Glucose Health, Inc. 10-K

Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations. Cautionary Note Regarding Forward Looking Statements Some of the statements in this report are "forward-looking statements." These forward-looking statements involve certain known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by these forward-looking statements. The words "believe," "expect," "anticipate," "intend," "plan," and similar expressions identify forward-looking statements. We caution you not to place undue reliance on these forward-looking statements. We undertake no obligation to update and revise any forward-looking statements or to publicly announce the result of any revisions to any of the forward-looking statements in this report to reflect any future or developments. However, the Private Securities Litigation Reform Act of 1995 is not available to us as a penny stock issuer and thus we may not rely on the statutory safe harbor from liability for forward-looking statements. Further, Section 27A(b)(2)(D) of the Securities Act and Section 21E(b)(2)(D) of the Securities Exchange Act expressly state that the safe harbor for forward looking statements does not apply to statements made in connection with any offering. Plan of Operation 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 for January 14, 2014. As of January 29, 2014, the Company obtained 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. On October 1, 2014, Murray Fleming was appointed the Company's Chief Executive Officer for the 12-month period ending October 1, 2015. Mr. Fleming was compensated with 300,000 unregistered shares of the Company's common stock. Additionally, on the same date, the Company entered into an Intellectual Property Purchase Agreement to purchase the "Glucose Health Natural Blood Sugar Maintenance" product from a company beneficially owned by Mr. Fleming for 300,000 unregistered shares of the Company's common stock. On October 1, 2014, Mr. Fleming beneficially owned 600,000 shares or 50.1% of the outstanding shares of the Company's common stock, which resulted in a change in control of the Company. Following the purchase of the "Glucose Health Natural Blood Sugar Maintenance" product, the Company undertook a series of steps to achieve a final product offering that would be considered efficacious as well as pleasant tasting by our target consumer market and would offer a value proposition relative to our competition in order to be considered for stocking by national and regional pharmacy retailers. To assist in achieving our final product objectives, we retained a former head of beverage product development at Nestle. We retained an attorney specializing in compliance with Food and Drug Administration (FDA) regulations, necessary, in part, to allow our product to be stocked by national pharmacy retailers. We also undertook a number of actions to establish and build our Glucose Health Ò brand. The Company conducted a design competition related to its packaging artwork and product logo and retained an experienced product packaging graphic artist to assist with all digital and print representations of the product. The Company filed for and received trademark protection for Glucose Health Ò with the United States Trademark and Patent Office (USPTO). While our primary sales and marketing focus is achieving sales to consumers through national and regional pharmacies, secondarily, we intend to also market the product directly to customers via our dedicated product website and through other online marketplaces. On October 30, 2014, the board of directors of the Company voted to reverse split the Company's common stock on the basis of one share of the Company's common stock for each 50 shares outstanding while maintaining the authorized capital structure of the Company at 200,000,000 shares; to authorize 1,000 shares of preferred stock with "blank check" rights; and to change the Company's name from Bio-Solutions Corp. to Glucose Health, Inc. (the "corporate action"). The board resolution set the date of record for shareholder approval of the corporate action for October 31, 2014 and the effective date of the corporate action for November 19, 2014. As of October 31, 2014, the Company obtained written consent in lieu of a meeting of shareholders to authorize the corporate action. Shareholders owning a total of 30,596,154 shares of the Company's common stock voted in favor of the corporate action. There were a total of 60,132,271 shares of common stock issued and outstanding as of October 31, 2014 (the date of record). The number of shares of common stock voting in favor of the corporate action was sufficient for approval. On November 5, 2014, the Company filed a Certificate of Amendment to its Articles of Incorporation, with the Nevada Secretary of State effecting, as of November 19, 2014, the 1-for-50 reverse split pursuant to which every fifty shares of the Company's common stock were combined and converted into one share of the Company's common stock (with all fractional shares 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; effecting