit of an uncertain tax position only after considering the probability that a tax authority would sustain the position in an examination. For tax positions meeting a more-likely than-not threshold, the amount recognized in the financial statements is the benefit expected to be realized upon settlement with the tax authority. For tax positions not meeting the threshold, no financial statement benefit is recognized. The Company recognizes interest and penalties, if any, related to uncertain tax positions in income tax expense. The Company did not have any unrecognized tax benefits as of May 31, 2016, and does not expect this to change significantly over the next 12 months. Stock-Based Compensation The Company accounts for equity instruments issued to employees based on the fair value using an option pricing model. Forfeitures are estimated at the time of grant and revised in subsequent periods if actual forfeitures differ from initial estimates. Equity instruments granted to non-employees are accounted for in accordance with ASC 505, Equity. The final measurement date for the fair value of equity instruments with performance criteria is the date that each performance commitment for such equity instrument is satisfied or there is a significant disincentive for non-performance. Cash and Cash Equivalents The Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents. Accounts Receivable The Company extends credit to its customers in the normal course of business and performs ongoing credit evaluations of its customers, maintaining an allowance for potential credit losses. Accounts receivable is reported net of the allowance for doubtful accounts. The allowance is based on management's estimate of the amount of receivables that will actually be collected. As of May 31, 2016 and 2015, no allowance for doubtful accounts was deemed necessary. Inventory Inventory consists of finished goods and is stated at the lower of cost (first-in, first-out) or market value. Fair Value of Financial Instruments Pursuant to ASC No. 820. "Fair Value Measurement and Disclosures," the Company is required to estimate the fair value of all financial instruments included on its balance sheets. The Company considers the carrying value of such amounts in the financial statements to approximate their fair value due to the short-term nature of these financial instruments. Advertising Advertising and promotion costs are expensed as incurred. Advertising and promotion expense amounted to approximately $5,000 and $3,400 for the years ended May 31, 2016 and 2015, respectively. Shipping and Handling Shipping and handling costs are included in costs of goods sold. Recent Pronouncements On February 25, 2016, the Financial Accounting Standards Board (FASB) issued ASU 2016-2, "Leases" (Topic 842), which is intended to improve financial reporting for lease transactions. This ASU will require organizations that lease assets, such as real estate and manufacturing equipment, to recognize assets and liabilities on their balance sheets for the rights to use those assets for the lease term and obligations to make lease payments created by those leases that have terms of greater than 12 months. The recognition, measurement, and presentation of expenses and cash flows arising from a lease by a lessee primarily will depend on its classification as a finance or operating lease. This ASU will also require disclosures to help investors and other financial statement users better understand the amount and timing of cash flows arising from leases. These disclosures will include qualitative and quantitative requirements, providing additional information about the amounts recorded in the financial statements. This ASU will be effective for public entities beginning the first quarter 2019. We do not believe that this ASU will have a material impact on our financial statements. In November 2015, the FASB issued ASU 2015-17, "Income Taxes, Balance Sheet Classifications of Deferred Taxes." This amendment simplifies the presentation of deferred taxes by requiring that all deferred tax liabilities and assets now be recorded as noncurrent. This amendment is effective for interim and annual reporting periods beginning after December 15, 2016 August 2015, the FASB issued ASU 2015-14, "Revenue from Contracts with Customers." This amendment defers the effective date of implementation to after December 15, 2017 In July 2015, the FASB issued ASU 2015-11, "Inventory. Simplifying the Measurement of Inventory." This amendment only applies to entities that use the first-in, first-out (FIFO) or average cost methods of valuing inventory. Entities would measure inventory at the lower of cost and net realizable value. This amendment aligns measurement of inventory in GAAP with the International Financial Reporting Standards (IFRS). This amendment is effective for annual periods beginning after December 15, 2016 In April 2015, the FASB issued ASU 2015-03 , Interest -Imputation of Interest. This guidance requires debt issuance costs be presented in the balance sheet as a reduction in liability rather than as an asset. This amendment is effective for interim and reporting periods beginning after December 15, 2016 with early adoption permissible. The Company has elected early adoption. On May 14, 2014, FASB and The International Accounting Standards Board (the IASB) issued a new joint revenue recognition standard that supersedes nearly all GAAP guidance on revenue recognition. The core principal of the standard is that revenue recognition should depict the transfer of goods and services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods and services. The new standard is effective for the Company for the fiscal year 2017 |
ACQUISITION OF ESD
ACQUISITION OF ESD | 3 Months Ended |
Aug. 31, 2016 | |
Business Combinations [Abstract] | |
ACQUISITION OF ESD | Note 2. ACQUISITION OF ESD In July 2016, the Company entered into a Senior Secured Revolving Credit Facility Agreement (the Credit Facility) with TCA Global Credit Master Fund L.P. (TCA) for a total amount of $7.5 million. However, as of the execution date of the Credit Facility, only $1.6 million was allocated by TCA to the Company for working capital financing and for any other purpose permitted under the terms of the Credit Facility. Energy Source Distributors, Inc. (ESD) is Corporate Guarantor to the Credit Facility. Under the terms of the Credit Facility, the Company paid advisory fees to TCA in the amount of $350,000, through the issuance of 374,332 shares of common stock. On July 5, 2016 the Company borrowed $650,000 from the Credit Facility and used the proceeds to acquire ESD for $450,000; payoff a note payable in the amount of $32,534; $74,466 was used to pay vendors for inventory purchases and $93,000 was paid to TCA for closing fees. The credit facility has a maturity date of January 5, 2017 which may be extended for an additional six months at the lenders discretion. The credit facility requires fees and interest only payments at 12% during the first two months. Principal payments begin in the third month. During the current quarter the Company issued an additional 157,480 shares of common stock to satisfy a default notice in the amount of $200,000. On July 5, 2016, the Company acquired all of the net assets of Energy Source Distributors, Inc. by purchasing all of the outstanding shares of common stock for $450,000. The following table presents the unaudited pro forma condensed consolidated statements of operations for the three months ended August 31, 2016: Unaudited Pro Forma Condensed Consolidated Statements of Operations For the three months ended August 31, 2016 Pro Forma Pro Forma HISP ESD Adjustments Notes Combined Product sales, net $ 111,004 $ 884,526 $ $ 995,530 Cost of goods sold 81,089 690,277 771,366 Gross income 29,915 194,249 224,164 Selling general and administrative expenses 628,435 156,595 785,030 Net Income/(loss) before other income and expenses (598,520 ) 37,654 (560,866 ) Other income and (expenses) (415,342 ) (59,664 ) (475,006 ) Provision for taxes Net Income/(loss) $ (1,013,862 ) $ (22,010 ) $ $ (1,035,872 ) See accompanying notes to the Unaudited Pro Forma Condensed Consolidated Financial Information Pro Forma Note 1. Basis of presentation The unaudited pro forma Consolidated Statements of Operations for the three months ended August 31, 2016 gives effect to the ESD acquisition as if it had occurred on June 1, 2016. Pro Forma Note 2 Purchase price allocation On July 5, 2016, the Company acquired all of the outstanding stock of ESD and certain assets from ESD for total consideration of $450,000. The unaudited pro forma condensed consolidated financial information includes various assumptions, including those related to the purchase price allocation of the assets acquired from ESD based on managements estimates. The following table shows the allocation of the purchase price the acquired assets: Property, plant and equipment $ 75,000 Intangible assets 375,000 Total purchase price $ 450,000 The estimated the useful life of the intangible assets is Ten (10) years. Amortization expense of $ 6,250 was recorded during the three months ended August 31, 2016. |
CONCENTRATIONS
CONCENTRATIONS | 12 Months Ended |
May 31, 2016 | |
Risks and Uncertainties [Abstract] | |
CONCENTRATIONS | Note 2 - CONCENTRATION OF CREDIT RISK Concentration of Credit Risk The Companys financial instruments that are exposed to concentrations of credit risk consist primarily of cash and trade accounts receivable. The Company places its cash with high quality credit institutions. At times, balances may be in excess of the Federal Deposit Insurance Corporation (FDIC) insurance limit. Cash in banks is insured by the FDIC up to $250,000 per institution, per entity. The Company routinely assesses the financial strength of its customers and, as a consequence, believes that its trade account receivable credit risk exposure is limited. Sales and Accounts Receivable During the year ended May 31, 2016, sales to three customers accounted for approximately 81% of the Company's net sales or approximately $156,000. There were no customers with significant accounts receivable balances at May 31, 2016. During the year ended May 31, 2015, sales to four customers accounted for approximately 79% of the Company's net sales or approximately $169,000. There were no customers with significant accounts receivable balances at May 31, 2015. |
