Glucose Health, Inc. 10-K

Item 9A. Controls and Procedures. Evaluation of disclosure controls and procedures. We maintain controls and procedures designed to ensure that information required to be disclosed in the reports that we file or submit under the Securities Exchange Act of 1934 is (i) recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission and (ii) accumulated and communicated to our principal executive and principal financial officers to allow timely decisions regarding required disclosure. Based upon their evaluation of those controls and procedures performed as of December 31, 2013, the date of this report, our former Chief executive officer/former Chief financial officer concluded that our disclosure controls and procedures were not effective. 30 Management's annual report on internal control over financial reporting. The Company’s management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is a set of processes designed by, or under the supervision of, a company’s principal executive and principal financial officers, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that: · pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the Company’s transactions and dispositions of the Company’s assets; · provide reasonable assurance that The Company’s transactions are recorded as necessary to permit preparation of the Company’s financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of the Company’s management and directors; and · provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. It should be noted that any system of internal control, however well designed and operated, can provide only reasonable, and not absolute, assurance that the objectives of the system will be met. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Under the supervision and with the participation of the Company’s management, including the Company’s Former Chief Executive Officer/Former Chief Financial Officer, the Company conducted an assessment of the effectiveness of the Company’s internal control over financial reporting based on criteria established in “Internal Control-Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), as of December 31, 2013. A material weakness is a control deficiency, or combination of control deficiencies, that results in more than a remote likelihood that a material misstatement of annual or interim financial statements will not be prevented or detected. In connection with the assessment described above, management identified the following control deficiency that represents material weaknesses at December 31, 2013: · Due to the limited number of Company personnel, a lack of segregation of duties and responsibilities with respect to our cash and control over the disbursements related thereto. An essential part of internal control is for certain procedures to be properly segregated and the results of their performance are adequately reviewed. This is normally accomplished by assigning duties so that no one person handles a transaction from beginning to end and incompatible duties between functions are not handled by the same person. As a result of this material weakness described above, management has concluded that, as of December 31, 2013, the Company’s internal control over financial reporting was not effective based on the criteria in “Internal Control-Integrated Framework” issued by COSO. The Company intends to augment the Company’s internal controls procedures and expand the Company’s accounting staff. The Company intends to initiate measures to remediate and refine the Company’s internal controls to address this identified material weakness as the Company grows and obtains a stronger cash position that would justify additional expenditures. Changes in Internal Control Over Financial Reporting There have been no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) or 15d-15(f) of the Exchange Act) during our most recently completed quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. Item 9B. Other Information. None. 31 PART III Item 10. Directors, Executive Officers and Corporate Governance. As of the date of this Annual Report, the following table sets forth information regarding our executive officers and directors: Name Age Position Thomas E. Metzger, PHD 52 Chief Executive Officer, Chief Financial Officer and Former Director James Hodge 53 Chairman of the Board of Directors Peggy Knight 58 Chief Marketing Officer and Executive Vice President of Marketing William Gallagher 74 Former Chief Executive Officer, Chief Financial Officer and Director Thomas E. Metzger, PHD. Mr. Metzger is a skilled business executive having served as a chief executive officer, president, chief operating officer of multiple hotel and restaurant companies. He has special understanding and expertise in all aspects of the food service and hospitality industry including strategic planning, concept development, construction, financial development and management, human resources and marketing. In 2006 he formed the South Seas Restaurant Management Company which operated Little Caesars Pizza and Buffalo Wild Wings in the Hawaiian Islands. From 2004-2006 he serves as president and chief operating officer of Heart of America Restaurants and Inn’s (“HOARI”). HOARI operated eight different full service restaurant brands and seven different hotel franchise brands together with the Wild Wood Lodges brand. From 2001 through 2004 he served as president and chief financial officer of W P Pacific, Inc. W P Pacific owned and operated Wolfgang Puck Café’s, Wolfgang Puck Express, Cucina Presto, Cucina-Cucina restaurants and the Coffee and Tea Leaf coffee shops. From 1999 through 2001 her served as chief executive officer and president of Sizzler USA, Inc. which is engaged in the operation, development and franchising of Sizzler Family Steakhouse. Prior to this, Mr. Metzger had