Glucose Health, Inc. 10-K

Item 8. Financial Statements The financial statements required by Item 8 are presented in the following order: BIO-SOLUTIONS CORP. (A Development Stage Company) INDEX TO FINANCIAL STATEMENTS Financial Statements: Report of Independent Registered Public Accounting Firms F-2 Balance Sheets as of December 31, 2013 and 2012 F-4 Statements of Operations and Comprehensive Loss for the Years Ended December 31, 2013 and 2012 and Development Stage from October 1, 2011 to December 31, 2013 F-5 Statements of Changes in Stockholders’ Equity (Deficit) for the Years Ended December 31, 2013 and 2012 and Development Stage from October 1, 2011 to December 31, 2013 F-6 Statements of Cash Flows For the Years Ended December 31, 2013 and 2012 and Development Stage from October 1, 2011 to December 31, 2013 F-7 Notes to Financial Statements F-8 F-1 Report of Independent Registered Public Accounting Firm To the Board of Directors of Bio-Solutions Corp. We have audited the accompanying balance sheet of Bio-Solutions Corp. (the "Company") as of December 31, 2013, and the related statements of operations and other comprehensive loss, changes in stockholders' equity (deficit) and cash flows for the year ended December 31, 2013. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit. The financial statements of the Company as of December 31, 2012 and for the year then ended and for the period from October 1, 2011 through December 31, 2012 (Development Stage) were audited by other auditors, whose report dated March 22, 2013, express an unqualified opinion on those financial statements and also included an explanatory paragraph that raise substantial doubt about the Company’s ability to continue as a going concern. We conducted our audit in accordance with standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. We were not engaged to perform an audit of the Company’s internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2013, and its results of operations, and cash flows for the year ended December 31, 2013 in conformity with U.S. generally accepted accounting principles. The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company is in process of executing its business plan and expansion. The Company has not generated significant revenue to this point. The lack of profitable operations and the need to continue to raise funds raise significant doubt about the Company’s ability to continue as a going concern. Management’s plans in this regard are described in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. /s/ Anton & Chia, LLP Newport Beach, California June 20, 2014 F-2 Report of Independent Registered Public Accounting Firm To the Directors of Bio-Solutions Corp. We have audited the accompanying balance sheets of Bio-Solutions Corp. (the "Company") as of December 31, 2012, and the related statements of operations and comprehensive loss, changes in stockholders' equity (deficit) and cash flows for the year ended December 31, 2012 and for the statements of operations and comprehensive loss, changes in stockholders’ equity (deficit) and cash flows for the period October 1, 2011 through December 31, 2012 (Development Stage). These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. We were not engaged to perform an audit of the Company’s internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Bio-Solutions Corp. as of December 31, 2012, and the results of its statements of operations and comprehensive loss, changes in stockholders’ equity (deficit), and cash flows for the year ended December 31, 2012 and for the statements of operations and comprehensive loss, changes in stockholders’ equity (deficit) and cash flows for the period October 1, 2011 through December 31, 2012 (Development Stage) in conformity with U.S. generally accepted accounting principles. The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company is in process of executing its business plan and expansion. The Company has not generated significant revenue to this point, however, has been successful in raising funds in their private placement. The lack of profitable operations and the need to continue to raise funds raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in this regard are described in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. /s/ KBL, LLP New York, NY March 22, 2013 F-3 BIO-SOLUTIONS CORP. (A DEVELOPMENT STAGE COMPANY) BALANCE SHEETS AS OF DECEMBER 31, 2013 AND 2012 DECEMBER 31, DECEMBER 31, 2013 2012 ASSETS CURRENT ASSETS Cash $ 711 $ 1,076 Inventory 24,879 - Total current assets 25,590 1,076 Other Asset Intellectual Property - 206,600 TOTAL ASSETS $ 25,590 $ 207,676 LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) CURRENT LIABILITIES Accounts payable and accrued expenses $ 144,633 $ 123,199 Short - term loans 6,000 - Short - term loans - related parties 1,672 1,597 Short - term loans - convertible 71,043 60,680 Total current liabilities 223,348 185,476 TOTAL LIABILITIES 223,348 185,476 STOCKHOLDERS' EQUITY (DEFICIT) Common stock, $0.001 par value, 200,000,000 shares authorized, 18,872,777 and 10,108,586 shares issued and outstanding as of December 31, 2013 and 2012, respectively (1) 18,873 10,109 Additional paid in capital 4,743,340 3,679,944 Stock to be issued 34,400 - Deferred compensation (17,372 ) (150,000 ) Accumulated deficit (2,873,925 ) (2,873,925 ) Deficit accumulated during the development stage (2,027,796 ) (568,650 ) Accumulated other comprehensive loss (75,278 ) (75,278 ) Total stockholders' equity (deficit) (197,758 ) 22,200 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) $ 25,590 $ 207,676 (1) The common stock shares authorized, issued and outstanding have been adjusted to reflect a 10 to 1 reverse split, which was effective in February 2014. The accompanying notes are an integral part of these financial statements. F-4 BIO-SOLUTIONS CORP. (A DEVELOPMENT STAGE COMPANY) STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS FOR THE YEARS ENDED DECEMBER 31, 2013 AND 2012 AND FROM OCTOBER 1, 2011 THROUGH DECEMBER 31, 2013 PERIOD FROM YEAR ENDED YEAR ENDED OCTOBER 1, 2011 to DECEMBER 31, 2013 DECEMBER 31, 2012 DECEMBER 31, 2013 REVENUE $ 224 $ - $ 224 COST OF REVENUES 2,315 - 5,947 GROSS LOSS (2,091 ) - (5,723 ) OPERATING EXPENSES Professional fees/stock based compensation 1,027,696 355,656 1,464,978 Amortization expense and impairment 200,000 - 285,288 General and administrative 39,497 5,767 45,774 Total operating expenses 1,267,193 361,423 1,796,040 LOSS FROM OPERATIONS (1,269,284 ) (361,423 ) (1,801,763 ) OTHER INCOME (EXPENSE) Interest income (expense) (168,862 ) (37,655 ) (205,033 ) Loss on conversion of debt (21,000 ) - (21,000 ) Total other expense, net (189,862 ) (37,655 ) (226,033 ) LOSS BEFORE IMCOME TAXES (1,459,146 ) (399,078 ) (2,027,796 ) PROVISION FOR (BENEFIT FROM) INCOME TAXES - - - NET LOSS $ (1,459,146 ) $ (399,078 ) $ (2,027,796 ) WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING - BASIC AND DILUTED (2) 14,861,248 7,605,160 NET LOSS PER SHARE - BASIC AND DILUTED $ (0.10 ) $ (0.05 ) STATEMENT OF COMPREHENSIVE LOSS Net loss $ (1,459,146 ) $ (399,078 ) $ (2,027,796 ) Currency translation gains (losses) - (6,060 ) (12,578 ) TOTAL COMPREHENSIVE LOSS $ (1,459,146 ) $ (405,138 ) $ (2,040,374 ) (2) The common stock shares authorized, issued and outstanding have been adjusted to reflect a 10 to 1 reverse split, which was effective in February 2014. The accompanying notes are an integral part of these financial statements. F-5 BIO-SOLUTIONS CORP. (A DEVELOPMENT STAGE COMPANY) STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT) FOR THE YEARS ENDED DECEMBER 31, 2013 AND 2012 AND FROM OCTOBER 1, 2011 THROUGH DECEMBER 31, 2013 Accumulated Additional Stock Deficit During Accumulated Other Common Stock Paid-In To Be Deferred Accumulated Development Comprehensive Shares Amount Capital Issued Compensation Deficit Stage Loss Total Balance - October 1, 2011 (3) 4,107,040 $ 4,107 $ 2,622,377 $ - $ - $ (2,873,925 ) $ - $ (62,700 ) $ (310,141 ) Common shares issued for services 77,000 77 9,923 10,000 Common shares issued for settlement of notes payable 300,000 300 9,561 9,861 Common shares issued for Type 2 Acquisition 2,060,000 2,060 204,540 206,600 Conversion of accounts payable to equity 73,748 73,748 Net loss for the year (169,572 ) (6,518 ) (176,090 ) Balance - December 31, 2011 (3) 6,544,040 $ 6,544 $ 2,920,149 $ - $ - $ (2,873,925 ) $ (169,572 ) $ (69,218 ) $ (186,022 ) Common shares issued for liability for stock to be issued 165,000 165 41,335 41,500 Common shares issued for services 905,000 905 183,270 184,175 Common shares issued for compensation under employment agreement 1,500,000 1,500 223,500 (225,000 ) - Common shares issued for settlement of notes payable 942,546 943 53,335 54,278 Common shares issued for settlement of accounts payable 52,000 52 6,248 6,300 Conversion of accounts payable and notes payable to equity (Note 8) 217,811 217,811 Discounts on shares issued for notes payable 34,296 34,296 Amortization of deferred compensation 75,000 75,000 Net loss for the year (399,078 ) (6,060 ) (405,138 ) Balance - December 31, 2012 (3) 10,108,586 $ 10,109 $ 3,679,944 $ - $ (150,000 ) $ (2,873,925 ) $ (568,650 ) $ (75,278 ) $ 22,200 Common shares issued for services 5,372,500 5,373 755,675 761,048 Common shares issued for settlement of notes payable 3,341,691 3,341 128,424 131,765 Common shares issued for settlement of accounts payable 50,000 50 6,325 6,375 Discounts on shares issued for notes payable 172,972 172,972 Stock to be issued 34,400 34,400 Amortization of deferred compensation 132,628 132,628 Net loss for the year (1,459,146 ) - (1,459,146 ) Balance - December 31, 2013 (3) 18,872,777 $ 18,873 $ 4,743,340 $ 34,400 $ (17,372 ) $ (2,873,925 ) $ (2,027,796 ) $ (75,278 ) $ (197,758 ) (3) The common stock shares authorized, issued and outstanding have been adjusted to reflect a 10 to 1 reverse split, which was effective in February 2014. The accompanying notes are an integral part of these financial statements. F-6 BIO-SOLUTIONS CORP. (A DEVELOPMENT STAGE COMPANY) STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2013 AND 2012 AND FROM OCTOBER 1, 2011 THROUGH DECEMBER 31, 2013 PERIOD FROM YEAR ENDED YEAR ENDED OCTOBER 1, 2011 THROUGH DECEMBER 31, 2013 DECEMBER 31, 2012 DECEMBER 31, 2013 OPERATING ACTIVITIES: Net loss $ (1,459,146 ) $ (399,078 ) $ (2,027,796 ) Adjustments to reconcile net loss to net cash used in operating activities: Impairment expense 200,000 - 285,288 Common stock issued for services 925,679 259,175 1,278,048 Beneficial Conversion Feature of Notes Payable 172,972 34,296 207,268 Loss on conversion of debt 21,000 - 21,000 Change in operating assets and liabilities Increase in inventory (24,879 ) - (24,879 ) Increase in accounts payable and accrued expenses 32,389 21,916 40,396 Total adjustments 1,327,161 315,387 1,807,121 Net cash used in operating activities (131,985 ) (83,691 ) (220,675 ) FINANCING ACTIVITIES: Proceeds from notes and loans payable 134,220 78,600 214,550 Principal payments on notes and loans payable (2,600 ) - (2,600 ) Net cash provided by financing activities 