Soupman (SOUPQ) 10-Q 2016 Q3 Quarterly report

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

þQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended May 31, 2016

Or

¨TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _________to ________

Commission File Number:  000-53943

SOUPMAN, INC.

 (Exact name of registrant as specified in its charter)

Delaware	61-1638630
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

1110 South Avenue, Suite 100

Staten Island, New York 10314

 (Address of principal executive offices) (Zip Code)

(212) 768-7687

 (Registrant’s telephone number, including area code)

____________________________________________________________

 (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 þ     No ¨

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

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

Large accelerated filer	¨	Accelerated filer	¨
Non-accelerated filer	¨	Smaller reporting company	þ
(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 ¨    No þ

Number of shares of common stock outstanding as of July 14, 2016is 146,048,989.

PART I – FINANCIAL INFORMATION

ITEM 1.     Financial Statements

Soupman, Inc. and Subsidiaries

Consolidated Balance Sheets

	May 31, 2016			August 31, 2015
	(Unaudited)
Assets
Current Assets
Cash	$	40,037		$	611,354
Accounts receivable - net		300,728			180,766
Inventory		311,427			358,934
Prepaid expenses		27,363			47,506
Total Current Assets		679,555			1,198,560
Property and equipment  - net		5,220			8,438
Due from franchisees		57,501			16,273
Due from co-marketer		15,361			—
Intangible assets - net		—			1,577
Other		4,800			4,800
Total Other Assets		77,662			22,650
Total Assets	$	762,437		$	1,229,648
Liabilities and Stockholders' Deficit
Current Liabilities
Accounts payable and accrued liabilities	$	3,932,605		$	4,319,988
Accounts payable and accrued liabilities - related parties		190,978			196,709
Convertible debt - net of discount		361,597			1,296,597
Current portion of non convertible debt - net of discount		1,962,567			3,082,563
Deferred revenue		168,013			118,750
Derivative liabilities		28,051			239,748
Total Current Liabilities		6,643,811			9,254,355
Long Term Liabilities
Non convertible debt		1,417,400			—
Total Long Term Liabilities		1,417,400			—
Total Liabilities		8,061,211			9,254,355
Stockholders' Deficit
Series A convertible preferred stock, par value $0.001; 2,500,000 shares authorized,
878,639 and 881,360 issued and outstanding		879			882
Series B convertible preferred stock, par value $0.001; 45,000,000 shares authorized,
18,637,176 and 18,141,051 issued and outstanding		18,637			18,141
Series C convertible preferred stock, par value $0.001; 2,500,000 shares authorized,
1,725,000 and 0 issued and outstanding		1,725			—
Common stock, par value $0.001; 500,000,000 shares authorized
135,798,989 and 70,967,340 issued and outstanding		135,800			70,968
Additional paid in capital		21,543,493			17,410,385
Accumulated deficit		(28,339,443	)		(24,821,607	)
Total Stockholders' Deficit		(6,638,909	)		(7,321,231	)
Noncontrolling interest		(659,865	)		(703,476	)
Total Deficit		(7,298,774	)		(8,024,707	)
Total Liabilities and Stockholders' Deficit	$	762,437		$	1,229,648

See accompanying notes to the unaudited financial statements

1

Soupman, Inc. and Subsidiaries

Consolidated Statements of Operations

(Unaudited)

	Three Months Ended May 31,						Nine Months Ended May 31,
	2016			2015			2016			2015
Revenue
Soup sales - net	$	587,585		$	441,033			1,939,724		$	1,589,297
Franchise sales - net		—			—			206,250			—
Franchise royalties		41,100			46,139			136,510			130,826
Total revenue		628,685			487,172			2,282,484			1,720,123
Cost of sales		476,710			356,403			1,705,837			1,459,342
Gross profit		151,975			130,769			576,647			260,781
Operating expenses
General and administrative		1,286,621			590,133			2,984,253			1,484,439
Royalty		12,868			14,215			60,030			50,170
Total operating expenses		1,299,489			604,348			3,044,283			1,534,609
Loss from operations		(1,147,514	)		(473,579	)		(2,467,636	)		(1,273,828	)
Other income (expense)
Interest expense		(103,057	)		(113,378	)		(227,753	)		(541,526	)
Loss on stock issuance		(12,313	)		—			(12,313	)		—
Gain (loss) on settlement of accounts payable - net		—			188,769			61,808			188,769
Gain (loss) on settlement of debt		(157,985	)		—			(385,115	)		26,791
Change in fair value of derivative liabilities		32,336			141,125			211,697			452,389
Loss on debt extinguishment		—			—			(654,913	)		—
Total other income (expense)		(241,019	)		216,516			(1,006,589	)		126,423
Net income (loss) including non controlling interest		(1,388,533	)		(257,063	)		(3,474,225	)		(1,147,405	)
Net income attributable to noncontrolling interest		(11,820	)		10,421			43,611			19,530
Net income (loss) attributable to Soupman		(1,376,713	)		(267,484	)		(3,517,836	)		(1,166,935	)
Deemed dividend on preferred stock		—			—			(3,280,151	)		—
Net income (loss) attributable to common stockholders	$	(1,376,713	)	$	(267,484	)	$	(6,797,987	)	$	(1,166,935	)
Net income (loss) per share, basic	$	(0.01	)	$	(0.00	)	$	(0.08	)	$	(0.02	)
Net income (loss) per share, diluted	$	(0.01	)	$	(0.00	)	$	(0.08	)	$	(0.02	)
Weighted average shares outstanding, basic		108,726,700			66,686,471			85,457,177			59,523,944

See accompanying notes to the unaudited financial statements

2

Consolidated Statement of Stockholders 'Deficit

Nine Months Ended May 31, 2016

(Unaudited)