executive level positions with Wrapsters, Inc., Kenny Rogers Roasters International, Inc. and Mid Atlantic Restaurant Systems. He earned an undergraduate and masters of Science degree from LaSalle University in hotel and restaurant management. Mr. Metzger joined the board on October 10, 2011. On February 25, 2014, Mr Metzger was appointed president and chief operating officer of the Company. On April 8, 2014, Mr Metzger resigned as director of the Company. On April 21, 2014, Mr. Metzger was appointed chief executive officer and chief financial officer of the Company. James Hodge. Mr. Hodge was appointed as Chairmen of the Company’s board of directors on April 8 th , 2014. Mr. Hodge serves as Board Chairman and CEO of ReelTime Rentals, Inc., overseeing and developing the company's new business plan and strategic initiatives. For the previous ten years, Mr. Hodge was a consultant to the private equity firm Capital Consulting, Inc. of Delray Beach, Florida. Prior to this engagement he served as Director of Corporate Credit for Speedcom Wireless Corporation of Sarasota, Florida. He has also managed several seven figure equipment lease portfolios. Mr. Hodge has worked in the development of wireless technology businesses, exploring new and exciting platforms. Peggy Knight . Ms. Knight, joined the company as Executive Vice-President of Marketing On December 19, 2013. Ms. Knight has over 20 years of retail experience with Walmart Stores Inc. and Sam’s Club. Her expertise includes operations, marketing, sourcing, product development, vendor relations and financial services. A long-time resident of Rogers, AR, home to the first Walmart which was built in 1962, she is currently the President of a highly successful independent consulting firm which for the past several years has assisted companies in bringing new products into Sam’s and Walmart eco-system and to set them apart from the fierce competition, that all vendors face in the aisles of the nation’s largest retailer. On April 21, 2014, Ms. Knight was appointed the Company’s Chief Marketing Officer. William Gallagher. On April 8, 2014, Mr. Gallagher retired from the Company. 32 All directors hold office until the completion of their term of office, which is not longer than one year, or until their successors have been elected. All officers are appointed annually by the board of directors and, subject to employment agreements (which do not currently exist) serve at the discretion of the board. Currently, directors receive no compensation. There are no family relationships between any of our officers or directors. There are no orders, judgments, or decrees of any governmental agency or administrator, or of any court of competent jurisdiction, revoking or suspending for cause any license, permit or other authority to engage in the securities business or in the sale of a particular security or temporarily or permanently restraining any of our officers or directors from engaging in or continuing any conduct, practice or employment in connection with the purchase or sale of securities, or convicting such person of any felony or misdemeanor involving a security, or any aspect of the securities business or of theft or of any felony. Nor are any of the officers or directors of any corporation or entity affiliated with us so enjoined. Code of Ethics. We do not currently have a Code of Ethics that applies to all employees, including our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions. We plan to adopt a Code of Ethics. Nominating Committee. Our entire Board participates in consideration of director nominees. The Board will consider candidates who have experience as a board member or senior officer of a company or who are generally recognized in a relevant field as a well-regarded practitioner, faculty member or senior government officer. The Board will also evaluate whether the candidates' skills and experience are complementary to the existing Board's skills and experience as well as the Board's need for operational, management, financial, international, technological or other expertise. The Board will interview candidates that meet the criteria and then select nominees that Board believes best suit our needs. The Board will consider qualified candidates suggested by stockholders for director nominations. Stockholders can suggest qualified candidates for director nominations by writing to our board of directors at 1250 NE Loop 410, San Antonio, TX 78209. Submissions that are received that meet the criteria described above will be forwarded to the Board for further review and consideration. The Board will not evaluate candidates proposed by stockholders any differently than other candidates Audit Committee Financial Expert. Our board of directors does not have an “audit committee financial expert,” within the meaning of such phrase under applicable regulations of the Securities and Exchange Commission, serving on its audit committee. The board of directors believes that all members of its audit committee are financially literate and experienced in business matters, and that one or more members of the audit committee are capable of (I) understanding generally accepted accounting principles (“GAAP”) and financial statements, (ii) assessing the general application of GAAP principles in connection with our accounting for estimates, accruals and reserves, (iii) analyzing and evaluating our financial statements, (iv) understanding our internal controls and procedures for financial reporting; and (v) understanding audit committee functions, all of which are attributes of an audit committee financial expert. However, the board of directors believes that there is not any audit committee members who have obtained these attributes through the experience specified in the SEC’s definition of “audit committee financial expert.” Further, like many small