UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 10-Q
  (Mark One)
 
x   QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 2013

OR

o   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                               to  ________________

Commission File Number: 333-59114

SNACKHEALTHY, INC.
 (Exact name of small business issuer as specified in charter)

Nevada
33-0730042
(State or other jurisdiction of
(I.R.S. Employer
incorporation or organization)
Identification No.)

620 Newport Center Drive Suite 1100
Newport Beach, CA
92660
(Address of principal executive offices)
(Zip Code)

(561) 935-6449
(Issuer's Telephone number, including area code)

Healthient, Inc., 15132 Park of Commerce Blvd. Jupiter, FL 33478
 (Former name, former address, and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports,), and (2) has been subject to such filing requirements for the past 90 days.      Yes  x     No  o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes  x      No  o

Indicate by check mark whether the registrant is a larger accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "larger accelerated filer" and "smaller or a smaller reporting company" in Rule 12b-2 of the Exchange Act.

Large accelerated Filer  o
Accelerated filer  o
Non-accelerated filer  o
Smaller reporting company x
(Do not check if a smaller reporting company)
 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act) Yes  o   No x
 
Indicate the number of shares of the registrant's common stock outstanding of each of the insurer's common stock, as of the latest practicable date. As of February 12, 2014, the registrant had outstanding 5,460,214 shares of common stock, $0.001 par value.

 
 
 

SNACKHEALTHY, INC.
(FORMERLY HEALTHIENT, INC.)
QUARTERLY REPORT ON FORM 10-Q
FOR THE PERIOD ENDED DECEMBER 31, 2013

TABLE OF CONTENTS

   
PAGE
PART I. FINANCIAL INFORMATION
1
Item 1. Financial Statements (Unaudited)
2
(a)    
Balance Sheets
2
(b)    
Statements of Operations
3
(c)    
Statement of Changes in Shareholders' Deficit
4
(d)    
Statements of Cash Flows
5
(e)    
Notes to Financial Statements
6
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
12
Item 3. Quantitative and Qualitative Disclosures about Market Risk
15
Item 4. Controls and Procedures
16
     
PART II. OTHER INFORMATION
16
Item 1. Legal Proceedings
16
Item 1A. Risk Factors
16
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
21
Item 3. Defaults On Senior Securities
21
Item 4. Mine Safety Disclosure
21
Item 5. Other Information
21
Item 6. Exhibits
21
     
Signatures
 
22
 
 
 
 

PART I
FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

The accompanying unaudited financial statements of SnackHealthy, Inc. (the "Company"), formerly known as Healthient, Inc., have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q.  Accordingly, these financial statements may not include all of the information and disclosures required by generally accepted accounting principles for complete financial statements. The interim financial statements should be read in conjunction with the annual financial statement for the year ended June 30, 2013 included in the amended Form 10-K filed on October 1, 2013.  In the opinion of management, the accompanying unaudited financial statements contain all adjustments necessary to fairly present the Company's financial position as of December 31, 2013 and its results of operations, changes in shareholders’ deficit and cash flows for the three and six months ended December 31, 2013 and 2012.

 
1
 

SnackHealthy, Inc.
(formerly Healthient, Inc.)
Balance Sheets
 
   
December31,
2013
(unaudited)
   
June30,
2013
(audited)
 
ASSETS
           
Current Assets
           
Cash
  $ 1,815     $ 1,815  
Inventory
    50,964       50,964  
Deposits and prepaid expenses
    11,226       11,226  
Total Current Assets
    64,005       64,005  
                 
Property and Equipment
               
Websites (net of amortization)
    7,390       37,576  
Office equipment (net of depreciation)
    12,233       13,723  
Total Fixed Assets
    19,623       51,299  
                 
Other Assets
               
Drink license (net of amortization)
    2,500       3,750  
                 
Total Assets
  $ 83,628     $ 115,304  
                 
 LIABILITIES AND STOCKHOLDERS'  DEFICIT
               
Current Liabilities
               
  Accounts payable
  $ 88,501     $ 105,020  
 Payroll taxes
    3,565       3,564  
 Sales tax liability
    29       39  
 Directors' fees
    -       180,000  
 Shareholder loans
    -       382,260  
Total Current Liabilities
    92,095       670,883  
                 
Commitments and Contingencies
               
Stockholders'  Deficit
               
Preferred stock, $0.001 Par value, 25,000,000 authorized: No shares issued
    -       -  
Common stock, $0.001 par value: 200,000,000 shares authorized, (after stock split of 50-1 on 10/01/2012 and stock split of 100-1 on 10/28/2013) there were 5,447,714 and 174,606 shares outstanding at December 31,2013 and June 30, 2013 respectively
    5,448       175  
Additional paid-in capital
    47,695,774       17,532,898  
Accumulated deficit
    (47,707,189 )     (18,084,902 )
Total Stockholders' Deficit
    (5,967 )     (551,829 )
                 
Total Liabilities and Stockholders' Deficit
  $ 86,128     $ 119,054  

The accompanying notes are an integral part of these financial statements.

 
 
2
 

Snackhealthy, Inc.
(formerly Healthient, Inc.)
Statement of Operations
(Unaudited)
   
For the three months ended December 31, 2013
   
For the three months ended December 31, 2012
   
For the six months ended December 31, 2013
   
For the six months ended December 31, 2012
 
Revenues
  $ -     $ 55,750     $ -     $ 153,439  
Cost of revenues
    -       38,620       -       83,711  
Gross profit
    -       17,130       -       69,728  
                                 
Operating  Expenses
                               
Selling expenses
    -       9,391       2,188       31,673  
General and administrative expenses
    130,130       32,450       192,303       263,235  
Loss on settlement of liabilities with equity
    27,387,797       -       29,427,796       -  
Total operating expenses
    27,517,927       41,841       29,622,287       294,908  
                                 
Operating loss
    (27,517,927 )     (24,711 )     (29,622,287 )     (225,180 )
                                 
Provision for income taxes
    -       -       -       -  
                                 
Net loss
  $ (27,517,927 )   $ (24,711 )   $ (29,622,287 )   $ (225,180 )
                                 
Net loss per share-Basic and Diluted
  $ (7.44 )   $ (0.04 )   $ (15.00 )   $ (0.42 )
                                 
Weighted average number of common shares outstanding: Basic and Diluted
    3,696,238       622,621       1,974,599       538,971  

The accompanying notes are an integral part of these financial statements.