131,620 78,600 211,950 Effect of exchange rates on cash - 6,085 5,507 NET INCREASE (DECREASE) IN CASH (365 ) 994 (3,218 ) CASH - BEGINNING OF PERIOD 1,076 82 3,929 CASH - END OF PERIOD $ 711 $ 1,076 $ 711 NON CASH OPERATING AND INVESTING ACTIVITIES: Conversion of notes payable and accrued interest to common stock $ 131,765 $ 54,278 $ 202,504 Conversion of liability to common stock $ 6,375 $ 47,800 $ 54,175 Conversion of accounts payable and notes payable to equity (Note 9) $ - $ 217,811 $ 291,559 The accompanying notes are an integral part of these financial statements. F-7 BIO-SOLUTIONS CORP. (A Development Stage Company) NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2013 AND 2012 NOTE 1 - ORGANIZATION AND BASIS OF PRESENTATION On March 27, 2007, Bio-Solutions Corp. (the “Company”) was incorporated in the State of Nevada. The Company was a manufacturer of a pre-mix for chicken integrators called Nutra-Animal, a pre-mix anti-oxidant containing wheat middlings, vitamin E, calcium carbonate, silicone dioxyde, shrimp flour, sodium selenite and fish oil. The Company is also the distributor of GreenEx ™ in Africa. GreenEx ™ is a biological larvicide produced from a strain of Bacillus thuringiensis subspecies israelensis (Bti), a naturally occurring bacterium that produces a crystalline protein toxin (cystal) toxic for mosquitoes, vectors of Malaria. GreenEx ™ formulations are produced in the United States to strict manufacturing specifications, ensuring that the products are of high quality and without any harmful contaminants. On June 30, 2010, the board of directors approved the increase of the authorized shares of common stock from 75,000,000 to 90,000,000. In addition the board approved a 1.20 to 1 stock split. All shares have been reflected retroactively in accordance with SAB Topic 14C. On September 26, 2011, the Company acquired all the assets and intellectual property rights of Type2 Defense, a natural dietary supplement formulated to support healthy glucose levels for type 2 diabetics and pre-diabetics. During October 2011, the Company decided to abandon the former operations to focus solely on the Type2 Defense product. All inventories from the former products were written off as of October 1, 2011. During October 2012, the board of directors increased the number of common shares authorized from 90,000,000 to 200,000,000 shares. The Company elected to enter the development stage on October 1, 2011. The first production run of the Company’s Type 2 Defense product was completed during June 2013. On July 8, 2013 the Company announced our product was available for on-line sales on Amazon.com. On July 9, 2013, the Company announced our product was available for on-line sales from our www.Type2Defense.com website. The first sale was completed in July 2013. As the Company only had nominal sales in the year ended December 31, 2013, they have remained in the development stage. The Company will closely monitor their sales and determine at which point in time they will emerge from the development stage. On January 10, 2014, the Company’s Board of Directors unanimously voted to reverse split the Company’s common stock on the basis of one share of the Company’s common stock for each 10 shares outstanding while maintaining the authorized capital structure of the Company at 200,000,000 shares. The Board resolution set the date of record for shareholder approval on January 14, 2014. As of January 29, 2014, the Company obtained the written consent in lieu of a meeting of the shareholders to authorize a reverse split of the Company’s common stock. Shareholders owning a total of 100,992,469 shares of the Company’s common stock voted in favor of the reverse split. There were a total of 199,611,900 shares of common stock issued and outstanding as of January 14, 2014 (the date of record). The number of shares of common stock voting in favor of the reverse split was sufficient for approval. On February 4, 2014, the Company filed a Certificate of Change with the State of Nevada effecting a 1-for-10 reverse split pursuant to which every ten shares of the Company’s common stock were combined and converted into one share of the Company’s common stock (with all fractional shares resulting there from being rounded up to the next whole share) with the total number of shares of the Company’s authorized common stock remaining at 200,000,000 shares. The effective date of the above corporate action was February 26, 2014, as approval by the Financial Industry Regulatory Authority. F-8 NOTE 1 - ORGANIZATION AND BASIS OF PRESENTATION (CONTINUED) Going Concern These financial statements have been prepared on a going concern basis, which implies the Company will continue to realize its assets and discharge its liabilities in the normal course of business. The Company has not generated significant revenues since inception and has generated losses totaling $4,901,721 since inception, of which $2,027,796 are deficits accumulated during the development stage and needs to raise additional funds to carry out its business plan. The continuation of the Company as a going concern is dependent upon the continued financial support from its shareholders, and the ability of the Company to obtain necessary equity financing to continue operations. The Company has had very little operating history to date. These financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. These factors raise substantial doubt regarding the ability of the Company to continue as a going concern. The Company estimates that they will need a $300,000 capital infusion to continue operations through the end of 2014. Besides generating revenues from current operations, the Company may need to raise additional capital to expand operations to the point at which the Company can achieve profitability. The terms of equity that may be raised may not be on terms acceptable by the Company. If adequate funds cannot be raised outside of the Company, the Company’s officer and directors may need to contribute funds to sustain operations. NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Prior period correction in the three months ended December 31, 2013 Beginning in the three months ended June 30, 2012 and through the three months ended September 30, 2013, the Company improperly valued the potential beneficial conversion option of the Company’s convertible notes payable. Based on ASC 470-20-30-16 through 30-18, the beneficial conversion option should have been valued based on the fair market value on the date of issuance and recorded as a debt discount. The debt discount should have been amortized over the term of the convertible note (longest term was 6 months). The accumulated impact of the correction was a charge to interest expense of $141,267 and a charge to debt discount on notes payable of $18,508 offset by a credit to additional paid in capital of $159,775. In-addition, during the quarter ended June 30, 2013, the Company improperly recorded stock-based compensation issued to the Company’s former chief executive officer upon achievement of operational milestones for the Type2Defense product (see Note 10) as intellectual property. Based on ASC 718-10 and ASC 505-50 this amount should have been classified as stock based compensation on the date earned. The accumulated impact of the correction on the financial statements was a charge to stock based compensation of $231,600 and a credit to intellectual property of $231,600. In accordance with the Securities and Exchange Commission's Staff Accounting Bulletin, or SAB, No. 99, Materiality, and SAB No. 108, the Company assessed the materiality of these charges to its financial statements for the quarters ended June 30, 2012 through September 30, 2013 and the year ended December 31, 2013, using both the roll-over method and iron-curtain method as defined in SAB No. 108. The Company concluded the effect of understating interest expense and share-based compensation was not material to its financial statements for the quarters ended June 30, 2012 through September 30, 2013 and the year ended December 31, 2013 and, as such, those financial statements are not materially misstated. The Company also concluded that providing for the correction of the understatement in 2013 would not have a material effect on its financial statements for the year ending December 31, 2013. The out-of-period adjustment at December 31, 2013 for the improperly valued beneficial conversion option of the Company’s convertible notes payable was a charge to interest expense of $141,267 and charge to debt discount on notes payable of $18,508 offset by a credit to additional paid in capital of $159,775 in the accompanying balance sheet and statement of operations. The out-of-period adjustment at December 31, 2013 for improperly recording stock-based compensation issued to the Company’s former Chief executive officer upon achievement of operational milestones as intellectual property was a charge to stock based compensation of $231,600 and a credit to intellectual property of $231,600 in the accompanying balance sheet and statement of operations. The impact of the misstatements on the previously issued financial statements and the effect of correcting the misstatements during the three months ended December 31, 2013 are as follows: F-9 NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Misstatements on previously issued financial statements: As Previously Correct Quarter ended June 30, 2012 Reported Amount Adjustment Beneficial Conversion Interest Expense 162,356 35,156 (127,200 ) Discount on Notes Payable - 19,171 19,171 Additional paid in capital (162,356 ) (54,327 ) 108,029 Quarter ended September 30, 2012 Beneficial Conversion Interest Expense 73,182 31,191 (41,991 ) Discount on Notes Payable - 1,809 1,809 Additional paid in capital (73,182 ) (33,000 ) 40,182 Quarter ended December 31, 2012 Beneficial Conversion Interest Expense (201,242 ) 26,221 227,463 Discount on Notes Payable - (10,721 ) (10,721 ) Additional paid in capital 201,242 (15,500 ) (216,742 ) Year ended December 31, 2012 Beneficial Conversion Interest Expense 34,296 92,569 58,273 Discount on Notes Payable - 10,258 10,258 Additional paid in capital (34,296 ) (102,827 ) (68,531 ) Quarter ended March 31, 2013 Beneficial Conversion Interest Expense 42,074 22,638 (19,436 ) Discount on Notes Payable - 2,575 2,575 Additional paid in capital (42,074 ) (25,213 ) 16,861 Quarter ended June 30, 2013 Stock Based Compensation - 231,600 231,600 Beneficial Conversion Interest Expense 57,754 19,615 (38,139 ) Intellectual property 231,600 - (231,600 ) Discount on Notes Payable - 27,578 27,578 Additional paid in capital (57,754 ) (47,193 ) 10,561 Quarter ended September 30, 2013 Beneficial Conversion Interest Expense (108,666 ) 31,903 140,569 Discount on Notes Payable - (21,903 ) (21,903 ) Additional paid in capital 108,666 (10,000 ) (118,666 ) F-10 NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Effect of correcting the misstatements during the three months ended December 31, 2013: As Previously Corrected Quarter ended December 31, 2013 Reported Amount Adjustment Stock Based