LOANS PAYABLE - STOCKHOLDER
LOANS PAYABLE - STOCKHOLDER | 3 Months Ended | 12 Months Ended |
Aug. 31, 2016 | May 31, 2016 | |
Notes to Financial Statements | ||
LOANS PAYABLE - STOCKHOLDER | Note 3. LOANS PAYABLE STOCKHOLDERS In April 2016, a stockholder and officer lent the Company $10,000. The loan bears interest at 18% per annum. The maturity date of the note is July 1, 2016. As of August 31, 2016 the Company has not repaid the loan. Accrued and unpaid interest totaled $661 at August 31, 2016 and is reported as accounts payable and accrued expenses. | Note 3. LOANS PAYABLE STOCKHOLDERS In February 2014, a stockholder lent the Company $10,000. The loan bore interest at 5% per annum and matured on February 28, 2015. The loan balance on May 31, 2015 was $10,000. In September 2015, the stockholder agreed to accept 43,266 shares of the Company's Series A Common Stock at $0.25 per share in lieu of cash as repayment of the principal and accrued and unpaid interest of $817 on the loan. In February 2015, a stockholder and officer lent the Company $20,000. The loan bore interest at 36% per annum. Under the terms of the agreement, the note matured on May 20, 2015. In April 2015, the Company repaid $10,000 of the loan balance. The remaining loan balance of $10,000, together with accrued interest of $1,284, was paid by the Company in September 2015. Accrued and unpaid interest totaled $384 at May 31, 2015. In April 2016, a stockholder and officer lent the Company $10,000. The loan bears interest at 18% per annum. The maturity date of the note is July 1, 2016. As of August 31, 2016 the Company has not repaid the loan. Accrued and unpaid interest totaled $207 at May 31, 2016. |
NOTES PAYABLE
NOTES PAYABLE | 3 Months Ended | 12 Months Ended |
Aug. 31, 2016 | May 31, 2016 | |
Related Party Transactions [Abstract] | ||
NOTES PAYABLE | Note 4. NOTES PAYABLE In September 2014, the Company issued a convertible note for the principal amount of $6,000. The note had an original due date of December 31, 2014. In January 2015, the holder signed an amendment that made the note and accrued interest payable on demand. Interest accrues at 10% per annum. The holder has the option of converting the note in whole or in part into the Company's common stock at the rate of $0.25 per share at any time prior to redemption. In October 2015, the Company repaid $3,000 of principal and $651 of interest. Accrued interest totaled $268 and $193 as of August 31, 2016 and May 31, 2016, respectively, and is reported as accounts payable and accrued expenses. In September 2015, the Company issued a convertible note payable (the Note) for the principal amount of $87,500 including an original issue discount ("OID") of $7,500 and loan costs of $5,000. The OID and loan costs have been capitalized and are being amortized over 23 months and are reported as financing costs. The note requires payment of unpaid principal bears interest at 10%. The note requires payment and accrued interest upon maturity in August 2017. Unamortized OID and loan costs totaled $7,735 at May 31, 2016. There is a prepayment premium of 125% of the loan balance being paid prior to the maturity date. Upon an event of default as described in the Note, the Company would incur penalties and fees and the annual interest rate would increase to 22%. At August 31, 2016, accrued interest of $1,045 is reported as accounts payable and accrued expenses. Under the terms of the Note, the Note holder has the right, until the outstanding balance has been paid in full, to convert all or any part of the outstanding balance into shares of fully paid and non-assessable common stock, $0.001 par value per shares of the Company (the Lender Conversion Shares), as per the following conversion formula: The number of Lender Conversion Shares equals the amount being converted (the "Conversion Amount") divided by the Lender Conversion Price. The Lender Conversion Price is defined in the Note as being $3.00 per share, however, in the event the Market Capitalization falls below $20,000,000.00 at any time, then in such event (a) the Lender Conversion Price for all Lender Conversions occurring after the first date of such occurrence shall equal the lower of the Lender Conversion Price and the Market Price as of any applicable date of Conversion. Subject to certain conditions, a Conversion Factor of 70%, shall apply to the Lender Conversion Price, subject to the following adjustments: (i) If at any time the average of the three (3) lowest Closing Bid Prices in the twenty (20) Trading Days immediately preceding any date of measurement is below $1.00, then in such event the then-current Conversion Factor shall be reduced by 10% for all future conversions; (ii) if at any time after the effective date of the Note, the Conversion Shares are not Eligible, then the then-current Conversion Factor will automatically be reduced by 5% for all future conversions; and, (iii) in addition to the Default Effect, as defined, if any Major Default occurs, as defined, after the effective date of the Note, the Conversion Factor shall automatically be reduced for all future conversions by an additional 5% for each of the first three (3) Major Defaults that occur. Under the terms of the Note, on June 17, 2016 the note holder elected to convert $12,500 of the outstanding principal and accrued interest balance into 18,315 shares of our common stock at a conversion price of $0.6825 per share. Under the terms of the Note, on July 25, 2016 the note holder elected to convert $15,000 of the outstanding principal and accrued interest balance into 52,053 shares of our common stock at a conversion price of $0.288167 per share. In March 2016, the Company borrowed $18,500 from an unrelated third party (GHS). The loan bears interest at 22% per annum. During the three months ended August 31, 2016 the Company incurred late payment penalties and other fees of approximately $13,304. The outstanding balance including penalties, fees, and accrued interest was repaid in July 2016. On July 15, 2016, the Company entered into a Future Sales Proceeds Purchase Agreement with Merchant Cash and Capital, LLC d/b/a Bizfi (the Buyer). Under the terms of the agreement, the Company received $167,450 of cash proceeds from the Buyer in exchange for a loan payable in the amount of $214,200 secured by future sales proceeds. The difference between the cash received and the cash to be paid from future sales proceeds of $46,750 was recognized as capitalized financing costs and is being amortized over the repayment period. This amount has been reflected as a direct reduction of the loan payable in the accompanying condensed consolidated balance sheets. As of August 31, 2016, unamortized financing costs related to this loan were approximately $38,000. The Company is obligated to make payments equal to 10% of future receipts estimated to be approximately 210 payments of $1,020 to the Buyer each business day until the full amount of the future sales proceeds is repaid. On July 15, 2016, the Company entered into a Purchase Rights Purchase and Sale Agreement with ESBF California LLC (the Buyer). Under the terms of the agreement, the Company received $197,370 of cash proceeds from the Buyer in exchange for a loan payable in the amount of $266,000 secured by future sales proceeds. The difference between the cash received and the cash to be paid from future sales proceeds of $68,630 was recognized as capitalized financing costs and is being amortized over the repayment period. This amount has been reflected as a direct reduction of the loan payable in the accompanying condensed consolidated balance sheets. As of August 31, 2016, unamortized financing costs related to this loan were approximately $57,000. The Company is obligated to make payments equal to 15% of future receipts estimated to be approximately 231 payments of $1,152 to the Buyer each business day until the full amount of the future sales proceeds is repaid. | Note 4. NOTES PAYABLE In September 2014, the Company issued a convertible note for the principal amount of $6,000. The note had an original due date of December 31, 2014. In January 2015, the holder signed an amendment that made the note and accrued interest payable on demand. Interest accrues at 10% per annum. The holder has the option of converting the note in whole or in part into the Company's common stock at the rate of $0.25 per share at any time prior to redemption. In October 2015, the Company repaid $3,000 of principal and $651 of interest. At May 31, 2016, accrued interest on the debenture was $ 193. At May 31, 2015, accrued interest on the debenture was $436. In September 2015, the Company issued a convertible note payable (the Note) for the principal amount of $87,500 including an original issue discount ("OID") of $7,500 and loan costs of $5,000. The OID and loan costs have been capitalized and are being amortized over 23 months and are reported as financing costs. The note bears interest at 10%. The note requires payment and accrued interest upon maturity in August 2017. Unamortized OID and loan costs totaled $7,735 at May 31, 2016. There is a prepayment premium of 125% of the loan balance being paid prior to the maturity date. Upon an event of default as described in the Note, the Company would incur penalties and fees and the annual interest rate would increase to 22%. During the year ended May 