Glucose Health, Inc. 10-K

Item 8. Financial Statements The financial statements required by Item 8 are presented in the following order: GLUCOSE HEALTH INC. INDEX TO FINANCIAL STATEMENTS Financial Statements: Report of Independent Registered Public Accounting Firms F-2 Balance Sheets as of December 31, 2015 and 2014 F-3 Statements of Operations for the Years Ended December 31, 2015 and 2014 F-4 Statements of Changes in Stockholders' Equity (Deficit) for the Years Ended December 31, 2015 and 2014 F-5 Statements of Cash Flows For the Years Ended December 31, 2015 and 2014 F-6 Notes to Financial Statements F-7 F-1 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Directors of Glucose Health Inc. We have audited the accompanying balance sheets of Glucose Health, Inc. (the "Company") as of December 31, 2015 and 2014, and the related statements of operations, changes in stockholders' deficit and cash flows for the years then ended. 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 Glucose Health Inc. as of December 31, 2015 and 2014, and the results of its statements of operations, changes in stockholders' deficit, and cash flows for the years then ended, 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/ Anton & Chia, LLP Newport Beach, California April 14, 2016 F-2 GLUCOSE HEALTH, INC. BALANCE SHEETS DECEMBER 31, 2015 DECEMBER 31, 2014 ASSETS CURRENT ASSETS Cash $ 2,055 $ 4,871 Accounts receivable 3,150 - Inventory 8,370 - Due from affiliate 250 - Prepaid expenses 1,282 38,859 Total current assets 15,107 43,730 Other Asset Intellectual assets, net of accumulated amortization of $0 and $0, respectively 300 300 TOTAL ASSETS $ 15,407 $ 44,030 LIABILITIES AND STOCKHOLDERS' DEFICIT CURRENT LIABILITIES Accounts payable and accrued expenses $ 94,920 $ 154,659 Notes payable 6,075 7,747 Convertible notes payable, related parties 100,829 23,927 Convertible notes payable 201,402 138,249 Total current liabilities 403,226 324,582 TOTAL LIABILITIES 403,226 324,582 COMMITMENT AND CONTINGENCIES STOCKHOLDERS' DEFICIT Preferred stock, $ no par value, 1,000 shares authorized, 1,000 shares issued and outstanding as of December 31, 2015 and December 31, 2014 113,200 113,200 Common stock, $0.001 par value, 200,000,000 shares authorized, 2,451,888 and 1,309,825 shares issued and outstanding as of December 31, 2015 and December 31, 2014, respectively (1) 2,452 1,310 Additional paid in capital 5,386,001 5,228,346 Stock subscription 23,000 23,000 Accumulated other comprehensive loss (75,278 ) (75,278 ) Accumulated deficit (5,837,194 ) (5,571,130 ) Total stockholders' deficit (387,819 ) (280,552 ) TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT $ 15,407 $ 44,030 _______________ (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 and 50 to 1 reverse split, which was effective in November 2014. The accompanying notes are an integral part of these financial statements. F-3 GLUCOSE HEALTH, INC. STATEMENTS OF OPERATIONS FOR THE YEAR FOR THE YEAR ENDED ENDED DECEMBER 31, 2015 DECEMBER 31, 2014 REVENUE $ 4,272 $ 2,739 COST OF REVENUES Cost of revenues 3,875 2,636 Inventory impairment - 20,829 Total Cost of Revenues 3,875 23,465 GROSS PROFIT/(LOSS) 397 (20,726 ) OPERATING EXPENSES Professional fees/stock based compensation 41,702 504,192 Research and development 48 4,000 General and administrative 114,868 16,298 Total Operating Expenses 156,570 524,490 LOSS FROM OPERATIONS (156,173 ) (545,216 ) OTHER INCOME (EXPENSE) Interest income (expense) (120,028 ) (109,631 ) Loss on conversion of debt (10,436 ) (14,562 ) Gain on forgiveness of accounts payable 20,573 - Total other expense (109,891 ) (124,193 ) LOSS BEFORE INCOME TAXES (266,064 ) (669,409 ) PROVISION FOR (BENEFIT FROM) INCOME TAXES - - NET LOSS $ (266,064 ) $ (669,409 ) WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING BASIC AND DILUTED (2) 1,956,371 675,155 NET LOSS PER SHARE - BASIC AND DILUTED $ (0.14 ) $ (0.99 ) (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 and 50 to 1 reverse split, which was effective in November 2014. The accompanying notes are an integral part of these financial statements. F-4 GLUCOSE HEALTH, INC. STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY Preferred Stock Common Stock Additional Paid-In Stock To Be Deferred Accumulated Accumulated Other Comprehensive Shares Amount Shares Amount Capital Issued Compensation Deficit Loss Total Balance - December 31, 2013 (3) - $ - 377,456 $ 377 $ 4,761,836 $ 34,400 $ (17,372 ) $ (4,901,721 ) $ (75,278 ) $ (197,758 ) Preferred shares issued for compensation under employment agreement 1,000 113,200 - 113,200 Common shares issued for compensation under employment agreement 300,000 300 113,700 114,000 Common shares issued for services 124,124 124 115,038 115,162 Common shares issued for liability for stock to be issued 16,000 16 14,384 14,400 Common shares issued for settlement - of notes payable 191,983 192 54,596 54,788 Common shares issued for Glucose Health Natural Blood Sugar Maintenance product acquisition 300,000 300 - 300 Options issued for service - - 51,850 51,850 Discounts on