companies, it is difficult for the Company to attract and retain board members who qualify as “audit committee financial experts,” as competition for these individuals is significant. The board believes that its current audit committee is able to fulfill its role under SEC regulations despite not having a designated “audit committee financial expert.” We believe the cost related to retaining a financial expert at this time is prohibitive. Further, because of our start-up operations, we believe the services of a financial expert are not warranted. Audit Committee. Presently, the board of directors acts as the audit committee. The board of directors does not have an audit committee financial expert. The board of directors has not yet recruited an audit committee financial expert to join the board of directors because we have only recently commenced a significant level of financial operations. 33 Item 11. Executive Compensation Summary Compensation Table. The table set forth below summarizes the annual and long-term compensation for services in all capacities to us payable to our chief executive officer, our other executive officers and our directors for years ended December 31, 2013 and 2012. Annual Compensation Long Term Compensation Awards Name and Principal Position Year Salary ($) Bonus ($) Other Annual Compensation ($) Restricted Stock Awards ($) Securities Underlying Options /SARs (#) Payouts LTIP Payouts ($) All Other Compensation Total Compensation Gilles Chaumillon, 2013 None None None None None None None None former president, chief executive officer, director (a) 2012 None None None None None None None None William Gallagher, 2013 None None None None None None $ 225,000 (1) $ 225,000 former chief executive officer, chief financial officer, director (b) 2012 None None None None None None $ 225,000 (2) $ 225,000 Thomas E. Metzger PHD, 2013 None None None None None None $ 37,500 (3) $ 37,500 chief executive officer, chief financial officer and former director 2012 None None None None None None $ 48,000 (4) $ 48,000 James Hodge, 2013 None None None None None None None None chairman of the board of directors 2012 None None None None None None None None Peggy Knight, 2013 None None None None None None None None executive VP of marketing, chief marketing officer 2012 None None None None None None None None Mark Solomon, 2013 None None None None None None None None former director (c) 2012 None None None None None None $ 5,500 (5) $ 5,500 _________________ (1) Value of 1,500,000 unregistered shares issued in June 2013 at $0.15 per share for achieved the operational milestones as specified in the September 26, 2011 Type 2 Defense acquisition agreement. (2) Value of 1,500,000 unregistered shares issued in October 2012 at $0.15 per share in accordance with Mr. Gallaher’s employment agreement dated July 1, 2012. (3) Value of 250,000 unregistered shares issued in June 2013 at $0.15 per share for Marketing services to the Company. (4) Value of 200,000 unregistered shares issued in July 2012 at $0.13 per share for director compensation to the Company. (5) Value of 25,000 unregistered shares issued in July 2012 at $0.22 per share for director compensation to the Company. (a) Mr. Chaumillon resigned June 15, 2012. (b) Mr. Gallagher resigned April 8, 2014. (c) Mr. Solomon resigned February 15, 2012 34 Employment Contracts and Termination of Employment. Mr. Gallagher signed an 18 month employment contract on July 1, 2012. The contract expired on December 31, 2013. According to the contract, Mr. Gallagher is compensated with 1,500,000 unregistered shares of the Company’s common stock valued at $225,000 or $0.15 per share. The shares were issued in October 2012. Only Mr. Gallaher has an employment contract. We have no other plans or arrangements in respect of remuneration received or that may be received by our executive officers to compensate such officers in the event of termination of employment as a result of resignation or retirement. Outstanding Equity Awards. As of December 31, 2013, the following named executive officers had the following unexercised options, stock that has not vested, and equity incentive plan awards: Option Awards Stock Awards Name Number of Securities Underlying Unexercised Options # Exercisable # Un-exercisable Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Options Option Exercise Price Option Expiration Date Number of Shares or Units of Stock Not Vested Market Value of Shares or Units Not Vested Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights Not Vested Value of Unearned Shares, Units or Other Rights Not Vested Gilles Chaumillon, former president, former Chief executive officer 0 0 0 0 0 0 0 0 0 William Gallagher, former Chief executive officer, former Chief financial officer, director 0 0 0 0 0 0 0 0 0 Thomas E. Metzger PHD, president and director 0 0 0 0 0 0 0 0 0 James Hodge, chairman of the board of directors 0 0 0 0 0 0 0 0 0 Peggy Knight, chief marketing officer director 0 0 0 0 0 0 0 0 0 Mark Solomon, former director 0 0 0 0 0 0 0 0 0 35 Stock Options/SAR Grants . No grants of stock options or stock appreciation rights were made since our date of incorporation on March 27, 2007. Long-Term Incentive Plans . There are no arrangements or plans in which we provide pension, retirement or similar benefits for directors or executive officers. We do not have any material bonus or profit sharing plans pursuant to which cash or non-cash compensation is or may be paid to our directors or executive officers. Director Compensation. Since March 27, 2007 through December 31, 2013, none of our directors received salary compensation solely by virtue of their serving on the Company’s Board of Directors other than share based compensation. Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters. The following table sets forth certain information regarding the beneficial ownership of our common stock as of December 31, 2013, by each person or entity known by us to be the beneficial owner of more than 5% of the outstanding shares of common stock, each of our directors and named executive officer, and all of our directors and executive officer as a group. Title of Class Name of Beneficial Owner Amount and Nature of Beneficial Owner Percent of Class Officers and Directors Common Stock James Hodge 0 shares 0% Common Stock Thomas E. Metzger, director 450,000 shares 2.1% Common Stock Peggy Knight 0 shares 0% Common Stock All directors and named executive officers as a group (3 persons) 450,000 shares 2.1%%* 5% and Greater Beneficial Owners Common Stock Lisa and Chris Partners LTD 1,203,000 shares 5.6% Common Stock William Gallagher 2,940,000 shares 13.4% _________________ * Figures may vary due to rounding. Beneficial ownership is determined in accordance with the rules of the Securities and Exchange Commission and generally includes voting or investment power with respect to securities. In accordance with Securities and Exchange Commission rules, shares of our common stock which may be acquired upon exercise of stock options or warrants which are currently exercisable or which become exercisable within 60 days of the date of the table are deemed beneficially owned by the optionees. Subject to community property laws, where applicable, the persons or entities named in the table above have sole voting and investment power with respect to all shares of our common stock indicated as beneficially owned by them. 36 Changes in Control. Our management is not aware of any arrangements which may result in “changes in control” as that term is defined by the provisions of Item 403(c) of Regulation S-K. Item 13. Certain Relationships and Related Transactions, and Director Independence. Related Party Transactions. Mr. Gallagher signed an 18 month employment contract on July 1, 2012. The contract expired on December 31, 2013. According to the contract, Mr. Gallagher is compensated with 1,500,000 unregistered shares of the Company’s common stock valued at $225,000 or $0.15 per share. The shares were issued in October 2012. On April 8, 2014, 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 compensation 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 In addition, Mr Gallagher is owed $1,301 and Mr. Ben Gallaher, former product director, is owed $17,398 for expenses paid on behalf of the Company. These balances are included in accounts payable and accrued expenses in the accompanying Balance Sheet. With regard to any future related party transaction, we plan to fully disclose any and all related party transactions, including, but not limited to, the following: · disclose such transactions in prospectuses where required; · disclose in any and all filings with the Securities and Exchange Commission, where required; · obtain disinterested directors consent; and · obtain shareholder consent where required. Director Independence. Members of our Board of Directors are not independent as that term is defined by defined in Rule 4200(a) (15) of the Nasdaq Marketplace Rules. 37 Item 14. Principal Accountant Fees and Services. Audit Fees. The aggregate fees billed was $19,800 and $20,000 in the fiscal year ended December 31, 2013 and 2012, respectively, for professional services rendered by the principal accountant for the audit of our annual financial statements and quarterly review of the financial statements included in our Form 10-K or services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements was $7,800 and $20,000. Audit-Related Fees. For the fiscal year ended December 31, 2013 and 2012, there were no fees billed for services reasonably related to the performance of the audit or review of the financial statements outside of those fees disclosed above under “Audit Fees.” Tax Fees. For the fiscal year ended December 31, 2013 and 2012 respectively, our accountants rendered services for tax compliance, tax advice, and tax planning work for which we paid $0 and $0, respectively. All Other Fees. None. Pre-Approval Policies and Procedures. Prior to engaging our accountants to perform a particular service, our board of directors obtains an estimate for the service to be performed. All of the services described above were approved by the board of directors in accordance with its procedures. Item 15. Exhibits, Financial Statement Schedules. (a) Financial Statements. Included in Item 7 38 (b) Exhibits. Exhibit No. Description 23.1 Consent of Auditors 23.2 Consent of Predecessor Auditors 31.1 Certification of Principal Executive Officer, pursuant to Rule 13a-14 and 15d-14 of the Securities Exchange Act of 1934 32.1 Certification of Principal Executive Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 101.INS ** XBRL Instance Document 101.SCH ** XBRL Taxonomy Extension Schema Document 101.CAL ** XBRL Taxonomy Extension Calculation Linkbase Document 101.DEF ** XBRL Taxonomy Extension Definition Linkbase Document 101.LAB ** XBRL Taxonomy Extension Label Linkbase Document 101.PRE ** XBRL Taxonomy Extension Presentation Linkbase Document ** XBRL (Extensible Business Reporting Language) information is furnished and not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections. 39 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. June 25, 2014 By: /s/ Thomas E. Metzger, PhD Thomas E. Metzger, PhD Its: Chief Executive Officer, Chief Financial Officer and a Former Director (Principal Executive, Financial and Accounting Officer) Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. June 25, 2014 By: /s/ Thomas E. Metzger, PhD Thomas E. Metzger, PhD Its: Chief Executive Officer, Chief Financial Officer and a Former Director (Principal Executive, Financial and Accounting Officer) June 25, 2014 By: /s/ James Hodge James Hodge Chairman of the Board of Directors 40