Glucose Health, Inc S-1, filed Jun 1, 2022
Glucose Health, Inc. (GLUC)
As filed with the U.S. Securities and Exchange Commission on June 1, 2022
Registration No. 333-
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
(Exact Name of Registrant as Specified in its Charter) |
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(State or other jurisdiction of incorporation or organization) |
| (Primary Standard Industrial Classification Code Number) |
| (I.R.S Employer Identification No.) |
Phone: (
(Address, including zip code, and telephone
number, including area code, of principal
executive offices)
Murray Fleming
Chief Executive Officer
609 SW 8th Street
Suite 600
Bentonville, AR 72712
Phone: (479) 802-3827
(Address, including zip code, and telephone
number, including area code, of agent for service)
Copies to:
Joseph M. Lucosky, Esq. |
| Ross Carmel, Esq. |
Lawrence Metelitsa, Esq. |
| Carmel Milazzo & Feil LLP |
Lucosky Brookman LLP |
| 55 W 39th Street |
101 Wood Avenue South |
| 18th Floor |
Woodbridge, New Jersey 08830 |
| New York, NY 10018 |
(732) 395-4500 |
| (212) 658-0458 |
Approximate date of commencement of proposed sale to the public: As soon as possible after this Registration Statement becomes effective.
If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933 check the following box: ☒
If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer | ☐ | Accelerated filer | ☐ |
☒ | Smaller Reporting Company | ||
Emerging growth company |
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided to Section 7(a)(2)(B) of the Securities Act.
The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.
The information in this preliminary prospectus is not complete and may be changed. We may not sell these securities until the Securities and Exchange Commission declares our registration statement effective. This prospectus is not an offer to sell nor does it seek an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.
SUBJECT TO COMPLETION, DATED [*], 2022
PRELIMINARY PROSPECTUS
GLUCOSE HEALTH, INC.
Units
Each Unit Consisting of One Share of Common Stock and
One Warrant to Purchase One Share of Common Stock
We are offering units (each a “Unit” and collectively, the “Units”), at a public offering price of $ per unit, of Glucose Health, Inc. (the “Company”, “Glucose Health”, “we”, “our”, or “us) with each Unit consisting of one share of our common stock, par value $0.001 per share (“Common Stock”) and one warrant (“Warrant”) to purchase one share of Common Stock. The Units have no stand-alone rights and will not be certificated or issued as stand-alone securities.
The shares of our Common Stock and the Warrants comprising the Units are immediately separable upon issuance and will be issued separately. The Warrants included in the Units will be exercisable immediately upon issuance, will expire five years from the date of issuance and have an exercise price of $ per share ( % of the price per unit sold in this offering.) This offering also includes the shares of Common Stock issuable from time to time upon exercise of the Warrants. The Warrants will be issued in book-entry form pursuant to a warrant agency agreement between us and Nevada Agency and Transfer Company as warrant agent.
We intend to apply for listing of our Common Stock and Warrants on the NYSE-American under the symbols “GLUC” and “GLUCW.” No assurance can be given that our application will be approved. If our listing application is not approved, we will not proceed with this offering. The listing standards of the NYSE-American include a minimum stock price. Prior to the consummation of this offering, we plan to effect a reverse stock split by a ratio within the range of one-for-[ ] (1-for-[ ]) to one-for-[ ] (1-for-[ ]). We have assumed a public offering price of $ , herein, which represents the last reported sales price of our common stock as quoted by OTC Markets on , 2022. The final public offering price per share will be determined at the time of pricing and may be at a discount to the current market price. The public offering price used herein may not be indicative of the final offering price.
We are an “emerging growth company” under applicable Securities and Exchange Commission rules and will be subject to reduced public company reporting requirements.
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Investing in our securities involves a high degree of risk. See “Risk Factors” beginning on page 15 of this prospectus. You should carefully consider these risk factors, as well as the information contained in this prospectus, before purchasing any of the securities offered by this prospectus.
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Public offering price |
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Underwriting discounts and commissions(1) |
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Proceeds to the Company, before expenses(2) |
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| (1) | We have also agreed to issue warrants to purchase 4% of the number of shares of common stock sold in this offering to the representative of the underwriters in this offering, to reimburse the representative of the underwriters for certain expenses, and to provide a non-accountable expense allowance equal to 1% of the gross proceeds of this offering payable to the representative of the underwriters. |
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| (2) | The amount of offering proceeds to us presented in this table does not give effect to any exercise of the: (i) over-allotment option (if any) we have granted to the representative of the underwriters as described below and (ii) the warrants being issued to the representative of the underwriters in this offering. |
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
We have granted a 45-day option to the representative of the underwriters, exercisable one or more times in whole or in part, to purchase up to additional shares of Common Stock to cover over-allotments, at the public offering price per share of Common Stock, less, in each case, the underwriting discounts payable by us. The securities issuable upon exercise of this overallotment option are identical to those offered by this prospectus and have been registered under the registration statement of which this prospectus forms a part.
The underwriters expect to deliver the shares of Units to investors on or about , 2022.
EF HUTTON,
division of Benchmark Investments, LLC
The date of this prospectus is , 2022
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TABLE OF CONTENTS
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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
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Neither we, nor the underwriters have authorized anyone to provide you with information other than that contained in this prospectus or any free writing prospectus prepared by or on behalf of us or to which we have referred you. No person is authorized in connection with this prospectus to give any information or to make any representations about us, the securities offered hereby, or any matter discussed in this prospectus, other than the information and representations contained in this prospectus. If any other information or representation is given or made, such information or representation may not be relied upon as having been authorized by us. Neither we nor the underwriters take responsibility for and can provide no assurance as to the reliability of any other information that others may give you.
This prospectus is not an offer to sell or the solicitation of an offer to buy our securities in any circumstances under which the offer or solicitation is unlawful or in any state or other jurisdiction where the offer is not permitted. The information contained in this prospectus, or any free writing prospectus is accurate only as of its date, regardless of its time of delivery or of any sale of shares of our common stock. Our business, financial condition, results of operations and prospects may have changed since that date.
No action is being taken in any jurisdiction outside the United States to permit a public offering of our common stock or possession or distribution of this prospectus in that jurisdiction. Persons who come into possession of this prospectus in jurisdictions outside the United States are required to inform themselves about and to observe any restrictions as to this public offering and the distribution of this prospectus applicable to that jurisdiction.
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CAUTIONARY NOTE CONCERNING FORWARD-LOOKING STATEMENTS
This prospectus includes forward-looking statements, which involve risks and uncertainties. These forward-looking statements can be identified by the use of forward-looking terminology, including the terms “believe,” “estimate,” “project,” “anticipate,” “expect,” “seek,” “predict,” “continue,” “possible,” “intend,” “may,” “might,” “will,” “could,” would” or “should” or, in each case, their negative, or other variations or comparable terminology. These forward-looking statements include all matters that are not historical facts. They appear in a number of places throughout this prospectus and include statements regarding our intentions, beliefs or current expectations concerning, among other things, the use of proceeds from this offering, our product candidates, research and development, commercialization objectives, prospects, strategies, the industry in which we operate and potential acquisitions or collaborations.
We derive many of our forward-looking statements from our operating budgets and forecasts, which are based upon many detailed assumptions. While we believe that our assumptions are reasonable, we caution that it is very difficult to predict the impact of known factors, and, of course, it is impossible for us to anticipate all factors that could affect our actual results. Forward-looking statements should not be read as a guarantee of future performance or results and may not be accurate indications of when such performance or results will be achieved. In light of these risks and uncertainties, the forward-looking events and circumstances discussed in this prospectus may not occur and actual results could differ materially from those anticipated or implied in the forward-looking statements. In addition, even if our results of operations, financial condition, business, and prospects are consistent with the forward-looking statements contained in this prospectus, those results may not be indicative of results in subsequent periods.
Forward-looking statements speak only as of the date of this prospectus. You should not put undue reliance on any forward- looking statements. Except as required by law, we undertake no obligation to update publicly any forward-looking statements for any reason, even if new information becomes available or other events occur in the future. If we update one or more forward-looking statements, no inference should be drawn that we will make additional updates with respect to those or other forward-looking statements. All subsequent written and oral forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the cautionary statements contained above and throughout this prospectus.
You should read this prospectus and the documents that we reference in this prospectus and have filed with the Securities and Exchange Commission, or SEC, as exhibits to the registration statement of which this prospectus is a part with the understanding that our actual future results, levels of activity, performance and events and circumstances may be materially different from what we expect. In addition to the risk factors set forth above, the factors set forth below under “Risk Factors” and other cautionary statements made in this prospectus should be read and understood as being applicable to all related forward-looking statements wherever they appear in this prospectus.
MARKET AND INDUSTRY DATA
This prospectus contains statistical data, estimates, and forecasts that are based on publicly available information, as well as other information based on our internal sources. While we believe the industry and market data included in this prospectus are reliable and are based on reasonable assumptions, these data involve many assumptions and limitations, and you are cautioned not to give undue weight to these estimates. We have not independently verified the accuracy or completeness of the data contained in these industry publications and other publicly available information. The industry in which we operate is subject to a high degree of uncertainty and risk due to a variety of factors, including those described in the sections titled “Cautionary Note Regarding Forward-Looking Statements” and “Risk Factors” included in this prospectus.
TRADEMARKS AND TRADE NAMES
We own or have rights to various trademarks, service marks and trade names that we use in connection with the operation of our business. This prospectus may also contain trademarks, service marks and trade names of third parties, which are the property of their respective owners. Our use or display of third parties’ trademarks, service marks, trade names or products in this prospectus is not intended to, and does not imply a relationship with, or endorsement or sponsorship by us. Solely for convenience, the trademarks, service marks and trade names referred to in this prospectus may appear without the ®, TM or SM symbols, but such references are not intended to indicate, in any way, that we will not assert, to the fullest extent under applicable law, our rights or the right of the applicable licensor to these trademarks, service marks and trade names.
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PROSPECTUS SUMMARY
This summary highlights selected information contained elsewhere in this prospectus. This summary does not contain all of the information that you should consider before deciding to invest in our Common Stock. You should read the entire prospectus carefully, including the “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and our combined financial statements and the related notes thereto that are included elsewhere in this prospectus, before making an investment decision.