shares issued for notes payable 116,943 116,943 Stock to be issued (11,400 ) (11,400 ) Amortization of deferred compensation 17,372 17,372 Factional shares issued 263 1 (1 ) - - Net loss for the year (669,409 ) - (669,409 ) Balance - December 31, 2014 (3) 1,000 $ 113,200 1,309,825 $ 1,310 $ 5,228,346 $ 23,000 $ - $ (5,571,130 ) $ (75,278 ) $ (280,552 ) Common stock issued in satisfaction of debt 58,092 58 232 290 Common stock issued in satisfaction of debt 58,750 59 235 294 Common stock issued in satisfaction of debt 59,078 59 236 295 Common stock issued in satisfaction of debt 59,244 59 237 296 Common stock issued in satisfaction of debt 54,018 54 216 270 Common stock issued as compensation 70,867 71 5,929 6,000 Common stock issued in satisfaction of debt 108,246 108 433 541 Common stock issued in satisfaction of debt 100,000 100 1,687 1,787 Common stock issued in satisfaction of debt 86,882 87 348 435 Common stock issued in satisfaction of debt 87,564 88 350 438 Common stock issued for sevices 10,000 10 490 500 Common stock issued for sevices 50,000 50 22,725 22,775 Common stock issued in satisfaction of debt 88,438 88 354 442 Common stock issued in satisfaction of debt 89,020 89 3,472 3,561 Common stock issued for sevices 50,000 50 3,450 3,500 Common stock issued in satisfaction of debt 111,864 112 7,719 7,831 Net loss for the year (266,064 ) - (266,064 ) Discounts on shares issued for notes payable 109,541 109,541 Balance - December 31, 2015 (3) 1,000 113,200 2,451,888 2,452 5,386,001 23,000 - (5,837,194 ) (75,278 ) (387,819 ) _______________ (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 and 50 to 1 reverse split, which was effective in November 2014 The accompanying notes are an integral part of these financial statements. F-5 GLUCOSE HEALTH, INC. STATEMENTS OF CASH FLOWS FOR THE YEAR FOR THE YEAR ENDED ENDED DECEMBER 31, 2015 DECEMBER 31, 2014 OPERATING ACTIVITIES: Net loss $ (266,064 ) $ (669,409 ) Adjustments to reconcile net loss to net cash used in operating activities: Inventory write down - 14,402 Common stock issued for services 32,775 372,725 Amortization of note discount 43,076 100,098 Gain on forgiveness of accounts payable - - (Gain) loss on conversion of debt - 14,562 Beneficial conversion feature of notes payable 109,541 - Change in assets and liabilities Increase in accounts receivable (4,572 ) - (Increase) decrease in inventory (8,370 ) 10,477 Decrease in prepaid expenses and other current assets 37,577 - Increase (decrease) in accounts payable and accrued expenses (59,739 ) 21,793 Total adjustments 150,288 534,057 Net cash used in operating activities (115,776 ) (135,352 ) CASH FLOWS FROM INVESTING ACTIVITIES: Increase in due from affilliate (250 ) - Net cash used in investing activities (250 ) - CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from notes and loans payable 113,210 139,512 Net cash provided by financing activities 113,210 139,512 NET INCREASE IN CASH (2,816 ) 4,160 CASH - BEGINNING OF PERIOD 4,871 711 CASH - END OF PERIOD $ 2,055 $ 4,871 NONCASH OPERATING AND INVESTING ACTIVITIES: Beneficial conversion feature $ 109,541 $ - Conversion of notes payable and accrued interest to common stock $ 4,100 $ 54,788 Cancellation for 600,000 shares of common stock to settle liabilities $ - $ 21,000 Conversion of liability to common stock $ 4,315 $ - The accompanying notes are an integral part of these financial statements. F-6 GLUCOSE HEALTH INC. NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2015 AND 20143 NOTE 1 - ORGANIZATION AND BASIS OF PRESENTATION On March 27, 2007, Glucose Health, Inc. (f/k/a Bio-Solutions Corp.) ("Company") was incorporated in the State of Nevada. At inception, the Company was a manufacturer of Nutra-Animal, a pre-mix anti-oxidant for chicken integrators. The Company was also the distributor of GreenEx™, a biological larvicide produced from a naturally occurring bacterium that produces a crystalline protein toxin, toxic for mosquitoes, vectors of malaria. 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 for 1 stock split. All shares have been reflected retroactively in accordance with SAB Topic 14C. On September 26, 2011, the Company entered into an acquisition agreement for Type2 Defense, a natural dietary supplement for the Type-2 diabetes and pre-diabetes market category and the Company's previous operations were discontinued. During October 2012, the board of directors increased the number of common shares authorized from 90,000,000 to 200,000,000 shares. 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 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. On October 1, 2014, Murray Fleming was appointed as the Company's Chief Executive Officer for the 12-month period ending October 1, 2015 and 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. As of 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. 