	Preferred Series A						Preferred Series B						Preferred Series C				Common Stock				Additional									Total
	$0.001 Par Value						$0.001 Par Value						$0.001 Par Value				$0.001 Par Value				Paid-in			Accumulated			Noncontrolling			Stockholders'
	Shares			Amount			Shares			Amount			Shares		Amount		Shares		Amount		Capital			Deficit			Interest			Deficit
Balance, August 31, 2015		881,360		$	882			18,141,051		$	18,141			—	$	—		70,967,340	$	70,968	$	17,410,385		$	(24,821,607	)	$	(703,476	)	$	(8,024,707	)
Stock based compensation		—			—			—			—			—		—		4,393,501		4,393		332,920			—			—			337,313
Issuance of common stock for services rendered		—			—			—			—			—		—		8,130,523		8,131		464,054			—			—			472,185
Issuance of common stock for debt and accrued interest ($0.40 /share)		—			—			—			—			—		—		12,898,654		12,899		433,047			—			—			445,946
Issuance of common stock for cash ($0.04 /share)		—			—			—			—			—		—		1,031,250		1,031		52,532			—			—			53,563
Excess of fair market value of common stock over share issuance price to settle debt		—			—			—			—			—		—		—		—		520,163			—			—			520,163
Issuance of additional common stock for inducement to settle debt		—			—			—			—			—		—		2,250,000		2,250		154,375			—			—			156,625
Issuance of Series B preferred stock for services rendered ($0.50 /share)		—			—			59,625			60			—		—		—		—		29,753			—			—			29,813
Issuance of Series B preferred stock for debt and accrued interest ($0.40 /share)		—			—			2,750,000			2,750			—		—		—		—		1,097,250			—			—			1,100,000
Excess of fair market value of Series B stock over share issuance price to settle debt		—			—			—			—			—		—		—		—		134,750			—			—			134,750
Issuance of Series B preferred stock for cash ($0.20 /share)		—			—			4,749,000			4,749			—		—		—		—		945,051			—			—			949,800
Conversion of Series A preferred stock to common stock		(2,721	)		(3	)		—			—			—		—		2,721		3		—			—			—			—
Conversion of Series B preferred stock to Series C preferred stock		—			—			(3,450,000	)		(3,450	)		1,725,000		1,725		—		—		1,725			—			—			—
Conversion of Series B preferred stock to common stock		—			—			(3,612,500	)		(3,613	)		—		—		36,125,000		36,125		(32,512	)					—			—
Discount due to beneficial conversion feature		—			—			—			—			—		—		—		—		(3,280,151	)		—			—			(3,280,151	)
Accretion of beneficial conversion feature		—			—			—			—			—		—		—		—		3,280,151			—			—			3,280,151
Net loss		—			—			—			—			—		—		—		—		—			(3,517,836	)		43,611			(3,474,225	)
Balance, May 31, 2016		878,639		$	879			18,637,176		$	18,637			1,725,000	$	1,725		135,798,989	$	135,800	$	21,543,493		$	(28,339,443	)	$	(659,865	)	$	(7,298,774	)

See accompanying notes to the unaudited financial statements

3

Soupman, Inc. and Subsidiaries

Consolidated Statements of Cash Flows

(Unaudited)

	Nine Months Ended May 31,
	2016			2015
Cash Flows From Operating Activities:
Net loss	$	(3,474,225	)	$	(1,147,405	)
Adjustments to reconcile net loss to net cash used in operating activities
Depreciation		3,218			4,408
Amortization of intangibles		1,577			8,018
Amortization of debt discount		—			538,695
Bad debt expense		1,196			—
Stock based compensation		337,313			45,304
Stock issued for services		501,998			353,614
Debt issue costs		—			22,096
Excess of fair market value of common stock over share issuance price to settle debt		520,163			—
Excess of fair market value of Series B stock over share issuance price to settle debt		134,750			—
Change in fair market value of derivative liabilities		(211,697	)		(452,389	)
Gain on settlement of accounts payable		(61,808	)		(188,769	)
Common stock issued for inducement to settle debt		156,625			—
Loss (gain) on settlement of debt		228,490			(26,791	)
Due from co-marketer		(15,361	)		—
Changes in operating assets and liabilities:
(Increase) decrease in:
Accounts receivable - net		(121,158	)		(90,127	)
Accounts receivable - related party		—			(29,763	)
Inventory		47,507			209,122
Prepaid expenses		20,143			23,528
Other assets		—			4,892
Accounts payable and accrued liabilities		518,881			(95,086	)
Accounts payable and accrued liabilities - related parties		(5,731	)		(178,958	)
Deferred franchising revenue		49,263			(4,000	)
Net Cash used in Operating Activities		(1,368,856	)		(1,003,611	)
Cash Flows From Investing Activities:
Due from franchisee		(41,228	)		(15,978	)
Net Cash Used in Investing Activities		(41,228	)		(15,978	)
Cash Flows From Financing Activities:
Proceeds from issuance of notes		70,000			383,500
Proceeds from issuance of common stock for cash		53,563			—
Proceeds from issuance of Series B preferred stock for cash		949,800			1,426,159
Repayment of debt and accrued interest in cash		(234,596	)		(798,577	)
Net Cash Provided by Financing Activities		838,767			1,011,082
Net decrease in cash		(571,317	)		(8,507	)
		—			—
Cash at beginning of year		611,354			14,179
Cash at end of period	$	40,037		$	5,672

(Continued)

See accompanying notes to the unaudited financial statements

4

Soupman, Inc. and Subsidiaries

Consolidated Statements of Cash Flows (Continued)

(Unaudited)

	Nine Months Ended May 31,
	2016		2015
Supplemental disclosures of cash flow information:
Cash paid for interest	$	—	$	4,000
Cash paid for taxes	$	—	$	—
Supplemental disclosures of non-cash investing and financing activities:
Debt converted to Series B preferred stock	$	1,100,000	$	—
Reclassification of short term debt to long term debt	$	1,417,400	$	—
Reclassification of accrued interest to debt	$	712,898	$	—
Debt and accrued interest converted to common stock	$	445,946	$	83,973
Reclassification of accrued commissions to debt	$	12,500	$	—
Reclassification of derivatives from equity to liabilities	$	—	$	106,007
Conversion of Series B preferred stock to common stock	$	36,125	$	—
Conversion of Series B preferred stock Series C preferred stock	$	1,725	$	—
Conversion of Series A preferred stock to common stock	$	3	$	—
Stock issued for prior year employee payroll and expenses	$	—	$	404,866
Debt discount recorded on derivatives	$	—	$	309,404

See accompanying notes to the unaudited financial statements

5

Soupman, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

May 31, 2016

(Unaudited)

Note 1 - Significant Accounting Policies and Basis of Presentation

Basis of Presentation

The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America,  the rules and regulations of the United States Securities and Exchange Commission for interim financial reporting  the instructions to Form 10-Q,  and Article 8-03 of Regulation S-X. Accordingly, they may not include all the information and footnotes necessary for a comprehensive presentation of financial position, results of operations or cash flows. It is management's opinion, however, that all material adjustments (consisting of normal recurring adjustments) have been made which are necessary for a fair financial statement presentation. The results for the interim period are not necessarily indicative of the results to be expected for the full year.

