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, 2014, the date of this report, our Chief Executive Officer and Interim Chief Financial Officer concluded that our disclosure controls and procedures were not effective. 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 interim 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 Chief Executive Officer and Interim 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, 2014. 20 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, 2014: · 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, 2014, 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. 21 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 Murray Fleming 52 Chief Executive Officer James Hodge 54 Chairman of the Board of Directors and Interim Chief Financial Officer Peggy Knight 59 Chief Marketing Officer and Executive Vice President of Marketing Thomas E. Metzger, Ph.D. 53 Former Chief Executive Officer, Chief Financial Officer and Director William Gallagher 75 Former Chief Executive Officer, Chief Financial Officer and Director Murray Fleming. On October 1, 2014, Murray Fleming was appointed the Company’s Chief Executive Officer for the 24-month period ending October 1, 2016. On February 10, 2015 Mr. Fleming was appointed the Company’s Chief Financial Officer. From 2006 to the present date, Mr. Fleming has been the managing director of a privately held investment company. Mr. Fleming earned a Bachelor of Arts degree with formal concentrations in Economics & Environmental Studies from the University of Victoria in May of 1986. In addition to serving as Chief Executive Officer of Glucose Health Inc., Mr. Fleming is a member of the Board of Directors of Nacel Energy Corporation. James Hodge. Mr. Hodge was appointed as Chairman of the Company’s board of directors April 8, 2014 and the Company’s interim Chief Financial Officer on July 22, 2014. Mr. Hodge additionally serves as Chairman and CEO of ReelTime Rentals, Inc., a public company. For the last ten years, Mr. Hodge has been a consultant to the private equity firm Capital Consulting, Inc. of Delray Beach, FL, which is a principal investor in Glucose Health, Inc. Prior to this engagement he served as Director of Corporate Credit for Speedcom Wireless Corporation of Sarasota, Florida. Peggy Knight . Ms. Knight joined the Company December 19, 2013. Ms. Knight has over 20 years of retail experience with Walmart Inc. and Sam’s Club. Her expertise includes operations, marketing, sourcing, product development, vendor relations and financial services. Ms. Knight is also President of an independent consulting firm which assists companies in bringing new products into Sam’s Club and Walmart Inc. On April 21, 2014, Ms. Knight was appointed the Company’s Chief Marketing Officer. Thomas E. Metzger, Ph.D. On July 22, 2014, Mr. Metzger resigned from the Company. William Gallagher. On April 8, 2014, Mr. Gallagher resigned from the Company. 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 serve at the discretion of the board. Currently directors receive compensation of $500 per month. 22 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 of directors 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 609 SW 8th Street, 6th Floor, Bentonville, AR 72712. 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. 23 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, 2014 and 2013. 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 Murray Fleming, Chief Executive Officer, 2014 None None None None None None $ 227,300 (1) $ 227,300 Chief Financial Officer 2013 None None None None None None None None James Hodge, 2014 $ 6,000 None None None None None $ 11,275 (2) $ 17,275 Chairman of the board of directors 2013 None None None None None None None None Peggy Knight, 2014 $ 20,500 None None None None None $ 11,325 (3) $ 31,825 Chief Marketing Officer 2013 None None None None None None None None Thomas E. Metzger Ph.D., former Chief Executive Officer, 2014 None None None None None None $ 8,700 (4) $ 8,700 Chief Financial Officer, director (a) 2013 None None None None None None $ 37,500 (5) $ 37,500 William Gallagher, former Chief Executive Officer, 2014 $ 12,000 None None None None None None $ 12,000 Chief Financial Officer, director (b) 2013 None None None None None None $ 225,000 (6) $ 225,000 ______________ (1) Value of 300,000 unregistered shares issued in October 2014 at $0.38 per share or $114,000 and 1,000 shares of unregistered shares preferred stock issued in November 2014 at $113.30 per share or $113,300, in accordance to Mr. Fleming’s 24 month management consulting agreement dated September 30, 2014 and revised on November 28, 2014. (2) Value of 11,923 unregistered shares issued in April and July 2014 at $0.694 per share or $8,275 and 17,295 unregistered shares earned but not issued at $0.173 per share or $3,000, in accordance to Mr. Hodge’s 12 month management consulting agreement dated April 4, 2014. (3) Value of 15,000 unregistered shares issued in April 2014 at $0.755 per share or $11,325, in accordance to Ms. Knight’s 24 month sales consulting agreement dated April 4, 2014. (4) Value of 10,000 unregistered shares issued in April and July 2014 at $0.87 per share or $8,700, in accordance to Mr. Metzger’s 12 month management consulting agreement dated April 4, 2014. (5) Value of 5,000 unregistered shares issued in July 2013 at $7.50 per share or $37,500 for director compensation to the Company. (6) Value of 30,000 unregistered shares issued in June 2013 at $7.50 per share or $225,000 for achieved the operational milestones as specified in the September 26, 2011 Type 2 Defense acquisition agreement. (a) Mr. Metzger resigned July 22, 2014. (b) Mr. Gallagher resigned April 8, 2014. 