 
 
3
 

SnackHealthy, Inc.
(formerly Healthient, Inc.)
Statement of Changes in Stockholders' Deficit
   
Common Shares
   
Additional
Paid-In Capital
   
Deficit
accumulated
   
Accumulated Equity
(Deficit)
 
   
Shares
   
Par Value 0.001
 
Balance June 30, 2012 - audited
    22,897     $ 23     $ 9,510,516     $ (11,447,097 )   $ (1,936,558 )
Common stock canceled (for services)
    (98 )     -       (54,136 )     -       (54,136 )
Common stock issued for services
    3,892       4       166,716       -       166,720  
Shares issued under settlement agreement
    143,840       144       7,562,356       -       7,562,500  
Share issued in settlement of convertible note
    4,075       4       347,446       -       347,450  
Net loss
    -       -       -       (6,637,805 )     (6,637,805 )
Balance June 30, 2013 - audited
    174,606     $ 175     $ 17,532,898     $ (18,084,902 )   $ (551,829 )
Common stock issued in settlement of liabilities
    5,262,822       5,263       30,098,386       -       30,103,649  
Common shares issued for services
    10,000       10       64,490       -       64,500  
Fractional shares issued (100 - 1 split)
    286       -       -       -       -  
Net loss
    -       -       -       (29,622,287 )   $ (29,622,287 )
Balance December 31, 3013 - unaudited
    5,447,714     $ 5,448     $ 47,695,774     $ (47,707,189 )   $ (5,967 )
                                         
As of October 1, 2012, the Company effected a reverse split of 50 for 1 that has been retroactively reflected at December 31, 2013.
As of October 28, 2013, the Company effected a reverse split of 100 for 1 that has been retroactively reflected at December 31, 2013.

The accompanying notes are an integral part of these financial statements.

 
 
4
 

SnackHealthy, Inc.
(formerly Healthient, Inc.)
Statements of Cash Flows
(Unaudited)
   
For the Six Months ended December 31, 2013
   
For the Six Months ended December 31, 2012
 
Cash Flows from Operating Activities
           
Net loss
  $ (29,622,287 )   $ (225,180 )
Depreciation
    1,490       1,756  
Amortization of websites and drink license
    31,436       31,416  
Loss on settlement of liabilities for equity
    29,427,796       -  
Shares issued for services
    64,500       77,584  
Changes in operating assets and liabilities
               
Decrease in inventory
    -       54,736  
Decrease in sales tax payable
    (10 )     (1,238 )
(Decrease) increase in accounts payable
    37,435       (15,695 )
Net Cash Used in Operations
    (59,640 )     (76,621 )
                 
Cash Flows from Investing Activities
               
  Furniture and office equipment
    -       (595 )
Net Cash Used in Investing Activities
    -       (595 )
                 
Cash Flows from Financing  Activities
               
    Bank overdraft
    -       (1,857 )
    Shareholder loans advanced
    59,640       79,073  
Net Cash Provided by Financing Activities
    59,640       77,216  
                 
Net Increase (decrease) in Cash
    -       -  
                 
Cash - Beginning of Period
    1,815       -  
                 
Cash - Ending of Period
  $ 1,815     $ -  
                 
Supplemental Disclosure of Non-Cash Activities:
               
Shares issued for services
  $ 64,500     $ 77,584  
Shares issued under settlement agreement
  $ -     $ 31,000  
Settlement of Directors' fees payable for shares
  $ 180,000     $ -  
Settlement of accounts payable for shares
  $ 53,853     $ -  
Settlement of shareholder loans for shares
  $ 442,900     $ -  
Income taxes paid
  $ -     $ -  
Interest paid
  $ -     $ -  
 
The accompanying notes are an integral part of these financial statements.

 
 
5
 
 
SNACKHEALTHY, INC.
(FORMERLY HEALTHIENT, INC.)
NOTES TO FINANCIAL STATEMENTS
FOR THE THREE AND SIX MONTHS ENDED DECEMBER 31, 2013 AND 2012
(UNAUDITED)
Note 1. Reorganization and Line of Business

On October 5, 2010 Time Associates ("the Company"), a Nevada corporation, acquired all of the issued and outstanding common stock of Healthient, Inc. ("Healthient"), a Nevada corporation organized April 29, 2009, in exchange for the issuance by the Company of a total of 43,618,356 newly issued restricted shares of common voting stock to the Healthient shareholders pursuant the Agreement and Plan of Reorganization dated as of September 23, 2010. Prior to the issuance of the shares, the Company had 160,078 shares of common stock issued and outstanding. Subsequent to the exchange there were 43,778,434 shares issued and outstanding. The shareholders of Healthient owned 99.6% of the common stock outstanding of the Company after the issuance of the 43,618,356 shares. On November 15, 2010 Time Associates, Inc. name was changed to Healthient, Inc.

The acquisition of Healthient by the Company on October 5, 2010 has been accounted for as a purchase and treated as a reverse acquisition and re-capitalization since the former owners of Healthient controlled 99.6% of the total shares of common stock of the Company outstanding immediately following the acquisition. In November 2010, Healthient, Inc. changed its name to SnackHealthy, Inc.

On October 4, 2013, the Company changed its name to "SnackHealthy, Inc." and dissolved its wholly-owned subsidiary SnackHealthy, Inc., a Nevada corporation.

On this basis, the historical financial statements prior to October 5, 2010 have been restated to be those of the accounting acquirer Healthient (now SnackHealthy, Inc.). The historical stockholders' equity prior to the reverse acquisition has been retroactively restated (a re-capitalization) for the equivalent number of shares received in the acquisition after giving effect to any difference in par value of the issuer's and acquirer's stock. The original 160,078 shares of common stock outstanding prior to the exchange reorganization have been reflected as an addition in the stockholders' equity account of the Company on October 5, 2010.

SnackHealthy, Inc. is a manufacturer and distributor of organic and all-natural healthy food products. The Company offers a portfolio of healthy foods and beverages that are organic, all-natural, low-calorie, and free from artificial sweeteners; created for consumption over several eating occasions daily. SnackHealthy’s export activities focus on the export of branded organic and natural food products with activities taking place mainly in Asia and a niche focus of providing safe, organic and all-natural dairy products to satisfy the growing demand  in this region. 
 
Note 2 Significant Accounting Policies

Cash and Cash Equivalents
The Company considers all highly liquid investments with an original maturity of three months or less as cash equivalents.
 
Reclassifications
Certain amounts previously presented for prior periods have been reclassified. The reclassifications had no effect on net loss, total assets, or shareholders' deficit.
 
Financial Instruments
The carrying value of the Company’s financial instruments, including cash and cash equivalents, accounts receivable, accounts payable, and due to related parties, as reported in the accompanying balance sheets, approximates fair value.
 
Long-Lived Assets
In accordance with ASC 350, the Company regularly reviews the carrying value of intangible and other long-lived assets for the existence of facts or circumstances, both internally and externally, that may suggest impairment. If impairment testing indicates a lack of recoverability, an impairment loss is recognized by the Company if the carrying amount of a long-lived asset exceeds its fair value.