Overview
We are an own-label distributor of nutritional beverages. Our niche is the formulation, manufacturing, marketing, and distribution of soluble fiber infused nutritional beverages. In November 2017, we registered the trademark GLUCODOWN® and have since launched the first soluble fiber infused, powdered iced tea, and flavored drink mixes, in North America. We launched GLUCODOWN® because we identified an absence of product variety and/or nutritional suitability among the “healthier” beverage offerings from other companies, serving pre-diabetic and diabetic consumers. We are currently in the early stages of marketing and distributing GLUCODOWN® nutritional beverages.
Recent Developments
Building upon our knowledge capital gained from formulating, manufacturing, marketing, and distributing GLUCODOWN®, we registered the trademark FIBER UP® in September 2020, and are developing our second soluble fiber infused nutritional beverage brand. We plan to launch FIBER UP® as a ready-to-drink beverage and to initially focus our marketing and distribution efforts to persons 45 and older.
Corporate History
We were incorporated under the laws of the State of Nevada as Bio-Solutions Corp. on March 27, 2007. From inception, through the third quarter of 2014, we were engaged in various businesses which were unrelated to our current business and corporate officers. On November 19, 2014, we changed our name to Glucose Health, Inc., and our business to that of an own-label distributor of nutritional beverages, which is our business today.
Effective on March 11, 2022, we filed Articles of Conversion with the Nevada Secretary of State and a Certificate of Conversion and Certificate of Incorporation with the Delaware Department of State, Division of Corporations and converted to a Delaware corporation. Our authorized capital stock consists of (i) 40,000,000 shares of common stock, $0.001 par value per share, (ii) 10,000,000 shares of preferred stock, $0.001 par value per share. Our issued and outstanding common shares are 13,848,630 and our issued and outstanding preferred shares are 3,781,002.
Market Opportunity - GLUCODOWN®
The National Diabetes Statistics Report (source: Centers for Disease Control and Prevention. www.cdc.gov/diabetes/data/statistics-report/index.html. Accessed April 10, 2022) estimates 96 million adults have pre-diabetes and 37.3 million adults have diabetes. We believe the National Diabetes Statistics Report points to a large and growing market of consumers likely receptive to nutritional beverages which help maintain healthy serum glucose levels (healthy blood sugar). Prior to the introduction of GLUCODOWN®, the only nutritional beverages formulated for healthy blood sugar by the companies addressing this large and growing consumer market, were dairy shakes (ready-to-drink and powder). By formulating a new form of nutritional beverage for this consumer market, delicious tasting iced tea, and drink mixes, we believe GLUCODOWN® will gain market share. We additionally believe, as this market of consumers becomes aware of GLUCODOWN®, they will discontinue purchasing sugar-free and low-calorie beverages from other companies which, while delicious tasting, do not provide the nutritional efficacy of GLUCODOWN®.
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Market Opportunity - FIBER UP®
FIBER UP® will expand our Company’s addressable consumer market, from pre-diabetic and diabetic persons, to also serve the 95% of Americans understood to be fiber deficient (source: Closing America’s Fiber Intake Gap. website https://www.ncbi.nlm.nih.gov/pmc/articles/PMC6124841/. Accessed April 10, 2022). In addition to helping maintain healthy post-prandial serum glucose levels, soluble fiber has other important physiological impacts, including supporting heart health, promoting weight loss, preserving bone density, and maintaining gut health. We believe consumer interest in the United States in the physiological benefits of soluble fiber is nascent, for reasons of an aging population and increasing health consciousness. While the beneficial impacts of increasing soluble fiber intake are applicable across all age cohorts, we plan to initially focus our launch of FIBER UP® to persons 45 and older - a consumer market we believe to be underserved by other beverage companies.
Products
In fourth quarter of 2017, we launched the first soluble fiber infused iced tea mix in North America in four flavors (Peach Tea, Lemon Tea, Raspberry Tea, and Mixed Berry Tea) under the GLUCODOWN® brand to principally serve pre-diabetic and diabetic persons.
We manufacture GLUCODOWN® in powder form which consumers can use to make their own beverages. In 2021, we launched four new GLUCODOWN® drink (not iced tea) mix flavors (Cherry, Strawberry-Banana, Peach Mango, and Watermelon) also in powder form.
Currently, we manufacture these eight GLUCODOWN® flavor variations in two packaging formats (foil resealable pouches and bulk containers).
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Additionally, we are formulating more GLUCODOWN® line extensions to serve prediabetic and diabetic persons, all to be manufactured in powder form, including flavored instant coffees, such as Mocha Coffee, and Horchata.
We are also developing new GLUCODOWN® packaging formats, including single-serve stick-packs for all our iced tea mix, drink mix and planned future flavor variations.
However, to launch more GLUCODOWN® line extensions in the current fiscal year, we require additional capital, which we do not presently have.
FIBER UP® will be our first ready-to-drink (not powder) nutritional beverage. To the present date, we have formulated multiple flavors of FIBER UP®, including Cherry and Grape. We evaluated many different forms of consumer packaging for FIBER UP® and determined aluminum bottles to be the most environmentally friendly due to their essentially infinite recyclability. We considered various aluminum bottle options from different manufacturers and opened an account with our chosen supplier. We have completed the graphic design and labeling for FIBER UP® including review by our FDA/FTC attorney for compliance with applicable regulations and industry guidance statements.
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We have also begun early manufacturing, marketing, and distribution planning for FIBER UP®, including hiring a brand management firm to assist us. However, to launch FIBER UP® in the current fiscal year, we require substantial additional capital, which we do not presently have.
Marketing and Distribution
Since we launched the GLUCODOWN® brand in the fourth quarter of 2017, our Company has become a supplier to national and large regional retailers, including Walmart, CVS Pharmacies and Woodland Partners (for Publix). We also launched GLUCODOWN® at Amazon in 2018, and at our own Shopify online store in 2021. This direct purchase of GLUCODOWN® online by consumers is now our largest source of revenue.
Our most important marketing and distribution objectives are:
| (1) | Build awareness of GLUCODOWN® among the persons which comprise our identified pre-diabetic and diabetic consumer market for this brand. |
| (2) | Increase sales of GLUCODOWN® via direct consumer purchase at Amazon and our own Shopify online store. |
| (3) | Secure distribution of GLUCODOWN® at national and large regional retailers. |
| (4) | Grow sales of GLUCODOWN® at the national and large regional retailers who are already our customers. |
| (5) | Launch FIBER UP® in at least one regional market. |
Competition
GLUCODOWN® competes directly on the shelves and/or online at the retailers who are our customers, and online at Amazon, with other nutritional beverages which serve our market niche of pre-diabetic and diabetic consumers. These nutritional beverages include Glucerna®, distributed by Abbott Laboratories; Boost®, distributed by Nestle; Splenda® distributed by Heartland Food Products Group, and Slimfast®, distributed by Glanbia, PLC. Our competitors are far larger companies than our Company, with much greater financial and human resources to allocate to their brands. Our competitor’s brands all have extensive retailer and online distribution, and established consumer recognition and loyalty.
Nevertheless, GLUCODOWN® has two competitive advantages over our much larger competitor’s brands: (1) its nutritional attributes and (2) its product differentiation.
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GLUCODOWN® is the only brand which possesses the four nutritional attributes we believe to be essential when formulating a nutritional beverage for diabetic and pre-diabetic consumers:
| · | No sugar (including no added sugar) |
| · | No saturated fat |
| · | Low-calorie (10 calories per serving) |
| · | Good Source of Fiber (soluble) |
GLUCODOWN® is also a unique and distinctive product compared to all others manufactured by our competitors. Our competitor’s products are all dairy shakes (powdered or ready-to-drink) with each brand offering a limited choice of flavors, typically chocolate, strawberry, and vanilla. In contrast, GLUCODOWN® offers an array of delicious iced tea mixes (Peach Tea, Lemon Tea, Raspberry Tea, and Mixed Berry Tea) and delicious (not iced tea) drink mixes (Cherry, Peach-Mango, Strawberry-Banana, and Watermelon).
GLUCODOWN® indirectly competes with supplements in tablet and capsule form found in brick-and-mortar retailers and online marketplaces, targeted to our consumer market niche. We believe the extensive clinical data, gained over two decades (see Clinical Data) for the soluble fiber in GLUCODOWN® both ensures that our statements of nutrition support are compliant with FDA regulations and industry guidance, and that, as our brand gains consumer recognition, we will effectively compete against all such supplement products.
FIBER UP® will face intense competition when it is launched. We believe that consumer preference for “healthier” soft drinks is a recognized industry trend. It is apparent that most, if not all leading beverage companies’ market healthier soft drinks with established brand recognition and extensive distribution. In addition, many small beverage companies also market healthier soft drinks, each with varying degrees of brand recognition and distribution.
Despite this intensely competitive market, we believe that FIBER UP® will be successful because it will have two important competitive advantages vs. other healthier soft drinks; (1) statements of nutritional support and (2) first-to-market status in our category segment.
The extensive body of clinical research underpinning the physiological benefits of the soluble fiber we will infuse in FIBER UP®, will enable us to incorporate the following four statements of nutritional support in our labeling and marketing of FIBER UP®:
· Supports a healthy heart
· Promotes weight loss
· Preserves bone strength
· Maintains a healthy gut
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We believe many, if not most, healthier soft-drinks presently marketed in the United States, utilize only simple nutritive statements, such as no-sugar, caffeine-free, gluten-free, or low-calorie, to attract the interest of consumers. We believe FIBER UP®’s four statements of nutritional support will provide important brand differentiation because they are not apparent in the labeling and marketing of other healthier soft drink brands from other beverage companies. We believe consumers 45 and older, in particular, will be receptive to these four statements of nutritional support. If we obtain the capital to launch FIBER UP®, of which there is no certainty, it is our intention to focus our limited marketing resources on 45 and older consumers.
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In the last two decades, leading beverage companies have marketed, or test-marketed, various fiber infused soft drinks in the United States, without apparent commercial success. In contrast, in Asian countries, particularly with older populations such as Japan, fiber infused soft drinks are today marketed by leading beverage companies with apparent commercial success and brand longevity. We believe consumer interest in the United States in the physiological benefits of soluble fiber is nascent, for reasons of an aging population and increasing health consciousness but, is still not yet at scale for brand investment by leading beverage companies. This absence of leading beverage companies offers a first-to-market opportunity for small beverage companies, including our Company, to launch soluble fiber infused, healthier soft drinks, and to potentially gain brand recognition and meaningful distribution.