31, 2016, the Company did not make timely payments and as a result incurred penalties and other fees of approximately $7,836 and the interest rate increased to 22%. During 2016, the Company made principal payments of $24,740 and Interest payments of $6,548. At May 31, 2016, accrued interest of $462 is reported as accounts payable and accrued expenses. Under the terms of the Note, the Note holder has the right, until the outstanding balance has been paid in full, to convert all or any part of the outstanding balance into shares of fully paid and non-assessable common stock, $0.001 par value per shares of the Company (the Lender Conversion Shares), as per the following conversion formula: The number of Lender Conversion Shares equals the amount being converted (the "Conversion Amount") divided by the Lender Conversion Price. The Lender Conversion Price is defined in the Note as being $3.00 per share, however, in the event the Market Capitalization falls below $20,000,000.00 at any time, then in such event (a) the Lender Conversion Price for all Lender Conversions occurring after the first date of such occurrence shall equal the lower of the Lender Conversion Price and the Market Price as of any applicable date of Conversion. Subject to certain conditions, a Conversion Factor of 70%, shall apply to the Lender Conversion Price, subject to the following adjustments: (i) If at any time the average of the three (3) lowest Closing Bid Prices in the twenty (20) Trading Days immediately preceding any date of measurement is below $1.00, then in such event the then-current Conversion Factor shall be reduced by 10% for all future conversions; (ii) if at any time after the effective date of the Note, the Conversion Shares are not DTC Eligible, then the then-current Conversion Factor will automatically be reduced by 5% for all future conversions; and, (iii) in addition to the Default Effect, as defined, if any Major Default occurs, as defined, after the effective date of the Note, the Conversion Factor shall automatically be reduced for all future conversions by an additional 5% for each of the first three (3) Major Defaults that occur. Under the terms of the Note, on June 17, 2016 the note holder elected to convert $12,500 of the outstanding principal and accrued interest balance into 18,315 shares of our common stock at a conversion price of $0.6825 per share. Under the terms of the Note, on July 25, 2016 the note holder elected to convert $15,000 of the outstanding principal and accrued interest balance into 52,053 shares of our common stock at a conversion price of $0.288167 per share. In March 2016, the Company borrowed $18,500 from an unrelated third party (GHS). The loan bears interest at 22% per annum. The Company incurred late payment penalties and other fees of approximately $13,304. Accrued and unpaid interest totaled $691 at May 31, 2016. The principal amount of the loan, the late payment penalties and other fees and accrued interest was repaid in July 2016. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 3 Months Ended | 12 Months Ended |
Aug. 31, 2016 | May 31, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | ||
COMMITMENTS AND CONTINGENCIES | Note 5. COMMITMENTS AND CONTINGENCIES The Company currently leases its offices on a month to month basis from the Company's Chief Operating Officer and stockholder for $750 per month. In connection with the acquisition of ESD, the Company assumed a lease for approximately 12,000 square feet of warehouse space located in Gilroy, California at a base rent of $5,248 per month. The lease terminates on June 30, 2021. In addition, the Company entered into an employment agreement with a general manager for a period of one year at a cost of $58,000. The employment agreement expires in July 2017. Rent expense for the three months ended August 31, 2016 and 2015 totaled $13,064 and $2,250, respectively. On October 30, 2015, the company entered into an agreement to acquire a 20% minority equity interest in Just Buns, Inc. in exchange for 20,000 shares to the Companys common stock. The Company also entered into an exclusive Distribution Agreement with Just Buns, Inc. to distribute their proprietary Ensaimades | Note 5. COMMITMENTS AND CONTINGENCIES The Company currently leases its Baldwin, NY office on a month to month basis from the Company's Chief Operating Officer and stockholder for $750 per month. Rent expense for the years ended May 31, 2016 and 2015 totaled $9,697 and $7,500, respectively. On October 30, 2015, the company entered into an agreement to acquire a 20% minority equity interest in Just Buns Inc. in exchange for 20,000 shares to the Companys common stock. The company also entered into an exclusive Distribution Agreement with Just Buns, Inc. to distribute their proprietary Ensaimades |
INCOME TAXES
INCOME TAXES | 3 Months Ended | 12 Months Ended |
Aug. 31, 2016 | May 31, 2016 | |
Income Tax Disclosure [Abstract] | ||
INCOME TAXES | Note 6. INCOME TAXES The deferred tax asset consists of the following: August 31, 2016 May 31, 2016 Net operating loss carryforward $ 736,000 $ 326,000 Valuation allowance (736,000 ) (326,000 ) Deferred tax asset, net $ $ The income tax benefit differs from the amount computed by applying the statutory federal and state income tax rates to the loss before income taxes. The sources and tax effects of the differences are as follows: Effective Income Tax Rate Reconciliation August 31, 2016 May 31, 2016 Federal Rate 34 % 34 % State Rate 6 % 6 % Valuation Allowance (40 %) (40 %) Effective income tax rate 0 % 0 % As of August 31, 2016, the Company has net operating loss carryforwards of approximately $1,840,000 to reduce future federal and state taxable income through 2036. The Company currently has no federal or state tax examinations in progress, nor has it had any federal or state examinations since its inception. All of the Company's tax years are subject to federal and state tax examinations. | Note 6. INCOME TAXES The deferred tax asset consists of the following: May 31, 2016 May 31, 2015 Net operating loss carryforward $ 326,000 $ 165,000 Valuation allowance (326,000 ) (165,000 ) Deferred tax asset, net $ $ The income tax benefit differs from the amount computed by applying the statutory federal and state income tax rates to the loss before income taxes. The sources and tax effects of the differences are as follows: Effective Income Tax Rate Reconciliation 2016 2015 Federal Rate 34 % 34 % State Rate 6 % 6 % Valuation Allowance (40 %) (40 %) Effective income tax rate (0 %) (0 %) As of May 31, 2016 the Company has net operating loss carryforwards of approximately $815,000 to reduce future federal and state taxable income through 2036. The valuation allowance increased by approximately $161,000 and $35,000 for the years ended May 31, 2016 and 2015, respectively. The Company currently has no federal,state or New York City tax examinations in progress nor has it had any federal,state or New York City examinations since its inception. All of the Companys tax years are subject to federal,state and New York City tax examination. |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 3 Months Ended | 12 Months Ended |
Aug. 31, 2016 | May 31, 2016 | |
Related Party Transactions [Abstract] | ||
RELATED PARTY TRANSACTIONS | Note 7. RELATED PARTY TRANSACTIONS The Company purchases its inventory from a supplier related through common ownership and management. The Chief Executive Officer and Chairman of the Company is the supplier's President. In addition, the Chief Financial Officer and Director of the Company has a minority interest in the supplier. The amount of inventory purchased from the supplier during the three months ended August 31, 2016 and August 31, 2015 was approximately $12,817 and $111,059, respectively. As of August 31, 2016 and August 31, 2015, accounts payable to this supplier of $-0- and $10,000, respectively, were reported as accounts payable and accrued expenses. | Note 7. OTHER RELATED PARTY TRANSACTIONS The Company purchases its inventory from a supplier related through common ownership and management. The Chief Executive Officer and Chairman of the Company is the suppliers President. In addition, the Chief Financial Officer and Director of the Company has a minority interest in the supplier. The amount of inventory purchased from this supplier during the years ended May 31, 2016 and 2015, was approximately $204,000 and $214,000, respectively. As of May 31, 2016 and 2015, the Company has advances to this supplier of $14,740 and $15,000, respectively. |
BASIS OF REPORTING
BASIS OF REPORTING | 3 Months Ended | 12 Months Ended |
Aug. 31, 2016 | May 31, 2016 | |
Accounting Changes and Error Corrections [Abstract] | ||
BASIS OF REPORTING | Note 8. BASIS OF REPORTING The accompanying financial statements have been prepared assuming the Company will continue as a going concern, which contemplates the recoverability of assets and the satisfaction of liabilities in the normal course of business. The Company has incurred losses from inception of approximately $1,840,000, which, among other factors, raises substantial doubt about the Company's ability to continue as a going concern. The ability of the Company to continue as a going concern is dependent upon management's plans to raise additional capital from the sale of stock and receive additional loans from related parties. The accompanying financial statements do not include any adjustments that might be required should the Company be unable to continue as a going concern. | Note 8. BASIS OF REPORTING The Company's financial statements are presented on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. The Company has experienced a loss from operations as a result of its investment necessary to achieve its operating plan, which is long-range in nature. Since inception the Company incurred a net loss of approximately $815,000. In addition, the Company has a working capital deficit as of May 31, 2016. The Company currently does not have sufficient cash to sustain itself for the next 12 months, and will require additional funding in order to execute its plan of operations and to continue as a going concern. To meet its cash needs, management expects to raise capital through a private placement offerings or borrowings from stockholders or others. The financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the possible inability of the Company to continue as a going concern. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 3 Months Ended | 12 Months Ended |