The unaudited interim consolidated financial statements should be read in conjunction with the Company’s Annual Report filed on Form 10-K for the year ended August 31, 2015, which contains the audited financial statements and notes thereto, together with Management’s Discussion and Analysis of Financial Condition and Results of Operation, for the year ended August 31, 2015. The interim results for the period ended May 31, 2016 are not necessarily indicative of results for the full fiscal year.

Fair Value of Financial Instruments

The Company measures assets and liabilities at fair value based on an expected exit price as defined by the authoritative guidance on fair value measurements, which represents the amount that would be received on the sale of an asset or paid to transfer a liability, as the case may be, in an orderly transaction between market participants. As such, fair value may be based on assumptions that market participants would use in pricing an asset or liability. The authoritative guidance on fair value measurements establishes a consistent framework for measuring fair value on either a recurring or nonrecurring basis whereby inputs, used in valuation techniques, are assigned a hierarchical level.

The following are the hierarchical levels of inputs to measure fair value:

· Level 1 – Observable inputs that reflect quoted market prices in active markets for identical assets or liabilities.

· Level 2 - Inputs reflect quoted prices for identical assets or liabilities in markets that are not active; quoted prices for similar assets or liabilities in active markets; inputs other than quoted prices that are observable for the assets or liabilities; or inputs that are derived principally from or corroborated by observable market data by correlation or other means.

· Level 3 – Unobservable inputs reflecting the Company’s assumptions incorporated in valuation techniques used to determine fair value. These assumptions are required to be consistent with market participant assumptions that are reasonably available.

	May 31, 2016		August 31, 2015
Derivative liabilities (balance)	$	28,051	$	239,748

The Level 3 valuation relates to derivative liabilities measured using management's estimates of fair value as well as other significant inputs, such as volatility and risk free interest rate, which may be unobservable. See Note 3.

The Company has determined the estimated fair value amounts presented in these financial statements using available market information and appropriate methodologies. However, considerable judgment is required in interpreting market data to develop the estimates of fair value. The estimates presented in the financial statements are not necessarily indicative of the amounts that could be realized in a current market exchange. The use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value amounts.

Fair value estimates are based upon pertinent information available. The Company has determined that the carrying value of all financial instruments approximates fair value. The Company's financial instruments consist primarily of accounts receivable, inventory, prepaid expenses, accounts payable including accrued liabilities and debt. The carrying amounts of the Company's financial instruments generally approximated their fair values at May 31, 2016 and August 31, 2015, respectively.

6

Soupman, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

May 31, 2016

(Unaudited)

Note 2 - Debt

Debt consists of the following at May 31, 2016 and August 31, 2015:

Description	May 31, 2016		August 31, 2015
A. Unsecured convertible debt – derivative liabilities	$	87,500	$	1,296,597
Less : debt discount		—		—
Convertible debt – net		87,500		1,296,597
B. Unsecured convertible debt – non-derivatives		274,097		—
Less : debt discount		—		—
Convertible debt – net		274,097		—
C. Unsecured demand/term debt		1,239,967		382,563
D. Secured debt		2,140,000		2,700,000
Total debt	$	3,741,564	$	4,379,160

Debt in default consists of secured and unsecured notes totaling approximately $1.6 million and $2.6 million at May 31, 2016 and August 31, 2015, respectively.

The corresponding debts above are more fully discussed below:

(A)

Unsecured Convertible Debt – Derivative Liabilities

Description	May 31, 2016			August 31, 2015
Carry forward balance	$	1,296,597		$	1,533,154
Borrowings		—			300,000
Repayment of derivative debt		—			(32,692	)
Conversion of derivative debt to common stock		(305,000	)		(790,712	)
Reclassification of convertible debt to demand debt		(630,000	)		-
Reclassification of derivative debt back to convertible debt (tainting removed)		(274,097	)		286,847
Ending balance	$	87,500		$	1,296,597

A summation of derivative debt issued during the nine months ended May 31, 2016 and the year ended August 31, 2015, respectively, are set out below:

Description	Information	May 31, 2016	August 31, 2015
Interest Rate				10%
Maturity Date(s)			Oct. 6, 2016
Series 10	10% per annum interest; convertible on demand at $0.04			300,000

During the nine months ended May 31, 2016, the Company recorded a gain on the settlement of derivative debt of $48,653, which is included in “Gain (loss) on the settlement of debt” on the Company’s consolidated statement of operations.

The Company also incurred a loss on the conversion of debt to stock equal to the difference in the stock issuance price ($0.04) per share and the actual fair market value, or $520,163, which is included in “Loss on debt extinguishment” on the Company’s consolidated statement of operations.

7

Soupman, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

May 31, 2016

(Unaudited)

Total derivative debt at May 31, 2016 and August 31, 2015 consists of the following.

Description	Information	May 31, 2016		August 31, 2015
Series 2	Convertible at $1.00 per share	$	75,000	$	120,000
Series 3	Convertible at $0.75 per share		12,500		72,500
Series 4	Convertible at $0.75 per share		—		724,097
Series 7	Convertible at $0.60 per share		—		280,000
Series 8	Convertible at $0.40 per share		—		100,000
Total		$	87,500	$	1,296,597

(B)

Unsecured Convertible Debt – Non-derivatives

Description	May 31, 2016			August 31, 2015
Carry forward balance	$	—		$	1,378,207
Borrowings		70,000			83,500
Repayment of convertible debt		—			(631,819	)
Conversion of convertible debt to common stock		(70,000	)		(844,250	)
Gain on debt settlement		—			(48,791	)
Reclassification of derivative debt back to convertible debt (tainting removed)		274,097			63,153
Ending balance	$	274,097		$	—

A summation of unsecured convertible non-derivative debt issued during the nine months ended May 31, 2016 and the year ended August 31, 2015, respectively, are set out below:

Description	Information	May 31, 2016		August 31, 2015
Interest rate					8%
Default interest rate					N/A
Term				9 months
Maturity				Sep. 5, 2015 to June 9, 2015
Series 5 debt	Zero percent (0%) interest if repaid within 3 months; Convertible at the lesser of $0.47 or 65% of the lowest trade price in the then prior 25 days, but only after 180 days from the loan date		—		—
Series 7 debt	1-year, 12% interest, fixed conversion at $0.60		—		—
Series 8 debt	24 month, 8% interest, fixed conversion at $0.40		—		—
Series 9 debt	9 month, 8% interest, convertible after 180 days at $0.02 per share.	$	—	$	83,500