Corporate Information
Our principal executive office is located at 609 SW 8th Street, Suite 600, Bentonville, AR 72712, and our telephone number is 479-802-3827. Our corporate website is www.glucosehealthinc.com, and our principal product website is www.glucodown.com. Information available on our websites is not incorporated by reference in and is not deemed a part of this prospectus or the registration statement of which this prospectus is a part.
Implications of Being a Smaller Reporting Company
We are a “smaller reporting company” as defined in Rule 10(f)(1) of Regulation S-K. Smaller reporting companies may take advantage of certain reduced disclosure obligations, including, among other things, providing only two years of audited financial statements. We will remain a smaller reporting company until the last day of the fiscal year in which (1) the market value of our shares held by non-affiliates equals or exceeds $250 million as of the prior June 30th, or (2) our annual revenues equaled or exceeded $100 million during such completed fiscal year and the market value of our shares held by non-affiliates equals or exceeds $700 million as of the prior June 30th. Such reduced disclosure and corporate governance obligations may make it more challenging for investors to analyze our results of operations and financial prospects.
We are a smaller reporting company within the meaning of the Securities Act, and if we take advantage of certain exemptions from disclosure requirements available to smaller reporting companies, this could make our securities less attractive to investors and may make it more difficult to compare our performance with other public companies and As a “smaller reporting company,” we may choose to exempt our company from certain corporate governance requirements that could have an adverse effect on our public shareholders.”
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Implications of Being an Emerging Growth Company
We are an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012, as amended, or the JOBS Act. We will remain an emerging growth company until the earlier of (1) December 31, 2024 (2) the last day of the fiscal year in which we have total annual gross revenue of at least $1.07 billion, (3) the last day of the fiscal year in which we are deemed to be a “large accelerated filer” as defined in Rule 12b-2 under the Securities Exchange Act of 1934, as amended, or the Exchange Act, which would occur on the date on which we have issued more than $1.0 billion in non-convertible debt securities during the prior three-year period. An emerging growth company may take advantage of specified reduced reporting requirements and is relieved of certain other significant requirements that are otherwise generally applicable to public companies. As an emerging growth company, we may:
| · | present only two years of audited financial statements, plus unaudited condensed financial statements for any interim period, and related management’s discussion and analysis of financial condition and results of operations in this prospectus; |
| · | avail ourselves of the exemption from the requirement to obtain an attestation and report from our auditors on the assessment of our internal control over financial reporting pursuant to the Sarbanes-Oxley Act of 2002, or Sarbanes-Oxley; |
| · | provide reduced disclosure about our executive compensation arrangements; and |
| · | not require stockholder non-binding advisory votes on executive compensation or golden parachute arrangements. |
In addition, under the JOBS Act, an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have irrevocably elected not to avail ourselves of this extended transition period, and, as a result we will adopt new or revised accounting standards on relevant dates on which adoption of such standards is required for other public companies.
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SUMMARY OF THE OFFERING
Issuer: |
| Glucose Health, Inc. |
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Securities Offered: |
| [ ] Units, each consisting of one share of Common Stock and one Warrant to purchase one share of Common Stock. The Units will not be certificated or issued in stand-alone form. The shares of our Common Stock and the Warrants comprising the Units are immediately separable upon issuance and will be issued separately; but will be purchased together in this offering. |
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Warrants Included in Units |
| The exercise price of the Warrants is $[ ] per share ([ ]% of the public offering price per Unit). Each Warrant is exercisable for one share of Common Stock. Each Warrant will be exercisable immediately upon issuance and will expire five years after the initial issuance date. The terms of the Warrants will be governed by a warrant agency agreement, dated as of the effective date of this offering, between us and Nevada Agency and Transfer Company as warrant agent. This prospectus also relates to the offering of the shares of Common Stock issuable upon exercise of the Warrants. For more information regarding the warrants, you should carefully read the section titled “Description of Securities” in this prospectus. |
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Over-allotment option: |
| We have granted to the representative of the underwriters a 45-day option to purchase up to [ ] additional shares of our Common Stock at a public offering price of $[ ] per share, less the underwriting discounts payable by us, in any combination solely to cover over-allotments, if any. |
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Representative’s warrants: |
| We have agreed to issue to the representative warrants to purchase a number of shares of common stock equal in the aggregate to 4% of the total number of shares issued in this offering. The representative’s warrants will be exercisable at a per share exercise price equal to 120% of the public offering price per share of common stock sold in this offering. The representative’s warrants will be exercisable at any time and from time to time, in whole or in part, during the four and a half-year period commencing six (6) months from the commencement date of sales in this offering. The registration statement of which this prospectus forms a part also registers the shares of common stock issuable upon exercise of the representative’s warrants. |
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Common stock issued and outstanding before this offering (1): |
| 13,848,630 Shares |
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Common stock issued and outstanding after the offering: |
| [ ] Shares, if the Warrants offered hereby are exercised in full. |
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Use of proceeds: |
| We estimate that the net proceeds to us from this offering will be approximately $ million, or approximately $ million if the underwriters exercise their over-allotment option in full, assuming an offering price of $ per share, after deducting underwriting discounts and commissions and estimated offering expenses payable by us.
We intend to use the net proceeds of this offering primarily for working capital, sales and marketing, research and development, and general corporate purposes. See “Use of Proceeds” for additional information. |
|
|
|
Proposed NYSE-American Trading Symbol and Listing: |
| We intend to apply for listing of our Common Stock and Warrants on the NYSE-American under the symbols “GLUC” and “GLUCW.” NYSE-American listing standards include, among other things, a stock price threshold. In order to meet that threshold prior to the consummation of this offering, we intend to file a Certificate of Amendment to our Certificate of Incorporation to effect a reverse stock split of our Common Stock by a ratio within the range of one-for-[ ] (1-for-[ ]) to one-for-[ ] (1-for-[ ]). |
|
|
|
Risk Factors: |
| See “Risk Factors” beginning on page 15 and the other information contained in this prospectus for a discussion of factors you should carefully consider before investing in our securities. |
|
|
|
Lock-up: |
| We, our directors, executive officers, and shareholders who own 5% or more of our outstanding Common Stock will agree with the underwriters not to offer for sale, issue, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, lend, or otherwise transfer or dispose of, directly or indirectly, any shares of capital stock of the Company or any securities convertible into or exercisable or exchangeable for shares of capital stock of the Company, in the case of the Company for a period of 360 days after the date of this prospectus, and in the case of our directors and executive officers and our 5% and greater stockholders for a period of 180 days after the date of this prospectus, without the prior written consent of the underwriter.
|
(1) | The total number of shares of Common Stock that will be outstanding after this offering is based on [ ] shares of Common Stock outstanding as of , 2022. Unless otherwise indicated, the Shares outstanding after this offering excludes the following: |
| · | [*] shares of our common stock issuable upon exercise of the Warrants to be issued as part of the Units; |
| · | [*] shares of our common stock issuable upon exercise of the one-for-one (1-for-1) conversion option of our Series B, C, D and E preferred stock. |
| 10 |
| Table of Contents |
SUMMARY FINANCIAL INFORMATION
The following summary statements of operations and balance sheet data for interim period ending March 31, 2022, and the fiscal years ended December 31, 2021, and 2020, have been derived from our audited financial statements included elsewhere in this prospectus. The historical financial data presented below is not necessarily indicative of our financial results in future periods. You should read the summary financial data in conjunction with those financial statements and the accompanying notes and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Our financial statements are prepared and presented in accordance with United States generally accepted accounting principles, or U.S. GAAP. Our financial statements have been prepared on a basis consistent with our audited financial statements and include all adjustments, consisting of normal and recurring adjustments that we consider necessary for a fair presentation of the financial position and results of operations as of and for such periods.
GLUCOSE HEALTH INC.
STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31,
|
| 2022 |
|
| 2021 |
| ||
|
| (UNAUDITED) |
|
|
|
| ||
|
|
|
|
|
|
| ||
REVENUE, NET |
| $ | 213,813 |
|
| $ | 237,465 |
|
|
|
|
|
|
|
|
|
|
COST OF REVENUES |
|
|
|
|
|
|
|
|
Cost of revenues |
|
| 90,719 |
|
|
| 134,251 |
|
|
|
|
|
|
|
|
|
|
GROSS PROFIT |
|
| 123,094 |
|
|
| 103,214 |
|
|
|
|
|
|
|
|
|
|
OPERATING EXPENSES |
|
|
|
|
|
|
|
|
Selling and marketing |
|
| 106,916 |
|
|
| 56,134 |
|
General and administrative |
|
| 34,547 |
|
|
| 11,879 |
|
Professional fees |
|
| 69,566 |
|
|
| 23,376 |
|
Services paid in stock |
|
| 103,114 |
|
|
| - |
|
Total operating expenses |
|
| 314,143 |
|
|
| 91,389 |
|
|
|
|
|
|
|
|
|
|
INCOME (LOSS) FROM OPERATIONS |
|
| (191,049 | ) |
|
| 11,825 |
|
|
|
|
|
|
|
|
|
|
OTHER INCOME (EXPENSE) |
|
|
|
|
|
|
|
|
Interest income (expense) |
|
| - |
|
|
| (1,402 | ) |
Total other expense |
|
| - |
|
|
| (1,402 | ) |
|
|
|
|
|
|
|
|
|
INCOME (LOSS) BEFORE INCOME TAXES |
|
| (191,049 | ) |
|
| 10,423 |
|
|
|
|
|
|
|
|
|
|
PROVISION FOR (BENEFIT FROM) INCOME TAXES |
|
| - |
|
|
| - |
|
|
|
|
|
|
|
|
|
|
NET INCOME (LOSS) |
| $ | (191,049 | ) |
| $ | 10,423 |
|
|
|
|
|
|
|
|
|
|
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING - BASIC AND DILUTED |
|
| 13,848,630 |
|
|
| 11,627,949 |
|
|
|
|
|
|
|
|
|
|
NET INCOME (LOSS) PER SHARE - BASIC AND DILUTED |
| $ | (0.01 | ) |
| $ | 0.00 |
|
The accompanying notes are an integral part of these financial statements.
| 11 |
| Table of Contents |
GLUCOSE HEALTH INC.
STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31,
|
| 2021 |
|
| 2020 |
| ||
|
|
|
|
|
|
| ||
REVENUE, NET |
| $ | 953,681 |
|
| $ | 480,713 |
|
|
|
|
|
|
|
|
|
|
COST OF REVENUES |
|
|
|
|
|
|
|
|
Cost of revenues |
|
| 543,639 |
|
|
| 307,168 |
|
|
|
|
|
|
|
|
|
|
GROSS PROFIT |
|
| 410,042 |
|
|
| 173,545 |
|
|
|
|
|
|
|
|
|
|
OPERATING EXPENSES |
|
|
|
|
|
|
|
|
Selling and marketing |
|
| 184,481 |
|
|
| 129,431 |
|
General and administrative |
|
| 92,885 |
|
|
| 61,735 |
|
Professional fees |
|
| 46,340 |
|
|
| 82,061 |
|
Uncollectible receivables |
|
| 10,000 |
|
|
| - |
|
Services paid in stock |
|
| 412,455 |
|
|
| 524,673 |
|
Total operating expenses |
|
| 746,161 |
|
|
| 797,900 |
|
|
|
|
|
|
|
|
|
|
INCOME (LOSS) FROM OPERATIONS |
|
| (336,119 | ) |
|
| (624,355 | ) |
|
|
|
|
|
|
|
|
|
OTHER INCOME (EXPENSE) |
|
|
|
|
|
|
|
|
Interest income (expense) |
|
| (2,785 | ) |
|
| (12,156 | ) |
Interest income (expense), non-cash item |
|
| - |
|
|
| (5,604 | ) |
Recovery of retailer chargebacks |
|
| - |
|
|
| 163,765 |
|
Loss on debt settlement |
|
| - |
|
|
| (14,370 | ) |
Gain on forgiveness of accounts payable |
|
| - |
|
|
| 15,042 |
|
Total other expense |
|
| (2,785 | ) |
|
| 146,677 |
|
|
|
|
|
|
|
|
|
|
INCOME (LOSS) BEFORE INCOME TAXES |
|
| (338,904 | ) |
|
| (477,678 | ) |
|
|
|
|
|
|
|
|
|
PROVISION FOR (BENEFIT FROM) INCOME TAXES |
|
| - |
|
|
| - |
|
|
|
|
|
|
|
|
|
|
NET INCOME (LOSS) |
| $ | (338,904 | ) |
| $ | (477,678 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING - BASIC AND DILUTED |
|
| 12,877,355 |
|
|
| 11,467,101 |
|
|
|
|
|
|
|
|
|
|
NET INCOME (LOSS) PER SHARE - BASIC AND DILUTED |
| $ | (0.03 | ) |
| $ | (0.04 | ) |
The accompanying notes are an integral part of these financial statements.
| 12 |
| Table of Contents |
GLUCOSE HEALTH, INC.
BALANCE SHEETS
ASSETS | ||||||||
|
| March 31, |
|
| December 31, |
| ||
|
| 2022 (UNAUDITED) |
|
| 2021 |
| ||
CURRENT ASSETS |
|
|
|
|
|
| ||
Cash |
| $ | 641,061 |
|
| $ | 752,402 |
|
Accounts receivable, net of allowance for doubtful accounts of $10,742 and $10,742, respectively |
|
| 36,451 |
|
|
| 29,435 |
|
Inventory |
|
| 251,642 |
|
|
| 267,861 |
|
Prepaid expenses |
|
| - |
|
|
| 103,114 |
|
Total current assets |
|
| 929,154 |
|
|
| 1,152,812 |
|
|
|
|
|
|
|
|
|
|
Other Assets |
|
|
|
|
|
|
|
|
Website domains |
|
| 3,295 |
|
|
| 3,295 |
|
Intellectual assets, net of accumulated |
|
|
|
|
|
|
|
|
amortization of $300 |
|
| - |
|
|
| - |
|
|
|
|
|
|
|
|
|
|
TOTAL ASSETS |
| $ | 932,449 |
|
| $ | 1,156,107 |
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
|
|
|
|
|
|
|
|
|
CURRENT LIABILITIES |
|
|
|
|
|
|
|
|
Accounts payable and accrued expenses |
| $ | 2,071 |
|
| $ | 9,555 |
|
Total current liabilities |
|
| 2,071 |
|
|
| 9,555 |
|
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES |
|
| 2,071 |
|
|
| 9,555 |
|
|
|
|
|
|
|
|
|
|
COMMITMENTS AND CONTINGENCIES |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
STOCKHOLDERS' EQUITY |
|
|
|
|
|
|
|
|
Preferred stock, Series A, $.001 par value, 1,000 shares authorized, |
|
|
|
|
|
|
|
|
1,000 shares issued and outstanding as of |
|
|
|
|
|
|
|
|
March 31, 2022 and December 31, 2021, respectively |
|
| 1 |
|
|
| 1 |
|
Preferred stock, Series B, $0.075 stated value, 3,466,668 shares authorized, |
|
|
|
|
|
|
|
|
2,133,334 shares and 3,466,668 shares issued and outstanding as of |
|
|
|
|
|
|
|
|
March 31, 2022 and December 31, 2021, respectively |
|
| 2,133 |
|
|
| 2,133 |
|
Preferred stock, Series C, $0.075 stated value, 866,668 shares authorized, |
|
|
|
|
|
|
|
|
866,668 shares issued and outstanding as of |
|
|
|
|
|
|
|
|
March 31, 2022 and December 31, 2021, respectively |
|
| 867 |
|
|
| 867 |
|
Preferred stock, Series D, $1.00 stated value, 300,000 shares authorized, |
|
|
|
|
|
|
|
|
300,000 shares issued and outstanding as of |
|
|
|
|
|
|
|
|
March 31, 2022 and December 31, 2021, respectively |
|
| 300 |
|
|
| 300 |
|
Preferred stock, Series E, $2.00 stated value, 480,000 shares authorized, |
|
|
|
|
|
|
|
|
480,000 shares and -0- shares issued and outstanding as of |
|
|
|
|
|
|
|
|
March 31, 2022 and December 31, 2021, respectively |
|
| 480 |
|
|
| 480 |
|
Common stock, $0.001 par value, 40,000,000 shares authorized, |
|
|
|
|
|
|
|
|
13,848,630 and 13,848,630 shares issued and outstanding as of |
|
|
|
|
|
|
|
|
March 31, 2022 and December 31, 2021, respectively |
|
| 13,849 |
|
|
| 13,849 |
|
Additional paid in capital |
|
| 8,831,233 |
|
|
| 8,831,233 |
|
Accumulated deficit |
|
| (7,918,484 | ) |
|
| (7,702,310 | ) |
Total stockholders' equity |
|
| 930,378 |
|
|
| 1,146,552 |
|
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY |
| $ | 932,449 |
|
| $ | 1,156,107 |
|
The accompanying notes are an integral part of these financial statements.
| 13 |
| Table of Contents |
GLUCOSE HEALTH, INC.
BALANCE SHEETS
ASSETS | ||||||||
|
| December 31, |
|
| December 31, |
| ||
|
| 2021 |
|
| 2020 |
| ||
CURRENT ASSETS |
|
|
|
|
|
| ||
Cash |
| $ | 752,402 |
|
| $ | 69,151 |
|
Accounts receivable, net of allowance for doubtful accounts of $10,742 and $742, respectively |
|
| 29,435 |
|
|
| 18,048 |
|
Inventory |
|
| 267,861 |
|
|
| 254,122 |
|
Prepaid expenses |
|
| 103,114 |
|
|
| - |
|
Total current assets |
|
| 1,152,812 |
|
|
| 341,321 |
|
|
|
|
|
|
|
|
|
|
Other Assets |
|
|
|
|
|
|
|
|
Website domains |
|
| 3,295 |
|
|
| 3,295 |
|
Intellectual assets, net of accumulated amortization of $300 |
|
| - |
|
|
| - |
|
|
|
|
|
|
|
|
|
|
TOTAL ASSETS |
| $ | 1,156,107 |
|
| $ | 344,616 |
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
|
|
|
|
|
|
|
|
|
CURRENT LIABILITIES |
|
|
|
|
|
|
|
|
Accounts payable and accrued expenses |
| $ | 9,555 |
|
| $ | - |
|
Accrued interest |
|
| - |
|
|
| 27,604 |
|
Convertible note payable, related party |
|
| - |
|
|
| 112,157 |
|
Total current liabilities |
|
| 9,555 |
|
|
| 139,761 |
|
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES |
|
| 9,555 |
|
|
| 139,761 |
|
|
|
|
|
|
|
|
|
|
COMMITMENTS AND CONTINGENCIES |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
STOCKHOLDERS' EQUITY |
|
|
|
|
|
|
|
|
Preferred stock, Series A, $.001 par value, 1,000 shares authorized, |
|
|
|
|
|
|
|
|
1,000 shares issued and outstanding as of |
|
|
|
|
|
|
|
|
December 31, 2021 and 2020, respectively |
|
| 1 |
|
|
| 1 |
|
Preferred stock, Series B, $0.075 stated value, 3,466,668 shares authorized, |
|
|
|
|
|
|
|
|
2,133,334 shares and 3,466,668 shares issued and outstanding as of |
|
|
|
|
|
|
|
|
December 31, 2021 and 2020, respectively |
|
| 2,133 |
|
|
| 3,467 |
|
Preferred stock, Series C, $0.075 stated value, 866,668 shares authorized, |
|
|
|
|
|
|
|
|
866,668 shares issued and outstanding as of |
|
|
|
|
|
|
|
|
December 31, 2021 and 2020, respectively |
|
| 867 |
|
|
| 867 |
|
Preferred stock, Series D, $1.00 stated value, 300,000 shares authorized, |
|
|
|
|
|
|
|
|
300,000 shares issued and outstanding as of |
|
|
|
|
|
|
|
|
December 31, 2021 and 2020, respectively |
|
| 300 |
|
|
| 300 |
|
Preferred stock, Series E, $2.00 stated value, 480,000 shares authorized, |
|
|
|
|
|
|
|
|
480,000 shares and -0- shares issued and outstanding as of |
|
|
|
|
|
|
|
|
December 31, 2021 and 2020, respectively |
|
| 480 |
|
|
| - |
|
Common stock, $0.001 par value, 40,000,000 shares authorized, |
|
|
|
|
|
|
|
|
13,848,630 and 11,627,949 shares issued and outstanding as of |
|
|
|
|
|
|
|
|
December 31, 2021 and 2020, respectively |
|
| 13,849 |
|
|
| 11,628 |
|
Additional paid in capital |
|
| 8,831,233 |
|
|
| 7,452,555 |
|
Accumulated deficit |
|
| (7,702,310 | ) |
|
| (7,263,963 | ) |
Total stockholders' equity |
|
| 1,146,552 |
|
|
| 204,855 |
|
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY |
| $ | 1,156,107 |
|
| $ | 344,616 |
|
The accompanying notes are an integral part of these financial statements.