 
6
 
 
SNACKHEALTHY, INC.
(FORMERLY HEALTHIENT, INC.)
NOTES TO FINANCIAL STATEMENTS
FOR THE THREE AND SIX MONTHS ENDED DECEMBER 31, 2013 AND 2012
(UNAUDITED)
Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities on the date of the financial statements and the reported amounts of revenues and expenses during the period. Actual results could differ from those estimates.

Revenue Recognition
Revenue is recognized when products are shipped, which is when title and risk of loss pass to the customer. The Company classifies selling discounts and rebates, if any, as a reduction of revenue.

Inventory
Inventory comprises packaged healthy snacks ready for final sale, and is stated at the lower of cost or market value. Cost is determined by the first-in, first-out method.

Property and Equipment
Property and equipment are stated at cost and depreciated on the straight line method over the estimated life of the asset, which is three to seven years.

Websites Development Cost
The Company has adopted the provisions of FASB Accounting Standards Codification No. 350 Intangible-Goodwill and Other. Costs incurred in the planning state of a websites are expensed, while costs incurred in the development stage are capitalized and amortized over the estimated three year life of the asset.

Other Assets
The drink license is being amortized over three years.

Income Taxes
The Company accounts for income taxes under FASB Codification Topic 740-10-25 (“ASC 740-10-25”) Income Taxes.  Under ASC 740-10-25, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases.  Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.  Under ASC 740-10-25, the effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.
 
Going Concern
The financial statements have been prepared assuming that the Company will continue as a going concern. The Company had a net loss of $29,622,287 during the six months ended December 31, 2013. Cash used in operations for the six months approximated $60,000. This raises substantial doubt about its ability to continue as a going concern. The ability of the Company to continue as a going concern is dependent on the Company’s ability to raise additional capital and implement its business plan.

Management believes that the actions presently being taken and the success of future operations will be sufficient to enable the Company to continue as a going concern.

However, there can be no assurance that the raising of equity will be successful. Failure to achieve the needed equity funding could have a material adverse effect on the Company’s ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 
7
 
 
SNACKHEALTHY, INC.
(FORMERLY HEALTHIENT, INC.)
NOTES TO FINANCIAL STATEMENTS
FOR THE THREE AND SIX MONTHS ENDED DECEMBER 31, 2013 AND 2012
(UNAUDITED)
Stock-Based Compensation
In December 2004, the FASB issued FASB Accounting Standards Codification No. 718, Compensation – Stock Compensation .  Under FASB Accounting Standards Codification No. 718, companies are required to measure the compensation costs of share-based compensation arrangements based on the grant-date fair value and recognize the costs in the financial statements over the period during which employees are required to provide services. Share-based compensation arrangements include stock options, restricted share plans, performance-based awards, share appreciation rights and employee share purchase plans.  As such, compensation cost is measured on the date of grant at their fair value.  Such compensation amounts, if any, are amortized over the respective vesting periods of the option grant.  The Company applies this statement prospectively.

Equity instruments (“instruments”) issued to other than employees are recorded on the basis of the fair value of the instruments, as required by FASB Accounting Standards Codification No. 718.  FASB Accounting Standards Codification No. 505, Equity Based Payments to Non-Employees defines the measurement date and recognition period for such instruments.  In general, the measurement date is when either a (a) performance commitment, as defined, is reached or (b) the earlier of (i) the non-employee performance is complete or (ii) the instruments are vested. The measured value related to the instruments is recognized over a period based on the facts and circumstances of each particular grant as defined in the FASB Accounting Standards Codification.

Basic and Diluted Net Loss per Common Share
Basic income (loss) per share is calculated by dividing the Company’s net loss applicable to common shareholders by the weighted average number of common shares during the period. Diluted earnings per share is calculated by dividing the Company’s net income available to common shareholders by the diluted weighted average number of shares outstanding during the year. The diluted weighted average number of shares outstanding is the basic weighted number of shares adjusted for any potentially dilutive debt or equity. No potentially dilutive debt or equity instruments were issued and outstanding during the three months and six months ended December 31, 2013 and 2012. At December 31, 2013 the Company had 4,716,000 common shares remaining to be issued in satisfaction of the settlement agreement. These shares have not been included in the number diluted shares because their effect would be anti-dilutive as the Company realized losses all periods presented in these financial statements..

Recent Accounting Pronouncements
The Company has reviewed all recently issued, but not yet effective, accounting pronouncements and does not believe the future adoption of any such pronouncements may be expected to cause a material impact on its financial condition or the results of its operations.

Note 3.  Property and Equipment
The Company started the construction of several websites, all of which have been completed and are being amortized over three years. Computers and furniture are being depreciated over three to seven years.

Property and equipment was as follows:

   
December 31, 2013
   
June 30, 2013
 
Website
  $ 181,008     $ 181,008  
Amortization
    173,618       43,432  
Net Book Value
    7,390       37,576  
                 
Computers and furniture
    22,165       22,165  
Depreciation
    9,932       8,442  
Net Book Value
  $ 12,233     $ 13,723  


 
8
 
 
SNACKHEALTHY, INC.
(FORMERLY HEALTHIENT, INC.)
NOTES TO FINANCIAL STATEMENTS
FOR THE THREE AND SIX MONTHS ENDED DECEMBER 31, 2013 AND 2012
(UNAUDITED)
Note 4 . Other Assets
   
December 31, 2013
   
June 30, 2013
 
License for drink
  $ 7,500     $ 7,500  
Amortization
    5,000       3,750  
Total
  $ 2,500     $ 3,750  
 
The Company’s license for drink is being amortized over three years.

Note 5. Commitments and Contingencies
Lease Commitments
The Company leases its office space. The Company has given up the lease of its office space in Jupiter, Florida. In January 2014, the leaseholder initiated a lawsuit seeking damages in the amount of $150,000 pursuant to the terms of the lease agreement with the lease term ending June 2016 (see Subsequent Events Note below).

The Company has acquired a new office lease for one year in Newport Beach, California at the rate of $1,439 per month.

Legal
In 2011 Siesta Flow LLC filed a legal action against the Company in the Twelfth Circuit Court of Sarasota County, Florida, alleging breach of contract and seeking damages in the amount of 92,000 plus costs. In April, 2012, the court has issued final summary judgment against the Company in the total amount of $95,500.  On April 27, 2012, the court issued an order to approve a settlement of the judgment issued against the Company.  According to the terms of the approved settlement, a third party and a non-party to the legal action against the Company, agreed to purchase the claim of Siesta Flow LLC. in the amount of $75,000 and additional claims against the Company from other parties, for a total amount of $95,500 in exchange for the issuance of 19,100,000 shares of common stock by the Company, subject to certain limitations on the issuance of such shares set forth in settlement. The Company has recorded the settlement agreement at the market price of the stock on the date of issuance.