8

Soupman, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

May 31, 2016

(Unaudited)

(C)

Unsecured Demand/Term Debt

Unsecured demand notes consist of the following at May 31, 2016 and August 31, 2015:

Description	May 31, 2016			August 31, 2015
Carry forward balance	$	382,563		$	833,192
Borrowings		—			100,000
Repayments		(74,596	)		(150,629	)
Additional debt brought about in debt settlement		121,360			—
Accrued interest reclassed to note principal		268,140			—
Conversion into master license agreement		(100,000	)		—
Conversion of demand debt to common stock		—			(50,000	)
Rollup of accrued commissions to term debt		12,500			—
Reclassification of derivative debt back to convertible debt (tainting removed)		630,000			—
Reclassification to derivative debt due to tainting		—			(350,000	)
Ending balance	$	1,239,967		$	382,563

Unsecured demand notes consisted of the following at May 31, 2016 and August 31, 2015:

Information	Maturity	May 31, 2016		August 31, 2015
Represents current unsecured demand debt	Nov. 6, 2015 – April 1, 2020	$	1,209,550	$	335,063
Represents an advance from a third party	Due on demand		10,000		10,000
The Company settled litigation in this matter during the period; see Note 5.	Settled		20,417		37,500
Total		$	1,239,967	$	382,563

On November 16, 2015, the Company entered into a Master License Agreement (“MLA”) with The Grilled Cheese Truck, Inc., a Nevada corporation (“GCT”). As part of the agreement, GCT considered its $100,000 note with the Company as paid in full, and the Company agreed to apply the $100,000 towards the MLA. Since then, the Company had received $200,000 towards the MLA; however, in March 2016, the Company notified GCT that is was in breach of the agreement (for non-payment) and terminated the agreement. No monies are due GCT.

During the nine months ended May 31, 2016, the Company settled a debt dispute with GSM for $50,000 plus 1,500,000 shares of common stock, having a fair value of $120,000, based upon the quoted closing price of the Company’s common stock on the date of the settlement. The Company recorded a loss of $120,000 in connection with the settlement, which is included in “Gain (loss) on settlement of debt” on the Company’s consolidated statement of operations. The Company also recorded areduction of accrued commissions of $9,474, which is included in the gain on settlement of AP of $61,808 on the statement of cash flow.

During the nine months ended May 31, 2016, the Company settled a debt dispute with a debt holder, incurring a loss of $121,360 in connection with the settlement, which is included in “Gain (loss) on settlement of debt” on the Company’s statement of operations. All previously accrued interest was reclassed to debt and a new note with interest at 12% was executed. Because the agreement calls for payment of the remaining $1,011,200 up to April 1, 2020, the Company recorded $293,800 as short-term debt and the remaining $935,600 as long-term debt.

9

Soupman, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

May 31, 2016

(Unaudited)

(D)

Secured Debt

Description	May 31, 2016			August 31, 2015
Carry forward balance	$	2,700,000		$	2,700,000
Additional debt brought about in debt settlement		155,242			—
Repayment of debt		(60,000	)		—
Conversion of secured debt to Series B preferred stock		(1,100,000	)		—
Reclassification of accrued interest to debt		444,758			—
Ending balance	$	2,140,000		$	2,700,000

During the nine months ended May 31, 2016, the Company settled a debt dispute with Penny Hart (“Hart”), incurring a loss of $155,242 in connection with the settlement, which is included in “Gain (loss) on settlement of debt” on the Company’s statement of operations. As part of the settlement, Hart agreed to convert $1,100,000 of the total $2,100,000 debt into shares of the Company’s Preferred Series B stock at $0.04 per share; the Company incurred a loss on the conversion of $134,750, which is included in “Loss on Debt Extinguishment” on the Company’s statement of operations. All previously accrued interest was reclassed to debt and a new note with interest at 5% was executed. Because the agreement calls for payment of the remaining $940,000 over 3 years, the Company recorded $240,000 as short-term debt and the remaining $700,000 as long-term debt.

Secured debt consisted of the following activity and terms for the nine months ended May 31, 2016 and the year ended August 31, 2015, respectively:

Information	May 31, 2016		August 31, 2015
Interest Rate		5.00%		12.75%
Maturity	November 9, 2018		Aug. 8, 2015
Secured by all the assets of OSM	$	2,140,000	$	2,700,000

(E)

Debt discount

	May 31, 2016		August 31, 2015
Total outstanding debt	$	3,741,564	$	4,379,160
Carry forward debt discount – net		—		(335,318	)
Debt discount		—		(316,102	)
Amortization of debt discount		—		621,009
Reclassification of debt discount		—		30,411
Debt – net	$	3,741,564	$	4,379,160

The Company records debt discount relating to its derivative debt to the extent of gross proceeds raised in its debt financing transactions, and immediately expenses the remaining value of the derivative if it exceeded the gross proceeds of the note. No derivative expenses were incurred during the nine months ended May 31, 2016.

10

Soupman, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

May 31, 2016

(Unaudited)

Note 3 - Derivative Liabilities

The Company identified conversion features embedded within convertible debt and/or warrants issued during the nine months ended May 31, 2016 and the year ended August 31, 2015, respectively, (see Note 2(A)).

The fair value of the Company’s derivative liabilities at May 31, 2016 and August 31, 2015 is as follows.

	May 31, 2016			August 31, 2015
Carry forward balance	$	239,748		$	180,418
Fair value at the commitment date for convertible debt		—			880,552
Loss on debt extinguishment		—			198,132
Fair value mark-to-market adjustment		(211,697	)		(817,223	)
Reclassification of derivative associated with convertible debt that was settled		—			(202,131	)
Derivative liabilities (balance)	$	28,051		$	239,748

The fair value at the commitment and re-measurement dates for convertible debt and warrants that are treated as derivative liabilities were based upon the following management assumptions for the nine months ended May 31, 2016:

	Commitment Date		Re-measurement Date
Exercise price	N/A		$0.35 - 1.00
Expected dividends		N/A		0	%
Expected volatility		N/A		132%-237	%
Expected term: convertible debt and warrants	N/A		3 days to 3 months
Risk free interest rate		N/A		0.11% - 0.33	%

Note 4 - Stockholders’ Deficit

(A)

Series A – Convertible Preferred Stock

Series A convertible preferred stock consists of the following activity for the nine months ended May 31, 2016:

Balance – August 31, 2015	881,360
Conversion to common stock	(2,721	)
Balance – May 31, 2016	878,639

No gain or loss was recorded in the conversion of preferred to common stock.