14 |
| Table of Contents |
RISK FACTORS
An investment in our securities involves a high degree of risk. Before making a decision to invest in our securities, you should carefully consider the risks that are described in this section and elsewhere in this prospectus. Additional risks not presently known or that we currently deem immaterial could also materially and adversely affect us. You should consult your own financial and legal advisors as to the risks entailed by an investment in our securities and the suitability of investing in our securities in light of your particular circumstances. If any of the risks contained in this prospectus develop into actual events, our assets, business, cash flows, condition (financial or otherwise), credit quality, financial performance, liquidity, long-term performance goals, prospects, and/or results of operations could be materially and adversely affected, the trading price of our Common Stock could decline, and you may lose all or part of your investment. Some statements in this prospectus, including such statements in the following risk factors, constitute forward-looking statements. See the section entitled “Cautionary Note Regarding Forward-Looking Statements.”
Risks Related to Our Company and Business
We have a limited operating history and may not be able to operate our business successfully.
On November 19, 2014, we changed our name to Glucose Health, Inc., and our business to that of an own-label distributor of nutritional beverages. Our business has a relatively limited operating history. Historical results are not indicative of, and may be substantially different than, the results we achieve in the future. We cannot assure you that we will be able to operate our business successfully or implement our operating policies and strategies. The results of our operations depend on several factors, our success in attracting and retaining motivated and qualified personnel, the availability of adequate short and long-term financing, conditions in the financial markets, and general economic conditions. In addition, our future operating results and financial data may vary materially from the historical operating results and financial data as well as the pro forma operating results and financial data because of a number of factors, including costs and expenses associated with being a public company.
We have limited capital resources, and we will need to raise additional capital through additional funding raises. Such funding, if obtained, could result in substantial dilution or significant debt service obligations. We may not be able to obtain additional capital on commercially reasonable terms in a timely manner, which could adversely affect our liquidity, financial position, and ability to continue operations.
As of March 31, 2022, we had a cash balance of $641,061. We thus have limited capital resources and require the funds from this offering to continue and grow our business. Even if we substantially increase revenue and reduce operating expenses, we will need to raise additional capital. In order to continue operating, we may need to obtain additional financing, either through borrowings, private offerings, public offerings, or some type of business combination, such as a merger, or buyout, and there can be no assurance that we will be successful in such pursuits. We may be unable to acquire the additional funding necessary to continue operating. Accordingly, if we are unable to generate adequate cash from operations, and if we are unable to find sources of funding, it may be necessary for us to sell one or more lines of business or all or a portion of our assets, enter into a business combination, or reduce or eliminate operations. These possibilities, to the extent available, may be on terms that result in significant dilution to our shareholders or that result in our investors losing all of their investment in our company.
If we are able to raise additional capital, we do not know what the terms of any such capital raising would be. In addition, any future sale of our equity securities would dilute the ownership and control of your shares and could be at prices substantially below prices at which our shares currently trade. Our inability to raise capital could require us to significantly curtail or terminate our operations. We may seek to increase our cash reserves through the sale of additional equity. The sale of additional equity securities could result in additional and potentially substantial dilution to our shareholders. In addition, our ability to obtain additional capital on acceptable terms is subject to a variety of uncertainties. We cannot assure you that financing will be available in amounts or on terms acceptable to us, if at all. Any failure to raise additional funds on favorable terms could have a material adverse effect on our liquidity and financial condition.
| 15 |
| Table of Contents |
The loss of key officers, executives or personnel, or the inability of replacements to quickly and successfully perform in their new roles could adversely affect our business.
We depend on the leadership and experience of our Chief Executive Officer and Chief Financial Officer, Murray Fleming. The loss of his services could have a material adverse effect on our business and prospects, as we may not be able to find suitable individuals to replace our Chief Executive Officer and Chief Financial Officer on a timely basis or without incurring increased costs, or at all. Furthermore, if in the future, we lose or terminate the services of one or more of our key employees or if one or more of our current or former executives or key employees joins a competitor or otherwise competes with us, it could impair our business and our ability to successfully implement our business plan. Additionally, if in the future, we are unable to hire qualified replacements for our executive and other key positions in a timely fashion, our ability to execute our business plan would be harmed. Even if we can quickly hire qualified replacements, we would expect to experience operational disruptions and inefficiencies during any transition. We believe that our future success will depend on our continued ability to attract and retain highly skilled and qualified personnel. There is a high level of competition for experienced, successful personnel in our industry. Our inability to meet our executive staffing requirements in the future could impair our growth and harm our business.
We are dependent on our ability to attract and retain qualified technical, sales and managerial personnel.
Our future success depends in part on our ability to attract and retain highly qualified technical, sales and managerial personnel. Competition for such personnel in the beverage industry is intense and we may not be able to attract and retain additional highly qualified technical, sales and managerial personnel in the future. Any inability to attract and retain the necessary technical, sales and managerial personnel could materially adversely affect us.
Our financial statements may be materially affected if our estimates prove to be inaccurate as a result of our limited experience in making critical accounting estimates.
Financial statements prepared in accordance with GAAP require the use of estimates, judgments, and assumptions that affect the reported amounts. Actual results may differ materially from these estimates under different assumptions or conditions. These estimates, judgments, and assumptions are inherently uncertain, and, if they prove to be wrong, then we face the risk that charges to income will be required. In addition, because we have limited operating history and limited experience in making these estimates, judgments, and assumptions, the risk of future charges to income may be greater than if we had more experience in these areas. Any such charges could significantly harm our financial condition, results of operations, and the price of our securities.
Our operating results may fluctuate significantly as a result of a variety of factors, many of which are outside of our control, which could cause fluctuations in the price of our securities.
We are subject to the following factors that may negatively affect our operating results:
| · | the announcement or introduction of new products by our competitors; |
| · | our ability to upgrade and develop our systems to accommodate growth; |
| · | our ability to attract and retain key personnel in a timely and cost-effective manner; |
| · | the amount and timing of operating costs relating to the expansion of our business operations; |
| · | our ability to identify and enter into relationships with appropriate and qualified third-party providers for operations, tolling and contract manufacturing services; |
| · | regulation by federal, state, or local governments; |
| · | general economic conditions; |
| · | economic conditions specific to the nutritional beverage industry, including for ingredient suppliers, tolling and contract manufactures, packaging suppliers and printers, warehousing, and logistics providers; |
| · | various risks related to health epidemics, pandemics, and similar outbreaks, such as the coronavirus disease 2019 (“COVID-19”) pandemic, which may have material adverse effects on our business, financial position, results of operations and/or cash flows. |
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As a result of our limited operating history and the nature of the markets in which we compete, it is difficult for us to forecast our revenues or earnings accurately. As a strategic response to changes in our competitive environment, we may from time to time make certain decisions concerning production, marketing and distribution of our products that could have a material and adverse effect on our business, results of operations, and financial condition. Due to the foregoing factors, our quarterly revenues and operating results are difficult to forecast.
We are increasingly dependent on information technology, and potential cyberattacks, security problems, or other disruption and expanding social media vehicles present new risks.
We rely on information technology networks such as EDI (electronic data interchange), and the internet, to process, transmit, and store electronic information, and to manage or support a variety of business processes, including financial transactions and records, billing, and operating data. We may purchase some of our information technology from vendors, on whom our systems will depend, and we rely on commercially available systems, software, tools, and monitoring to provide security for processing, transmission, and storage of confidential operator and other customer information. We depend upon the secure transmission of this information over public networks. Our networks and storage applications could be subject to unauthorized access by hackers or others through cyberattacks, which are rapidly evolving and becoming increasingly sophisticated, or by other means, or may be breached due to operator error, malfeasance, or other system disruptions. In some cases, it will be difficult to anticipate or immediately detect such incidents and the damage they cause. Any significant breakdown, invasion, destruction, interruption, or leakage of information from our systems could harm our reputation and business.
Further, in the normal course of our business, we collect, store, and transmit proprietary and confidential information regarding our customers, employees, suppliers, and others, including personally identifiable information. An operational failure or breach of security from increasingly sophisticated cyber threats could lead to loss, misuse, or unauthorized disclosure of this information about our customers, employees, suppliers, and others, which may result in regulatory or other legal proceedings, and have a material adverse effect on our business and reputation. We also may not have the resources or technical sophistication to anticipate or prevent rapidly evolving types of cyber-attacks. Any such attacks or precautionary measures taken to prevent anticipated attacks may result in increasing costs, including costs for additional technologies, training, and third-party consultants. The losses incurred from a breach of data security and operational failures as well as the precautionary measures required to address this evolving risk may adversely impact our financial condition, results of operations and cash flows.
We are subject to significant competition.
The business of making and distributing nutritional beverages is highly competitive. The principal areas of competition include pricing, packaging, distribution channel penetration, development of new products and line extensions and marketing campaigns. Our products compete with a wide range of nutritional beverage produced principally by very large multinational companies, which have substantially greater financial, marketing and distribution resources and brand name recognition than we do.
We compete in an industry that is brand-conscious, so brand name recognition and acceptance of our products are critical to our success and significant marketing and advertising will be needed to achieve and sustain brand recognition.
The business of making and distributing nutritional beverages is substantially dependent upon brand awareness and market acceptance of our products by consumers. The development of brand awareness and market acceptance is likely to require significant marketing and advertising expenditures. Even if we are able to engage in such marketing and advertising efforts, there can be no assurance that we will achieve and maintain satisfactory levels of brand awareness and market acceptance by consumers. Any failure of our brands to achieve brand awareness and market acceptance would likely have a material adverse effect on business, financial condition, and results of operations.
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We are dependent on a limited number of raw materials suppliers and a limited number of tolling and contract manufacturers, which may affect our ability to procure our inputs and produce our products in a timely manner. If we are not able to ensure timely product deliveries, our customers may not order our products, and our revenues may decrease.
We rely on a limited number of specialized companies to supply our raw materials and a limited number of tolling and contract manufacturing companies with the necessary expertise to manufacture our products. These suppliers and tolling and contract manufacturers may be unable to satisfy our requirements, on a timely basis. Any failure to meet our timelines, could adversely affect our revenues, as well as jeopardize our relationships with our customers. In the event any of our suppliers and tolling and contract manufacturers were to become unable or unwilling to continue to serve us, we would be required to identify and obtain acceptable alternatives. There is no assurance that we would be able to find such alternatives on a timely basis, or at all. An extended interruption in the supply of our products would result in decreased product sales and our revenues would likely decline.