Aug. 31, 2016 | May 31, 2016 | |
Subsequent Events [Abstract] | ||
SUBSEQUENT EVENTS | NOTE 9. SUBSEQUENT EVENTS On September 30, 2016, the Company entered into a Securities Purchase Agreement (Purchase Agreement) with Anson Investments Master Fund LP (Anson) pursuant to which Anson purchased the Companys unsecured convertible promissory note in the principal amount of $440,000 (Note). The carries interest at the rate of 5% per annum. The maturity date of the Note is October 30, 2017. The Note was issued with a 10% original issue discount. As additional consideration for the purchase of the note, the Company will issue 1,100,000 of its common stock to Anson. Pursuant to the Purchase Agreement, the Company issued its Common Stock Purchase Warrant to Anson. The Warrant allows Anson to purchase up to 400,000 shares of the Companys Common Stock at an exercise price of $0.85 per share until September 30, 2021. Also, under the terms of the Purchase Agreement, the Company and Anson entered into a Registration Rights Agreement covering the 1,100,000 shares issued to Anson. Under the Registration Rights Agreement, the Company is required to file a registration statement with the U.S. Securities and Exchange Commission covering up to an aggregate of 8,000,000 shares within 45 days of the sale and receipt by the Company of an aggregate of $400,000 of Notes sold pursuant to the Purchase Agreement. From September 1 through October 17, 2016, the Company issued 682,500 shares of its common stock for services and 69,404 shares of its common stock to repay debt. | Note 9. SUBSEQUENT EVENTS In July 2016, the Company entered into a Senior Secured Revolving Credit Facility Agreement (the Credit Facility) with TCA Global Credit Master Fund L.P. (TCA) for a total amount of $7.5 million. However, as of the execution date of the Credit Facility, only $1.6 million has been allocated by TCA to the Company for working capital financing and for any other purpose permitted under the terms of the Credit Facility. Energy Source Distributors, Inc. (ESD) is Corporate Guarantor to the Credit Facility. Under the terms of the Credit Facility, the Company is obligated to pay approximately $544,000 of transaction fees to TCA including a Transaction Advisory Fee equal to 2% of the loan commitment amount, as defined by the Credit Facility, and an Advisory Fee of $350,000 which may be paid in restricted stock or cash. On July 5, 2016 the Company borrowed $650,000 from the Credit Facility and used the proceeds to acquire ESD for $450,000; payoff the GHS loan in the amount of $32,534; $74,466 was used to pay vendors for inventory purchases and $93,000 was paid to TCA for closing fees. The credit facility has a maturity date of January 5, 2017 which may be extended for an additional six months at the lenders discretion. On July 5, 2016, the Company acquired all of the net assets of Energy Source Distributors, Inc. by purchasing all of the outstanding shares of ESD stock for $450,000. ESD will be operated as a wholly-owned subsidiary of HISP. The following table presents the unaudited condensed pro forma balance sheet of the consolidated Company as of May 31, 2016: Unaudited Pro Forma Condensed Consolidated Balance Sheet As of May 31, 2016 Pro Forma Pro Forma HISP ESD Adjustments Notes Combined Current assets: Cash and equivalents $ 27,241 $ 270,394 $ (270,394 ) (a) $ 27,241 Accounts receivable 1,692 345,058 (345,058 ) (a) 1,692 Prepaid expenses 14,740 6,728 (6,728 ) (a) 14,740 Inventory 12,887 234,705 (234,705 ) (a) 12,887 Total current assets 56,560 856,885 (856,885 ) 56,560 Property and equipment, net 204,578 (139,578 ) (a) 65,000 Other assets 375,000 (c) 375,000 Total assets $ 56,560 $ 1,061,463 $ (621,463 ) $ 496,560 Current Liabilities Accounts payable and accrued expenses $ 28,051 $ 95,707 $ (41,707 ) (a) $ 82,051 Other current liabilities 20,880 20,880 Notes payable 31.500 47,217 485,783 (a) (b) 564,500 Total current liabilities 80,431 142,924 444,076 667,431 Other liabilities Notes payable 55,025 55,025 Total liabilities 135,456 142,924 444,076 722,456 Total Stockholders' Equity (Deficiency): (78,896 ) 918,539 (1,065,539 ) (225,896 ) Total Liabilities and Stockholders' Equity (Deficiency) $ 56,560 $ 1,061,463 $ (621,463 ) $ 496,560 See accompanying notes to the Unaudited Pro Forma Condensed Consolidated Financial Information. The following table presents the unaudited condensed pro forma statements of operations of the consolidated Company for the year ended May 31, 2016: Unaudited Pro Forma Condensed Consolidated Statement of Operations For the year ended May 31, 2016 Pro Forma Pro Forma HISP ESD Adjustments Notes Combined Product sales, net $ 193,734 $ 2,775,113 $ $ 2,968,847 Cost of goods sold 215,997 2,091,010 2,307,007 Gross income (22,263 ) 684,103 661,840 Selling general and administrative expenses 342,506 555,177 10,000 (d) 907,683 Net income/(loss) before other expenses (364,769 ) 128,926 (10,000 ) (245,843 ) Other income and (expenses) (35,438 ) (1,225 ) (147,000 ) (e) (183,663 ) Net income/(loss) $ (400,207 ) $ 127,701 $ (157,000 ) $ (429,506 ) See accompanying notes to the Unaudited Pro Forma Condensed Consolidated Financial Information Note 1. Basis of presentation The unaudited pro forma condensed Consolidated financial statements are based on the Companys historical financial statements as adjusted to give effect to the acquisition of Energy Source Distributors, Inc. (ESD) and the debt issuance necessary to finance the acquisition. The unaudited pro forma Consolidated statement of operations for the year ended May 31, 2016 gives effect to the ESD acquisition as if it had occurred on June 1, 2015. The unaudited pro forma consolidated balance sheet as of May 31, 2016 gives effect to the ESD acquisition as if it had occurred on May 31, 2016. Note 2 Preliminary purchase price allocation On July 5, 2016, the Company acquired all of the outstanding stock of ESD and certain assets from ESD for total consideration of $450,000. The Company financed the acquisition by borrowing the purchase price and closing fees from TCA. The unaudited pro forma condensed consolidated financial information includes various assumptions, including those related to the preliminary purchase price allocation of the assets acquired from ESD based on managements best estimates of fair value. The final purchase price allocation may vary based on final appraisals, valuations and analyses of the fair value of the acquired assets and assumed liabilities. Accordingly, the pro forma adjustments are preliminary and have been made solely for illustrative purposes. The following table shows the preliminary allocation of the purchase price for ESD to the acquired identifiable assets and pro forma goodwill: Total purchase price $ 450,000 Property and equipment 75,000 Total intangible assets $ 375,000 Note 3 Pro forma adjustments The pro forma adjustments are based on our preliminary estimates and assumptions that are subject to change. The following adjustments have been reflected in the unaudited pro forma condensed combined financial information: Adjustments to the pro forma condensed combined balance sheet (a) Reflects the preliminary fair value adjustment of $75,000 to the acquired property and equipment (b) Reflects the term loan issuance of $543,000 necessary to finance the acquisition (c) Reflects the preliminary estimate of intangible assets, which represents customer lists, work force and the excess of the purchase price over the fair value of ESDs identifiable assets acquired as shown in Note 2 Adjustments to the pro forma condensed statements of operations (d) Reflects the estimated depreciation and amortization expense related to the acquired property and equipment as discussed in Note 3(a) (e) Reflects the additional interest expense related to the loan issuance of $543,000 with a fixed 12% annual interest rate. Note 4 Commitments In connection with the acquisition of ESD, the Company assumed a lease for approximately 12,000 square feet of warehouse space located in Gilroy, California at a base rent of $5,248 per month. The lease terminates on June 30, 2021. In addition, the Company entered into an employment agreement with a general manager for a period of one year at a cost of $58,000. The employment agreement expires in July 2017. |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 3 Months Ended | 12 Months Ended |
Aug. 31, 2016 | May 31, 2016 | |
Accounting Policies [Abstract] | ||
Organization | Organization The accompanying consolidated financial statements include the financial statements of Hispanica International Delights of America, Inc. (HISP) and its wholly owned subsidiary, Energy Source Distributors Inc., (ESD) (collectively , the Company. All intercompany balances and transactions have been eliminated in consolidation. HISP was incorporated in Delaware in April 2013 and acquired ESD during July 2016. The Company currently markets and sells traditional Hispanic beverages and ethnic food packaged products and will license and/or acquire existing brands and distributors of Hispanic products. | Organization Hispanica International Delights of America, Inc. ("HISP" or the "Company") was incorporated in Delaware in April 2013. The Company has not generated significant sales to date. The Company currently markets and sells traditional Hispanic beverages and ethnic food packaged products and will license and/or acquire existing brands and distributors of Hispanic products. |