(B)

Series B – Convertible Preferred Stock

Series B convertible preferred stock consists of the following activity for the nine months ended May 31, 2016:

				Range of value
Type	Shares			per share
Balance – August 31, 2015		18,141,051
Shares issued for cash		4,749,000		$0.20
Shares issued for debt conversion		2,750,000		$0.40
Shares issued for services rendered		59,625		$0.50
Conversion of preferred Series B to Series C		(3,450,000	)	—
Conversion of preferred Series B to common stock		(3,612,500	)	—
Balance – May 31, 2016		18,637,176

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Soupman, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

May 31, 2016

(Unaudited)

During the nine months ended May 31, 2016, the Company converted shares of its Series B preferred stock to shares of its Series C preferred stock at a conversion factor of 2:1. The difference in par value was recorded to APIC.

During the nine months ended May 31, 2016, the Company converted shares of its Series B preferred stock to shares of its common stock at a conversion factor of 1:10.

Prior to February 24, 2016, the effective conversion rate of the Company’s Series B preferred shares was less than the market price of the underlying common stock when issued but the Company lacked available common shares to allow Series B shareholders to convert their shares into common shares. These factors created a contingent beneficial conversion feature (“BCF”), which is shown on the Company’s statement of operations for the nine months ended as a deemed dividend of $3,280,151 (not an actual dividend), which affects EPS only.

At August 31, 2015 the company had a deemed dividend of $2,252,351.

(C)

Series C – Convertible Preferred Stock

Series C convertible preferred stock consists of the following activity for the nine months ended May 31, 2016:

Type	Shares		Fair value
Balance – August 31, 2015		—	$	—
Conversion of preferred Series B to Series C		1,725,000		—
Balance – May 31, 2016		1,725,000	$	—

There was no BCF on the conversion of Series B to Series C shares.

(D)

Common Stock

For the nine months ended May 31, 2016, the Company issued the following shares of common stock:

Type	Shares		Fair value		Range of value per share
1. Stock issued for compensation		4,393,501	$	337,313(1)	$0.0587 - $0.0880
2. Stock issued for services		8,130,523	$	472,185(1)	$0.0516 - $0.0938
3. Stock issued as an inducement to settle debt (see Note 2.)		2,250,000	$	156,625	$0.02 - $0.0475
4. Stock issued for debt and accrued interest		12,898,654	$	1,100,859(2)	$0.0749 - $0.0890
5. Stock issued for cash		1,031,250	$	53,563(1)	$0.0400
6. Stock issued for conversion of Series A preferred stock		2,721	$	—	N/A
7. Stock issued for conversion of Series B preferred stock		36,125,000	$	—	N/A

1.  Includes $98,102 for the excess of fair value over issuance price for compensation, services and cash.

2. Includes $654,913 for the excess in fair value over issuance price for debt settlement.

12

Soupman, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

May 31, 2016

(Unaudited)

(E)

Stock Options

There were no stock options issued for the nine months ended May 31, 2016.

The following is a summary of the Company’s stock option activity for the nine months ended May 31, 2016.

	Options		Weighted Average Exercise Price		Weighted Average Remaining Contractual Life	Aggregate Intrinsic Value
Balance – August 31, 2015		1,975,000	$	0.53	5.44 years		—
Granted		—		—
Exercised		—		—
Forfeited		—		—
Balance – May 31, 2016		1,975,000	$	0.53	4.69 years		—
Exercisable – May 31, 2016		1,975,000	$	0.53	4.69 years		—
Grant date fair value of options granted			$	147,588
Weighted average grant date fair value			$	0.75
Outstanding options held by related parties (May 31, 2016)		1,450,000
Exercisable options held by related parties (May 31, 2016)		1,450,000

For the nine months ended May 31, 2016, the Company had no expenses related to vested options.

(F)

Stock Warrants

The following is a summary of the Company’s stock warrant activity for the nine months ended May 31, 2016. Any warrants that were not exercised during the term of the warrants are shown in the below table as forfeited:

	Number of Warrants			Weighted Average Exercise Price
Balance at August 31, 2015		7,496,140		$	0.42
Granted (for debt)		—			—
Granted (other)		—			—
Exercised		—			—
Expired		(531,250	)		0.82
Balance at May 31, 2016		6,964,890		$	0.56

	Warrants Outstanding						Warrants Exercisable
Range of exercise price	Number Outstanding		Weighted Average Remaining Contractual Life (in years)		Weighted Average Exercise Price		Number Exercisable		Weighted Average Exercise Price		Intrinsic Value
$0.40 - $1.25		4,491,050		1.67	$	0.56		6,564,383	$	0.56	$	-

Note 5 - Commitments and Contingencies

Litigations, Claims and Assessments

There have been no changes to the status of our legal proceedings since our last 10-Q Report.

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Soupman, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

May 31, 2016

(Unaudited)

Note 6 - Going Concern

As reflected in the accompanying consolidated financial statements for the nine months ended May 31, 2016, the Company had a net loss including non-controlling interest of approximately $3.5 million, net cash used in operations of approximately $1.4 million, working capital deficit of approximately $6 million and a stockholders’ deficit of approximately $7.3 million. These factors raise substantial doubt about the Company’s ability to continue as a going concern.

The ability of the Company to continue its operations is dependent on management's plans, which may include the raising of capital through equity markets with some additional funding from other traditional financing sources, including term notes, until such time that funds provided by operations are sufficient to fund working capital requirements.

The Company will require additional funding to finance the growth of its current and expected future operations as well as to achieve its strategic objectives. The Company believes its current available cash along with anticipated revenues will be insufficient to meet its cash needs for the next twelve months. There can be no assurance that financing will be available in amounts or terms acceptable to the Company, if at all.

In response to these problems, management has taken the following actions:

· seeking additional equity financing for operations, marketing and potential acquisitions

· seeking to increase sales and distribution of Tetra Pak products;

· seeking to open new franchise locations

· allocating sufficient resources to continue advertising and marketing efforts

The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. These financial statements do not include any adjustments relating to the recovery of the recorded assets or the classification of the liabilities that might be necessary should the Company be unable to continue as a going concern.