We depend upon our tolling and contract manufacturers to warehouse our raw materials
We have no facilities of our own to warehouse our raw materials. Instead, we rely on our tolling and contract manufacturers to provide space to us and stage our raw materials for production. While we have negotiated favorable fees for this, there can be no certainty these costs won’t rise and reduce our gross margins. If our tolling and contract manufacturers were to decide not to warehouse and stage our raw materials, this would have a very significant impact on our ability to manufacture any product at all in a cost-effective manner, and our business would materially suffer.
Increases in cost or shortages of raw materials could harm our business.
Increases in costs of our raw materials produced by shortages or inflation will result in increased costs of production. We are uncertain whether we will be able to pass any of such increases on to our customers. We do not use hedging agreements or alternative instruments to manage the risks associated with securing our raw materials. In addition, some of our raw materials may only be available from a single or a limited number of suppliers. As alternative sources of supply may not be available, any increase in costs or interruption in the supply of such raw materials might materially harm us.
Our failure to accurately estimate demand for our products could adversely affect our business.
We may not correctly estimate demand for our products. If we materially underestimate demand for our products and are unable to secure sufficient raw materials, we might not be able to satisfy consumer demand for our nutritional beverages, on a short-term basis, when we run out of inventory to sell, in which case our business, financial condition and results of operations could be adversely affected.
We may not be able to develop successful new products, which could impede our growth and cause us to sustain future losses.
Part of our business strategy is to increase our sales through the development of new products and line extensions. We cannot assure you that we will be able to develop, market, sell and distribute new products and line extensions that will enjoy consumer or retailer buyer acceptance. The failure to develop new products or line extensions that gain consumer or retailer buyer acceptance could have an adverse impact on our growth and materially adversely affect our financial condition.
Our lack of product diversification and inability to timely introduce new or alternative products could cause us to cease operations.
Our business is focused on GLUCODOWN® and our second brand FIBER UP® is only in early development and not yet commercialized. The risks associated with focusing on such a limited product line are substantial. If consumers do not accept our products or if there is a general decline in market demand for, or any significant decrease in, the consumption of nutritional beverages, we are not financially or operationally capable of introducing alternative products within a short time frame. As a result, such lack of acceptance or market demand decline could cause us to cease operations.
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Low demand for new products and the inability to develop and introduce new products at favorable margins could adversely impact our performance and prospects for future growth.
The uncertainties associated with developing and introducing new products, such as market demand and costs of development and production, may impede the successful development and introduction of new products on a consistent basis. Introduction of new technology may result in higher costs to us than that of the technology replaced. That increase in costs, which may continue indefinitely or until increased demand and greater availability in the sources of the new technology drive down its cost, could adversely affect our results of operations. Market acceptance of the new products introduced in recent years and scheduled for introduction in future years may not meet sales expectations due to various factors, such as the failure to accurately predict market demand, end-user preferences, evolving industry standards, or the emergence of new or disruptive technologies. Moreover, the ultimate success and profitability of the new products may depend on our ability to resolve technical and technological challenges in a timely and cost-effective manner. Our investments in productive capacity and commitments to fund advertising and product promotions in connection with these new products could erode profits if those expectations are not met.
If we are unable to maintain good relationships with retailers and maintain good standing in online marketplaces, our business could suffer.
Our access to the customers of retailers and our access to online marketplaces are both material to our success. If we are unable to maintain our good relationships with retailers and maintain our good standing in online marketplaces, our revenues could decline significantly. Unilateral decisions could be taken by the buyers at retailers, or by the policy-makers at our online marketplaces, to discontinue carrying any or all of our products, at any time, which could cause our business to suffer.
We may incur material losses as a result of product recall and product liability.
We may be liable if the consumption of any of our products causes injury, illness, or death. We also may be required to recall some of our products if they become contaminated or are damaged or mislabeled. A significant product liability judgment against us, or a widespread product recall, could have a material adverse effect on our business, financial condition, and results of operations. The amount of the insurance we carry is limited, and that insurance is subject to certain exclusions and may or may not be adequate.
Litigation may adversely affect our business.
From time to time in the normal course of our business operations, we may become subject to litigation involving intellectual property, data privacy and security, consumer protection, commercial disputes and other matters that may negatively affect our operating results if changes to our business operation are required. We may also be subject to a variety of claims including product liability, and consumer protection claims, among other litigation. The cost to defend such litigation may be significant and may require a diversion of our resources. There also may be adverse publicity associated with litigation that could negatively affect customer perception of our business, regardless of whether the allegations are valid or whether we are ultimately found liable. As a result, litigation may adversely affect our business, financial condition, and results of operations. In addition, insurance may not cover existing or future claims, be sufficient to fully compensate us for one or more of such claims or continue to be available on terms acceptable to us. A claim brought against us that is uninsured or underinsured could result in unanticipated costs, thereby adversely affecting our results of operations and resulting in a reduction in the trading price of our stock.
We face risks related to Novel Coronavirus (COVID-19) which could significantly disrupt our business.
Our business has been and may continue to be adversely impacted by the effects of the Novel Coronavirus (COVID-19). In addition to global macroeconomic effects, the Novel Coronavirus (COVID-19) outbreak and any other related adverse public health developments has and may continue to cause disruption to our operations and sales activities. Our third-party vendors, third-party distributors, and our customers have been and will be disrupted by worker absenteeism, quarantines, and restrictions on employees’ ability to work, office and factory closures, disruptions to ports and other shipping infrastructure, border closures, or other travel or health-related restrictions. Depending on the magnitude of such effects on our activities or the operations of our third-party vendors and third-party distributors, the supply of our products will be delayed, which could adversely affect our business, operations, and customer relationships. In addition, the Novel Coronavirus (COVID-19) or other disease outbreak will in the short-run and may over the longer term adversely affect the economies and financial markets of many countries, resulting in an economic downturn that will affect demand for our products and services and impact our operating results. There can be no assurance that any decrease in sales resulting from the Novel Coronavirus (COVID-19) will be offset by increased sales in subsequent periods. Although the magnitude of the impact of the Novel Coronavirus (COVID-19) outbreak on our business and operations remains uncertain, the continued spread of the Novel Coronavirus (COVID-19) or the occurrence of other epidemics and the imposition of related public health measures and travel and business restrictions will adversely impact our business, financial condition, operating results, and cash flows. In addition, we have experienced and will experience disruptions to our business operations resulting from quarantines, self-isolations, or other movement and restrictions on the ability of our employees to perform their jobs that may impact our ability to develop and design our products and services in a timely manner or meet required milestones or customer commitments.
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Prolonged economic downturn, particularly in light of the COVID-19 pandemic and international conflicts, could adversely affect our business.
Uncertain global economic conditions, in particular in light of the COVID-19 pandemic and international conflicts, could adversely affect our business. Negative global and national economic trends, such as decreased consumer and business spending, high unemployment levels and declining consumer and business confidence, pose challenges to our business and could result in declining revenues, profitability, and cash flow. Although we continue to devote significant resources to support our brands, unfavorable economic conditions may negatively affect demand for our products.
Risks related to our Intellectual Property
If we fail to protect our compositions and methods with patents, competitors may be able to use our compositions and methods, to weaken our competitive position, reduce our net revenue, and increase our costs.
Our commercial success will depend in part on obtaining and maintaining patent protection to help prevent compositions and methods that we have developed, or may develop or acquire in the future, from being used by our competitors to weaken our competitive position. We have a patent pending before the United States Patent and Trademark Office (“USPTO”). But patent applications can take many years to issue, and there is no assurance that our current pending patent application, or any future patent applications, will be granted. If we are unable to obtain patent protection for our current or future applications, we may not be able to successfully prevent our competitors from imitating or copying our products or using some or all of the processes that are the subject of such patent application(s). Such imitation, or copying, may lead to increased competition within the finite market for products such as ours. Even if our pending application was granted, our intellectual property rights may not be sufficiently comprehensive to prevent our competitors from developing similar competitive products.
There are multiple risks inherent in patent litigation. In patent litigation in the U.S., defendant counterclaims alleging invalidity and/or unenforceability are commonplace, as are validity challenges by the defendant against the subject patent or other patents before the USPTO. Grounds for a validity challenge could be an alleged failure to meet any of several statutory requirements, including lack of novelty, obviousness or non-enablement, failure to meet the written description requirement, indefiniteness, and/or failure to claim patent eligible subject matter. Grounds for an unenforceability assertion could be an allegation that someone connected with prosecution of the patent intentionally withheld material information from the USPTO, or made a misleading statement, during prosecution. Third parties may also raise similar claims before the USPTO even outside the context of litigation, in for example, post-grant review proceedings and inter partes review proceedings. The outcome is unpredictable following any legal assertions of invalidity and unenforceability. With respect to the validity question, for example, we cannot be certain that no invalidating prior art existed of which we and the patent examiner were unaware during prosecution. These assertions may also be based on information known to us or the USPTO. If a defendant or third party were to prevail on a legal assertion of invalidity and/or unenforceability, we would lose at least part, and perhaps all, of the claims of the challenged patent. Such a loss of patent protection would or could have a material adverse impact on our business.
Even if the validity of our patent rights is upheld by a court, a court may not prevent the alleged infringement of our patent rights on the grounds that such activity is not covered by our patent claims. Although we may aggressively pursue anyone whom we reasonably believe is infringing upon our intellectual property rights, initiating, and maintaining suits against third parties that may infringe upon our intellectual property rights will require substantial financial resources. We may not have the financial resources to bring such suits, and if we do bring such suits, we may not prevail. Regardless of our success in any such actions, we could incur significant expenses in connection with such suits.
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If our trademarks and brand names are not adequately protected, that could adversely impact our ability to build name recognition in certain markets.