the authorization of 1,000 shares of preferred stock with "blank check" rights; and effecting the change of the Company's name from Bio-Solutions Corp. to Glucose Health, Inc. 14 On November 20, 2014, the board of directors voted to designate Series A Special Preferred Shares consisting of 1,000 shares of preferred stock with special voting rights whereby the holder(s) may exercise their right to vote on all shareholder matters representing the number of votes equal to all shares of common stock then issued and outstanding, plus an additional ten thousand (10,000) shares. Additionally, the board of directors voted to extend an existing consulting contract with the Company's CEO, Murray Fleming, for an additional 12 months, through October 1, 2016, without further compensation, in exchange for the issuance to Mr. Fleming, of the 1,000 Series A Special Preferred Shares. A Certificate of Designation for the Series A Special Preferred Shares was filed with the Nevada Secretary of State and effective on December 1, 2014. On December 15, 2014, the Company submitted its application to OTC Markets Group Inc. for inclusion in the OTCQB tier of quoted securities. In addition, the Company's new ticker symbol, GLUC, was included on the Financial Industry Regulatory Authority's (FINRA) Daily List, with an effective date of December 15, 2014. On January 5, 2015, the Company signed a contract manufacturing agreement for testing, compounding, supply and order fulfillment for the Glucose Health Ò product and additionally a purchasing agreement to distribute the product in a limited number of Northwest Arkansas pharmacies. On January 7, 2015 the Company announced it has completed implementation of Food and Drug Administration (FDA) Current Good Manufacturing Practices (CGMP). The Dietary Supplement (DS) CGMP rule in 21 CFR part 111 of the FDA's regulations requires companies which manufacture, package, label, or hold a dietary supplement to establish and follow current good manufacturing practice to ensure the quality of the dietary supplement and to ensure that the dietary supplement is packaged and labeled as specified in the master manufacturing record. On January 27, 2015 the Company announced the filing of its initial application for trademark protection related to its Glucose Health Ò line of dietary products, with the United States Trademark and Patent Office. If the Company's application is successful and a trademark is awarded by the USPTO, a legal presumption of the Company's ownership nationwide of "Glucose Health", and the exclusive right to use a trademark on or in connection with all Glucose Health Ò branded products, as set forth in the registration, will exist. On February 10, 2015, Murray Fleming, the Company's Chief Executive Officer was appointed the Company's Chief Financial Officer. Mr. Fleming replaces James Hodge the Company's interim Chief Financial Officer. Mr. Hodge will remain the Company's Chairman of the board of directors. On February 18, OTC Markets Group Inc. issued a press release announcing the inclusion of Glucose Health, Inc. in the OTCQB venture marketplace tier, trading under the symbol GLUC. On February 24, 2015, the Company announced the completion of the FDA's facility registration procedure. On May 1, 2015, the Company filed Form 8-A12G registering a class of securities under the Securities Exchange Act of 1934 and became subject to the 1934 Act. The Company completed the first production run of the product on May 26, 2015 and pursuant to the January 5, 2015 purchasing agreement, the product began to be offered for retail sale through a limited number of Northwest Arkansas pharmacies and additionally, on the Company's product website www.glucosehealth.com. 15 Our Plan of Operation for the Next Twelve Months Our principal business strategy for the next twelve months will be to implement marketing and sales initiatives and earn significant revenues from our Glucose Health Ò product. Our sales initiatives will be focused upon securing repeat purchase orders from national and regional pharmacy retailers for our Glucose Health Ò Daily Blood Sugar Maintenance product. Our marketing initiatives will be primarily to support Glucose Health Ò channel sales through national and regional partners. We intend to begin advertising in and sponsoring, various print, digital and social media platforms, which align with the interest of our customers in natural products including dietary supplements for pre-diabetes and Type-2 diabetes. Secondarily to our primary sales and marketing initiatives above, we also intend to grow our online sales of Glucose Health Ò product through sales from our product website and sales through other online marketplaces. We also intend to further develop our Glucose Health Ò product in order to introduce variations of our proprietary formula and to introduce a variety of packaging options to our target consumer market segment. At December 31, 2015 we had nominal cash, which will not be sufficient to satisfy our working capital requirements for the next twelve