Note 7 - Subsequent Events

Since May 31, 2016, the Company has issued 10,250,000 shares of common stock for the conversion of 1,025,000 of its Series B preferred shares.  

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ITEM 2.     Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following analysis of our consolidated financial condition and results of operations for the three and nine months ended May 31, 2016 should be read in conjunction with the consolidated financial statements, including footnotes, and other information presented elsewhere in this Quarterly Report on Form 10-Q and the risk factors and the financial statements and the other information set forth in our Annual Report on Form 10-K. 

The following Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is intended to help the reader understand our results of operations and financial condition.

Cautionary Note Regarding Forward-Looking Statements

This report and other documents that we file with the Securities and Exchange Commission contain forward-looking statements that are based on current expectations, estimates, forecasts and projections about our future performance, our business, our beliefs and our management’s assumptions. Statements that are not historical facts are forward-looking statements, including forward-looking information concerning pharmacy sales trends, prescription margins, number and location of new store openings, outcomes of litigation, and the level of capital expenditures, industry trends, demographic trends, growth strategies, financial results, cost reduction initiatives, acquisition synergies, regulatory approvals, and competitive strengths. Words such as “expect,” “outlook,” “forecast,” “would,” “could,” “should,” “project,” “intend,” “plan,” “continue,” “sustain”, “on track”, “believe,” “seek,” “estimate,” “anticipate,” “may,” “assume,” and variations of such words and similar expressions are often used to identify such forward-looking statements, which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are not guarantees of future performance and involve risks, assumptions and uncertainties, including, but not limited to, those described in our reports that we file or furnish with the Securities and Exchange Commission. Should one or more of these risks or uncertainties materialize, or should any underlying assumptions prove incorrect, our actual results may vary materially from those indicated or anticipated by such forward-looking statements. Accordingly, you are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date they are made. Except to the extent required by law, we undertake no obligation to update publicly any forward-looking statements after the date they are made, whether as a result of new information, future events, changes in assumptions or otherwise.

OVERVIEW

Description of the Company

Unless otherwise stated, the terms "we," "us", "our" and the "company" refer to Soupman, Inc. and its consolidated subsidiaries.

We manufacture and sell soups under the brand name “Original Soupman”. Our soups can be purchased in national and regional supermarket chains such as Kroger, Publix, Safeway, Shoprite, Shaw’s, HEB, Winn Dixie and Bi Lo in shelf stable Tetra Recart packaging allowing for maximum shelf life and freshness in every carton. The annual market size for soup sales to grocery and chain stores in the US is approximately $6.4 billion.

We also sell our Original Soupman soups in flash-frozen “heat ‘n serve” pouches to our franchisees, such as our flagship store at 55^th Street and 8^th Avenue in NYC, the Mohegan Sun Casino in Connecticut, Resorts Hotel & Casino in Atlantic City, New Jersey, the Original Soupman Delicatessen at Roosevelt Field Mall on Long Island, New York, to a national restaurant chain and to educational institutions (such as the New York City Public school system). In addition to our soups, we sell to our educational institution customers various vegetarian items such as Mexicali Beans and Stewed Pinto Beans, which are low in fat, low in sodium and high in dietary fiber.

Executive Summary

This Executive Summary provides significant highlights from the discussion and analysis that follows. Each balance sheet comparison compares May 31, 2016 (the end of the current period) to August 31, 2015 (the end of the prior fiscal year); each income statement comparison compares the three and nine month ended May 31, 2016 to the three and nine month ended May 31, 2015. For the nine months ended May 31, 2016:

·

Accounts payable and accrued liabilities decreased approximately 10% or approximately $393,000.

15

·

Debt decreased by approximately 17% or approximately $638,000.

·

Revenue increased 33% due primarily an increase in sales to grocery stores and franchise sales and the reduction of slotting fees.

·

Tetra sales increased 64%, or approximately $495,000.

·

Administrative expenses increased 101% or approximately $1.5 million, due to: (i) non-employee based stock compensation to our advisors, consultants and third-party vendors; (ii) compensation to our senior management, including our new CEO our new VP of Tetra pak sales and our former COO; (iii) increases in marketing, travel and promotion to drive Tetra pak sales in the grocery channel and (iv) an increase in professional services.

Year-over-year comparability of earnings and earnings per share

The following items affected the comparability of year-over-year earnings and earnings per share:

· During the nine months ended May 31 2016, we posted a loss on the extinguishment of debt of approximately $655,000.

Net loss attributable to non-controlling interests

We own 80% controlling interest in Kiosk Concepts, Inc.; the remaining 20% is owned by Al Yeganeh, from whom we license our soup recipes. The non-controlling interests' share in the net loss was included in net loss attributable to non-controlling interests in the consolidated statements of operations.

DISCUSSION AND ANALYSIS

There were no unusual or infrequent events or transactions, or significant economic changes that materially affected the amount of reported income or expenses from operations and nor is the Company aware of any known uncertainties that it reasonably expects will have a material impact income or expenses from operations, other than in the normal course of business such as seasonality.

Results of Operations –Three Months Ended May 31, 2016 and May 31, 2015

The following table summarizes our operating results for the three months ended May 31, 2016 and 2015; all amounts have been rounded to the nearest thousandth.

	May 31, 2016			May 31, 2015
Revenue	$	629,000		$	487,000
Cost of Sales		477,000			356,000
Gross Profit		152,000			131,000
Operating Expenses		1,299,000			604,000
Loss From Operations		(1,147,000	)		(473,000	)
Other Income		(241,000	)		217,000
Net Loss (including non-controlling interest)	$	(1,388,000	)	$	(256,000	)

Soup sales

Soup sales accounted for approximately 93% and 91% of overall revenue for the three months ended May 31, 2016 and 2015, respectively, while franchise activities accounted for the remaining 7% and 9%, respectively. Our year-over-year revenues increased approximately 29%.

16

The following table summarizes our net soup sales for the three months ended May 31, 2016 and 2015; all amounts have been rounded to the nearest thousandth. Soup sales are net of slotting fees (a onetime fee charged by supermarkets in order to have our products placed on their shelves) promotions and early payment discounts.