During the year ended June 30, 2013, the Company issued 14,384,000 shares of common stock with a market value of $7,562,500 in payment of the settlement. $1,719,000 was in satisfaction of the settlement payable and $5,843,000 was recognized as a loss on the settlement of this liability, which was netted to $5,799,000 by forgiven amounts of $44,000. At December 31, 2013 there was a balance of 4,716,000 common shares remaining to be issued under the settlement agreement. Under the agreement, the shares can be drawn upon at any time, provided that the number of shares of common stock of the Company beneficially owned by the purchaser of the Siesta Flow LLC's claim does not exceed 9.99%.

Note 6 . Stockholders’ Deficit
The Company has authorized 200,000,000 shares of common stock with a par value of $0.001 and 25,000,000 shares of preferred stock with a par value of $0.001.

On October 1, 2012 and October 28, 2013, the Company effected respectively a 50 to 1 and a 100 to 1 reverse split of its common stock that has been reflected in the Stockholders’ Deficit.

During the six months ended December 31, 2013, the Company issued a total of 5,273,108 shares of common stock valued at $30,168,149 as follows:
 
   
Number of Shares
   
Market Value
 
Shares issued in settlement of shareholder loans
    2,231,596     $ 13,523,547  
Shares issued in settlement of accounts payable
    261,875       600,834  
Shares issued for independent contractor services
    10,000       64,500  
Shares issued in settlement of directors’ fees payable
    2,769,637       15,925,415  
Fractional shares issued (100:1 split)
    286       -  
Total
    5,273,108     $ 30,168,149  

 
9
 
 
SNACKHEALTHY, INC.
(FORMERLY HEALTHIENT, INC.)
NOTES TO FINANCIAL STATEMENTS
FOR THE THREE AND SIX MONTHS ENDED DECEMBER 31, 2013 AND 2012
(UNAUDITED)
The Company used market price on date of issuance as fair market value.

At December 31, 2013 the Company had a balance of 4,716,000 common shares remaining to be issued in satisfaction of the settlement agreement. Under the agreement, the shares can be drawn upon at any time, provided that the number of shares of common stock of the Company beneficially owned by the purchaser of the Siesta Flow LLC's claim does not exceed 9.99%.

Non-Employee Stock Options and Warrants
The Company accounts for non-employee stock options and warrants under ASC 718, whereby option and warrant costs are recorded based on the fair value of the consideration received or the fair value of the equity instruments issued, whichever is more reliably measurable. Unless otherwise provided for, the Company covers option and warrant exercises by issuing new shares.

There were no warrants or stock options outstanding during the three months and the six months ended December 31, 2013 or 2012. All warrants issued in prior periods expired without being exercised.
 
Note 7. Loans from Directors and Shareholders
During the six months ended December 31, 2013, directors’ fees payable of $180,000 and loans from shareholders in the amount of $441,900 were settled by the issuance of 2,769,637 and 2,231,596 shares of our common stock, respectively.

Consequently there were no director loans or shareholders loans outstanding at December 31, 2013.  
 
Note 8.  Income Taxes
The components of the deferred tax asset are as follows:
 
   
December 31, 2013
   
June 30, 2013
 
Deferred tax assets
           
Net operating loss carry-forward
  $ 9,600,000     $ 1,900,000  
Valuation allowance
    (9,600,000 )     (1,900,000 )
Net deferred tax assets
  $ -     $ -  
 
The Company had available approximately $48,000,000 at December 31, 2013 and $16,319,000 at June 30, 2013 of unused Federal and Florida net operating loss carry-forwards that may be applied against future taxable income. These net operating loss carry-forwards expire through 2033. There is no assurance that the Company will realize the benefit of the net operating loss carry-forwards.
 
ASC No. 740 requires a valuation allowance to be recorded when it is more likely than not that some or all of the deferred tax assets will not be realized.
 
Reconciliation of the differences between the statutory tax rate and the effective income tax rate is as follows at December 31, 2013 and June 30, 2013 respectively:
 
Statutory rate
35%
State taxes, net of Federal tax benefit
6%
Net operating loss carry-forward
(41)%
Federal effective tax rate
(-)%
 

 
10
 
 
SNACKHEALTHY, INC.
(FORMERLY HEALTHIENT, INC.)
NOTES TO FINANCIAL STATEMENTS
FOR THE THREE AND SIX MONTHS ENDED DECEMBER 31, 2013 AND 2012
(UNAUDITED)
Note 9. Subsequent Events
On January 3, 2014, A&M Acquisitions, LLC. filed a legal action against the Company, its former director and its current officer and director alleging a breach of lease of the Company's former executive offices in Jupiter, Florida, and seeking damages in the amount of $150,000 plus costs. The Company intends to vigorously defend itself against the claim and the defendants have not filed a response to the complaint at this time.

The Company evaluated subsequent events through the date these financial statements were issued on February 19, 2014. Other than as disclosed above, there have been no subsequent events after December 31, 2013 for which disclosure is required.

 
11
 

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

PRELIMINARY NOTE REGARDING FORWARD-LOOKING STATEMENTS:
ALL FORWARD-LOOKING STATEMENTS CONTAINED HEREIN ARE DEEMED BY THE COMPANY TO BE COVERED BY AND TO QUALIFY FOR THE SAFE HARBOR PROTECTION PROVIDED BY THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995. PROSPECTIVE SHAREHOLDERS SHOULD UNDERSTAND THAT SEVERAL FACTORS GOVERN WHETHER ANY FORWARD - LOOKING STATEMENT CONTAINED HEREIN WILL BE OR CAN BE ACHIEVED. ANY ONE OF THOSE FACTORS COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE PROJECTED HEREIN. THESE FORWARD-LOOKING STATEMENTS INCLUDE PLANS AND OBJECTIVES OF MANAGEMENT FOR FUTURE OPERATIONS, INCLUDING PLANS AND OBJECTIVES RELATING TO THE PRODUCTS AND THE FUTURE ECONOMIC PERFORMANCE OF THE COMPANY. ASSUMPTIONS RELATING TO THE FOREGOING INVOLVE JUDGMENTS WITH RESPECT TO, AMONG OTHER THINGS, FUTURE ECONOMIC, COMPETITIVE AND MARKET CONDITIONS, FUTURE BUSINESS DECISIONS, AND THE TIME AND MONEY REQUIRED TO SUCCESSFULLY COMPLETE DEVELOPMENT PROJECTS, ALL OF WHICH ARE DIFFICULT OR IMPOSSIBLE TO PREDICT ACCURATELY AND MANY OF WHICH ARE BEYOND THE CONTROL OF THE COMPANY.  ALTHOUGH THE COMPANY BELIEVES THAT THE ASSUMPTIONS UNDERLYING THE FORWARD-LOOKING STATEMENTS CONTAINED HEREIN ARE REASONABLE, ANY OF THOSE ASSUMPTIONS COULD PROVE INACCURATE AND, THEREFORE, THERE CAN BE NO ASSURANCE THAT THE RESULTS CONTEMPLATED IN ANY OF THE FORWARD-LOOKING STATEMENTS CONTAINED HEREIN WILL BE REALIZED.  BASED ON ACTUAL EXPERIENCE AND BUSINESS DEVELOPMENT, THE COMPANY MAY ALTER ITS MARKETING, CAPITAL EXPENDITURE PLANS OR OTHER BUDGETS, WHICH MAY IN TURN AFFECT THE COMPANY'S RESULTS OF OPERATIONS.  IN LIGHT OF THE SIGNIFICANT UNCERTAINTIES INHERENT IN THE FORWARD-LOOKING STATEMENTS INCLUDED HEREIN, THE INCLUSION OF ANY SUCH STATEMENT SHOULD NOT BE REGARDED AS A REPRESENTATION BY THE COMPANY OR ANY OTHER PERSON THAT THE OBJECTIVES OR PLANS OF THE COMPANY WILL BE ACHIEVED.