We rely on trademarks, service marks, trade names and brand names to distinguish our nutritional beverages from those of competitors and have registered these trademarks. Our registered or unregistered trademarks, service marks, trade names and brand names may be challenged, infringed, diluted, circumvented, or declared generic or determined to be infringing on other marks. Additionally, we cannot assure you that our future trademark applications will be approved. During trademark registration proceedings, we may receive rejections. Although we are given an opportunity to respond to those rejections, we may be unable to overcome such rejections. In addition, in proceedings before the USPTO third parties are given an opportunity to oppose pending trademark applications and to seek to cancel registered trademarks. Opposition or cancellation proceedings may be filed against our trademarks, and our trademarks may not survive such proceedings. In the event that our trademarks are successfully challenged, we could be forced to rebrand our products, which could result in loss of brand recognition and could require us to devote resources towards advertising and marketing new brands. At times, competitors may adopt trade names or trademarks similar to ours, which could harm our brand identity and lead to market confusion. Certain of our current or future trademarks may become so well known by the public that their use becomes generic and they lose trademark protection. Over the long term, if we are unable to establish name recognition through our trademarks and trade names, then we may not be able to compete effectively and our business, financial condition and results of operations may be adversely affected.
If we cannot keep our trade secrets, which includes our formulas, compositions and methods, and knowledge capital (know-how), confidential, that could adversely impact our competitive position and reduce our revenue.
We rely on trade secrets and other proprietary information. We seek to protect this confidential information, in part, through the use of confidentiality agreements with employees, consultants, advisors and others. Nonetheless, we cannot assure you that those agreements will provide adequate protection and prevent their unauthorized use or disclosure. To the extent that consultants, key employees or other third parties apply trade secrets independently developed by them or by others to our proposed products, disputes may arise as to the proprietary rights to such products which may not be resolved in our favor. There is a risk that other parties may breach confidentiality agreements or that our trade secrets and other proprietary information become known or independently discovered by competitors, which could adversely affect our revenue.
Third-party claims of infringement against us could adversely affect our ability to market our products and require us to reformulate our products or seek licenses from third parties.
We are susceptible to intellectual property lawsuits that could cause us to incur substantial costs, pay substantial damages, or prohibit us from distributing our products. Whether a product infringes a patent involves complex legal and factual issues, the determination of which is often uncertain. In addition, because patent applications can take many years to issue, there may be applications now pending of which we are unaware, which later may result in issued patents that our products may infringe. If any of our products infringe a valid patent, we could be prevented from distributing that product unless and until we can obtain a license or reformulate it to avoid infringement. A license may not be available or may require us to pay substantial royalties. We also may not be successful in any attempt to reformulate the product to avoid any infringement. Infringement and other intellectual property claims, with or without merit, can be expensive and time-consuming to litigate, and we may not have the financial and human resources to defend ourselves against any infringement suits that may be brought against us.
We may employ individuals who were previously employed by companies that are developing beverage products, including our competitors or potential competitors. To the extent our employees are involved in research areas which are similar to those areas in which they were involved at their former employers, we may be subject to claims that such employees and/or we have inadvertently or otherwise used or disclosed the alleged trade secrets or other proprietary information of the former employers. Litigation may be necessary to defend against such claims, which could result in substantial costs and be a distraction to management and which may have a material adverse effect on us, even if we are successful in defending such claims.
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Risks related to Government Regulation
We are affected by extensive laws, governmental regulations, administrative determinations, court decisions and similar constraints, which can make compliance costly and subject us to enforcement actions by governmental agencies.
Formulation, manufacturing, packaging, labeling, holding, storage, distribution, advertising, and sale of our products are affected by extensive laws, governmental regulations and policies, administrative determinations, court decisions and similar constraints at the federal, state, and local levels. There can be no assurance that we will be in compliance with all of these regulations. A failure by us to comply with these laws and regulations could lead to governmental investigations, civil and criminal prosecutions, administrative hearings and court proceedings, civil and criminal penalties, injunctions against product sales or advertising, civil and criminal liability for the Company and/or its principals, bad publicity, and tort claims arising out of governmental or judicial findings of fact or conclusions of law adverse to the Company or its principals. In addition, the adoption of new regulations and policies or changes in the interpretations of existing regulations and policies may result in significant new compliance costs or discontinuation of product sales, and may adversely affect the marketing of our products, resulting in decreases in revenues.
Our principal regulator, the Food and Drug Administration (FDA) has not passed on the efficacy of our products or the accuracy of any claim we make related to our products.
Although many clinical studies have been conducted relating to the physiological impacts of the ingredients and related effects of our products, FDA does not, and has not, reviewed or passed on the efficacy of any of our products, which are classified as conventional foods, nor has it reviewed or passed on any nutritional claims of support we make related to our conventional food beverages.
The Food and Drug Administration (FDA) conducts unannounced on-premises inspections of our facilities and records.
We are subject to periodic unannounced visits by FDA officers who inspect our facilities and records. Even though we are an own-label distributor and utilize tolling and contract manufactures to produce our products, we still must maintain extensive records including certificates of analysis for all ingredients we use, master specifications for our products and certain batch production and testing records. Keeping such records is time-consuming and costly and if our record-keeping is deemed deficient, we could receive warning letters or other more serious administrative actions could take place that could harm our business and reputation with customers.
The Federal Trade Commission (FTC) prohibits use of any consumer testimonials in our marketing
In December 2009, the FTC substantially revised its Guides Concerning the Use of Endorsements and Testimonials in Advertising, or “Endorsement Guides,” to eliminate a safe harbor principle that formerly recognized that Companies like ours could publish consumer testimonials that conveyed truthful but extraordinary results from using our products as long as we clearly and conspicuously disclosed that the endorser’s results were not typical. This change makes it more difficult to communicate the benefits of our nutritional beverages to consumers and our revenues may not grow if we can’t find other compliant means to reach our customers.
Risks Related to this Offering
Our Chief Executive Officer and Chief Financial Officer, Murray Fleming, holds all our Series A Voting Preferred Stock and maintains the ability to control substantially all matters submitted to shareholders for approval.
Our Series A Voting Preferred Stock voting shares may, if exercised, control the election of directors and approval of any merger, consolidation, or sale of all or substantially all of our assets. Our Chief Executive Officer and Chief Financial Officer, Murray Fleming, holds all shares of our Series A Voting Preferred Stock and has the right to vote the number of votes equal to all shares of Common Stock which are then issued and outstanding, plus an additional 10,000 shares. Therefore, Mr. Fleming maintains the ability to control substantially all matters submitted to shareholders for approval due to the voting rights features of the Series A Voting Preferred Stock. This concentration of voting power could delay or prevent an acquisition of us on terms that other shareholders may desire. As a result, currently, and after this offering, Mr. Fleming will possess significant influence and can elect a majority of our Board and authorize or prevent proposed significant corporate transactions without the votes of any other stockholders. Mr. Fleming is expected to have significant influence over a decision to enter into any corporate transaction and have the ability to prevent any transaction that requires the approval of stockholders, regardless of whether or not our other stockholders believe that such transaction is in our best interests. Such concentration of voting power could have the effect of delaying, deterring, or preventing a change of control or other business combination, which could, in turn, have an adverse effect on the market price of our Common Stock or prevent our shareholders from realizing a premium over the then-prevailing market price for their Common Stock.
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Shares eligible for future sale may have adverse effects on our share price.
Sales of substantial amounts of shares or the perception that such sales could occur may adversely affect the prevailing market price for our shares. We may issue additional shares in subsequent public offerings or private placements to make new investments or for other purposes. We are not required to offer any such shares to existing shareholders on a pre-emptive basis. Therefore, it may not be possible for existing shareholders to participate in such future share issuances, which may dilute the existing shareholders’ interests in us.
Our planned reverse stock split may decrease the liquidity of the shares of our Common Stock.
The liquidity of the shares of our Common Stock may be affected adversely by our planned reverse stock split given the reduced number of shares that will be outstanding following the reverse stock split, especially if the market price of our Common Stock does not increase as a result of the reverse stock split. In addition, the reverse stock split may increase the number of stockholders who own odd lots (less than 100 shares) of our Common Stock, creating the potential for such stockholders to experience an increase in the cost of selling their shares and greater difficulty effecting such sales.
Following a reverse stock split, the resulting market price of our Common Stock may not attract new investors, including institutional investors, and may not satisfy the investing requirements of those investors. Consequently, the trading liquidity of our Common Stock may not improve.
Although we believe that a higher market price of our Common Stock may help generate greater or broader investor interest, there can be no assurance that the reverse stock split will result in a share price that will attract new investors, including institutional investors. In addition, there can be no assurance that the market price of our Common Stock will satisfy the investing requirements of those investors. As a result, the trading liquidity of our Common Stock may not necessarily improve.
If we fail to comply with the rules and regulations under the Sarbanes-Oxley Act, our operating results, our ability to operate our business and investors’ views of us may be harmed.
Section 404 of the Sarbanes-Oxley Act requires public companies to conduct an annual review and evaluation of their internal controls. Ensuring that we have adequate internal financial and accounting controls and procedures in place so that we can produce accurate financial statements on a timely basis is a costly and time-consuming effort that will need to be evaluated frequently. Our failure to maintain the effectiveness of our internal controls in accordance with the requirements of the Sarbanes-Oxley Act could have a material adverse effect on our business. We could lose investor confidence in the accuracy and completeness of our financial reports, which could have an adverse effect on the price of our Common Stock. In addition, our efforts to comply with the rules and regulations under the Sarbanes-Oxley or new or changed laws, regulations, and standards may differ from the activities intended by regulatory or governing bodies due to ambiguities related to practice. Regulatory authorities may investigate transactions disclosed in our “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and if legal proceedings are initiated against us, it may harm our business.
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We do not anticipate paying any cash dividends on our shares of common stock in the foreseeable future.
We currently intend to retain most future earnings (if any) to finance the growth and development of our business, and therefore, we do not anticipate paying any cash dividends on our shares of common stock in the foreseeable future. We believe it is likely that our Board will continue to conclude, that it is in the best interests of the Company and its shareholders to retain most earnings (if any) for the development of our business. As a result, capital appreciation, if any, of our Common Stock will be your sole source of gain for the foreseeable future.
Investors in this offering will experience immediate and substantial dilution in net tangible book value.
The public offering price per Unit is substantially higher than the net tangible book value per share of our outstanding shares of Common Stock. As a result, investors in this offering will incur immediate dilution of $[*] per share, based on the assumed public offering price of $[*] per Unit. Investors in this offering will pay a price per Unit that substantially exceeds the book value of our assets after subtracting our liabilities. See “Dilution” for a more complete description of how the value of your investment will be diluted upon the completion of this offering.
Our Common Stock may not be approved for listing on the NYSE-American or on any other trading market and you may not be able to resell your Common Stock at a price above the price you paid, if at all.