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, a 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. On November 20, 2015, the board of directors voted to designate Series A Special Preferred Shares consisting of 1000 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 1000 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. F-7 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 February 10, 2015, Murray Fleming, the Company's Chief Executive Officer was appointed the Company's Chief Financial Officer. Going Concern The Company had a working capital deficiency of $388,119 and an accumulated deficit of $5,837,194 as of December 31, 2015. The Company's continuation as a going concern is dependent on its ability to generate sufficient cash flows from operations to meet its obligations and/or obtain additional financing from its members or other sources, as may be required. 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, has generated losses totaling $5,837,194 since inception 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 it will need a total of $120,000 in capital to continue operations through the end of 2016. 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 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. 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. The Company previously operated in Canada and certain accounts of the Company were reflected in currencies other than the U.S. dollar. 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 were included in other income (expense) in the results of operations. F-8 Cash Flow Reporting The Company follows ASC 230, Statement of Cash Flows, for cash flows reporting, classifies cash receipts and payments according to whether they stem from operating, investing, or financing activities and provides definitions of each category, and uses the indirect or reconciliation method ("Indirect method") as defined by ASC 230, Statement of Cash Flows, to report net cash flow from operating activities by adjusting net income to reconcile it to net cash flow from operating activities by removing the effects of (a) all deferrals of past operating cash receipts and payments and all accruals of expected future operating cash receipts and payments and (b) all items that are included in net income that do not affect operating cash receipts and payments. 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, 2015 and 2014. The Company maintains its cash balances at one financial institution that is insured by the Federal Deposit Insurance Corporation. Prepaid Expenses The Company considers all items incurred for future services to be prepaid expenses. As of December 31, 2015 and 2014, the Company had prepaid expenses of $1,282 and $38,859, respectively, comprised of a prepaid subscription and the issuance of unregistered shares of the Company's common stock to consultants, respectively. Recoverability of Long-Lived Assets The Company reviews its 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. F-9 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 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 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 years ended December 31, 2015 and 2014, 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. ASC 820, Fair Value Measurements and Disclosures , defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820 also establishes a fair value hierarchy that distinguishes between (1) market participant assumptions developed based on market data obtained from independent sources (observable inputs) and (2) an entity's own assumptions about market participant assumptions developed based on the best information available in the circumstances (unobservable inputs). The fair value hierarchy consists of three broad levels, which gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of the fair value hierarchy are described below: Level 1 Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities Level 2 Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly, including quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; inputs other than quoted prices that are observable for the asset or liability (e.g., interest rates); and inputs that are derived principally from or corroborated by observable market data by correlation or other means. Level 3 Inputs that are both significant to the fair value measurement and unobservable. Fair value estimates discussed herein are based upon certain market assumptions and pertinent information available to management as of December 31, 2015. The respective carrying value of certain on-balance-sheet financial instruments approximated their fair values due to the short-term nature of these instruments. 