	May 31, 2016					May 31, 2015
	Sales		% of sales			Sales		% of sales
Grocery Stores (Tetra)	$	360,000		61	%	$	202,000		46	%
Educational Institutions		112,000		19	%		72,000		16	%
Franchisees		116,000		20	%		165,000		38	%
Net  sales	$	588,000				$	441,000

Our year-over-year increase in our grocery store sales is primarily attributable to the acquisition of new customers, our increased marketing activities and promotions to sample our products, including events with the actor Larry Thomas from the TV series Seinfeld.

Cost of Sales

The following table summarizes our cost of sales for the three months ended May 31, 2016 and 2015; all amounts have been rounded to the nearest thousandth. Cost of sales represents costs associated with soup sales only.

	May 31, 2016					May 31, 2015
	Costs		% of Total			Costs		% of Total
Grocery Stores (Tetra)	$	233,000		49	%	$	149,000		42	%
Educational Institutions		91,000		19	%		59,000		17	%
Franchisees		87,000		18	%		108,000		30	%
Freight		66,000		14	%		40,000		11	%
Total	$	477,000				$	356,000

Operating Expenses

Year over year operating expenses increased approximately 115% or approximately $695, 000. The increase was primarily attributable to an increase in stock based compensation for outside services, compensation related to new hires and an increase in marketing, travel and promotion to drive Tetra pak sales.

The following table summarizes major components of our operating expenses for the three months ended May 31, 2016 and May 31, 2015; all amounts have been rounded to the nearest thousandth.

	May 31, 2016		May 31, 2015
Compensation expense-cash		357,000		113,000
Compensation - stock		63,000		61,000
Professional fees		87,000		294,000
Marketing/Advertising/Branding/Public Relations/Promotions/Trade Shows		150,000		27,000
Travel		72,000		46,000
Non-Employee Stock Based Compensation		458,000		—

Other Income (Expense)

Year-over-year other expenses increased approximately 221%, from an approximately $217,000 gain to an approximately $241,000 loss. This increase was primarily attributable to losses from the settlement and extinguishment of debt and accounts payable.

17

Net Loss

Year-over-year net loss increased approximately 440% or approximately $1.1 million due to the various factors discussed above, which impacted revenue, cost of sales, gross profit and operating expenses. Our year-over-year basic and diluted net loss per share increased by $0.01, due primarily to a wider loss for the period and a one-time deemed dividend resulting from the removal of tainting.

Results of Operations –Nine months Ended May 31, 2016 and May 31, 2015

The following table summarizes our operating results for the nine months ended May 31, 2016 and 2015; all amounts have been rounded to the nearest thousandth.

	May 31, 2016			May 31, 2015
Revenue	$	2,282,000		$	1,720,000
Cost of Sales		1,706,000			1,459,000
Gross Profit		576,000			261,000
Operating Expenses		3,044,000			1,535,000
Loss From Operations		(2,468,000	)		(1,274,000	)
Other Income (Expense)		(1,007,000	)		126,000
Net Loss (including non-controlling interest)	$	(3,475,000	)	$	(1,148,000	)

Soup sales

Soup sales accounted for approximately 85% and 92% of overall revenue for the nine months ended May 31, 2016 and 2015, respectively, while franchise activities accounted for the remaining 15% and 8%, respectively. Our year-over-year revenues increased approximately 33%.

The following table summarizes our net sales for the nine months ended May 31, 2016 and 2015; all amounts have been rounded to the nearest thousandth. Soup sales are net of slotting fees (a onetime fee charged by supermarkets in order to have the product placed on their shelves) promotions and early payment discounts.

	May 31, 2016					May 31, 2015
	Sales		% of Total Sales			Sales		% of Total Sales
Grocery store sales (Tetra) - net	$	1,273,000		66	%	$	778,000		49	%
Educational Institutions		265,000		14	%		376,000		24	%
Franchises		402,000		21	%		435,000		27	%
	$	1,940,000		330	%	$	1,589,000

Our year-over-year increase in our grocery store sales is primarily attributable to the acquisition of new customers, our increased marketing activities and promotions to sample our products, including events with the actor Larry Thomas from the TV series Seinfeld.

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Cost of Sales

The following table summarizes our cost of sales for the nine months ended May 31, 2016 and 2015; all amounts have been rounded to the nearest thousandth. Cost of sales represents costs associated with soup sales only.

	May 31, 2016					May 31, 2015
	Costs		% of Total			Costs		% of Total
Grocery Stores	$	1,024,000		60	%	$	743,000		51	%
Educational Institutions		209,000		12	%		281,000		19	%
Franchisees		287,000		17	%		295,000		20	%
Freight		186,000		11	%		140,000		10	%
Total	$	1,706,000				$	1,459,000

Operating Expenses

Year over year operating expenses increased approximately 98% or approximately $1.5 million. The increase was primarily attributable to an increase in compensation related to new hires and other professional fees.

The following table summarizes major components of our operating expenses for the nine months ended May 31, 2016 and May 31, 2015; all amounts have been rounded to the nearest thousandth.

	May 31, 2016		May 31, 2015
Compensation – cash		723,000		377,000
Compensation expense - stock		408,000		184,000
Professional fees		435,000		421,000
Stock based compensation		501,000		48,000
Marketing/Advertising/Branding/Public Relations/Promotions/Trade Shows		398,000		120,000
Travel		190,000		73,000

Other Income (Expense)

Year-over-year other expenses increased approximately 896%, from a gain of approximately $126,000 to loss of approximately $1 million. This increase was primarily attributable to losses from the settlement and extinguishment of debt.

Net Loss

Year-over-year net loss increased approximately 203% or approximately $2.3 million to the various factors discussed above, which impacted revenue, cost of sales, gross profit and operating expenses. Our year-over-year basic and diluted net loss per share increased by $0.06 per share, due primarily to greater losses a one-time deemed dividend resulting from the removal of tainting.

LIQUIDITY AND CAPITAL RESOURCES

We expect foreseeable liquidity and capital resource requirements to be met through anticipated cash flows from operations and investments in our company. We believe that with the anticipated investments in our company, that our sources of financing will be adequate to meet our requirements for future growth.

Our net cash used from operations was approximately $1.4 million during the nine months ended May 31, 2016, compared to an approximately $1 million during the nine months ended May 31, 2015.

We received proceeds of approximately $1 million from the issuance of notes and stock during the nine months ended May 31, 2016, and repaid debt and accrued interest of approximately $235,000, compared to the issuance of notes and stock of approximately $1.8 million and the repayment of debt and accrued interest of approximately $799,000 during the nine months ended May 31, 2015.