Basis of Prersentation | Basis of Presentation The accompanying interim condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP"). In the opinion of management, all adjustments considered necessary for a fair presentation of the interim periods presented have been included. All such adjustments are of a normal recurring nature. The accompanying condensed financial statements and the information included under the heading Management's Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with the Company's audited financial statements and related notes included in the Company's Form 10-K as of May 31, 2016. Interim results are not necessarily indicative of the results of a full year. | |
Revenue Recognition | Revenue Recognition In general, the Company records revenue when persuasive evidence of an arrangement exists, services have been rendered or product delivery has occurred, the sales price to the customer is fixed or determinable, and collectability is reasonably assured. The following policies reflect specific criteria for the various revenue streams of the Company: Revenue is recognized at the time the product is delivered. Provision for sales returns is estimated based on the Company's historical return experience. Revenue is presented net of returns. | Revenue Recognition In general, the Company records revenue when persuasive evidence of an arrangement exists, product delivery has occurred, the sales price to the customer is fixed or determinable, and collectability is reasonably assured. The following policies reflect specific criteria for the various revenues streams of the Company: Revenue is recognized at the time the product is delivered. Provision for sales returns is estimated based on the Company's historical return experience. Revenue is presented net of returns. |
Use of Estimates | Use of Estimates The preparation of condensed financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the dates of the condensed balance sheets and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. | Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (GAAP) requires management to make estimates that affect certain reported amounts and disclosures. Actual results could differ from those estimates. |
Net Loss Per Common Share | Net Loss Per Common Share The Company calculates net income (loss) per share based on the authoritative guidance. Basic earnings (loss) per share is calculated by dividing net income (loss) by the weighted average number of common shares outstanding for the period. Diluted earnings (loss) per share is calculated by dividing net income (loss) by the weighted average number of common shares and dilutive common stock equivalents outstanding. During periods in which the Company incurs losses common stock equivalents, if any, are not considered, as their effect would be anti-dilutive. As of August 31, 2016, the convertible notes payable, which could be converted into approximately 52,000 shares of common stock, were outstanding. | Net Loss Per Common Share The Company calculates net income (loss) per share based on the authoritative guidance. Basic earnings (loss) per share is calculated by dividing net income (loss) by the weighted average number of common shares outstanding for the period. Diluted earnings (loss) per share is calculated by dividing net income (loss) by the weighted average number of common shares and dilutive common stock equivalents outstanding. During periods in which the Company incurs losses common stock equivalents, if any, are not considered, as their effect would be anti-dilutive. As of May 31, 2016, the convertible notes payable could be converted into approximately 101,000 shares of common stock. |
Income Taxes | Income Taxes The Company utilizes the accrual method of accounting for income taxes. Under the accrual method, deferred tax assets and liabilities are determined based on the differences between the financial reporting basis and the tax basis of the assets and liabilities, and are measured using enacted tax rates and laws that will be in effect when the differences are expected to reverse. An allowance against deferred tax assets is recognized, when it is more likely than not, that such tax benefits will not be realized. The Company recognizes the financial statement benefit of an uncertain tax position only after considering the probability that a tax authority would sustain the position in an examination. For tax positions meeting a more-likely-than-not threshold, the amount recognized in the financial statements is the benefit expected to be realized upon settlement with the tax authority. For tax positions not meeting the threshold, no financial statement benefit is recognized. The Company recognizes interest and penalties, if any, related to uncertain tax positions in income tax expense. The Company did not have any unrecognized tax benefits as of August 31, 2016, and does not expect this to change significantly over the next 12 months. | Income Taxes The Company utilizes the accrual method of accounting for income taxes. Under the accrual method, deferred tax assets and liabilities are determined based on the differences between the financial reporting basis and the tax basis of the assets and liabilities and are measured using enacted tax rates and laws that will be in effect, when the differences are expected to reverse. An allowance against deferred tax assets is recognized, when it is more likely than not, that such tax benefits will not be realized. The Company recognizes the financial statement benefit of an uncertain tax position only after considering the probability that a tax authority would sustain the position in an examination. For tax positions meeting a more-likely than-not threshold, the amount recognized in the financial statements is the benefit expected to be realized upon settlement with the tax authority. For tax positions not meeting the threshold, no financial statement benefit is recognized. The Company recognizes interest and penalties, if any, related to uncertain tax positions in income tax expense. The Company did not have any unrecognized tax benefits as of May 31, 2016, and does not expect this to change significantly over the next 12 months. |
Stock-Based Compensation | Stock-Based Compensation The Company accounts for equity instruments issued to employees in accordance with ASC 718, Compensation - Stock Compensation. ASC 718 requires all share-based compensation payments to be recognized in the financial statements based on the fair value on the issuance date. Equity instruments granted to non-employees are accounted for in accordance with ASC 505, Equity. The final measurement date for the fair value of equity instruments with performance criteria is the date that each performance commitment for such equity instrument is satisfied or there is a significant disincentive for non-performance. | Stock-Based Compensation The Company accounts for equity instruments issued to employees based on the fair value using an option pricing model. Forfeitures are estimated at the time of grant and revised in subsequent periods if actual forfeitures differ from initial estimates. Equity instruments granted to non-employees are accounted for in accordance with ASC 505, Equity. The final measurement date for the fair value of equity instruments with performance criteria is the date that each performance commitment for such equity instrument is satisfied or there is a significant disincentive for non-performance. |
Cash and Cash Equivalents | Cash and Cash Equivalents The Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents. | Cash and Cash Equivalents The Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents. |
Accounts Receivable | Accounts Receivable The Company extends credit to its customers in the normal course of business and performs ongoing credit evaluations of its customers, maintaining an allowance for potential credit losses. Uncollectible accounts are written off at the time they are deemed uncollectible. Accounts receivable is reported net of the allowance for doubtful accounts. The allowance is based on management's estimate of the amount of receivables that will actually be collected. As of February 29, 2016 and May 31, 2015, an allowance for doubtful accounts was not necessary. | Accounts Receivable The Company extends credit to its customers in the normal course of business and performs ongoing credit evaluations of its customers, maintaining an allowance for potential credit losses. Accounts receivable is reported net of the allowance for doubtful accounts. The allowance is based on management's estimate of the amount of receivables that will actually be collected. As of May 31, 2016 and 2015, no allowance for doubtful accounts was deemed necessary. |
Inventory | Inventory Inventory consists of finished goods and is stated at the lower of cost (first-in, first-out) or market value. | Inventory Inventory consists of finished goods and is stated at the lower of cost (first-in, first-out) or market value. |
Advertising | Advertising Advertising and promotion costs are expensed as incurred. Advertising and promotion expense amounted to approximately $5,000 and $3,400 for the years ended May 31, 2016 and 2015, respectively. | |
Shipping and Handling | Shipping and Handling Shipping and handling costs are included in costs of goods sold. | |
Fair Value of Financial Instruments | Fair Value of Financial Instruments Pursuant to ASC No. 820. "Fair Value Measurement and Disclosures," the Company is required to estimate the fair value of all financial instruments included on its balance sheets. The Company considers the carrying value of such amounts in the financial statements to approximate their fair value due to the short-term nature of these financial instruments. | |