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. F-10 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, 2015, 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 is required to file income tax returns in the U.S. federal tax jurisdiction and in various state tax jurisdictions. The tax years for 2009 to 2014 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 nominal revenues. Once the Company generates significant revenues from the sales of our products, the following criteria for revenue 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) collectability 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. The Company issues restricted stock to employees for their services. Cost for these transactions are measured at the fair value of the equity instruments issued at the date of grant. These shares are considered fully vested and the fair market value is recognized as expense in the period granted. The Company also issues restricted stock to consultants for various services. Cost for these transactions are measured at the fair value of the consideration received or the fair value of the equity instruments issued, whichever is more reliably measurable. The value of the common stock is measured at the earlier of (i) the date at which a firm commitment only if there is sufficient disincentive to ensure performance or (ii) the date at which the counterparty's performance is complete. The Company recognized consulting expenses and a corresponding increase to additional paid-in-capital related to stock issued for services. For agreements requiring future services, the consulting expense is to be recognized ratably over the requisite service period. F-11 (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. Except as noted below, the Company has not issued any options or warrants to date. At December 31, 2015, the total shares issuable upon conversion of convertible notes payable would be approximately 2,327,352 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 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, 2015 and 2014, the Company had inventory of $8,370 and $0, respectively, with no allowance for obsolescence. Recent Issued Accounting Standards There were 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. NOTE 3 - STOCKHOLDERS' DEFICIT The Company was established with one class of stock, common stock – 75,000,000 shares authorized at a par value of $0.001. On June 30, 2010, the authorized shares were increased to 90,000,000. In October 2012, the Company increased the authorized common shares to 200,000,000. In November 2014, the Company established a second class of stock – 1,000 shares of preferred stock with no par value. As of December 31, 2015 and 2014, 2,451,888 and 1,309,825 shares of the Company's common stock and 1,000 and 1,000 shares of the Company's preferred stock were issued and outstanding, respectively. Issuances pursuant to Conversions 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 17,132 unregistered shares of the Company's common stock at $0.75 per share, the conversion price as stated in the convertible promissory note. 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 $5.00 per share to $0.75 per share. The Company recognized a loss on extinguishment of $14,562 resulting from the debt modification. 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 16,000 unregistered shares of the Company's common stock at $0.25 per share, the conversion price as stated in the convertible promissory note. F-12 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 13,171 unregistered shares of the Company's common stock at $0.999 per share, the conversion price as stated in the convertible promissory note. During January 2015, the Company issued 58,092 shares of common stock to a corporation for conversion of $250 principal and $40 accrued interest related to a Note. These shares were valued at $0.005 per share, the conversion price as stated in the Note. During February 2015, the Company issued 177,072 shares of common stock to a corporation for conversion of $886 in principal and accrued interest related to a Note. These shares were valued at $0.005 per share, the conversion price as stated in the Note. During March 2015, the Company issued 162,264 shares of common stock to a corporation for conversion of $541 in principal and accrued interest related to a Note. These shares were valued at $0.005 per share, the conversion price as stated in the Note. During April 2015, the Company issued 86,882 shares of common stock to a corporation for conversion of $400 principal and $40 accrued interest related to Note. These shares were valued at $0.005 per share, the conversion price as stated in the Note. During June 2015, the Company issued 87,564 shares of common stock to a corporation for conversion of $400 principal and $38 accrued interest related to a Note. These shares were valued at $0.005 per share, the conversion price as stated in the Note. During September 2015, the Company issued 88,438 shares of common stock to a corporation for conversion of $400 principal and $42 accrued interest related to a Note. These shares were valued at $0.005 per share, the conversion price as stated in the Note. During November 2015, the Company issued 89,020 shares of common stock to a corporation for conversion of $400 principal and $45 accrued interest related to a Note. These shares were valued at $0.004 per share, the conversion price stated in the Note. During December 2015, the Company issued 111,864 shares of common stock to a corporation for conversion of $500 principal and $59 accrued interest related to a Note. These shares were valued at $0.07 