Compensation - 231,600 231,600 Beneficial Conversion Interest Expense - 141,267 141,267 Intellectual property - (231,600 ) (231,600 ) Discount on Notes Payable - 18,508 18,508 Additional paid in capital - (159,775 ) (159,775 ) Year ended December 31, 2013 Stock Based Compensation - 231,600 231,600 Beneficial Conversion Interest Expense (8,838 ) 141,267 150,105 Intellectual property 231,600 - (231,600 ) Discount on Notes Payable - 18,508 18,508 Additional paid in capital 8,838 (159,775 ) (168,613 ) Effect on previously filed financial statements: As Previously Quarter ended June 30, 2012 Reported Adjustment As Revised Interest (expense) income (163,323 ) 127,200 (36,123 ) Net loss (184,597 ) 127,200 (57,397 ) Short - term loan - convertible 47,150 (19,171 ) 27,979 Total liabilities 179,490 (19,171 ) 160,319 Additional paid in capital 3,292,105 (108,029 ) 3,184,076 Accumulated deficit during development stage (361,883 ) 127,200 (234,683 ) Total stockholders' equity 54,330 19,171 73,501 Quarter ended September 30, 2012 Interest (expense) income (73,975 ) 41,991 (31,985 ) Net loss (282,940 ) 41,991 (240,950 ) Short - term loan - convertible 79,717 (20,979 ) 58,738 Total liabilities 457,889 (20,979 ) 436,910 Additional paid in capital 3,496,212 (148,211 ) 3,348,001 Accumulated deficit during development stage (657,323 ) 169,190 (488,133 ) Total stockholders' equity (224,012 ) 20,979 (203,033 ) F-11 NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) As Previously Reported Adjustment As Revised Year ended December 31, 2012 Interest (expense) income (37,655 ) (58,273 ) (95,928 ) Net loss (399,078 ) (58,273 ) (457,351 ) Short - term loan - convertible 60,680 (10,258 ) 50,422 Total liabilities 185,476 (10,258 ) 175,218 Additional paid in capital 3,588,967 68,531 3,657,498 Accumulated deficit during development stage (568,650 ) (58,273 ) (626,923 ) Total stockholders' equity 22,200 10,258 32,458 Quarter ended March 31, 2013 Interest (expense) income (43,189 ) 19,436 (23,753 ) Net loss (235,696 ) 19,436 (216,260 ) Short - term loan - convertible 63,168 (12,833 ) 50,335 Total liabilities 358,442 (12,833 ) 345,609 Additional paid in capital 3,773,560 51,670 3,825,230 Accumulated deficit during development stage (804,346 ) (38,837 ) (843,183 ) Total stockholders' deficiency (108,354 ) 12,833 (95,521 ) Quarter ended June 30, 2013 Operating Expense 285,566 231,600 517,166 Net loss before other expense (285,566 ) (231,600 ) (517,166 ) Interest (expense) income (59,068 ) 38,139 (20,929 ) Net loss (344,634 ) (193,461 ) (538,095 ) Intellectual property 431,600 (231,600 ) 200,000 Total Assets 492,016 (231,600 ) 260,416 Short - term loan - convertible 108,494 (40,411 ) 68,083 Total liabilities 234,699 (40,411 ) 194,288 Additional paid in capital 4,381,309 41,109 4,422,418 Accumulated deficit during development stage (1,148,980 ) (232,298 ) (1,381,278 ) Total stockholders' equity 257,317 (191,189 ) 66,128 Total liabilities and stockholders' equity 492,016 (231,600 ) 260,416 Quarter ended September 30, 2013 Interest (expense) income 107,492 (140,569 ) (33,077 ) Total other (expense) Income 86,492 (140,569 ) (54,077 ) Net loss (146,567 ) (140,569 ) (287,136 ) Intellectual property 431,600 (231,600 ) 200,000 Total Assets 464,732 (231,600 ) 233,132 Short - term loan - convertible 91,716 (18,508 ) 73,208 Total liabilities 242,449 (18,508 ) 223,941 Additional paid in capital 4,384,693 159,775 4,544,468 Accumulated deficit during development stage (1,295,547 ) (372,867 ) (1,668,414 ) Total stockholders' equity 222,283 (213,092 ) 9,191 Total liabilities and stockholders' equity 464,732 (231,600 ) 233,132 F-12 NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Development Stage The Company is in the development stage commencing October 1, 2011, in accordance with FASB ASC 915, Development Stage Entities. On September 26, 2011, the Company acquired all the assets and intellectual property rights of Type 2 Defense. During October 2011, the Company abandoned its former operations to focus solely on the Type 2 Defense product. All inventories from the former products were written off as of October 1, 2011. The first production run of the Company’s Type 2 Defense product was completed during June 2013. On July 8, 2013 the Company announced their product was available for on-line sales on Amazon.com. On July 9, 2013, the Company announced their product was available for on-line sales from our www.Type2Defense.com website. The first sale was completed in July 2013. As the Company only had nominal sales year ended December 31, 2013, the Company will remain in the development stage. The Company will closely monitor their sales and determine at which point in time they will emerge from the development stage. Use of 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 and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. The Company provides estimates for its common stock valuations, inventory reserves, and valuation allowances for deferred taxes. Currency Translation The Company no longer operates in Canada. Effective January 1, 2013, the Company changed its functional currency from the Canadian dollar to the US dollar and combined the accounting records into a single set of books based on the currency translation rate at January 1, 2013. Prior to January 1, 2013, the Company recorded translation adjustments as accumulated other comprehensive income (loss). Gains and losses from foreign currency transactions are included in other income (expense) in the results of operations. For the years ended December 31, 2013 and 2012, the Company recorded $0 and $6,060 in translation losses, respectively. Comprehensive Income (Loss) The Company adopted ASC 220-10, “Reporting Comprehensive Income.” ASC 220-10 requires the reporting of comprehensive income in addition to net income from operations. Comprehensive income is a more inclusive financial reporting methodology that includes disclosure of information that historically has not been recognized in the calculation of net income. F-13 NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Cash and Cash Equivalents The Company considers all highly liquid debt instruments and other short-term investments with maturity of three months or less, when purchased, to be cash equivalents. There were no cash equivalents as of December 31, 2013 and 2012. The Company maintains cash balances at one financial institution that is insured by the Federal Deposit Insurance Corporation. Recoverability of Long-Lived Assets The Company reviews their long-lived assets on a periodic basis, namely intellectual property, whenever events and changes in circumstances have occurred which may indicate a possible impairment. The assessment for potential impairment will be based primarily on the Company’s ability to recover the carrying value of its long-lived assets from expected future cash flows from its operations on an undiscounted basis. If such assets are determined to be impaired, the impairment recognized is the amount by which the carrying value of the assets exceeds the fair value of the assets. Fixed assets to be disposed of by sale will be carried at the lower of the then current carrying value or fair value less estimated costs to sell. The Company evaluates the carrying value of goodwill during the fourth quarter of each year and between annual evaluations if events occur or circumstances change that would more likely than not reduce the fair value of the reporting unit below its carrying amount. Such circumstances could include, but are not limited to (1) a significant adverse change in legal factors or in business climate, (2) unanticipated competition, or (3) an adverse action or assessment by a regulator. When evaluating whether goodwill is impaired, the Company compares the fair value of the reporting unit to which the goodwill is assigned to the reporting unit’s carrying amount, including goodwill. The fair value of the reporting unit is estimated using a combination of the income, or discounted cash flows, approach and the market approach, which utilizes comparable companies’ data. If the carrying amount of a reporting unit exceeds its fair value, then the amount of the impairment loss must be measured. The impairment loss would be calculated by comparing the implied fair value of reporting unit goodwill to its carrying amount. In calculating the implied fair value of reporting unit goodwill, the fair value of the reporting unit is allocated to all of the other assets and liabilities of that unit based on their fair values. The excess of the fair value of a reporting unit over the amount assigned to its other assets and liabilities is the implied fair value of goodwill. We make critical assumptions and estimates in completing impairment assessments of goodwill and other intangible assets. Our cash flow projections look several years into the future and include assumptions on variables such as future sales and operating margin growth rates, economic conditions, market competition, inflation and discount rates. A 10% decrease in the estimated discounted cash flows for the reporting units tested would result in an impairment that is not material to our results of operations. A 1.0 percentage point increase in the discount rate used would also result in an impairment that is not material to our results of operations. We amortize the cost of other intangible assets over their estimated useful lives, which range up to ten years, unless such lives are deemed indefinite. Intangible assets with indefinite lives are tested in the third quarter of each fiscal year for impairment, or more often if indicators warrant. During the fiscal year ended December 31, 2013, the Company recorded impairment charge related to other intangible assets in the amount of $200,000. During fiscal year 2012, we recorded no impairment charges related to other intangible assets. Fair Value of Financial Instruments The carrying amount reported in the balance sheets for cash, accounts payable, accrued expenses, and short-term notes approximate fair value because of the immediate or short-term maturity of these financial instruments. The Company does not utilize derivative instruments. F-14 NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Beneficial Conversion Features ASC 470-20 applies to convertible securities with beneficial conversion features that must be settled in stock and to those that give the issuer a choice in settling the obligation in either stock or cash. ASC 470-20 requires that the beneficial conversion feature should be valued at the commitment date as the difference between the conversion price and the fair market value of the common stock into which the security is convertible, multiplied by the number of shares into which the security is convertible. This amount is recorded as a debt discount and amortized over the life of the debt. ASC 470-20 further limits this amount to the proceeds allocated to the convertible instrument. Income Taxes The Company accounts for income taxes utilizing the liability method of accounting. Under the liability method, deferred taxes are determined based on