The following Management’s Discussion and Analysis should be read in conjunction with Management’s Discussion and Analysis included in our Annual Report on Form 10-K, as amended, for the year ended June 30, 2013 filed with the Securities and Exchange Commission (“SEC”), and our other filings, including Current Reports on Form 8-K, filed with the SEC through the date of this report.

COMPANY OVERVIEW
The Company began development of its snack food product line with the introduction of two products in the third quarter of fiscal year 2011; additional products launched in 2012. Initial sales and distribution of the products were generated through a network marketing model.

We are committed to providing delicious, healthy snacks and beverages that appeal to health conscious consumers. Our products are designed to appeal to the growing base of consumers seeking healthier alternatives and desiring a healthier lifestyle. We will continue this mission by introducing new products and by upgrading or reformulating existing product lines. Based upon factors such as the prevalence of obesity in America, we have created high quality products designed to help people achieve and maintain their healthy weight, control their appetite, and improve their health.

Our products are manufactured for us by third party manufacturing companies. We work closely with our vendors in an effort to achieve the highest quality standards and product availability. We continually strive to establish excellent relationships with our manufacturers and to obtain improvements in product quality and product delivery. Some of our key input materials such as whey proteins and packaging materials are subject to pricing fluctuations driven by commodities pricing. We are confident that we can offset potential cost increases of these materials with volume increases in our inventory purchases and, when necessary, by raising the prices of our products.

During 2013, our primary focus was on decreasing general and administrative costs associated with network marketing and improving sales and profit margins through pricing strategies and enhanced packaging and product configuration. We began to implement a strategic plan for future growth of our existing core brands through a new expanded distribution method. To accomplish this we began the process of winding down the network marketing sales in order to better position the Company to serve retailers and ultimately, the end consumer. We completed this project in the last quarter of fiscal 2013 to prepare the Company for mass retail distribution.

 
12
 

 
To more effectively facilitate the process of shifting to retail distribution, in November 2013, Richard Damion joined our Company as the acting chief executive officer. He was then approved by the Board of Directors as the Company's CEO in January, 2014.  Since the hiring of Mr. Damion, the Company has focused on the export of branded organic and natural food products mainly in Asia with a niche focus of providing safe, organic and all-natural dairy products to satisfy the growing demands of Asian consumers. In the first quarter of fiscal year 2014, the Company launched its organic, GMO-free line of gourmet pork sausage for exclusive import into China, Hong Kong, Taiwan and Singapore and the Asian roll out of its branded organic dairy products.

We will continue to explore opportunities with major retailers for the US and international distribution of our products which provides us the opportunity to expand revenues without a costly proportionate expansion of infrastructure, including support personnel and inventory purchase and management costs. While there can be no assurance, management believes that this strategy will ultimately prove successful.
 
RESULTS OF OPERATIONS
Our results of operations for the periods below are not necessarily indicative of results of operations for future periods, which depend on numerous factors, including our ability to distribute our products through major retailers in the US and abroad, open new markets, penetrate existing markets, and our ability to secure, develop and introduce new products.

Three Months Ended December 31, 2013 Compared to Three Months Ended December 31, 2012
and Six Months Ended December 31, 2013 Compared to Six Months Ended December 31, 2012

Revenue
The Company revised its sales method from network marketing sales through individual brand partners to direct to consumer and retail store sales at the end of its fiscal year June 30, 2013. As such, the Company had no revenues in the quarter ended December 31, 2013 as compared to the quarter ended December 31, 2012, during which the Company had revenues of $55,750.  The Company had no revenues during the six months period ended December 31, 2013 as compared to the six months period ended December 31, 2012, during which the Company had revenues of $153,439. The Company does expect to sell products in the next quarter under its revised sales policy.

Cost of Revenues
The Company's cost of revenues for the quarter ended December 31, 2013 was $0 as compared to $38,620 for the quarter ended December 31, 2012. The Company's cost of revenues for the six months period ended December 31, 2013 was $0 as compared to $83,711 for the six months period ended December 31, 2012.The Company recognized no cost of sales in the three and six months ended December 31, 2013 as it made no sales in these periods.

Gross Profit
The Company recognized no gross profit in the three and six months ended December 31, 2013 compared to gross profits of $17,130 and $69,728 respectively for the three and six months period ended December 31, 2012 due to the factors described above.

Selling Expenses
The Company did not incur any selling costs during the three months ended December 31, 2013. During the six months period ended December 31, 2013 the Company incurred $2,188 in transferring inventory from its Utah warehouse to Florida which has been classified as a selling expense. By comparison the Company incurred selling expenses of $9,391 and $31,673 respectively for the three and six month periods ended December 31, 2012 reflecting the increased sales activity in these periods.

 
13
 

General and Administrative Expenses
General and administrative expenses comprised the following for the six months ended December 31, 2013 and 2012.

   
Six months ended
December 31,
 
   
2013
   
2012
 
Salaries and wages
  $ 11,276     $ 30,097  
Independent Contractor
    70,500       135,793  
Professional Fees
    39,380       (44,627 )
Technology
    4,081       45,890  
Travel and entertainment
    3,188       9,878  
Office expenses
    4,331       19,834  
Utilities
    1,407       5,972  
Rent Expense
    25,214       19,384  
Amortization of Websitelicense
    31,436       31,416  
Depreciation Expense
    1,490       1,756  
Other
    -       7,843  
Total Expense
  $ 192,303     $ 263,235  

General and administrative expenses consist primarily of compensation and benefits to our general management, finance and administrative staff, professional advisor fees, audit fees and other expenses incurred in connection with general operations.  Our general and administrative expenses for the six months ended December 31, 2013 were $70,932 less than for the six months ended December 31, 2012 primarily due to reduced salary and independent contractor costs.

Loss on Settlement of Liabilities With Equity
During the six months ended December 31, 2013 we settled liabilities totaling $675,853 through the issuance of 5,272,822 shares of our common stock.