months. We cannot forecast with any degree of certainty our anticipated revenues or cash flow. Our forecasts and operations will involve risks and uncertainties, which we are unable to predict and actual results could fail. We will require additional capital to continue operations. If we cannot secure additional capital or generate significant revenues we may cease operations in which case you will lose your investment. We intend to continue to source capital from the two private equity companies currently providing financing to us on a monthly basis. We cannot guarantee that such additional funding will be available on favorable terms, if at all. If adequate funds are not available, then our ability to continue or expand our operations may be significantly hindered. If adequate funds are not available, our officer, directors and principal shareholders may contribute capital to the Company in the form of debt financing or equity contributions. However, our officer, directors and principal shareholders are not committed to contribute funds to pay for our expenses. Even assuming that we secure adequate financing, there can be no assurance that we will be profitable at any time in the future. Further, the legal and accounting costs of being a public company will continue to impact our liquidity and we will need to obtain funds to pay those expenses. Other than the anticipated increases in legal and accounting costs due to the reporting requirements of being a reporting company, we are not aware of any other known trends, events or uncertainties, which may affect our future liquidity. Our auditors have questioned our ability to continue operations as a "going concern." While we expect to obtain significant revenues from future product sales, in the absence of significant sales and profits, we will seek to raise funds to meet our working capital needs principally through the additional sales of our securities. However, we cannot guarantee that we will be able to obtain sufficient additional funds when needed, or that such funds, even if available, will be obtainable on terms satisfactory to us. As a result, our auditors believe that substantial doubt exists about our ability to continue operations. Liquidity and Capital Resources. At December 31, 2015, our total assets were $15,407 consisting of $2,055 cash, $8,370 inventory consisting of 801 units of Glucose Health Ò Daily Blood Sugar Maintenance product, $3,150 accounts receivable and $1,282 prepaid consultant compensation. This compares to our total assets of $44,030 at December 31, 2014, consisting of $4,871 in cash and $38,859 in prepaid consultant compensation. At December 31, 2015 our current liabilities totaled $403,226 consisting of $94,920 in accounts payable and accrued expenses, $6,075 for short term loans, $100,829 in related party convertible short-term loans and $201,402 in convertible short-term loans. This compares to our current liabilities at December 31, 2014 of $324,582 consisting of $154,659 in accounts payable and accrued expenses $7,747 for a short-term loan, $23,927 for a short-term loan from a related party and $138,249 in convertible short-term loans. We had a working capital deficit for 2015 and 2014 of $388,119 and $280,852, respectively. We rely upon funding from two private equity firms. Unless we continue secure additional funding from these firms, or others, of which there can be no assurance, we will not be able to satisfy our ongoing expenses. At December 31, 2015 and 2014, we had no other liabilities and no long-term commitments or contingencies. 16 Material Commitments On April 8, 2014, the Company issued a $21,000 convertible note to a corporation. 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 $0.0065 per share. On May 8, 2014, the Company issued a $21,000 convertible note to a corporation. 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 $0.0065 per share. On May 28, 2014, the Company issued a $10,000 convertible note to a corporation. 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 $0.0065 per share. On June 23, 2014, the Company issued a $10,000 convertible note to a corporation. The loan bears interest at 5% and has a maturity date of December 23, 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 $0.0065 per share. On July 11, 2014, the Company issued a $10,000 convertible note to a corporation. The loan bears interest at 5% and has a maturity date of January 11, 2015. In addition, at any time, the holder may convert the note into shares of the Company's common stock at an exercise price of $0.0065 per share. On August 4, 2014, the Company issued an $8,000 convertible note to a corporation. The loan bears interest at 5% and has a maturity date of February 4, 2015. In addition, at any time, the holder may convert the note into shares of the Company's common stock at an exercise price of $0.0065 per share. On August 4, 2014, the Company issued an $8,000 convertible note to a corporation owned by the Company's CEO. The loan bears interest at 5% and has a maturity date of February 4, 2015. In addition, at