differences between financial statement and tax bases of assets and liabilities at enacted tax rates in effect in years in which differences are expected to reverse. Valuation allowances are established, when necessary, to reduce deferred tax assets to amounts that are expected to be realized. The Company follows ASC 740-10, “Accounting for Uncertainty in Income Taxes” (“ASC 740-10”). This interpretation requires recognition and measurement of uncertain income tax positions using a “more-likely-than-not” approach. ASC 740-10 is effective for fiscal years beginning after December 15, 2006. Management has adopted ASC 740-10 for 2007, and they evaluate their tax positions on an annual basis, and have determined that as of December 31, 2013, no additional accrual for income taxes is necessary. The Company’s policy is to recognize both interest and penalties related to unrecognized tax benefits expected to result in payment of cash within one year are classified as accrued liabilities, while those expected beyond one year are classified as other liabilities. The Company has not recorded any interest or penalties since its inception. The Company files income tax returns in the U.S. federal tax jurisdiction and various state tax jurisdictions. The tax years for 2009 to 2012 remain open for examination by federal and/or state tax jurisdictions. The Company is currently not under examination by any other tax jurisdictions for any tax year. Revenue Recognition The Company currently has no revenue. Once the Company emerges from the development stage and generates revenue from the sales of our products, the following criteria for recognition will be utilized: 1) Persuasive evidence of an arrangement exists; 2) delivery has occurred or services have been rendered; 3) the seller’s price to the buyer is fixed or determinable, and 4) collectable is reasonably assured. Share Based Compensation The Company accounts for share-based compensation in accordance with the fair value recognition provisions of the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) No. 718 and No. 505. For employees, directors and non-employees, the fair value of the stock compensation is based upon the measurement date as determined at either (a) the date at which a performance commitment is reached, or (b) at the date at which the necessary performance to earn the equity instruments is complete. The Company has not issued any stock option or warrants. F-15 NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (Loss) Per Share of Common Stock Basic net loss per common share is computed using the weighted average number of common shares outstanding. Diluted earnings per share (EPS) include additional dilution from common stock equivalents, such as stock issuable pursuant to the exercise of stock options warrants and convertible notes. Common stock equivalents are not included in the computation of diluted earnings per share when the Company reports a loss because to do so would be anti-dilutive for periods presented. The Company has not issued any options or warrants to date. At December 31, 2013, the total shares issuable upon conversion of convertible notes payable would be approximately 10,600,000 shares of the Company’s common stock. Inventory Inventory is stated at the lower of cost (FIFO: first-in, first-out) or market, and includes raw materials and finished goods. The cost of finished goods includes the cost of packaging supplies, direct and indirect labor and other indirect manufacturing costs. As of December 31, 2013, the Company had inventory of $24,879 comprise solely of the Type2Defense product. Recent Issued Accounting Standards In July 2012, the FASB issued ASU 2012-02, Intangibles – Goodwill and Other (Topic 350): Testing Indefinite-Lived Intangible Assets for Impairment, on testing for indefinite-lived intangible assets for impairment. The new guidance provides an entity to simplify the testing for a drop in value of intangible assets such as trademarks, patents, and distribution rights. The amended standard reduces the cost of accounting for indefinite-lived intangible assets, especially in cases where the likelihood of impairment is low. The changes permit businesses and other organizations to first use subjective criteria to determine if an intangible asset has lost value. The amendments to U.S. GAAP will be effective for fiscal years starting after September 15, 2012. The Company’s adoption of this accounting guidance does not have a material impact on the financial statements and related disclosures. In February 2013, the FASB issued ASU 2013-05, Foreign Currency Matters (Topic 830): Parent’s Accounting for the Cumulative Translation Adjustment upon Derecognition of Certain Subsidiaries or Groups of Assets within a Foreign Entity or of an Investment in a Foreign Entity, The standard requires that companies present either in a single note or parenthetically on the face of the financial statements, the effect of significant amounts reclassified from each component of accumulated other comprehensive income based on its source (e.g., the release due to cash flow hedges from interest rate contracts) and the income statement line items affected by the reclassification (e.g., interest income or interest expense). If a component is not required to be reclassified to net income in its entirety (e.g., the net periodic pension cost), companies would instead cross reference to the related footnote for additional information (e.g., the pension footnote). The amendments to U.S. GAAP will be effective for fiscal years starting after December 15, 2012. The Company is currently assessing the impact of this accounting guidance on the financial statements and related disclosures should be applied. There were other updates recently issued, most of which represented technical corrections to the accounting literature or application to specific industries and are not expected to have a material impact on the Company’s financial position, results of operations or cash flows. F-16 NOTE 3 - STOCKHOLDERS’ EQUITY (DEFICIT) In October 2012, the Company increased the authorized common shares to 200,000,000. During April 2012, the Company issued 10,000 unregistered shares of the Company’s common stock to settle a notes payable and related accrued interest. These shares were valued at $1.09 per share or $10,935. During July 2012, a director was issued 200,000 unregistered shares of the Company’s common stock for director compensation. These shares were valued at $0.24 per share or $48,000. During July 2012, three consultants were issued 325,000 unregistered shares of the Company’s common stock for sales, financing and investor/public relations compensation. These shares were valued at $0.24 per share or $78,000. During July and September 2012, the Company issued 164,000 unregistered shares of the Company’s common stock, respectively, to settle a convertible note payable. These shares were valued at $0.025 per share or $4,100. During September 2012, a former director was issued 25,000 unregistered shares of the Company’s common stock for director compensation. These shares were valued at $0.22 per share or $5,500. During October 2012, our former Chief executive officer was issued 1,500,000 unregistered shares of the Company’s common stock as part of his employment contract dated July 1, 2012. These shares were valued at $0.15 per share or $225,000. During October and November 2012, the Company issued 155,000 registered shares of the Company’s common stock in their S-8 registration filed March 2011 to a consultant for legal compensation. These shares were valued at $0.179 per share or $27,675. During October 2012, the Company issued 170,833 unregistered shares of the Company’s common stock to settle a convertible note payable plus accrued interest. These shares were valued at $0.09 per share or $15,375. During November 2012, the Company issued 200,000 registered shares of the Company’s common stock in their S-8 registration filed March 2011 to an employee for service to the Company. These shares were valued at $0.125 per share or $25,000. During November 2012, the Company issued 52,000 registered shares of the Company’s common stock in their S-8 registration filed March 2011 to settle an accounts payable. These shares were valued at $0.121 per share or $6,300. During November and December 2012, the Company issued 500,000 unregistered shares of the Company’s common stock to settle two convertible notes payable. These shares were valued at $0.025 per share or $12,608. During December 2012, the Company issued 39,901 unregistered shares of the Company’s common stock to settle a convertible note payable plus accrued interest. These shares were valued at $0.09 per share or $3,566. F-17 NOTE 3 - STOCKHOLDERS’ EQUITY (DEFICIT) (CONTINUED) During December 2012, the Company issued 57,812 unregistered shares of the Company’s common stock to settle a convertible note payable plus accrued interest. These shares were valued at $0.09 per share or $5,228. During January 2013, a consultant was granted 150,000 registered shares of the Company’s common stock in their S-8 registration filed in March 2013 for website services. The shares were valued at $15,000 or $0.10 per share. The shares were issued on March 8, 2013. During January 2013, a consultant was granted 200,000 registered shares of the Company’s common stock in their S-8 registration filed in March 2013 for legal services to the Company. The shares were valued at $26,000 or $0.13 per share. The shares were issued on March 8, 2013. During January 2013 a consultant was issued 200,000 unregistered shares of the Company’s common stock for marketing services to the Company. These shares were valued at $26,000 or $0.13 per share. During January 2013 a consultant was granted 50,000 unregistered shares of the Company’s common stock for accounting and finance services to the Company. These shares were valued at $6,000 or $0.12 per share. The shares were issued on April 23, 2013. During January 2013, a consultant was granted 62,500 registered shares of the Company’s common stock in their S-8 registration filed March 2013 for marketing services to the Company. The shares were valued at $6,938 or $0.111 per share. The shares were issued on March 8, 2013. During January 2013, a consultant was granted 450,000 registered shares of the Company’s common stock in their S-8 registration filed March 2013 for marketing services to the Company. The shares were valued at $50,000 or $0.111 per share. The shares were issued on March 15, 2013. During January and February 2013, a convertible promissory note totaling $30,983 including interest was fully converted into 442,617 unregistered shares of the Company’s common stock at $0.07 per share. During February 2013, a consultant was granted 450,000 registered shares of the Company’s common stock in their S-8 registration filed March 2013 for marketing services to the Company. The Company issued 300,000 shares on April 23, 2013 and issued the remaining 150,000 shares on June 10, 2013 upon fulfilling certain performance obligations under the agreement. The 300,000 