The liabilities settled for this issuance of shares of comprises common stock shareholder loans of $442,900, directors’ fees payable of $180,000 and accounts payable of $53,853.

The fair market value of the 5,272,822 shares issued, based on the market price on the date of issuance, was $30,103,649.

Consequently we recognized a non cash loss on the settlement of these liabilities of $29,427,796.
 
Provision for Income Taxes
No provision for income taxes was required as we incurred tax losses during all periods presented in these financial statements.

Net Loss
The net loss for the three and six months ended December 31, 2013 was $27,517,927 (2012 - $24,711) and $29,622,287 (2012 – $225,180) respectively due to the factors described above.
 
Liquidity and Capital Resources
Generally, our principal uses of cash includes operating expenses, particularly selling expenses, and working capital (principally inventory purchases), as well as capital expenditures and the development of operations in new markets.  The capital expenditures to date have been primarily related to the following:    

 
14
 

·  
purchases of computer systems and software and development costs;
·  
the build-out and upgrade of leasehold improvements in our corporate headquarters;
·  
the purchase of office furniture, phone systems and equipment;
·  
product inventory.

The Company anticipates it will need to raise additional funds during the next twelve months in order to sustain the growth of our business and has signed an investment banking agreement with a licensed broker dealer. Monies will be used primarily to build significant product inventory and cash reserves.

The Company plans to continue to raise funds through the sales of common stock and to obtain credit from vendors for the purchase of inventory.  The Company has a bank balance of $1,815 at December 31, 2013. The Company had a working capital deficit as follows:

Total current assets
  $ 64,005  
Total current liabilities
    92,095  
         
Negative working capital
  $ (28,090 )

Net Cash Used in Operating Activities
In the six months ended December 31, 2013, the Company used $59,640 for operating activities as compared to $76,621 for the six months ended December, 31, 2013.  Our cash flows from operating activities have been significantly impacted by the winding down of our network marketing sales in order to better position the Company to serve retailers and ultimately, the end consumer. We completed this project in the last quarter of fiscal 2013 to prepare the Company for mass retail distribution and anticipated future revenue growth.

Net Cash Provided By (Used In) Investing Activities
During the six months ended December 31, 2013, we neither used nor generated cash from investing activities. By comparison in the six months ended December 31, 2012 we used $595 in the purchase of furniture and office equipment.

Net Cash Provided by Financing Activities
In the six months ended December 31, 2013, net cash provided by financing activities was $59,640 as compared to $79,073 for the six months ended December 31, 2012. In both periods funds we provided to us as non-interest bearing loans from a shareholder.

Management believes that the actions presently being taken and the success of future operations will be sufficient to enable the Company to continue as a going concern.

However, there can be no assurance that the raising of equity will be successful. Failure to achieve the needed equity funding could have a material adverse effect on the Company’s ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
   
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.   

As a Smaller Reporting Company, as defined by Rule 12b-2 of the Exchange Act and in Item 10 (f) (1) of Regulation S-K, we are electing scaled disclosure reporting obligations and therefore are not required to provide the information  requested by this Item.

 
15
 

ITEM 4.  CONTROLS AND PROCEDURES.   
The Company has disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) promulgated under the Securities Exchange Act of 1934, as amended) to ensure that material information contained in its filings with the Securities and Exchange Commission is recorded, processed, summarized and reported on a timely and accurate basis. Based on such evaluation, the Company's principal executive officer and principal financial officer have concluded that the Company's disclosure controls and procedures are effective at ensuring that material information is recorded, processed, summarized and reported on a timely and accurate basis in the Company's filings with the Securities and Exchange Commission. Since such evaluation there have not been any significant changes in the Company's internal controls, or in other factors that could significantly affect these controls.

CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING
There have been no changes in our internal control over financial reporting during the last fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Our management, including the Chief Executive Officer and Chief Financial Officer, does not expect that our disclosure controls and procedures or our internal control over financial reporting will prevent all errors and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system is met. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the company have been detected.
 
PART II - OTHER INFORMATION
 
ITEM 1. LEGAL PROCEEDINGS
In 2011 Siesta Flow LLC filed a legal action against the Company in the Twelfth Circuit Court of Sarasota County, Florida, alleging breach of contract and seeking damages in the amount of 92,000 plus costs. In April, 2012, the court has issued final summary judgment against the Company in the total amount of $95,500.  On April 27, 2012, the court issued an order to approve a settlement of the judgment issued against the Company.  According to the terms of the approved settlement, a third party and a non-party to the legal action against the Company, agreed to purchase the claim of Siesta Flow LLC. in the amount of $75,000 and additional claims against the Company from other parties, for a total amount of $95,500 in exchange for the issuance of 19,100,000 shares of common stock by the Company, subject to certain limitations on the issuance of such shares set forth in settlement. The Company has recorded the settlement agreement at the market price of the stock on the date the settlement was approved by the court (see Note 5 Commitments and Contingencies to the financial statements).
 
On January 3, 2014, A&M Acquisitions, LLC., filed a legal action against the Company, its former director and its current officer and director alleging a breach of lease of the Company's former executive offices in Jupiter, Florida, and seeking damages in the amount of $150,000 plus costs (see Note 9 Subsequent Events to the financial statements).

ITEM 1A - RISK FACTORS
The worldwide financial and economic “crisis” could negatively impact our access to capital and the sales of our products and could harm our financial condition and operating results.
 
The current worldwide financial and economic “crisis” could potentially have a negative impact on us, our liquidity, our access to capital, our operations and our overall financial condition. While we have historically met our funding needs, no assurances can be given that the current overall downturn in the world economy will not significantly adversely impact us, and our business operations. We note economic and financial markets are fluid and we cannot ensure that there will not be in the near future a material adverse deterioration in our sales or liquidity.
 
 
16
 

 
Our failure to appropriately respond to changing consumer preferences and demand for new products or product enhancements could significantly harm our customer relationships and product sales and harm our financial condition and operating results.
 
Our business is subject to changing consumer trends and preferences, especially with respect to healthy products. Our continued success depends in part on our ability to anticipate and respond to these changes, and we may not respond in a timely or commercially appropriate manner to such changes.  Furthermore, the healthy snack food and nutritional supplement industries are characterized by rapid and frequent changes in demand for products and new product introductions and enhancements.
 
 Our failure to accurately predict these trends could negatively impact consumer opinion of our products, which in turn could harm our customer relationships and cause the loss of sales. The success of our new product offerings and enhancements depends upon a number of factors, including our ability to:
   
·  
accurately anticipate customer needs;
·  
innovate and develop new products or product enhancements that meet these needs;
·  
successfully commercialize new products or product enhancements in a timely manner;
·  
price our products competitively;
·  
manufacture and deliver our products in sufficient volumes and in a timely manner; and
·  
differentiate our product offerings from those of our competitors.
      