any time, the holder may convert the note into shares of the Company's common stock at an exercise price of $0.0065 per share. On September 3, 2014, the Company issued a $6,000 convertible note to a corporation. The loan bears interest at 5% and has a maturity date of March 3, 2015. In addition, at any time, the holder may convert the note into shares of the Company's common stock at an exercise price of $0.005 per share. On September 3, 2014, the Company issued a $6,000 convertible note to a corporation owned by the Company's CEO. The loan bears interest at 5% and has a maturity date of March 3, 2015. In addition, at any time, the holder may convert the note into shares of the Company's common stock at an exercise price of $0.005 per share. On October 1, 2014, the Company issued a $4,625 convertible note to a corporation. The loan bears interest at 5% and has a maturity date of April 1, 2015. In addition, at any time, the holder may convert the note into shares of the Company's common stock at an exercise price of $0.005 per share. On October 1, 2014, the Company issued a $4,625 convertible note to a corporation owned by the Company's CEO. The loan bears interest at 5% and has a maturity date of April 1, 2015. In addition, at any time, the holder may convert the note into shares of the Company's common stock at an exercise price of $0.005 per share. On October 15, 2014, the Company issued a $3,600 convertible note to a corporation owned by the Company's CEO. The loan bears interest at 5% and has a maturity date of April 15, 2015. In addition, at any time, the holder may convert the note into shares of the Company's common stock at an exercise price of $0.004 per share. 17 On November 4, 2014, the Company issued a $6,850 convertible note to a corporation. The loan bears interest at 5% and has a maturity date of May 4, 2015. In addition, at any time, the holder may convert the note into shares of the Company's common stock at an exercise price of $0.0025 per share. On November 4, 2014, the Company issued a $6,850 convertible note to a corporation owned by the Company's CEO. The loan bears interest at 5% and has a maturity date of May 4, 2015. In addition, at any time, the holder may convert the note into shares of the Company's common stock at an exercise price of $0.0025 per share. On November 8, 2014, the Company issued a $2,962 convertible note to a corporation owned by the Company's CEO. The loan bears interest at 5% and has a maturity date of May 8, 2015. In addition, at any time, the holder may convert the note into shares of the Company's common stock at an exercise price of $0.00475 per share. On December 1, 2014, the Company issued a $5,000 convertible note to a corporation. The loan bears interest at 5% and has a maturity date of June 1, 2015. In addition, at any time, the holder may convert the note into shares of the Company's common stock at an exercise price of $0.09 per share. On December 1, 2014, the Company issued a $5,000 convertible note to a corporation owned by the Company's CEO. The loan bears interest at 5% and has a maturity date of June 1, 2015. In addition, at any time, the holder may convert the note into shares of the Company's common stock at an exercise price of $0.09 per share. On January 7, 2015, the Company issued a $4,315 convertible note to a corporation owned by the Company's CEO. The loan bears interest at 5% and has a maturity date of July 7, 2015. In addition, at any time, the holder may convert the note into shares of the Company's common stock at an exercise price of $0.04 per share. On January 8, 2015, the Company issued an $8,750 convertible note to a corporation. The loan bears interest at 5% and has a maturity date of July 8, 2015. In addition, at any time, the holder may convert the note into shares of the Company's common stock at an exercise price of $0.04 per share. On January 8, 2015, the Company issued an $8,750 convertible note to a corporation owned by the Company's CEO. The loan bears interest at 5% and has a maturity date of July 8, 2015. In addition, at any time, the holder may convert the note into shares of the Company's common stock at an exercise price of $0.04 per share. On February 2, 2015, the Company issued a $12,500 convertible note to a corporation. The loan bears interest at 5% and has a maturity date of August 2, 2015. In addition, at any time, the holder may convert the note into shares of the Company's common stock at an exercise price of $0.031 per share. On February 2, 2015, the Company issued a $12,500 convertible note to a corporation owned by the Company's CEO. The loan bears interest at 5% and has a maturity date of August 2, 2015. In addition, at any time, the holder may convert the note into shares of the Company's common stock at an exercise price of $0.031 per share. On March 2, 2015, the Company issued a $10,000 convertible note to a corporation. The loan bears interest at 5% and has a maturity date of September 2, 2015. In addition, at any time, the holder may convert the note into shares of the Company's common stock at an exercise price of $0.025 per share. On March 2, 2015, the Company issued a $10,000 convertible note to a corporation owned by the Company's CEO. The loan bears interest at 5% and has a maturity date of September 2, 2015. In addition, at any time, the holder may convert the note into shares of the Company's common stock at an exercise price of $0.025 per share. 