24 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 was to be compensated with 30,000 unregistered shares of the Company’s common stock valued at $225,000 or $7.50 per share. The shares were issued in October 2012. 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, 2014, 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 Murray Fleming, Chief Executive Officer Chief Financial Officer 0 0 0 0 0 0 0 0 0 James Hodge, Chairman of the board of directors, interim Chief Financial Officer 0 0 0 0 0 0 0 0 0 Peggy Knight, Chief Marketing Officer 0 0 0 0 0 0 0 0 0 Thomas E. Metzger PHD, former Chief Executive officer, Chief Financial Officer, director 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 25 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. Our directors currently receive salary compensation of $500 per month by virtue of their serving on the Company’s board of directors. 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, 2014, 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 Murray Fleming, CEO, CFO 600,000 shares 42.7 % Common Stock James Hodge, Chairman of board of directors 49,219 shares 3.5 % Common Stock Peggy Knight, Chief Marketing Officer 15,000 shares 1.1 % Common Stock All directors and named executive officers as a group (3 persons) 678,809 shares 47.3 %* 5% and Greater Beneficial Owners Common Stock None _______________ * 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. 26 Changes in Control. The following transaction resulted in “changes in control” as that term is defined by the provisions of Item 403(c) of Regulation S-K. On October 1, 2014, the Company entered into an agreement and issued 300,000 unregistered shares of the Company’s common stock to corporation beneficially owned by the Company’s CEO, Murray Fleming, to purchase the Glucose Health Natural Blood Sugar Maintenance™ product. Additionally, on October 1, 2014, the Company entered into a management consulting agreement and issued 300,000 unregistered shares of the Company’s common stock to Murray Fleming. The 300,000 shares issued to Mr. Fleming directly and the 300,000 shares issued to the corporation over which Mr. Fleming exercises voting control of the 300,000 shares, constitute a change of the control of the Company. On October 1, 2014, Mr. Fleming beneficially owned 600,000 shares or 50.1% of the outstanding shares of the Company’s common stock. 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 was to be compensated with 30,000 unregistered shares of the Company’s common stock valued at $225,000 or $7.5 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. On September 13, 2014, this agreement was revised to a $1,500 monthly fee (an aggregate of $45,000) and the term extended an additional 12 months ended on March 31, 2017. In addition, Mr. Gallagher is owed $1,301 and Mr. Ben Gallagher, former product director, is owed $690 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. 27 Item 14. Principal Accountant Fees and Services. Audit Fees. Fees of $16,480 and $19,800 in the fiscal year ended December 31, 2014 and 2013, respectively, were paid 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. Audit-Related Fees. For the fiscal year ended December 31, 2014 and 2013, 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, 2014 and 2013 respectively, our accountants did not render any service for tax compliance, tax advice, and tax planning work. 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. The board of directors in accordance with its procedures approved all of the services described above. 28 PART IV Item 15. Exhibits, Financial Statement Schedules. (a) Financial Statements. Included in Item 7 (b) Exhibits. Exhibit No. Description 31.1 Certification of Principal Executive Officer/Chief Financial Officer, pursuant to Rule 13a-14 and 15d-14 of the Securities Exchange Act of 1934 as of December 31, 2014 32.1 Certification of Principal Executive Officer/Chief Financial Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 as of December 31, 2014 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. 29 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. March 30, 2015 By: /s/ Murray Fleming Name: Murray Fleming Its: Chief Executive Officer, Chief Financial Officer (Principal Executive Officer/Financial 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. March 30, 2015 By: /s/ Murray Fleming Name: Murray Fleming Its: Chief Executive Officer, Chief Financial Officer (Principal Executive Officer/Financial Officer) March 30, 2015 By: /s/ James Hodge Name: James Hodge Its: Chairman of the board of directors 30