If we do not introduce new products or make enhancements to meet the changing needs of our customers in a timely manner, some of our products could be rendered obsolete, which could negatively impact our revenues, financial condition and operating results.
 
Due to the high level of competition in our industry, we might fail to retain our customers, which would harm our financial condition and operating results.
 
The business of marketing snack foods and nutrition products is highly competitive and sensitive to the introduction of new products or weight management plans, including various prescription drugs, which may rapidly capture a significant share of the market. These market segments include numerous manufacturers, marketers, retailers and physicians that actively compete for the business of consumers both in the United States and abroad.
 
In addition, we anticipate that we will be subject to increasing competition in the future from sellers that utilize electronic commerce. Some of these competitors have longer operating histories, significantly greater financial, technical, product development, marketing and sales resources, greater name recognition, larger established customer bases and better-developed distribution channels than we do.
 
Our present or future competitors may be able to develop products that are comparable or superior to those we offer, adapt more quickly than we do to new technologies, evolving industry trends and standards or customer requirements, or devote greater resources to the development, promotion and sale of their products than we do. Accordingly, we may not be able to compete effectively in our markets and competition may intensify.
 
Our competitors include both direct selling companies such as Brothers All Natural, Crispy Green, Annie’s Homegrown, as well natural and organic food manufactures and retail health food and grocery stores.

We are affected by extensive laws, governmental regulations; administrative determinations, court decisions and similar constraints, and our failure to comply with these constraints could lead to the imposition of significant penalties or claims, which could harm our financial condition and operating results.
 
The formulation, manufacturing, packaging, labeling, distribution, importation, exportation, licensing, sale and storage of our products are affected by extensive laws, governmental regulations, administrative determinations, court decisions and similar constraints. Such laws, regulations and other constraints may exist at the federal, state or local levels in the United States and at all levels of government in foreign jurisdictions.
 
 
17
 
 
 
There can be no assurance that we are in compliance with all of these regulations. Our failure to comply with these regulations or new regulations could lead to the imposition of significant penalties or claims and could negatively impact our business.
 
In addition, the adoption of new regulations or changes in the interpretations of existing regulations may result in significant compliance costs or discontinuation of product sales and may negatively impact the marketing of our products, resulting in significant loss of sales revenues.
 
Governmental regulations in countries where we plan to commence operations may prevent or delay entry into those markets. In addition, our ability to sustain satisfactory levels of sales in our markets is dependent in significant part on our ability to introduce additional products into such markets. However, governmental regulations, both domestic and international, can delay or prevent the introduction, or require the reformulation or withdrawal, of certain of our products.
 
On June 25, 2007, the FDA published its final rule for cGMPs affecting the manufacture, packing, and holding of dietary supplements. The final rule requires identity testing on all incoming dietary ingredients, but permits the use of certificates of analysis or other documentation to verify the reliability of the ingredient suppliers. On the same date the FDA also published an interim final rule that outlined a petition process for manufacturers to request an exemption to the cGMP requirement for 100 percent identity testing of specific dietary ingredients used in the processing of dietary supplements. Under the interim final rule the manufacturer may be exempted from the dietary ingredient testing requirement if it can provide sufficient documentation that the reduced frequency of testing requested would still ensure the identity of the dietary ingredient. The final rule includes a phased-in effective date based on the size of the manufacturer. These rules apply only to manufacturers and holders of finished products and not to ingredient suppliers unless the ingredient supplier is manufacturing a final dietary supplement.
  
If we fail to further penetrate existing markets or successfully expand our business into new markets, then the growth in sales of our products, along with our operating results, could be negatively impacted.
 
The success of our business is to a large extent contingent on our ability to continue to grow by entering new markets and further penetrating existing markets. Our ability to successfully expand our business into additional countries, to the extent we believe that we have identified attractive geographic expansion opportunities in the future, is subject to numerous factors, many of which are out of our control.
 
In addition, government regulations in both our domestic and international markets can delay or prevent the introduction, or require the reformulation or withdrawal, of some of our products, which could negatively impact our business, financial condition and results of operations.  While we anticipate significant growth in certain of our markets, we cannot assure you that such growth levels will continue in the immediate or long term future.
 
Furthermore, our efforts to support growth in such international markets could be hampered to the extent that our infrastructure in such markets is deficient when compared to our more developed markets, such as the U.S. Therefore, we cannot assure you that our general efforts to increase our market penetration in international markets will be successful. If we are unable to continue to expand into new markets or further penetrate existing markets, our operating results could suffer.
 
We depend on the integrity and reliability of our information technology infrastructure, and any related inadequacies may result in substantial interruptions to our business.
 
While we have invested in our information technology infrastructure, there can be no assurance that there will not be any significant interruptions to such systems or that the systems will be adequate to meet all of our future business needs.
 
Any such errors or inadequacies that we may encounter in the future may result in substantial interruptions to our services and may damage our relationships with our customers if the errors or inadequacies impair our ability to track sales.
 
Such errors may be expensive or difficult to correct in a timely manner, and we may have little or no control over whether any inadequacies in software or services supplied to us by third parties are corrected, if at all.
 
 
18
 
 
 
Since we rely on independent third parties for the manufacture and supply of certain of our products, if these third parties fail to reliably supply products to us at required levels of quality, then our financial condition and operating results would be harmed.
 
Our products are manufactured at third party contract manufacturers. We cannot assure that our outside manufacturers will continue to reliably supply products to us at the levels of quality, or the quantities, we require, especially under the FDA’s cGMP regulations. While we are not presently aware of any current liquidity issues with our suppliers, we cannot assure you that they will not experience financial hardship as a result of the current global financial crisis.
 
In the event any of our third-party manufacturers were to become unable or unwilling to continue to provide us with products in required volumes and at suitable quality levels, we would be required to identify and obtain acceptable replacement manufacturing sources. There is no assurance that we would be able to obtain alternative manufacturing sources on a timely basis.
 
An extended interruption in the supply of products would result in the loss of sales. In addition, any actual or perceived degradation of product quality as a result of reliance on third party manufacturers may have an adverse effect on sales or result in increased product returns and buybacks.
 
Also, as we experience ingredient and product price pressure in the areas of whey products, plastics, and transportation reflecting global economic trends, we believe that we will have the ability to mitigate some of these cost increases through improved optimization of our supply chain coupled with select increases in the retail prices of our products.
 
If we fail to protect our trademarks and trade names, then our ability to compete could be negatively affected, which would harm our financial condition and operating results.
 
The market for our products depends to a significant extent upon the goodwill associated with our trademark and trade names. We own the material trademark and trade name rights used in connection with the packaging, marketing and distribution of our products. Therefore, trademark and trade name protection is important to our business.
 
The loss or infringement of our trademarks or trade names could impair the goodwill associated with our brands and harm our reputation, which would harm our financial condition and operating results.
 