Recent Pronouncements | Recent Pronouncements Management does not believe that any recently issued, but not yet effective accounting pronouncement, if adopted, would have a material effect on the accompanying condensed consolidated financial statements. | Recent Pronouncements On February 25, 2016, the Financial Accounting Standards Board (FASB) issued ASU 2016-2, "Leases" (Topic 842), which is intended to improve financial reporting for lease transactions. This ASU will require organizations that lease assets, such as real estate and manufacturing equipment, to recognize assets and liabilities on their balance sheets for the rights to use those assets for the lease term and obligations to make lease payments created by those leases that have terms of greater than 12 months. The recognition, measurement, and presentation of expenses and cash flows arising from a lease by a lessee primarily will depend on its classification as a finance or operating lease. This ASU will also require disclosures to help investors and other financial statement users better understand the amount and timing of cash flows arising from leases. These disclosures will include qualitative and quantitative requirements, providing additional information about the amounts recorded in the financial statements. This ASU will be effective for public entities beginning the first quarter 2019. We do not believe that this ASU will have a material impact on our financial statements. In November 2015, the FASB issued ASU 2015-17, "Income Taxes, Balance Sheet Classifications of Deferred Taxes." This amendment simplifies the presentation of deferred taxes by requiring that all deferred tax liabilities and assets now be recorded as noncurrent. This amendment is effective for interim and annual reporting periods beginning after December 15, 2016 August 2015, the FASB issued ASU 2015-14, "Revenue from Contracts with Customers." This amendment defers the effective date of implementation to after December 15, 2017 In July 2015, the FASB issued ASU 2015-11, "Inventory. Simplifying the Measurement of Inventory." This amendment only applies to entities that use the first-in, first-out (FIFO) or average cost methods of valuing inventory. Entities would measure inventory at the lower of cost and net realizable value. This amendment aligns measurement of inventory in GAAP with the International Financial Reporting Standards (IFRS). This amendment is effective for annual periods beginning after December 15, 2016 In April 2015, the FASB issued ASU 2015-03 , Interest -Imputation of Interest. This guidance requires debt issuance costs be presented in the balance sheet as a reduction in liability rather than as an asset. This amendment is effective for interim and reporting periods beginning after December 15, 2016 with early adoption permissible. The Company has elected early adoption. On May 14, 2014, FASB and The International Accounting Standards Board (the IASB) issued a new joint revenue recognition standard that supersedes nearly all GAAP guidance on revenue recognition. The core principal of the standard is that revenue recognition should depict the transfer of goods and services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods and services. The new standard is effective for the Company for the fiscal year 2017 |
ACQUISITION OF ESD (Tables)
ACQUISITION OF ESD (Tables) | 3 Months Ended | 12 Months Ended |
Aug. 31, 2016 | May 31, 2016 | |
Business Combinations [Abstract] | ||
Proforma Acquisition | Unaudited Pro Forma Condensed Consolidated Statements of Operations For the three months ended August 31, 2016 Pro Forma Pro Forma HISP ESD Adjustments Notes Combined Product sales, net $ 111,004 $ 884,526 $ $ 995,530 Cost of goods sold 81,089 690,277 771,366 Gross income 29,915 194,249 224,164 Selling general and administrative expenses 628,435 156,595 785,030 Net Income/(loss) before other income and expenses (598,520 ) 37,654 (560,866 ) Other income and (expenses) (415,342 ) (59,664 ) (475,006 ) Provision for taxes Net Income/(loss) $ (1,013,862 ) $ (22,010 ) $ $ (1,035,872 ) See accompanying notes to the Unaudited Pro Forma Condensed Consolidated Financial Information | |
Preliminary allocation of the purchase price | Property, plant and equipment $ 75,000 Intangible assets 375,000 Total purchase price $ 450,000 | Total purchase price $ 450,000 Property, plant and equipment 75,000 Total intangible asset $ 375,000 |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 3 Months Ended | 12 Months Ended |
Aug. 31, 2016 | May 31, 2016 | |
Income Tax Disclosure [Abstract] | ||
Deferred Tax Asset | August 31, 2016 May 31, 2016 Net operating loss carryforward $ 736,000 $ 326,000 Valuation allowance (736,000 ) (326,000 ) Deferred tax asset, net $ $ | May 31, 2016 May 31, 2015 Net operating loss carryforward $ 326,000 $ 165,000 Valuation allowance (326,000 ) (165,000 ) Deferred tax asset, net $ $ |
Statutory Rate | Effective Income Tax Rate Reconciliation August 31, 2016 May 31, 2016 Federal Rate 34 % 34 % State Rate 6 % 6 % Valuation Allowance (40 %) (40 %) Effective income tax rate 0 % 0 % | Effective Income Tax Rate Reconciliation 2016 2015 Federal Rate 34 % 34 % State Rate 6 % 6 % Valuation Allowance (40 %) (40 %) Effective income tax rate (0 %) (0 %) |
SUBSEQUENT EVENTS (Tables)
SUBSEQUENT EVENTS (Tables) | 3 Months Ended | 12 Months Ended |
Aug. 31, 2016 | May 31, 2016 | |
Subsequent Events [Abstract] | ||
Unaudited Pro Forma Condensed Combined Balance Sheet | The following table presents the unaudited condensed pro forma balance sheet of the consolidated Company as of May 31, 2016: Unaudited Pro Forma Condensed Consolidated Balance Sheet As of May 31, 2016 Pro Forma Pro Forma HISP ESD Adjustments Notes Combined Current assets: Cash and equivalents $ 27,241 $ 270,394 $ (270,394 ) (a) $ 27,241 Accounts receivable 1,692 345,058 (345,058 ) (a) 1,692 Prepaid expenses 14,740 6,728 (6,728 ) (a) 14,740 Inventory 12,887 234,705 (234,705 ) (a) 12,887 Total current assets 56,560 856,885 (856,885 ) 56,560 Property and equipment, net 204,578 (139,578 ) (a) 65,000 Other assets 375,000 (c) 375,000 Total assets $ 56,560 $ 1,061,463 $ (621,463 ) $ 496,560 Current Liabilities Accounts payable and accrued expenses $ 28,051 $ 95,707 $ (41,707 ) (a) $ 82,051 Other current liabilities 20,880 20,880 Notes payable 31.500 47,217 485,783 (a) (b) 564,500 Total current liabilities 80,431 142,924 444,076 667,431 Other liabilities Notes payable 55,025 55,025 Total liabilities 135,456 142,924 444,076 722,456 Total Stockholders' Equity (Deficiency): (78,896 ) 918,539 (1,065,539 ) (225,896 ) Total Liabilities and Stockholders' Equity (Deficiency) $ 56,560 $ 1,061,463 $ (621,463 ) $ 496,560 See accompanying notes to the Unaudited Pro Forma Condensed Consolidated Financial Information. The following table presents the unaudited condensed pro forma statements of operations of the consolidated Company for the year ended May 31, 2016: Unaudited Pro Forma Condensed Consolidated Statement of Operations For the year ended May 31, 2016 Pro Forma Pro Forma HISP ESD Adjustments Notes Combined Product sales, net $ 193,734 $ 2,775,113 $ $ 2,968,847 Cost of goods sold 215,997 2,091,010 2,307,007 Gross income (22,263 ) 684,103 661,840 Selling general and administrative expenses 342,506 555,177 10,000 (d) 907,683 Net income/(loss) before other expenses (364,769 ) 128,926 (10,000 ) (245,843 ) Other income and (expenses) (35,438 ) (1,225 ) (147,000 ) (e) (183,663 ) Net income/(loss) $ (400,207 ) $ 127,701 $ (157,000 ) $ (429,506 ) See accompanying notes to the Unaudited Pro Forma Condensed Consolidated Financial Information | |
Preliminary allocation of the purchase price | Property, plant and equipment $ 75,000 Intangible assets 375,000 Total purchase price $ 450,000 | Total purchase price $ 450,000 Property, plant and equipment 75,000 Total intangible asset $ 375,000 |
SUMMARY OF SIGNIFICANT ACCOUN23
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($) | 3 Months Ended | 12 Months Ended | |
Aug. 31, 2016 | May 31, 2016 | May 31, 2015 | |
Accounting Policies [Abstract] | |||
Common stock equivalents, outstanding | 52,000 | 101,000 | |
Allowance for doubtful accounts | $ 0 | ||
Advertising and promotion expense | $ 5,000 | $ 3,400 |
ACQUISITION OF ESD (Details)
ACQUISITION OF ESD (Details) - USD ($) | 1 Months Ended | 3 Months Ended | 12 Months Ended | |
Jul. 31, 2016 | Aug. 31, 2016 | May 31, 2016 | Jul. 05, 2016 | |
Credit line available | $ 7,500,000 | |||
Credit line allocated for use | 1,600,000 | $ 650,000 | ||
Transaction Fee | 544,000 | |||
Advisory Fee | $ 350,000 | |||
Shares issued for advisory fees | 374,332 | |||
Interest rate | 12.00% | 12.00% | ||
Shares issued for debt | 157,480 | |||
Debt amount satisfied | $ 200,000 | |||
ESD [Member] | ||||
Credit line allocated for use | 450,000 | |||
GHS Secured Loan [Member] | ||||
Credit line allocated for use | 32,534 | |||
Vendors [Member] | ||||
Credit line allocated for use | 74,466 | |||
TCA Closing Fees [Member] | ||||
Credit line allocated for use | $ 93,000 |
ACQUISITION OF ESD - Proforma A
ACQUISITION OF ESD - Proforma Acquisition (Details)(Details) - USD ($) | 3 Months Ended | 12 Months Ended | 15 Months Ended | |||
Aug. 31, 2016 | Aug. 31, 2015 | May 31, 2016 | May 31, 2015 | Aug. 31, 2016 | Aug. 31, 2015 | |
Product sales, net | $ 649,411 | $ 129,871 | $ 193,734 | $ 214,502 | ||
Cost of goods sold | 501,257 | 127,501 | 215,997 | 240,017 | ||
Gross income | 148,154 | 2,370 | (22,263) | (25,515) | ||
Net Income/(loss) before other income and expenses | (575,600) | (24,462) | (364,769) | (209,773) | ||
Other income and (expenses) | 441,659 | 1,350 | 35,438 | 2,820 | ||
Net (loss) | (1,027,259) | $ (25,812) | (400,207) | $ (212,593) | $ (400,207) | $ (212,593) |
HISP [Member] | ||||||