per share, the conversion price stated in the Note. Issuances pursuant to Agreements 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 7,200 unregistered shares of the Company's common stock payable in increments of 600 shares per month for twelve (12) months starting on April 1, 2014. During 2014, the Company issued 7,200 unregistered shares of the Company's common stock, which were valued at $0.52 per share or $3,732 to fully satisfy the March 2014 agreement. Compensation was calculated at the fair market value of the shares at the date earned. F-13 On June 27, 2014, the Company signed a one-year consulting agreement with an individual to provide product marketing, endorsement and spokesperson services for the Company. The agreement began on May 10, 2014 and expires on May 10, 2015. The consultant will be compensated with 5,000 shares of the Company's common stock. These shares were issued in July 2014. The shares were valued at $0.65 per share or $3,250. Compensation was calculated at the fair market value of the shares at the date earned. In addition, the consultant may purchase 50,000 shares of the Company's common stock at an exercise price of $0.025 per share each quarter ending May 10, 2015 (an aggregate of 200,000 shares). Options were valued using the Black Scholes Method, resulting in a value of $103,700 of which $51,850 and $51,850 have vested and expense recognized in year 2015 and 2014, respectively. The weighted average assumptions made in calculating the fair values of options granted during the years ended December 31, 2015 and 2014 are as follows: Years Ended December 31, 2015 2014 Expected volatility – 197.1 % Expected dividend yield – – Risk-free interest rate – 0.86 % Expected term (in years) – 3.0 During February 2015, the Company issued 70,867 unregistered shares of the Company's common stock as compensation to the Company's chairman of the board. The shares were valued at $0.08467 per share or $6,000. During April 2015, the Company issued 50,000 unregistered shares of the Company's common stock in final settlement of a consulting agreement. The shares were valued at $1,787. During May 2015, the Company issued 100,000 unregistered shares of the Company's common stock in final settlement of an outstanding debt. The shares were valued at $22,775. During June 2015, the Company issued 10,000 unregistered shares of the Company's common stock as compensation to a consultant. The shares were valued at $500. During November 2015, the Company's issued 50,000 unregistered shares of the Company's common stock as compensation to a consultant. These shares were valued at $0.07 per share or $3,500. NOTE 4 – NOTES PAYABLE On April 20, 2012, the Company issued a $2,500 convertible note to a corporation. 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 $3,391 and $3,016 at December 31, 2014 and December 31, 2013, respectively. The Company is not compliant with the repayment terms of the note. F-14 On May 10, 2012, the Company issued a $2,600 convertible note to William Gallagher, 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, William Gallagher 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 and July 2013, the Company paid the principal and interest balance of $2,909 to William Gallagher. On May 27, 2013, the Company issued a $12,500 convertible note to a corporation. 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 $2.50 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. 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 $2.50 per share to $0.75 per share. During January 2014, $12,849 including interest was converted into 17,132 unregistered shares of the Company's common stock at $0.75 per share to fully satisfy the promissory note. The unpaid balance including accrued interest was $12,865 at December 31, 2013. On June 11, 2013, the Company issued a $6,500 convertible note to a corporation. 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 $7,001 and $6,676 at December 31, 2014 and December 31, 2013, respectively. The Company is not compliant with the repayment terms of the note. On June 11, 2013, the Company issued a $6,222 convertible note to a corporation. 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 $6,702 and $6,391 at December 31, 2014 and December 31, 2013, respectively. The Company is not compliant with the repayment terms of the note. 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. On March 12, 2015, the repayment term were extended to December 31, 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 $.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 $21,000, and was recorded as debt discount. The debt discount is amortized through the term of the note. The unpaid balance including accrued interest was $22,496 at December 31, 2014. F-15 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. On March 12, 2015, the repayment term were extended to December 31, 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 $.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 $14,538, and was recorded as debt discount. The debt discount is amortized through the term of the note. The unpaid balance including accrued interest was $22,365 at December 31, 2014. 