shares were valued at $56,700 or $0.189 per share and the 150,000 shares were valued at $19,500 or $.13 per share for an aggregate of $76,200. During March 2013, a consultant was granted 450,000 registered shares of the Company’s common stock in their S-8 registration filed March 2013 for marketing services to the Company. The Company issued 300,000 shares on April 22, 2013 and issued the remaining 150,000 shares on June 10, 2013 upon fulfilling certain performance obligations under the agreement. The 300,000 shares were valued at $69,000 or $0.23 per share and the 150,000 shares were valued at $19,500 or $.13 per share for an aggregate of $88,500. On March 4, 2013, the Company filed a Form S-8 with the Security and Exchange Commission. The 2013 Stock Incentive Plan may issue up to 30,000,000 registered shares of the Company’s common stock for services to the Company. The Company granted 25,625,000 (2,562,500 post reverse split shares) shares under this plan during the year ended December 31, 2013. During March 2013, a convertible promissory note was partially converted into unregistered shares of the Company’s common stock. The amount totaled $3,091 including interest was converted into 44,158 unregistered shares of the Company’s common stock at $0.07 per share. During March 2013, a convertible promissory notes totaling $4,433.61 including interest was fully converted into 177,344 unregistered shares of the Company’s common stock at $0.025 per share. The shares were issued on April 3, 2013. F-18 NOTE 3 - STOCKHOLDERS’ EQUITY (DEFICIT) (CONTINUED) During April 2013, the Company issued 50,000 registered shares of the Company’s common stock in their S-8 registration filed March 2013 to settle an accounts payable. These shares were valued at $0.128 per share or $6,375. During April 2013, a convertible promissory note was converted into unregistered shares of the Company’s common stock. The amount totaled $10,266 including interest was converted into 146,654 unregistered shares of the Company’s common stock at $0.07 per share. During May 2013 a consultant was granted 10,000 unregistered shares of the Company’s common stock for investor relation services to the Company. These shares were valued at $1,410 or $0.141 per share. During May 2013, a convertible promissory note was converted into unregistered shares of the Company’s common stock. The amount totaled $7,175 including interest was converted into 102,500 unregistered shares of the Company’s common stock at $0.07 per share. During June 2013, a director was issued 250,000 unregistered shares of the Company’s common stock for marketing services compensation. These shares were valued at $0.15 per share or $37,500. During June 2013, an employee was issued 350,000 unregistered shares of the Company’s common stock for website services and salary compensation. These shares were valued at $0.15 per share or $52,500. During June 2013, a consultant was issued 250,000 unregistered shares of the Company’s common stock for warehousing and fulfillment services compensation. These shares were valued at $0.15 per share or $37,500. During June 2013, our former Chief executive officer was issued 1,500,000 unregistered shares of the Company’s common stock for fulfilling provisions in the Type2 acquisition agreement dated September 26, 2011. These shares were valued at $0.15 per share or $225,000. During June 2013, a consultant was issued 250,000 unregistered shares of the Company’s common stock for investor relations compensation. These shares were valued at $0.15 per share or $37,500. During July 2013, a convertible promissory note was converted into unregistered shares of the Company’s common stock. The amount totaled $7,688 including interest was converted into 153,750 unregistered shares of the Company’s common stock at $0.05 per share. During August 2013, a consultant was granted 750,000 registered shares of the Company’s common stock in their S-8 registration filed March 2013 for marketing services and creating an infomercial for the Company. The shares were valued at $75,000 or $0.10 per share. During August 2013, a convertible promissory note was converted into unregistered shares of the Company’s common stock. The amount totaled $12,500 was converted into 125,000 unregistered shares of the Company’s common stock at $0.10 per share. During September 2013, a convertible promissory note was converted into unregistered shares of the Company’s common stock. The amount totaled $7,688 including interest was converted into 153,750 unregistered shares of the Company’s common stock at $0.05 per share. F-19 NOTE 3 - STOCKHOLDERS’ EQUITY (DEFICIT) (CONTINUED) During September 2013, a third party purchased a $12,000 demand promissory note dated January 25, 2013 from one of the Company’s investors. According to the release and settlement between the Company and the third party, the note may be converted into unregistered shares of the Company’s common stock for $.01 per share. The third party partially converted $6,000 of the demand promissory note into 600,000 unregistered shares of the Company’s common stock at $0.01 per share. In addition, the Company recorded a loss on conversion of debt for $21,000 in the accompanying statements of operations for the difference between the fair market value to the Company’s common stock and the conversion price. The fair market value on the date of conversion was $0.045 per share. During November 2013, a convertible promissory note was converted into unregistered shares of the Company’s common stock. On November 7, 2013, the Company agreed to modify the terms of the convertible promissory note to reduce the conversion price from $0.10 per share and to $0.015 per share. The amount totaled $10,750 including interest was converted into 716,667 unregistered shares of the Company’s common stock at $0.015 per share. During December 2013, a convertible promissory note was converted into unregistered shares of the Company’s common stock. On November 7, 2013, the Company agreed to modify the terms of the convertible promissory note to reduce the conversion price from $0.05 per share and to $0.015 per share. The amount totaled $10,189 including interest was converted into 679,251 unregistered shares of the Company’s common stock at $0.015 per share. During December 2013, a consultant was granted 800,000 unregistered shares of the Company’s common stock for a clinical research study on our Type2Defense product. These shares were valued at $0.018 per share or $14,400. The shares were issued in January 2014. As of December 31, 2013, the Company has 18,872,777 shares of common stock issued and outstanding. The Company has not issued any options or warrants to date. NOTE 4 - SHORT-TERM LOANS On January 25, 2013, the Company issued a $12,000 promissory note to an individual. The loan bears interest at 5% and is payable on demand. On September 24, 2013, the note was sold to a third party and the accrued interest was forgiven. According to the release and settlement between the Company and the third party, the note may be converted into unregistered shares of the Company’s common stock for $.01 per share. The third party converted $6,000 of the note into 600,000 unregistered shares of the Company’s common stock for $.01 per share. In addition, the Company recorded a loss on conversion of debt for $21,000 in the accompanying statements of operations for the difference between the fair market value to the Company’s common stock and the conversion price. The fair market value on the date of conversion was $0.045 per share. The unpaid balance was $6,000 at December 31, 2013. This note is included as short - term loans on the balance sheet. NOTE 5 - SHORT-TERM LOANS – RELATED PARTY On August 18, 2011, a related party advanced $1,500 to the Company. The advance is evidenced by a demand promissory note bearing interest at 5% per annum. The unpaid balance including accrued interest was $1,672 and $1,597 at December 31, 2013 and 2012, respectively. This noted is included as short-term loans – related party on the balance sheet. F-20 NOTE 6 - CONVERTIBLE NOTES PAYABLE On December 16, 2011, the Company was advanced $4,100 each from two unrelated parties. The advances are evidenced by two equal convertible promissory notes bearing interest at 5% per annum with a due date on December 31, 2012. In addition, at any time, the holders may convert the notes into shares of the Company’s common stock at an exercise price of $.025 per share. The Company calculated the fair value of the beneficial conversion feature as the difference between the conversion price and the fair market value of the Company’s common stock into on the date of issuance. The fair value of the conversion option in connection with the note on the date of issuance aggregated $8,200, and was recorded as debt discount. The debt discount was amortized through the term of the note. During July and September 2012, one of the convertible notes was converted into 164,000 unregistered shares of the Company’s common stock at $0.025 per share. During March 2013 the remaining $4,434, principle and accrued interest was converted into 177,344 unregistered shares of the Company’s common stock at $0.025 per share to fully satisfy the promissory note. On April 20, 2012, the Company issued a $2,500 convertible note to an individual. The loan bears interest at 5% and has a maturity date of October 20, 2012. In addition, at any time, the holder may convert the note into shares of the Company’s common stock at an exercise price of $0.009 per share. After the due date, the interest rate on the convertible note increased to 15%. The Company calculated the fair value of the beneficial conversion feature as the difference between the conversion price and the fair market value of the Company’s common stock into on the date of issuance. The fair value of the conversion option in connection with the note on the date of issuance aggregated $2,083, and was recorded as debt discount. The debt discount was amortized through the term of the note. The unpaid balance including accrued interest was $3,016 and $2,641 at December 31, 2013 and 2012, respectively. The Company is not compliant with the repayment terms of the note. On May 10, 2012, the Company issued a $2,600 convertible note to the Company’s former CEO. The loan bears interest at 5% and has a maturity date of November 10, 2012. In addition, at any time, the Company’s former CEO may convert the note into shares of the Company’s common stock at an exercise price of $0.009 per share. After the due date, the interest rate on the convertible note increases to 15%. The Company calculated the fair value of the beneficial conversion feature as the difference between the conversion price and the fair market value of the Company’s common stock into on the date of issuance. The fair value of the conversion option in connection with the note on the date of issuance aggregated $1,733, and was recorded as debt discount. The debt discount was amortized through the term of the note. During June 2013, the Company paid the principal balance of $2,600 to the Company’s