Product sales, net | 111,004 | |||||
Cost of goods sold | 81,089 | |||||
Gross income | 29,915 | |||||
Selling general and administrative expenses | 628,435 | |||||
Net Income/(loss) before other income and expenses | (598,520) | |||||
Other income and (expenses) | (415,342) | |||||
Net (loss) | (1,013,862) | |||||
ESD [Member] | ||||||
Product sales, net | 884,526 | 2,775,113 | ||||
Cost of goods sold | 690,277 | 2,091,010 | ||||
Gross income | 194,249 | 684,103 | ||||
Selling general and administrative expenses | 156,595 | |||||
Net Income/(loss) before other income and expenses | 37,654 | 128,926 | ||||
Other income and (expenses) | (59,664) | 1,225 | ||||
Net (loss) | (22,010) | 127,701 | ||||
Proforma Adjustments [Member] | ||||||
Product sales, net | ||||||
Cost of goods sold | ||||||
Gross income | ||||||
Selling general and administrative expenses | ||||||
Net Income/(loss) before other income and expenses | (10,000) | |||||
Other income and (expenses) | (147,000) | |||||
Net (loss) | 157,000 | |||||
ProForma Combined [Member] | ||||||
Product sales, net | 995,530 | 2,968,847 | ||||
Cost of goods sold | 771,366 | 2,307,007 | ||||
Gross income | 224,164 | 661,840 | ||||
Selling general and administrative expenses | 785,030 | |||||
Net Income/(loss) before other income and expenses | (560,866) | (245,843) | ||||
Other income and (expenses) | (475,006) | 183,663 | ||||
Net (loss) | $ (1,035,872) | $ (429,506) |
ACQUISITION OF ESD - Purchase P
ACQUISITION OF ESD - Purchase Price (Details Narrative) - USD ($) | 3 Months Ended | 12 Months Ended |
Aug. 31, 2016 | May 31, 2016 | |
Business Combinations [Abstract] | ||
Property, plant and equipment | $ 75,000 | $ 75,000 |
Intangible asset | 375,000 | 375,000 |
Total purchase price | 450,000 | $ 450,000 |
Amortization expense | $ 6,250 |
CONCENTRATIONS (Details Narrati
CONCENTRATIONS (Details Narrative) - USD ($) | 12 Months Ended | |
May 31, 2016 | May 31, 2015 | |
Concentration Risk [Line Items] | ||
FDIC limit | $ 250,000 | |
Sales [Member] | ||
Concentration Risk [Line Items] | ||
Customers | 3 | 4 |
Concentration Risk, Percentage | 81.00% | 79.00% |
Net Sales | $ 156,000 | $ 169,000 |
Accounts Receivable [Member] | ||
Concentration Risk [Line Items] | ||
Customers | 0 | 0 |
LOANS PAYABLE - STOCKHOLDER (De
LOANS PAYABLE - STOCKHOLDER (Details Narrative) - USD ($) | Sep. 30, 2015 | Apr. 30, 2015 | Aug. 31, 2016 | Aug. 31, 2016 | May 31, 2016 | Aug. 31, 2016 | Aug. 31, 2015 |
Debt Instrument [Line Items] | |||||||
Proceed from note | $ (10,000) | $ (10,000) | |||||
Shares issued for debt | 157,480 | ||||||
Loan Payable - Stockholder #1 [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Date of Transaction | Feb. 28, 2014 | ||||||
Maturity date of loan | Feb. 28, 2015 | ||||||
Proceed from note | $ 10,000 | ||||||
Interest rate | 5.00% | ||||||
Accrued and unpaid interest | $ 817 | ||||||
Shares issued for debt | 43,266 | ||||||
Share price | $ 0.25 | ||||||
Loan Payable - Stockholder #2 [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Date of Transaction | Feb. 28, 2015 | ||||||
Maturity date of loan | May 20, 2015 | ||||||
Proceed from note | $ 20,000 | ||||||
Payment on loans | $ 10,000 | $ 10,000 | |||||
Interest paid on loan | $ 1,284 | ||||||
Interest rate | 36.00% | ||||||
Accrued and unpaid interest | $ 384 | ||||||
Loan Payable - Stockholder #3 [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Date of Transaction | Apr. 1, 2016 | Apr. 1, 2016 | |||||
Maturity date of loan | Jul. 1, 2016 | Jul. 1, 2016 | |||||
Proceed from note | $ 10,000 | $ 10,000 | |||||
Interest paid on loan | $ 661 | ||||||
Interest rate | 18.00% | ||||||
Accrued and unpaid interest | $ 207 |
NOTES PAYABLE (Details Narrativ
NOTES PAYABLE (Details Narrative) - USD ($) | Jul. 25, 2016 | Jun. 17, 2016 | Aug. 31, 2016 | May 31, 2016 | May 31, 2015 |
Debt Instrument [Line Items] | |||||
Issuance of common stock for repayment of note, amount | $ 10,817 | ||||
Note 1 [Member] | |||||
Debt Instrument [Line Items] | |||||
Issue date | Sep. 1, 2014 | Sep. 1, 2014 | |||
Maturity date of loan | Dec. 31, 2014 | Dec. 31, 2014 | |||
Convertible debt | $ 6,000 | $ 6,000 | |||
Interest rate | 10.00% | 10.00% | |||
Principal payment on loans | $ 3,000 | $ 3,000 | |||
Interest payment on loans | 651 | 651 | |||
Accrued and unpaid interest | $ 268 | $ 193 | $ 436 | ||
Conversion rate per share | $ 0.25 | $ 0.25 | |||
Note 2 [Member] | |||||
Debt Instrument [Line Items] | |||||
Issue date | Sep. 1, 2015 | Sep. 1, 2015 | |||
Convertible debt | $ 87,500 | $ 87,500 | |||
Original issue discount | 7,500 | 7,500 | |||
Capitalized financing costs | 7,735 | 7,735 | |||
Loan costs | $ 5,000 | $ 5,000 | |||
Maturity date of loan | 23 months after inception | 23 months after inception | |||
Prepayment premium | 125.00% | 125.00% | |||
Interest rate | 22.00% | 22.00% | |||
Principal payment on loans | $ 24,740 | ||||
Interest payment on loans | 6,548 | ||||
Late payment and penalties | $ 7,836 | 7,836 | |||
Accrued and unpaid interest | $ 1,045 | $ 462 | |||
Issuance of common stock for repayment of note, amount | $ 15,000 | $ 12,500 | |||
Issuance of common stock for repayment of note, shares | 52,053 | 18,315 | |||
Conversion rate per share | $ 0.288167 | $ 0.6825 | $ 3 | $ 3 | |
Note 3 [Member] | |||||
Debt Instrument [Line Items] | |||||
Issue date | Mar. 1, 2016 | Mar. 1, 2016 | |||
Maturity date of loan | Jul. 31, 2016 | Jul. 31, 2016 | |||
Convertible debt | $ 18,500 | $ 18,500 | |||
Proceeds from notes payable | $ 18,500 | $ 18,500 | |||
Interest rate | 22.00% | 22.00% | |||
Late payment and penalties | $ 13,304 | $ 13,304 | |||
Accrued and unpaid interest | $ 691 | ||||
Note 4 [Member] | |||||
Debt Instrument [Line Items] | |||||
Issue date | Jul. 15, 2016 | ||||
Secured Loan Payable | $ 214,200 | ||||
Proceeds from notes payable | 167,450 | ||||
Capitalized financing costs | 46,750 | ||||
Unamortized finance costs | 38,000 | ||||
Principal payment on loans | $ 1,020 | ||||
Note 5 [Member] | |||||
Debt Instrument [Line Items] | |||||
Issue date | Jul. 15, 2016 | ||||
Secured Loan Payable | $ 266,000 | ||||
Proceeds from notes payable | 197,370 | ||||
Capitalized financing costs | 68,630 | ||||
Unamortized finance costs | 57,000 | ||||
Principal payment on loans | $ 1,152 |
NOTES PAYABLE (Details Narrat30
NOTES PAYABLE (Details Narrative) (Parenthetical) | 3 Months Ended | 12 Months Ended |
Aug. 31, 2016 | May 31, 2016 | |
Note 2 [Member] | ||
Debt Instrument [Line Items] | ||
Loan terms | Under the terms of the Note, the Note holder has the right, until the outstanding balance has been paid in full, to convert all or any part of the outstanding balance into shares of fully paid and non-assessable common stock, $0.001 par value per shares of the Company (the Lender Conversion Shares), as per the following conversion formula: The number of Lender Conversion Shares equals the amount being converted (the "Conversion Amount") divided by the Lender Conversion Price. The Lender Conversion Price is defined in the Note as being $3.00 per share, however, in the event the Market Capitalization falls below $20,000,000.00 at any time, then in such event (a) the Lender Conversion Price for all Lender Conversions occurring after the first date of such occurrence shall equal the lower of the Lender Conversion Price and the Market Price as of any applicable date of Conversion. Subject to certain conditions, a Conversion Factor of 70%, shall apply to the Lender Conversion Price, subject to the following adjustments: (i) If at any time the average of the three (3) lowest Closing Bid Prices in the twenty (20) Trading Days immediately preceding any date of measurement is below $1.00, then in such event the then-current Conversion Factor shall be reduced by 10% for all future conversions; (ii) if at any time after the effective date of the Note, the Conversion Shares are not DTC Eligible, then the then-current Conversion Factor will automatically be reduced by 5% for all future conversions; and, (iii) in addition to the Default Effect, as defined, if any Major Default occurs, as defined, after the effective date of the Note, the Conversion Factor shall automatically be reduced for all future conversions by an additional 5% for each of the first three (3) Major Defaults that occur. | Under the terms of the Note, the Note holder has the right, until the outstanding balance has been paid in full, to convert all or any part of the outstanding balance into shares of fully paid and non-assessable common stock, $0.001 par value per shares of the Company (the Lender Conversion Shares), as per the following conversion formula: The number of Lender Conversion Shares equals the amount being converted (the "Conversion Amount") divided by the Lender Conversion Price. The Lender Conversion Price is defined in the Note as being $3.00 per share, however, in the event the Market Capitalization falls below $20,000,000.00 at any time, then in such event (a) the Lender Conversion Price for all Lender Conversions occurring after the first date of such occurrence shall equal the lower of the Lender Conversion Price and the Market Price as of any applicable date of Conversion. Subject to certain conditions, a Conversion Factor of 70%, shall apply to the Lender Conversion Price, subject to the following adjustments: (i) If at any time the average of the three (3) lowest Closing Bid Prices in the twenty (20) Trading Days immediately preceding any date of measurement is below $1.00, then in such event the then-current Conversion Factor shall be reduced by 10% for all future conversions; (ii) if at any time after the effective date of the Note, the Conversion Shares are not DTC Eligible, then the then-current Conversion Factor will automatically be reduced by 5% for all future conversions; and, (iii) in addition to the Default Effect, as defined, if any Major Default occurs, as defined, after the effective date of the Note, the Conversion Factor shall automatically be reduced for all future conversions by an additional 5% for each of the first three (3) Major Defaults that occur. |