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. On March 12, 2015, the repayment term were extended to December 31, 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 $.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 $7,538, and was recorded as debt discount. The debt discount is amortized through the term of the note. The unpaid balance including accrued interest was $10,375 at December 31, 2014. 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. On March 12, 2015, the repayment term were extended to December 31, 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 $.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 $10,000, and was recorded as debt discount. The debt discount is amortized through the term of the note. The individual contributed $5,000 in June 2014 and $5,000 in July 2014. The unpaid balance was $10,250 at December 31, 2014. 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. On March 12, 2015, the repayment term were extended to December 31, 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 $.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 $10,000, and was recorded as debt discount. The debt discount is amortized through the term of the note. The unpaid balance was $10,229 at December 31, 2014. 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. On March 12, 2015, the repayment term were extended to December 31, 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 $.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 $8,000, and was recorded as debt discount. The debt discount is amortized through the term of the note. The unpaid balance was $8,167 at December 31, 2014. 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. On March 12, 2015, the repayment term were extended to December 31, 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 $.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 $8,000, and was recorded as debt discount. The debt discount is amortized through the term of the note. The unpaid balance was $8,167 at December 31, 2014. F-16 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. On March 12, 2015, the repayment term were extended to December 31, 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 $.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 $6,000, and was recorded as debt discount. The debt discount is amortized through the term of the note. The unpaid balance was $6,100 at December 31, 2014. 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. On March 12, 2015, the repayment term were extended to December 31, 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 $.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 $6,000, and was recorded as debt discount. The debt discount is amortized through the term of the note. The unpaid balance was $6,100 at December 31, 2014. 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 $.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 $2,405, and was recorded as debt discount. The debt discount is amortized through the term of the note. The unpaid balance was $4,683 at December 31, 2014. 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 $.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 $2,405, and was recorded as debt discount. The debt discount is amortized through the term of the note. The unpaid balance was $4,683 at December 31, 2014. 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 $.004 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 $0, and no debt discount was recorded. The debt discount is amortized through the term of the note. The unpaid balance was $3,638 at December 31, 2014. 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 $.0025 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 $4,110, and was recorded as debt discount. The debt discount is amortized through the term of the note. The unpaid balance was $6,907 at December 31, 2014. F-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 $.0025 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 $4,110, and was recorded as debt discount. The debt discount is amortized through the term of the note. The unpaid balance was $6,907 at December 31, 2014. 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 $.00475 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 $2,837, and was recorded as debt discount. The debt discount is amortized through the term of the note. The unpaid balance was $2,981 at December 31, 2014. 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 $.09 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 $5,000, and was recorded as debt discount. The debt discount is amortized through the term of the note. The unpaid balance was $5,021 at December 31, 2014. 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 $.09 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 $5,000, and was recorded as debt discount. The debt discount is amortized through the term of the note. The unpaid balance was $5,021 at December 31, 2014. 