If our intellectual property is not adequate to provide us with a competitive advantage or to prevent competitors from replicating our products, or if we infringe the intellectual property rights of others, then our financial condition and operating results would be harmed.
 
Our future success and ability to compete depend upon our ability to timely produce innovative products and product enhancements that motivate our customers, some of which we will attempt to protect under a combination of copyright, trademark and trade secret laws, confidentiality procedures and contractual provisions.
 
However, our products are generally not patented and the legal protections afforded by common law and contractual proprietary rights in our products provide only limited protection and may be time- consuming and expensive to enforce and/or maintain.
 
Further, despite our efforts, we may be unable to prevent third parties from infringing upon or misappropriating our proprietary rights or from independently developing non- infringing products that are competitive with, equivalent to and/or superior to our products.
 
Monitoring infringement and/or misappropriation of intellectual property can be difficult and expensive, and we may not be able to detect any infringement or misappropriation of our proprietary rights. Even if we do detect infringement or misappropriation of our proprietary rights, litigation to enforce these rights could cause us to divert financial and other resources away from our business operations.
 
Additionally, third parties may claim that products we have independently developed infringe upon their intellectual property rights. There can be no assurance that one or more of our products will not be found to infringe upon other third party intellectual property rights in the future.
 
 
19
 
 
 
If any one of our products constituted a significant portion of our sales, significant decreases in consumer demand for this product or our failure to produce a suitable replacement should we cease offering it would harm our financial condition and operating results.
 
If consumer demand for this primary product decreased significantly or we ceased offering this product without a suitable replacement, then our financial condition and operating results would be harmed.
 
If we lose the services of members of our senior management team, then our financial condition and operating results could be harmed.
 
We depend on the continued services of senior management team including our Chairman and Executive Officer,  Katherine West and our Chief Executive Officer, Richard Damion as they work closely to create an environment of inspiration, motivation and entrepreneurial business success. Although we do not believe that any of the management team is planning to leave in the near term, we cannot assure you that they will remain with us. The loss or departure of any member of our senior management team could adversely impact our operating results.
 
If any of the senior management team does not remain with us, our business could suffer and could negatively impact our ability to implement our business strategy. Our continued success will be dependent on our ability to retain existing, and attract additional, qualified personnel to meet our needs. We currently do not maintain “key person” life insurance with respect to our senior management team.
 
We may incur material product liability claims, which could increase our costs and harm our financial condition and operating results.
 
Our products are classified as foods or dietary supplements and not subject to pre-market regulatory approval in the United States. Our products could contain contaminated substances, and some of our products contain some ingredients that do not have long histories of human consumption. Previously unknown adverse reactions resulting from human consumption of these ingredients could occur.
 
As a marketer of foods and dietary supplements that are ingested by consumers may be subjected to various product liability claims, including that the products contain contaminants, the products include inadequate instructions as to their uses, or the products include inadequate warnings concerning side effects and interactions with other substances.
 
It is possible that widespread product liability claims could increase our costs, and adversely affect our revenues and operating income. Moreover, liability claims arising from a serious adverse event may increase our costs through higher insurance premiums and deductibles, and may make it more difficult to secure adequate insurance coverage in the future. In addition, product liability insurance may fail to cover future product liability claims, thereby requiring us to pay substantial monetary damages and adversely affecting our business.
 
We are subject to, among other things, requirements regarding the effectiveness of internal controls over financial reporting. In connection with these requirements, we conduct regular audits of our business and operations. Our failure to identify or correct deficiencies and areas of weakness in the course of these audits could adversely affect our financial condition and operating results.
 
We are required to comply with various corporate governance and financial reporting requirements under the Sarbanes-Oxley Act of 2002, as well as new rules and regulations adopted by the SEC, and the Public Company Accounting Oversight Board. In particular, we are required to include management and auditor reports on the effectiveness of internal controls over financial reporting as part of our annual reports on Form 10-K, pursuant to Section 404 of the Sarbanes-Oxley Act.
 
We expect to spend significant amounts of time and money on compliance with these rules. Our failure to correct any noted weaknesses in internal controls over financial reporting could result in the disclosure of material weaknesses which could have a material adverse effect upon the market value of our stock.
 
 
20
 


On a regular and on-going basis, we will conduct audits of various aspects of our business and operations. These internal audits are conducted to insure compliance with our policies and to strengthen our operations and related internal controls. Our Board of Directors regularly reviews the results of these internal audits and, if appropriate, will suggest remedial measures and actions to correct noted deficiencies or strengthen areas of weakness.
 
There can be no assurance that these internal audits will uncover all material deficiencies or areas of weakness in our operations or internal controls. If left undetected and uncorrected, such deficiencies and weaknesses could have a material adverse effect on our financial condition and results of operations.
 
From time to time, the results of these internal audits may necessitate that we conduct further investigations into aspects of our business or operations. In addition, our business practices and operations may periodically be investigated by one or more of the governmental authorities with jurisdiction over our operations. In the event that these investigations produce unfavorable results, we may be subjected to fines, penalties or loss of licenses or permits needed to operate in certain jurisdictions, any one of which could have a material adverse effect on our financial condition or operating results.

ITEM 2 - UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
During the six months ended December 31, 2013, the Company issued a total of 5,001,233 shares of common stock valued at $29,448,962 in settlement of shareholder loans and in settlement of directors' fees payable as described in Note 6. Stockholders’ Deficit of the financial statements.

The shares of the Company's common stock were issued in reliance upon the exemption provided by Section 4(2) and Regulation D of the Securities Act of 1933.

ITEM 3 - DEFAULTS UPON SENIOR SECURITIES
Not applicable.

ITEM 4 - MINE SAFETY DISCLOSURE
Not applicable.
   
ITEM 5 - OTHER INFORMATION
None.
 
ITEM 6 - EXHIBITS

Exhibit No.
Description
Exhibit 31
CERTIFICATION OF CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT
Exhibit 32
CERTIFICATION OF CHIEF EXECUTIVE OFFICER AND CHIEF  FINANCIAL OFFICER PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT
101.INS
XBRL Instance Document
101.SCH
XBRL Schema Document
101.CAL
XBRL Calculation Linkbase Document
101.DEF
XBRL Definition Linkbase Document
101.LAB
XBRL Label Linkbase Document
101.PRE
XBRL Presentation Linkbase Document


 
21
 

SIGNATURES

Pursuant to the requirements of Section 12 of the Securities Exchange Act of 1934, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized.
 
Date:   February 19,  2014
SNACKHEALTHY, INC.
 
       
 
By:
/s/ Richard Damion
 
   
Richard Damion
 
   
Chief Executive Officer
 
       
 
By:
/s/ William Lindberg
 
   
William Lindberg
 
   
Chief Financial Officer
 
       
 
 
22
 
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