former CEO. The unpaid balance including accrued interest of $2,714 was in default at December 31, 2012. On July 18, 2012, the Company issued a $30,000 convertible note to an individual. The loan bears interest at 5% and has a maturity date of December 18, 2012. In addition, at any time, the individual may convert the note into shares of the Company’s common stock at an exercise price of $0.07 per share. The Company calculated the fair value of the beneficial conversion feature as the difference between the conversion price and the fair market value of the Company’s common stock into on the date of issuance. The fair value of the conversion option in connection with the note on the date of issuance aggregated $30,000, and was recorded as debt discount. The debt discount was amortized through the term of the note. During January and February 2013, $30,983 including accrued interest was converted into 442,617 unregistered shares of the Company’s common stock at $0.07 per share to fully satisfy the promissory note. The unpaid balance including accrued interest of $30,813 was in default at December 31, 2012. On August 22, 2012, the Company issued a $3,000 convertible note to an individual. The loan bears interest at 5% and has a maturity date of January 22, 2013. In addition, at any time, the individual may convert the note into shares of the Company’s common stock at an exercise price of $0.07 per share. The Company calculated the fair value of the beneficial conversion feature as the difference between the conversion price and the fair market value of the Company’s common stock into on the date of issuance. The fair value of the conversion option in connection with the note on the date of issuance aggregated $10,000, and was recorded as debt discount. The debt discount was amortized through the term of the note. During March 2013, $3,091 including accrued interest was converted into 44,158 unregistered shares of the Company’s common stock at $0.07 per share to fully satisfy the promissory note. The unpaid balance including accrued interest was $3,056 at December 31, 2012. F-21 NOTE 6 - CONVERTIBLE NOTES PAYABLE (CONTINUED) On October 19, 2012, the Company issued a $10,000 convertible note to an individual. The loan bears interest at 5% and has a maturity date of April 19, 2013. In addition, at any time, the individual may convert the note into shares of the Company’s common stock at an exercise price of $0.07 per share. The Company calculated the fair value of the beneficial conversion feature as the difference between the conversion price and the fair market value of the Company’s common stock into on the date of issuance. The fair value of the conversion option in connection with the note on the date of issuance aggregated $3,000, and was recorded as debt discount. The debt discount was amortized through the term of the note. During April 2013, $10,266 including accrued interest was converted into 146,654 unregistered shares of the Company’s common stock at $0.07 per share to fully satisfy the promissory note. The unpaid balance including accrued interest was $10,105 at December 31, 2012. On November 23, 2012, the Company issued a $7,000 convertible note to an individual. The loan bears interest at 5% and has a maturity date of May 23, 2013. In addition, at any time, the individual may convert the note into shares of the Company’s common stock at an exercise price of $0.07 per share. The Company calculated the fair value of the beneficial conversion feature as the difference between the conversion price and the fair market value of the Company’s common stock into on the date of issuance. The fair value of the conversion option in connection with the note on the date of issuance aggregated $5,500, and was recorded as debt discount. The debt discount was amortized through the term of the note. During May 2013, $7,175 including accrued interest was converted into 102,500 unregistered shares of the Company’s common stock at $0.07 per share to fully satisfy the promissory note. The unpaid balance including accrued interest was $7,037 at December 31, 2012. On January 28, 2013, the Company issued a $12,500 convertible note to an individual. The loan bears interest at 5% and is payable on demand and may be converted at any time prior to December 31, 2013 into shares of the Company’s common stock. The conversion price shall be 80% of the average closing price of the stock for the ten (10) business days preceding the conversion notice. The conversion price shall not be lower than $0.10 per share. The Company calculated the fair value of the beneficial conversion feature as the difference between the conversion price and the fair market value of the Company’s common stock into on the date of issuance. The fair value of the conversion option in connection with the note on the date of issuance aggregated $8,508, and was recorded as debt discount. The debt discount was amortized through the term of the note. During August 2013, $12,500 was converted into 125,000 unregistered shares of the Company’s common stock at $0.10 per share to satisfy the principal balance of the promissory note. The unpaid balance of accrued interest was $328 at December 31, 2013. On January 30, 2013, the Company issued a $7,500 convertible note to an individual. The loan bears interest at 5% and has a maturity date of July 30, 2013. In addition, at any time, the holder may convert the note into shares of the Company’s common stock at an exercise price of $.05 per share. The Company calculated the fair value of the beneficial conversion feature as the difference between the conversion price and the fair market value of the Company’s common stock into on the date of issuance. The fair value of the conversion option in connection with the note on the date of issuance aggregated $7,500, and was recorded as debt discount. The debt discount was amortized through the term of the note. During August 2013, $7,688 including accrued interest was converted into 153,750 unregistered shares of the Company’s common stock at $0.05 per share to fully satisfy the promissory note. On February 20, 2013, the Company issued a $7,500 convertible note to an individual. The loan bears interest at 5% and has a maturity date of August 20, 2013. In addition, at any time, the holder may convert the note into shares of the Company’s common stock at an exercise price of $0.05 per share. The Company calculated the fair value of the beneficial conversion feature as the difference between the conversion price and the fair market value of the Company’s common stock into on the date of issuance. The fair value of the conversion option in connection with the note on the date of issuance aggregated $7,500, and was recorded as debt discount. The debt discount was amortized through the term of the note. During September 2013, $7,688 including accrued interest was converted into 153,750 unregistered shares of the Company’s common stock at $0.05 per share to fully satisfy the promissory note. On February 26, 2013, the Company issued a $12,500 convertible note to an individual. The loan bears interest at 5% and is payable on demand and may be converted at any time prior to January 31, 2014 into shares of the Company’s common stock. The conversion price shall be 80% of the average closing price of the stock for the ten (10) business days preceding the conversion notice. The conversion price shall not be lower than $0.01 per share. The Company calculated the fair value of the beneficial conversion feature as the difference between the conversion price and the fair market value of the Company’s common stock into on the date of issuance. The fair value of the conversion option in connection with the note on the date of issuance aggregated $1,705, and was recorded as debt discount. The debt discount was amortized through the term of the note. The unpaid balance including accrued interest was $13,021 at December 31, 2013. F-22 NOTE 6 - CONVERTIBLE NOTES PAYABLE (CONTINUED) On April 30, 2013, the Company issued a $10,000 convertible note to an individual. The loan bears interest at 5% and has a maturity date of October 30, 2013. In addition, at any time, the holder may convert the note into shares of the Company’s common stock at an exercise price of $0.05 per share. The Company calculated the fair value of the beneficial conversion feature as the difference between the conversion price and the fair market value of the Company’s common stock into on the date of issuance. The fair value of the conversion option in connection with the note on the date of issuance aggregated $10,000, and was recorded as debt discount. The debt discount was amortized through the term of the note. On November 7, 2013, the Company agreed to modify the terms of the convertible promissory note to reduce the conversion price from $0.05 per share and to $0.015 per share. During November 2013, $10,750 including accrued interest was converted into 716,667 unregistered shares of the Company’s common stock at $0.015 per share to fully satisfy the promissory note. On April 30, 2013, the Company issued a $10,000 convertible note to an individual. The loan bears interest at 10% and has a maturity date of October 30, 2013. In addition, at any time, the holder may convert the note into shares of the Company’s common stock at an exercise price of $0.10 per share. The Company calculated the fair value of the beneficial conversion feature as the difference between the conversion price and the fair market value of the Company’s common stock into on the date of issuance. The fair value of the conversion option in connection with the note on the date of issuance aggregated $4,800, and was recorded as debt discount. The debt discount was amortized through the term of the note. On November 7, 2013, the Company agreed to modify the terms of the convertible promissory note to reduce the conversion price from $0.10 per share to $0.015 per share. During December 2013, $10,189 including accrued interest was converted into 679,251 unregistered shares of the Company’s common stock at $0.015 per share to fully satisfy the promissory note. In addition, the fair value of the conversion option in connection with the note on the date of modification aggregated $5,200, and was recorded as debt discount. Since the note was past due and in default, the debt discount was recognized as interest expense on the date of modification. On May 27, 2013, the Company issued a $12,500 convertible note to an individual. The loan bears interest at 5% and has a maturity date of November 27, 2013. In addition, at any time, the holder may convert the note into shares of the Company’s common stock at an exercise price of $.005 per share. The Company calculated the fair value of the beneficial conversion feature as the difference between the conversion price and the fair market value of the Company’s common stock into on the date of issuance. The fair value of the conversion option in connection with the note on the date of issuance aggregated $12,500, and was recorded as debt discount. The debt discount was amortized through the term of