18 On April 1, 2015, the Company issued a $5,000 convertible note to a corporation. The loan bears interest at 5% and has a maturity date of October 1, 2015. In addition, at any time, the holder may convert the note into shares of the Company's common stock at an exercise price of $0.020 per share. On April 1, 2015, the Company issued a $5,000 convertible note to a corporation owned by the Company's CEO. The loan bears interest at 5% and has a maturity date of October 1, 2015. In addition, at any time, the holder may convert the note into shares of the Company's common stock at an exercise price of $0.020 per share. On May 1, 2015, the Company issued a $5,000 convertible note to a corporation. The loan bears interest at 5% and has a maturity date of November 1, 2015. In addition, at any time, the holder may convert the note into shares of the Company's common stock at an exercise price of $0.025 per share. On May 1, 2015, the Company issued a $5,000 convertible note to a corporation owned by the Company's CEO. The loan bears interest at 5% and has a maturity date of November 1, 2015. In addition, at any time, the holder may convert the note into shares of the Company's common stock at an exercise price of $0.025 per share. On June 1, 2015, the Company issued a $4,000 convertible note to a corporation. The loan bears interest at 5% and has a maturity date of December 1, 2015. In addition, at any time, the holder may convert the note into shares of the Company's common stock at an exercise price of $0.025 per share. On June 1, 2015, the Company issued a $4,000 convertible note to a corporation owned by the Company's CEO. The loan bears interest at 5% and has a maturity date of December 1, 2015. In addition, at any time, the holder may convert the note into shares of the Company's common stock at an exercise price of $0.025 per share. On July 1, 2015, the Company issued a $9,090 convertible note to a corporation. The loan bears interest at 5% and has a maturity date of December 1, 2015. In addition, at any time, the holder may convert the note into shares of the Company's common stock at an exercise price of $0.025 per share. On July 1, 2015, the Company issued a $8,305 convertible note to a company owned by the Company's CEO. The loan bears interest at 5% and has a maturity date of December 1, 2015. In addition, at any time, the holder may convert the note into shares of the Company's common stock at an exercise price of $0.025 per share. On December 10, 2015, the Company issued a $2,500 convertible note to a company owned by the Company's CEO. The loan bears interest at 5% and has a maturity date of June 10, 2015. In addition, at any time, the holder may convert the note into shares of the Company's common stock at an exercise price of $0.03 per share. Results of Operations. Results of operations for the year ended December 31, 2015 compared to year ended December 31, 2014 Revenues We generated nominal revenues of $4,272 and $2,739 for the years ended December 31, 2015 and 2014, respectively. The Company's focus for 2016 will be the manufacturing, marketing and distribution of our Glucose Health Ò Daily Blood Sugar Maintenance dietary supplement product. We hope to generate substantial revenues, continue our operations and fully implement our business plan by December 31, 2016. 19 Gross Profit (Loss) We reported a gross profit (loss) of $397 and ($20,726) for the years ended December 31, 2015 and 2014, respectively. Included in the gross loss was an impairment to inventory of $20,829 for the year ended December 31, 2014. Until the Company generates significant revenues, our revenue will continue to be nominal. Operating Expenses For the year ended December 31, 2015, we had total operating expenses of $156,570, as compared to total operating expenses of $524,490 for the year ended December 31, 2014. The substantial decrease of $367,920 or 70.1%, in our operating expenses between the two periods is primarily due to an approximate $501,000 decrease in professional fees incurred in 2015 and a decrease of approximately $23,490 for other general and administrative expenses compared to 2014. We expect we will continue to incur significant legal and accounting expenses related to being a public company. Net Loss For the year ended December 31, 2015, we had a net loss of $266,064 or $0.14 per share. In comparison, for the year ended December 31, 2014, we had a net loss of $669,409 or $0.99 per share. We expect to continue to incur net losses for the foreseeable future and until we generate significant revenues. Off-Balance Sheet Arrangements. We have no off-balance sheet arrangements. Item 7A. Quantitative and Qualitative Disclosures about Market Risk. Not applicable. 20