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. F-18 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. 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. F-19 NOTE 5 - 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, 2015 2014 Federal Current $ - $ - Deferred (1,926,274 ) (1,894,184 ) State and local Current – – Deferred – – (1,926,274 ) (1,894,184 ) Change in valuation allowance 1,926,274 1,894,184 Income tax provision (benefit) $ - $ - At December 31, 2015 and 2014, the Company had a net operating loss ("NOL's") carry forward in the amount of $5,837,194 and $5,571,130, 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, 2015 and 2014 is summarized below. 2015 2014 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-20 NOTE 6 - INTELLECTUAL PROPERTY On September 26, 2011, the Company acquired all the assets and intellectual property rights of Type2 Defense, a natural dietary supplement. The acquisition of Type2 Defense was paid for by the issuance of 40,000 shares of the Company's common stock. The shares were valued at $200,000 or $5.00 per share based on the closing price of the Company's common stock on September 26, 2011. The agreement also included the issuance of 20,000 shares of the Company's common stock upon achieving certain operational milestones and an additional 20,000 shares of Company's common stock upon reaching 1,500 customers. On November 4, 2011, an advance of 1,200 shares of the Company's common stock related to the reaching of the 1,500 customers milestone in the original agreement was approved by the board of directors. The shares were valued at $5.50 per share or $6,600. The issuance of 20,000 shares of the Company's common stock upon reaching 1,500 customers, was reduced by the advance to 1,200 shares. During June 2013, the Company achieved the operational milestones as specified in the September 26, 2011 Type2 Defense acquisition agreement. On June 18, 2013, the Company issued 20,000 shares to the Company's former CEO for the Type2 Defense product meeting the operational milestones. The shares were valued at $7.50 per share or $150,000 and included as stock based compensation in the statement of operation in 2011. In addition, on June 18, 2013, an advance of 10,000 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 William Gallagher, the Company's former CEO. The shares were valued at $7.50 per share or $75,000 and included as stock based compensation in the accompanying statement of operation in 2013. Since the Company has not been able to generate substantial revenues from the Type2 Defense product since June 2013 and has produced only nominal sales of the product in 2014, the Company elected to write-off the $200,000 intellectual property for Type2 Defense as impaired. In addition, as the Company elected to terminate development of the Type2 Defense product in October 2014, the Company wrote down its inventory to -0- as of December 31, 2014 and no further shares will be issued or compensation paid under the aforementioned agreement with the Company's former CEO. On October 1, 2014, the Company entered into an Intellectual Property Purchase Agreement to purchase the "Glucose Health Natural Blood Sugar Maintenance" product for the purchase price of 300,000 unregistered shares of the Company's common stock from a company beneficially owned by the Company's CEO, Murray Fleming. The shares were recorded at their par value of $0.001 per share or $300, valued at the nominal historical cost of the related party seller. All assets other than the intellectual property had a fair value of $0, with the intellectual property valued at $300. NOTE 7 - SUBSEQUENT EVENTS On January 27, 2016 the Company notified OTC Markets, Inc. of its intention to not renew its OTCQB service. The Company filed Form 8-A12G in fiscal 2015 registering a class of securities under the 1934 Securities Exchange Act. Accordingly, the Company does not make use of the OTC Markets Disclosure and News Service and instead files its periodic and annual reports and audited financial statements with the Securities and Exchange Commission. On February 4, 2016, the Company's Chief Executive Officer and Chief Financial Officer, Murray Fleming, was appointed to the Board of Directors of Glucose Health, Inc. ("Company"). On February 5, 2016, James Hodge resigned from the Board of Directors. On January 6, 2016, Glucose Health, Inc. ("Company") executed a General Merchandise Supplier Agreement ("Agreement") with Wal-mart Stores, Inc. ("Customer") of Bentonville, Arkansas. On March 8, 2016, the Company received a series of material purchase orders from the Customer pursuant to this Agreement for delivery of its Glucose Health Ò product - a natural dietary supplement formulated for persons concerned about pre-diabetes and Type-2 diabetes. The Company expects Glucose Health Ò to be stocked and available for purchase by consumers in the "Diabetes Supplies" section of many of the Customer's pharmacy locations across the United States by early May, 2016. F-21 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure. None.