the note. The unpaid balance including accrued interest was $12,865 at December 31, 2013. The Company is not compliant with the repayment terms of the note and currently in default. On June 11, 2013, the Company issued a $6,500 convertible note to an individual. The loan bears interest at 5% and has a maturity date of August 11, 2013. In addition, at any time, the holder may convert the note into shares of the Company’s common stock at an exercise price of $.0065 per share. The Company calculated the fair value of the beneficial conversion feature as the difference between the conversion price and the fair market value of the Company’s common stock into on the date of issuance. The fair value of the conversion option in connection with the note on the date of issuance aggregated $2,500, and was recorded as debt discount. The debt discount was amortized through the term of the note. The unpaid balance including accrued interest was $6,676 at December 31, 2013. The Company is not compliant with the repayment terms of the note and currently in default. On June 11, 2013, the Company issued a $6,222 convertible note to an individual. The loan bears interest at 5% and has a maturity date of August 11, 2013. In addition, at any time, the holder may convert the note into shares of the Company’s common stock at an exercise price of $.0065 per share. The Company calculated the fair value of the beneficial conversion feature as the difference between the conversion price and the fair market value of the Company’s common stock into on the date of issuance. The fair value of the conversion option in connection with the note on the date of issuance aggregated $2,393, and was recorded as debt discount. The debt discount was amortized through the term of the note. The unpaid balance including accrued interest was $6,391 at December 31, 2013. The Company is not compliant with the repayment terms of the note and currently in default. F-23 NOTE 6 - CONVERTIBLE NOTES PAYABLE (CONTINUED) On June 11, 2013, the Company issued a $6,500 convertible note to an individual. The loan bears interest at 5% and has a maturity date of August 11, 2013. In addition, at any time, the holder may convert the note into shares of the Company’s common stock at an exercise price of $.0065 per share. The Company calculated the fair value of the beneficial conversion feature as the difference between the conversion price and the fair market value of the Company’s common stock into on the date of issuance. The fair value of the conversion option in connection with the note on the date of issuance aggregated $2,500, and was recorded as debt discount. The debt discount was amortized through the term of the note. The unpaid balance including accrued interest was $6,676 at December 31, 2013. The Company is not compliant with the repayment terms of the note and currently in default. On June 18, 2013, the Company issued a $12,500 convertible note to an individual. The loan bears interest at 5% and has a maturity date of December 18, 2013. In addition, at any time, the holder may convert the note into shares of the Company’s common stock at an exercise price of $.005 per share. The Company calculated the fair value of the beneficial conversion feature as the difference between the conversion price and the fair market value of the Company’s common stock into on the date of issuance. The fair value of the conversion option in connection with the note on the date of issuance aggregated $12,500, and was recorded as debt discount. The debt discount was amortized through the term of the note. The unpaid balance including accrued interest was $12,839 at December 31, 2013. The Company is not compliant with the repayment terms of the note and currently in default. On August 2, 2013, the Company issued a $10,000 convertible note to an individual. The loan bears interest at 5% and has a maturity date of February 2, 2014. In addition, at any time, the holder may convert the note into shares of the Company’s common stock at an exercise price of $.005 per share. The Company calculated the fair value of the beneficial conversion feature as the difference between the conversion price and the fair market value of the Company’s common stock into on the date of issuance. The fair value of the conversion option in connection with the note on the date of issuance aggregated $11,000, and was recorded as debt discount. The debt discount was amortized through the term of the note. The unpaid balance including accrued interest was $10,208 at December 31, 2013. The Company is not compliant with the repayment terms of the note and currently in default. On December 10, 2013, the Company issued a $3,000 convertible note to an individual. The loan bears interest at 5% and has a maturity date of June 10, 2014. In addition, at any time, the holder may convert the note into shares of the Company’s common stock at an exercise price of $0.015 per share. The Company calculated the fair value of the beneficial conversion feature as the difference between the conversion price and the fair market value of the Company’s common stock into on the date of issuance. The fair value of the conversion option in connection with the note on the date of issuance aggregated $10,000, and was recorded as debt discount. The debt discount is amortized through the term of the note. The unpaid balance including accrued interest was $3,009 at December 31, 2013. On December 10, 2013, the Company issued a $5,000 convertible note to an individual. The loan bears interest at 5% and has a maturity date of June 10, 2014. In addition, at any time, the holder may convert the note into shares of the Company’s common stock at an exercise price of $0.015 per share. The Company calculated the fair value of the beneficial conversion feature as the difference between the conversion price and the fair market value of the Company’s common stock into on the date of issuance. The fair value of the conversion option in connection with the note on the date of issuance aggregated $10,000, and was recorded as debt discount. The debt discount is amortized through the term of the note. The unpaid balance including accrued interest was $5,014 at December 31, 2013. As of December 31, 2013, the total short-term loans - convertible amounted to $80,043 including $2,821 of accrued interest. The conversion price of the notes were fixed and determinable on the date of issuance and as such in accordance with ASC Topic 815 “ Derivatives and Hedging ” (“ASC 815”), the embedded conversion options of the note were not considered derivative liabilities. The beneficial conversion features of certain convertible notes are at a price below fair market value. The Company recorded interest expense on the debt discount of $96,864 and $34,496 for the years ended December 31, 2013 and 2012, respectively. In addition, the out-of-period adjustment at December 31, 2013 for the improperly valued beneficial conversion option of the Company’s convertible notes payable was a charge to interest expense of $58,272 (see Note 2 in the Notes to the Financial Statements) F-24 NOTE 7 - PROVISION FOR INCOME TAXES Deferred income taxes are determined using the liability method for the temporary differences between the financial reporting basis and income tax basis of the Company’s assets and liabilities. Deferred income taxes are measured based on the tax rates expected to be in effect when the temporary differences are included in the Company’s tax return. Deferred tax assets and liabilities are recognized based on anticipated future tax consequences attributable to differences between financial statement carrying amounts of assets and liabilities and their respective tax bases. The income tax provision (benefit) consists of the following: December 31, 2013 2012 Federal Current $ - $ - Deferred (1,666,585) (1,170,476 ) State and local Current – – Deferred – – (1,666,585 ) (1,170,476 ) Change in valuation allowance 1,666,585 1,170,476 Income tax provision (benefit) $ - $ - At December 31, 2013 and 2012, the Company had a net operating loss (“NOL’s”) carry forward in the amount of $4,901,721 and $3,442,575, respectively, available to offset future taxable income. The Company established valuation allowances equal to the full amount of the deferred tax assets due to the uncertainty of the utilization of the operating losses in future periods. The Company has not filed its federal tax returns since inception and therefore, the NOL’s will not be available to offset future taxable income until the tax returns are filed with the respective federal tax authorities. A reconciliation of the Company’s effective tax rate as a percentage of income before taxes and federal statutory rate for the periods ended December 31, 2013 and 2012 is summarized below. 2013 2012 Federal statutory rate (34.0 )% (34.0 )% State income taxes, net of federal benefits 0.0 0.0 Valuation allowance 34.0 34.0 F-25 NOTE 8 - CONVERSION OF ACCOUNTS PAYABLE AND NOTES PAYABLE TO EQUITY On June 15, 2012, Gilles Chaumillon resigned as President, Chief Executive Officer and Director of the Company. In addition, Mr. Chaumillon agreed to settle his outstanding debt, interest and account payable balances of $227,811 for $10,000 payable in ten equal monthly installments of $1,000 beginning July 2012. At June 30, 2012, the Company wrote-off the net amount of $217,811 as a conversion of accounts payable and notes payable to equity. At December 31, 2013, Mr. Chaumillon is owed $9,000. NOTE 9 - INTELLECTUAL PROPERTY On September 26, 2011, the Company acquired all the assets and intellectual property rights of Type2 Defense, a natural dietary supplement formulated to support healthy glucose levels for type 2 diabetics and pre-diabetics. The acquisition from Type2 Defense, a Texas based sole proprietorship was for the issuance of 2,000,000 shares of the Company’s common stock. The shares are valued at $200,000 or $0.10 per share based on the closing price of the Company’s common stock on September 26, 2011. The agreement also includes the issuance of 1,000,000 shares of the Company’s common stock upon achieving certain operational milestones and an additional 1,000,000 shares of Company’s common stock upon reaching 1,500 customers. On November 4, 2011, an advance of 60,000 shares of the Company’s common stock related to the reaching of 1,500 customers’ milestone in the original agreement was approved by the board of directors. The shares were valued at $0.13 per share or $6,600. The issuance of 10,000,000 shares of the Company’s common stock upon reaching 1,500 customers was reduced by the advance to 940,000 shares. During June 2013, the Company achieved the operational milestones as specified in the September 26, 2011 Type 2 Defense acquisition agreement. On June 18, 2013, the Company issued 1,000,000 shares to the Company’s former CEO for the Type2 Defense product meeting the operational milestones. The shares were valued at $0.15 per share or $150,000 and included as stock based compensation in the accompanying statement of operation. In addition, on June 18, 2013, an advance of 500,000 shares