19

The following table summarizes our working capital as of May 31, 2016 and August 31, 2015; all amounts have been rounded to the nearest thousandth.

	May 31, 2016			August 31, 2015
Current assets	$	680,000		$	1,199,000
Current liabilities		6,182,000			9,254,000
Working capital (deficit)	$	(5,502,000	)	$	(8,055,000	)

At May 31, 2016, we had cash and cash equivalents of approximately $40,000 as compared to approximately $611,000 at August 31, 2015.  During the nine months ended May 31, 2016, our working capital deficit decreased approximately $2.1million, primarily attributable to decreases in current debt of approximately $2.1 million, accounts payable of approximately $393,000 and derivative liability of approximately $212,000, offset by decreases in cash and inventory of approximately $571,000 and 48,000, respectively.

Current and Future Financing Needs

We have incurred a stockholders’ deficit of approximately $6.6 million through May 31, 2016 and have incurred a net loss including non-controlling interest of approximately $3.5 million for the nine months ended May 31, 2016. We have incurred negative cash flow from operations since inception and have primarily financed our operations through the sale of stock and the issuance of notes. At May 31, 2016, we had short-term debt of approximately $2.1 million and a working capital deficit of approximately $6 million. These factors raise doubt about our ability to continue as a going concern.

We expect to spend capital in connection with implementing our business strategy, including the promotion of our shelf stable Tetra pak soups, our advertising and marketing campaigns and fees in connection with regulatory compliance and corporate governance. The actual amount of funds we will need to operate is subject to many factors, some of which are beyond our control. We do not have sufficient cash to operate our business at the current level for the next twelve months and insufficient cash to achieve our business goals. If our anticipated sales for the next few months do not meet our expectations, our existing resources will not be sufficient to meet our cash flow requirements. Furthermore, if our expenses exceed our anticipations, we will need additional funds to implement our business plan. We will not be able to fully establish our business if we do not have adequate working capital so we will need to raise additional funds, whether through a stock offering or otherwise.

We believe that if we successfully raise at least $2.5 million, it will be sufficient to support our normal operations and support our growth based on current operations. In addition, we believe we will seek to raise an additional $10 to $15 million over the next 12 months to make potential acquisitions, increase our marketing and promotion efforts and add new soup varieties and line extensions to our offerings such as bone-in broth to further increase revenue. We believe that at $6 million in sales, our operations would be self-sustaining and cash flow positive. We use co-packers to manufacture our products, have no brick and mortar, rent very modest space and only have seven full time employees and therefore, many of our fixed costs are minimal and will remain unchanged regardless of how much money we are able to raise. If we are forced to reduce our marketing and promotion efforts and/or size of our operations because we are unable to raise the entire $2.5 million to support implementing our business plan, our revenues will likely be less than $6 million had we been able to implement our full program, and as a direct result, our income may suffer, and may not be sufficient to cover our negative cash flow, negatively affecting our liquidity.

Item 3.     Quantitative and Qualitative Disclosures about Market Risk.

Not applicable.

20

Item 4.      Controls and Procedures.

(a) Disclosure Controls and Procedures

The Company has adopted and maintains disclosure controls and procedures that are designed to provide reasonable assurance that information required to be disclosed in the reports filed under the Exchange Act, such as this Form 10-Q, is collected, recorded, processed, summarized and reported within the time periods specified in the rules of the Securities and Exchange Commission. The Company’s disclosure controls and procedures are also designed to ensure that such information is accumulated and communicated to management to allow timely decisions regarding required disclosure. As required under Exchange Act Rule 13a-15, the Company’s management, including its CEO the Principal Executive Officer and its CFO the Principal Financial Officer, has conducted an evaluation of the effectiveness of disclosure controls and procedures as of the end of the period covered by this report. Based upon that evaluation, the Company’s CEO and CFO concluded that the Company’s disclosure controls and procedures are effective to ensure that information required to be disclosed by the Company in the reports that the Company files or submits under the Exchange Act, is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to the Company’s management, including the Company’s CEO and CFO, as appropriate, to allow timely decisions regarding required disclosure.

(b) Changes in internal controls over financial reporting

There has been no change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) that occurred during the quarter ended May 31, 2016 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

21

PART II - OTHER INFORMATION

Item 1.       Legal Proceedings.

There have been no changes to the status of our legal proceedings since our last 10-Q Report.

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

During the three months ended May 31, 2016, we issued 1,031,250 shares of common for $41,250 in cash at an issuance price of $0.04 per share, 7,960,522 shares for services rendered with a value of $451,145 based on an average issue price of $0.0567 per share, 1,893,500 shares as compensation expense with a value of $101,480 based on an average issuance price of $0.0536 per share and 750,000 shares as an inducement to settle debt(s) with a fair market value of $35,875 based on the price set out in the settlement agreement(s).

These securities were issued pursuant to the exemption provided by Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”). The holders represented their intention to acquire the securities for investment only and not with a view towards distribution. The holders were given adequate information about us to make an informed investment decision. We did not engage in any general solicitation or advertising. We directed our transfer agent to issue the stock certificates with the appropriate restrictive legend affixed to the restricted stock.

In addition, the Company issued 36,125,000 shares of common stock upon the conversion of 3,612,500 shares of its Series B preferred stockpursuant to the exemption provided by Section 3(a)(9) of the Securities Act.

Item 3.      Defaults upon Senior Securities.

None.

Item 4.      Mine Safety Disclosure.

Not Applicable

Item 5.      Other Information.

None.

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Item 6.      Exhibits.

Exhibit
Number	Description
31.1*	Certification of the Principal Executive Officer, Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*	Certification of the Principal Financial Officer, Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1*	Certification of the Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act
32.2*	Certification of the Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act
101.INS**	XBRL Instance
101.XSD**	XBRL Schema
101.CAL**	XBRL Calculation
101.DEF**	XBRL Definition
101.LAB**	XBRL Label
101.PRE**	XBRL Presentation

———————

*       Filed herewith

**     Filed herewith electronically

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	SOUPMAN, INC.
Date: July 18, 2016	By:	/s/ Jamieson Karson
		Jamieson Karson
		Chief Executive Officer and Director (Principal Executive Officer)

	SOUPMAN, INC.
Date: July 18, 2016	By:	/s/ Robert Bertrand
		Robert Bertrand
		President & CFO
		(Principal Financial Officer)

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