Note 4 [Member] | ||
Debt Instrument [Line Items] | ||
Loan terms | Payments equal to 10% of future receipts estimated to be approximately 210 payments | |
Note 5 [Member] | ||
Debt Instrument [Line Items] | ||
Loan terms | Payments equal to 15% of future receipts estimated to be approximately 231 payments |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Details Narrative 1) - USD ($) | 3 Months Ended | 12 Months Ended | ||
Aug. 31, 2016 | Aug. 31, 2015 | May 31, 2016 | May 31, 2015 | |
Commitments and Contingencies Disclosure [Abstract] | ||||
Rent Expense, monthly | $ 750 | |||
Rental Obligation | 5,248 | |||
Employment agreement | 58,000 | |||
Rent expense. paid | $ 13,064 | $ 2,250 | $ 9,697 | $ 7,500 |
COMMITMENTS AND CONTINGENCIES32
COMMITMENTS AND CONTINGENCIES (Details Narrative 2) | 1 Months Ended |
Oct. 30, 2015shares | |
Equity Method Investments and Joint Ventures [Abstract] | |
Equity interest | 20.00% |
Shares issued for investment | 20,000 |
INCOME TAXES - Tax Benefit (Det
INCOME TAXES - Tax Benefit (Details) - USD ($) | Aug. 31, 2016 | May 31, 2016 | May 31, 2015 |
Deferred tax asset | |||
Net operating loss carryforward | $ 736,000 | $ 326,000 | $ 165,000 |
Valuation Allowance | (736,000) | (326,000) | (165,000) |
Deferred tax asset, net |
INCOME TAXES - Statutory Rate (
INCOME TAXES - Statutory Rate (Details) | 3 Months Ended | 12 Months Ended | |
Aug. 31, 2016 | May 31, 2016 | May 31, 2015 | |
Effective Income Tax Rate Reconciliation | |||
Federal Rate | 34.00% | 34.00% | 34.00% |
State Rate | 6.00% | 6.00% | 6.00% |
Valuation allowance | (40.00%) | (40.00%) | (40.00%) |
Effective income tax rate | 0.00% | 0.00% | 0.00% |
INCOME TAXES (Details Narrative
INCOME TAXES (Details Narrative) - USD ($) | 3 Months Ended | 12 Months Ended | |
Aug. 31, 2016 | May 31, 2016 | May 31, 2015 | |
Income Tax Disclosure [Abstract] | |||
Net operating loss carry forward | $ 1,840,000 | $ 815,000 | |
Valuation allowance | $ 161,000 | $ 35,000 | |
Expiration date | May 31, 2036 | May 31, 2036 |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details Narrative) - USD ($) | 3 Months Ended | 12 Months Ended | ||
Aug. 31, 2016 | Aug. 31, 2015 | May 31, 2016 | May 31, 2015 | |
Related Party Transactions [Abstract] | ||||
Purchases from related party | $ 12,817 | $ 111,059 | $ 204,000 | $ 214,000 |
Advances to supplier | $ 10,000 | $ 14,740 | $ 15,000 |
BASIS OF REPORTING (Details)
BASIS OF REPORTING (Details) - USD ($) | 38 Months Ended | 41 Months Ended |
May 31, 2016 | Aug. 31, 2016 | |
Segment Reporting, Measurement Disclosures [Abstract] | ||
Net loss | $ 815,000 | $ 1,840,000 |
SUBSEQUENT EVENTS - Unaudited P
SUBSEQUENT EVENTS - Unaudited Pro Forma Condensed Combined Balance Sheet (Details) - USD ($) | Aug. 31, 2016 | May 31, 2016 | Aug. 31, 2015 | May 31, 2015 | May 31, 2014 |
Current Assets: | |||||
Cash and cash equivalents | $ 115,783 | $ 27,241 | $ 69,628 | $ 44,101 | |
Accounts receivable | 264,353 | 1,692 | 1,206 | ||
Prepaid expenses | 14,740 | $ 10,000 | 15,000 | ||
Inventory | 250,073 | 12,887 | 18,879 | ||
Total current assets | 630,209 | 56,560 | 79,186 | ||
Property and equipment, net | 71,250 | ||||
Other assets | |||||
Total assets | 1,070,209 | 56,560 | 79,186 | ||
Liabilities | |||||
Accounts payable and accrued expenses | 424,223 | 28,051 | 3,718 | ||
Other current liabilities | 20,880 | ||||
Notes payable | 31,500 | ||||
Total current liabilities | 772,448 | 80,431 | 29,718 | ||
Other liabilities | |||||
Convertible note payable, net of unamortized financing costs of $7,735 | 42,573 | 55,025 | |||
Total liabilities | 1,169,688 | 135,456 | 29,718 | ||
Total Stockholders' Equity (Deficit): | (99,479) | (78,896) | 49,468 | $ 17,511 | |
Total liabilities and stockholders' equity (deficiency) | $ 1,070,209 | 56,560 | $ 79,186 | ||
ESD [Member] | |||||
Current Assets: | |||||
Cash and cash equivalents | 270,394 | ||||
Accounts receivable | 345,058 | ||||
Prepaid expenses | 6,728 | ||||
Inventory | 234,705 | ||||
Total current assets | 856,885 | ||||
Property and equipment, net | 204,578 | ||||
Other assets | |||||
Total assets | 1,061,463 | ||||
Liabilities | |||||
Accounts payable and accrued expenses | 95,707 | ||||
Notes payable | 47,217 | ||||
Total current liabilities | 142,924 | ||||
Other liabilities | |||||
Total liabilities | 142,924 | ||||
Total Stockholders' Equity (Deficit): | 918,539 | ||||
Total liabilities and stockholders' equity (deficiency) | 1,061,463 | ||||
Pro forma adjustments [Member] | |||||
Current Assets: | |||||
Cash and cash equivalents | (270,394) | ||||
Accounts receivable | (345,058) | ||||
Prepaid expenses | (6,728) | ||||
Inventory | (234,705) | ||||
Total current assets | (856,885) | ||||
Property and equipment, net | (164,578) | ||||
Other assets | 375,000 | ||||
Total assets | (621,463) | ||||
Liabilities | |||||
Accounts payable and accrued expenses | (41,707) | ||||
Notes payable | 485,783 | ||||
Total current liabilities | 444,076 | ||||
Other liabilities | |||||
Total liabilities | 444,076 | ||||
Total Stockholders' Equity (Deficit): | (1,065,539) | ||||
Total liabilities and stockholders' equity (deficiency) | (621,463) | ||||
Pro forma combined [Member] | |||||
Current Assets: | |||||
Cash and cash equivalents | 27,241 | ||||
Accounts receivable | 1,692 | ||||
Prepaid expenses | 14,740 | ||||
Inventory | 12,887 | ||||
Total current assets | 56,560 | ||||
Property and equipment, net | 65,000 | ||||
Other assets | 375,000 | ||||
Total assets | 496,560 | ||||
Liabilities | |||||
Accounts payable and accrued expenses | 82,051 | ||||
Other current liabilities | 20,880 | ||||
Notes payable | 564,500 | ||||
Total current liabilities | 667,431 | ||||
Other liabilities | |||||
Convertible note payable, net of unamortized financing costs of $7,735 | 55,025 | ||||
Total liabilities | 722,456 | ||||
Total Stockholders' Equity (Deficit): | (225,896) | ||||
Total liabilities and stockholders' equity (deficiency) | $ 496,560 |
SUBSEQUENT EVENTS - Unaudited39
SUBSEQUENT EVENTS - Unaudited Pro Forma Condensed Combined Statement of Operations (Details) - USD ($) | 3 Months Ended | 12 Months Ended | 15 Months Ended | |||
Aug. 31, 2016 | Aug. 31, 2015 | May 31, 2016 | May 31, 2015 | Aug. 31, 2016 | Aug. 31, 2015 | |
Product sales, net | $ 649,411 | $ 129,871 | $ 193,734 | $ 214,502 | ||
Cost of goods sold | 501,257 | 127,501 | 215,997 | 240,017 | ||
Gross (loss) | 148,154 | 2,370 | (22,263) | (25,515) | ||
Total expenses | 723,754 | 26,832 | 342,506 | 184,258 | ||
Net Income/(loss) before other income and expenses | (575,600) | (24,462) | (364,769) | (209,773) | ||
Other income and (expenses) | (441,659) | (1,350) | (35,438) | (2,820) | ||
Net (loss) | (1,027,259) | $ (25,812) | (400,207) | $ (212,593) | $ (400,207) | $ (212,593) |
ESD [Member] | ||||||
Product sales, net | 884,526 | 2,775,113 | ||||
Cost of goods sold | 690,277 | 2,091,010 | ||||
Gross (loss) | 194,249 | 684,103 | ||||
Total expenses | 555,177 | |||||
Net Income/(loss) before other income and expenses | 37,654 | 128,926 | ||||
Other income and (expenses) | 59,664 | (1,225) | ||||
Net (loss) | (22,010) | 127,701 | ||||
Proforma Adjustments [Member] | ||||||
Product sales, net | ||||||
Cost of goods sold | ||||||
Gross (loss) | ||||||
Total expenses | 10,000 | |||||
Net Income/(loss) before other income and expenses | (10,000) | |||||
Other income and (expenses) | 147,000 | |||||
Net (loss) | 157,000 | |||||
ProForma Combined [Member] | ||||||
Product sales, net | 995,530 | 2,968,847 | ||||
Cost of goods sold | 771,366 | 2,307,007 | ||||
Gross (loss) | 224,164 | 661,840 | ||||
Total expenses | 907,683 | |||||
Net Income/(loss) before other income and expenses | (560,866) | (245,843) | ||||
Other income and (expenses) | 475,006 | (183,663) | ||||
Net (loss) | $ (1,035,872) | $ (429,506) |
SUBSEQUENT EVENTS (Details Narr
SUBSEQUENT EVENTS (Details Narrative 1) - USD ($) | 1 Months Ended | |
Jul. 31, 2016 | Jul. 05, 2016 | |
Credit line available | $ 7,500,000 | |
Credit line allocated for use | 1,600,000 | $ 650,000 |
Transaction Fee | 544,000 | |
Advisory Fee | $ 350,000 | |
Transaction precentage for fees | 2.00% | |
ESD [Member] | ||
Credit line allocated for use | 450,000 | |
GHS Secured Loan [Member] | ||
Credit line allocated for use | 32,534 | |
Vendors [Member] | ||
Credit line allocated for use | 74,466 | |
TCA Closing Fees [Member] | ||
Credit line allocated for use | $ 93,000 |
SUBSEQUENT EVENTS (Details Na41
SUBSEQUENT EVENTS (Details Narrative 2) - USD ($) | 1 Months Ended | 3 Months Ended | 12 Months Ended |
Jul. 31, 2016 | Aug. 31, 2016 | May 31, 2016 | |
Subsequent Events [Abstract] | |||
Total purchase price | $ 450,000 | $ 450,000 | |
Property, plant and equipment | 75,000 | 75,000 | |
Total intangible asset | $ 375,000 | 375,000 | |
Term loan issuance for purchase | $ 543,000 | ||
Interest rate | 12.00% | 12.00% |
SUBSEQUENT EVENTS (Details Na42
SUBSEQUENT EVENTS (Details Narrative 3) - USD ($) | 3 Months Ended | 12 Months Ended |
Aug. 31, 2016 | May 31, 2016 | |
Rent obligation | $ 750 | |
Employment agreement | $ 58,000 | |
ESD [Member] | ||
Rent obligation | $ 5,248 | |
Employment agreement | $ 58,000 |
SUBSEQUENT EVENTS (Details Na43
SUBSEQUENT EVENTS (Details Narrative 4) - Subsequent Event [Member] - USD ($) | 1 Months Ended | |
Oct. 17, 2016 | Sep. 30, 2016 | |
Purchase agreement | $ 440,000 | |
Maturity date of loan | Oct. 30, 2017 | |
Original issue discount | 10.00% | |
Interest rate | 5.00% | |
Issuance of common stock for repayment of note, shares | 69,404 | 1,100,000 |
Warrants to purchase | 400,000 | |
Warrant price | $ 0.85 | |
Issuance of stock for Services, shares | 682,500 | |
Proceeds from notes payable | $ 400,000 | |
Shares authoirzed | 8,000,000 |