of the Company’s common stock related to reaching of 1,500 customers milestone in the original agreement was approved by the board of directors and issued to the Company’s former CEO. The shares were valued at $0.15 per share or $75,000 and included as stock based compensation in the accompanying statement of operation. As of June 20, 2014 the agreement provisions for reaching 1,500 customers for 440,000 shares of the Company’s common stock has not been achieved. All assets other than the intellectual property had a fair value of $0, with the intellectual property was valued at $200,000. Since the Company has not been able to generate substantial revenues from our Type2Defense product over the last two years and have only produced minimal sales of the product in 2014, the Company elected to write-off the $200,000 intellectual property for Type2Defense as impaired. NOTE 10 - FAIR VALUE MEASUREMENTS The Company adopted certain provisions of ASC Topic 820. ASC 820 defines fair value, provides a consistent framework for measuring fair value under generally accepted accounting principles and expands fair value financial statement disclosure requirements. ASC 820’s valuation techniques are based on observable and unobservable inputs. Observable inputs reflect readily obtainable data from independent sources, while unobservable inputs reflect our market assumptions. ASC 820 classifies these inputs into the following hierarchy: · Level 1 inputs: Quoted prices for identical instruments in active markets. · Level 2 inputs: Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations whose inputs are observable or whose significant value drivers are observable. · Level 3 inputs: Instruments with primarily unobservable value drivers. F-26 NOTE 11 - SUBSEQUENT EVENTS During January 2014, our former chief executive officer canceled 600,000 of his personal unregistered shares of the Company’s common stock to satisfy a promissory note conversion request. These shares were valued at $0.035 per share or $21,000. During January 2014, a promissory note was converted into unregistered shares of the Company’s common stock. The amount totaled $12,849 including interest was converted into 856,632 unregistered shares of the Company’s common stock at $0.015 per share. On January 6, 2014, the Company agreed to modify the terms of this $12,500 convertible promissory notes dated May 27, 2013. The conversion rate was reduced from $0.05 per share to $0.015 per share. During March 2014, a promissory note was partially converted into unregistered shares of the Company’s common stock. The amount totaled $4,000 was converted into 800,000 unregistered shares of the Company’s common stock at $0.005 per share. During March 2014, a promissory note was converted into unregistered shares of the Company’s common stock. The amount totaled $13,151 including interest was converted into 658,594 unregistered shares of the Company’s common stock at $0.020 per share. During March 2014, the Company signed an agreement with a firm to provide strategic business development activities for the Company. The firm will be compensated with 360,000 unregistered shares of the Company’s common stock payable in increments of 30,000 shares per month for twelve (12) months starting on April 1, 2014. As of June 20, the Company issued 90,000 unregistered shares of the Company’s common stock which were valued at $0.014 per share or $1,239. On April 7, 2014, the Company terminated the Marketing Services Agreement Dated July 24, 2013 between the Company and Damon R Devitt to produce an infomercial for the Type2Defense product. The Company acknowledges that the infomercial stated in the Marketing Services Agreement dated July 24, 2013 has been completed, but the Company does not desire to complete a media placement using the infomercial or use this infomercial for any benefit to the Company. The Company has resolved to move in a different direction for marketing the Type2Defense product. In addition, the Company acknowledges is owes Mr. Devitt 7,500,000 S-8 shares for completing the infomercial, which must be adjusted for the Company’s 1 for 10 reverse split declared effective on February 26, 2014. Thus, the Company issued 750,000 S-8 shares (7,500,000 / 10) to Mr. Devitt at $.0151 per share on April 15, 2014. On April 8, 2014, the Company appointed James Hodge as Chairmen of the Company’s board of directors. On April 8, 2014, in a special meeting of the board of directors, the board voted in favor of amending the Company’s Bylaws to decrease the number of members of the board of directors from three to one. Messrs. Gallagher and Metzger agreed to resign from the board and accept other duties for the Company as follows: William Gallagher, Chief Executive Officer and director elected to retire from the Company. Mr. Gallagher signed a twenty four (24) month advisory agreement to promote the Company’s product(s), introduce new products and to provide capital formation initiatives. Mr. Gallagher will be compensated with a $2,500 monthly fee (an aggregate of $60,000). In addition, Mr. Gallagher will receive a 10% commission on the collections of sales he consummates. F-27 NOTE 11 - SUBSEQUENT EVENTS (CONTINUED) Thomas E. Metzger, PhD , President, Chief Operating Officer and director resigned from the Company’s board of directors . Mr. Metzger signed a twelve (12) month consulting agreement to continue as the Company’s President. Mr. Metzger will receive Two Hundred and Fifty Thousand (250,000) unregistered shares of the Company’s common stock in consideration for prior services rendered to the Company. In addition, the Company agreed to pay Mr. Metzger $18,000 for the twelve month consulting period. In lieu of cash, the Company will issue unregistered shares of the Company’s common stock at September 4, 2014 equal to $18,000 with a cap of 250,000 unregistered shares of the Company’s common stock which shall be determined based on the average closing price of the Company’s common stock, as publicly traded, during the last five (5) business days prior to September 8, 2014. On April 8, 2014, the Company issued a $21,000 convertible note to an individual. The loan bears interest at 8% and has a maturity date of October 8, 2014. In addition, at any time, the holder may convert the note into shares of the Company’s common stock at an exercise price of $.0065 per share. On April 21, 2014, the Company promoted Thomas Metzger PhD, President to Chief Executive Officer and Chief Financial Officer. In addition, Peggy Knight, Executive Vice-President of Marketing was promoted to Chief Marketing Officer. During April 2014, our former chief executive officer was re-issued 600,000 unregistered shares of the Company’s common stock which were canceled in January 2014 to satisfy a promissory note conversion request. These shares were valued at $0.035 per share or $21,000. During April 2014, Thomas Metzger, our chief executive officer/chief financial officer was issued 250,000 unregistered shares of the Company’s common stock for compensation. These shares were valued at $0.0151 per share or $3,375. During April 2014, James Hodge, our chairman of the board of directors, was issued 250,000 unregistered shares of the Company’s common stock for joining the Company’s board. These shares were valued at $0.0151 per share or $3,375. During April 2014, Peggy Knight our chief marketing officer was issued 750,000 unregistered shares of the Company’s common stock for marketing compensation. These shares were valued at $0.0151 per share or $11,325. On May 8, 2014, the Company issued a $21,000 convertible note to an individual. The loan bears interest at 8% and has a maturity date of November 8, 2014. In addition, at any time, the holder may convert the note into shares of the Company’s common stock at an exercise price of $.0065 per share. On May 28, 2014, the Company issued a $10,000 convertible note to an individual. The loan bears interest at 5% and has a maturity date of November 28, 2014. In addition, at any time, the holder may convert the note into shares of the Company’s common stock at an exercise price of $.0065 per share. F-28 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure. (a) Former independent accountants. (i) On April 30, 2014, we notified KBL, LLP (KBL), our independent registered public accounting firm, that it was being replaced. (ii) The report of KBL on our financial statements as of and for the year ended December 31, 2012 and December 31, 2011 did not contain an adverse opinion or a disclaimer of opinion nor was it qualified or modified as to uncertainty, audit scope or accounting principles, except that the report included an explanatory paragraph relating to an uncertainty as to our ability to continue as a going concern. (iii) The decision to discontinue the audit services of KBL was approved by our Board of Directors. (iv) During the fiscal years ended December 31, 2012 and 2011 and through April 30, 2014, there has been no disagreement with KBL on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreement, if not resolved to the satisfaction of KBL, would have caused KBL to make reference to the subject matter of the disagreement in its report. There have been no reportable events as provided in Item 304 (a)(1)(v) of Regulation S-K up to and including the dismissal of KBL except for the material weakness in its system of internal controls over financial reporting which KBL advised us existed. The controls designed were adequate for financial disclosures required for the preparation of our Form 10-Q and 10-K filings; however due to lack of resources in our accounting department the controls were not operating effectively. Our board of directors discussed this issue with KBL. KBL has been fully authorized by us to answer all inquiries of KBL concerning the controls that were not operating effectively. There are no limitations placed on KBL or KBL concerning the inquiry of any matter related to our financial reporting. (v) We provided KBL with a copy of the disclosure and requested that KBL furnish us with a letter addressed to the SEC stating whether it agreed with the above statements. A copy of the letter from KBL, dated April 30, 2014 was filed as Exhibit 16.1 to the Form 8-K filed with the SEC on May 5, 2014. (b) New independent accountants. (i) On April 30, 2014, we retained Anton & Chia, LLP (A&C) as our new independent registered public accounting firm to audit Registrant’s financial statements for the fiscal year ending December 31, 2013. The appointment was approved by our Board of Directors. (ii) During our two most recent fiscal years and any subsequent interim period preceding such engagement, we have not previously consulted with A&C on the application of accounting principles to a specified transaction, or on the type of audit opinion that might be rendered on our financial statements, or any other matter that was the subject of a disagreement between us and A&C or was a reportable event. In addition, we did not consult with A&C regarding the material weakness of our internal control over financial reporting prior to engaging A&C.