We intend to apply to list the shares of our Common Stock on the NYSE-American, under the symbol “GLUC.” An approval of our listing application by the NYSE-American will be subject to, among other things, our fulfilling all of the listing requirements of the NYSE-American. No assurances can be given, however, that the application will be approved or that our Common Stock will ever be traded on the NYSE-American or listed or quoted on any other trading market. If for any reason our Common Stock is not listed on the NYSE-American, or any other trading market, or a public trading market does not develop, purchasers of our Common Stock may have difficulty selling their Common Stock should they desire to do so. Moreover, there is a risk that our Common Stock could be delisted from any trading market on which it may be listed or quoted. The lack of an active trading market may also impair our ability to raise capital to continue to fund operations by selling securities and may impair our ability to acquire additional intellectual property assets by using our securities as consideration.
There can be no assurances that if our Common Stock is listed on the NYSE-American we will be able to meet the NYSE-American’s continued listing requirements which will result in the delisting of our Common Stock from the NYSE-American.
The NYSE-American has rules for continued listing, including, without limitation, minimum market capitalization and other requirements. Failure to maintain our listing (i.e., being de-listed from the NYSE-American), would make it more difficult for shareholders to sell our Common Stock and more difficult to obtain accurate price quotations on our Common Stock. This could have an adverse effect on the price of our Common Stock. Our ability to issue additional securities for financing or other purposes, or otherwise to arrange for any financing we may need in the future, may also be materially and adversely affected if our Common Stock is not traded on a national securities exchange.
Holders of our Warrants will have no rights as a common stockholder until they acquire our Common Stock.
The Warrants included in the Units in this offering do not confer any rights of Common Stock ownership on their holders, such as voting rights or the right to receive dividends, but rather merely represent the right to acquire shares of our Common Stock at a fixed price for a limited period of time. Specifically, commencing on the date of issuance, holders of the Warrants may exercise their right to acquire the Common Stock and pay the exercise price per share, prior to [*] years from the date of issuance, after which date any unexercised Warrants will expire and have no further value. Until holders of the Warrants acquire Common Stock upon exercise of the Warrants, the holders will have no rights with respect to the Common Stock issuable upon exercise of the Warrants. Upon exercise of the Warrants, the holder will be entitled to exercise the rights of a stockholder as to the security exercised only as to matters for which the record date occurs after the exercise. There can be no assurance that the market price of the Common Stock will ever equal or exceed the exercise price of the Warrants, and consequently, whether it will ever be profitable for holders of the Warrants to exercise the Warrants.
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Provisions of the Warrants offered by this prospectus could discourage an acquisition of us by a third party.
In addition to the discussion of the provisions of our governing organizational documents, certain provisions of the Warrants offered by this prospectus could make it more difficult or expensive for a third party to acquire us. The Warrants prohibit us from engaging in certain transactions constituting “fundamental transactions” unless, among other things, the surviving entity assumes our obligations under the Warrants. These and other provisions of the Warrants offered by this prospectus could prevent or deter a third party from acquiring us even where the acquisition could be beneficial to you.
The Warrants offered by this prospectus may not have any value.
The Warrants offered by this prospectus will be exercisable for five years from the date of issuance. There can be no assurance that the market price of our common stock will ever exceed the exercise price of the Warrants. In the event that our common stock price does not exceed the exercise price of the Warrants during the term of the Warrants, the Warrants may not have any value.
We are a smaller reporting company within the meaning of the Securities Act, and if we take advantage of certain exemptions from disclosure requirements available to smaller reporting companies, this could make our securities less attractive to investors and may make it more difficult to compare our performance with other public companies.
Rule 12b-2 of the Exchange Act defines a “smaller reporting company” as an issuer that is not an investment company, an asset-backed issuer, or a majority-owned subsidiary of a parent that is not a smaller reporting company and that:
| · | had a public float of less than $250 million as of the last business day of its most recently completed second fiscal quarter, computed by multiplying the aggregate worldwide number of shares of its voting and non-voting common equity held by non-affiliates by the price at which the common equity was last sold, or the average of the bid and asked prices of common equity, in the principal market for the common equity; or |
|
|
|
| · | in the case of an initial registration statement under the Securities Act or the Exchange Act for shares of its common equity, had a public float of less than $250 million as of a date within 30 days of the date of the filing of the registration statement, computed by multiplying the aggregate worldwide number of such shares held by non-affiliates before the registration plus, in the case of a Securities Act registration statement, the number of such shares included in the registration statement by the estimated public offering price of the shares; or |
|
|
|
| · | in the case of an issuer whose public float as calculated under paragraph (1) or (2) of this definition was zero or whose public float was less than $700 million, had annual revenues of less than $100 million during the most recently completed fiscal year for which audited financial statements are available. |
As a smaller reporting company, we will not be required and may not include a Compensation Discussion and Analysis section in our proxy statements; we will provide only two years of financial statements; and we need not provide the table of selected financial data. We also will have other “scaled” disclosure requirements that are less comprehensive than issuers that are not smaller reporting companies which could make our Common Stock less attractive to potential investors, which could make it more difficult for our stockholders to sell their shares.
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| Table of Contents |
As a “smaller reporting company,” we may at some time in the future choose to exempt our company from certain corporate governance requirements that could have an adverse effect on our public shareholders.
Under NYSE-American rules, a “smaller reporting company,” as defined in Rule 12b-2 under the Exchange Act, is not subject to certain corporate governance requirements otherwise applicable to companies listed on NYSE-American. For example, a smaller reporting company is exempt from the requirement of having a compensation committee composed solely of directors meeting certain enhanced independence standards, as long as the compensation committee has at least two members who do meet such standards. Although we have determined not to avail ourselves of this or other exemptions from NYSE-American requirements that are or may be afforded to smaller reporting companies while we will seek to maintain our shares on NYSE-American, in the future we may elect to rely on any or all of these exemptions. By electing to utilize any such exemptions, our company may be subject to greater risks of poor corporate governance, poorer management decision-making processes, and reduced results of operations from problems in our corporate organization. Consequently, if we were to avail ourselves of these exemptions, our stock price might suffer, and there is no assurance that we would be able to continue to meet all continuing listing requirements of NYSE-American from which we would not be exempt, including minimum stock price requirements.
We are an emerging growth company, and we cannot be certain if the reduced reporting requirements applicable to emerging growth companies will make our Common Stock less attractive to investors.
We are an “emerging growth company,” as defined in the Jumpstart Our Business Startups Act of 2012 (the JOBS Act). For as long as we continue to be an emerging growth company, we may take advantage of exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies, including not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in this prospectus and our periodic reports and proxy statements and exemptions from the requirements of holding nonbinding advisory votes on executive compensation and stockholder approval of any golden parachute payments not previously approved. We could be an emerging growth company for up to five years following the year in which we complete this offering, although circumstances could cause us to lose that status earlier. We will remain an emerging growth company until the earlier of (i) the last day of the fiscal year (a) following the fifth anniversary of the completion of the first sale of shares covered by this prospectus, (b) in which we have total annual gross revenue of at least $1.07 billion or (c) in which we are deemed to be a large accelerated filer, which requires the market value of our Common Stock that is held by non-affiliates to exceed $700.0 million as of the prior September 30th, and (ii) the date on which we have issued more than $1.0 billion in non-convertible debt during the prior three-year period.
We have broad discretion in the use of the net proceeds from this offering and may not use them effectively.
Our management will have broad discretion in the application of the net proceeds from this offering, including for any of the purposes described in the section entitled “Use of Proceeds,” and you will not have the opportunity as part of your investment decision to assess whether the net proceeds will be used appropriately. Because of the number and variability of factors that will determine our use of the net proceeds from this offering, their ultimate use may vary substantially from their currently intended use. Our management might not apply our net proceeds in ways that ultimately increase the value of your investment. We currently intend to use the net proceeds of this offering primarily for general corporate purposes, including working capital, expanded sales and marketing activities, increased research and development expenditures and funding our growth strategies.
Our expected use of net proceeds from this offering represents our current intentions based upon our present plans and business condition. As of the date of this prospectus, we cannot predict with certainty all of the particular uses for the net proceeds to be received upon the completion of this offering, or the amounts that we will actually spend on the uses set forth above. The amounts and timing of our actual use of the net proceeds will vary depending on numerous factors, including the commercial success of our systems and the costs of our research and development activities, as well as the amount of cash used in our operations. As a result, our management will have broad discretion in the application of the net proceeds, and investors will be relying on our judgment regarding the application of the net proceeds of this offering.
The failure by our management to apply these funds effectively could harm our business. Pending their use, we may invest the net proceeds from this offering in short-term, investment-grade, interest-bearing securities. These investments may not yield a favorable return to our stockholders. If we do not invest or apply the net proceeds from this offering in ways that enhance stockholder value, we may fail to achieve expected financial results, which could cause our stock price to decline.
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If securities or industry analysts do not publish research or publish inaccurate or unfavorable research about our business, our stock price and trading volume could decline.
The trading market for our Common Stock will depend in part on the research and reports that securities or industry analysts publish about us or our business. Securities and industry analysts do not currently, and may never, publish research on our company. If no securities or industry analysts commence coverage of our company, the trading price for our stock would likely be negatively impacted. In the event securities or industry analysts initiate coverage, if one or more of the analysts who covers us downgrades our stock or publishes inaccurate or unfavorable research about our business, our stock price may decline. If one or more of these analysts ceases coverage of our company or fails to publish reports on us regularly, demand for our stock could decrease, which might cause our stock price and trading volume to decline.
Our shares of Common Stock are subject to the penny stock rules, which makes shares of our Common Stock more difficult to trade.
We are currently subject to the SEC’s “penny stock” rules as our shares of Common Stock sell below $5.00 per share. Penny stocks generally are equity securities with a price of less than $5.00. The penny stock rules require broker-dealers to deliver a standardized risk disclosure document prepared by the SEC which provides information about penny stocks and the nature and level of risks in the penny stock market. The broker-dealer must also provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson, and monthly account statements showing the market value of each penny stock held in the customer’s account. The bid and offer quotations, and the broker-dealer and salesperson compensation information must be given to the customer orally or in writing prior to completing the transaction and must be given to the customer in writing before or with the customer’s confirmation.
In addition, the penny stock rules require that, prior to a transaction, the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser’s written agreement to the transaction. The penny stock rules are burdensome and may reduce purchases of any offerings and reduce the trading activity for shares of our common stock. As long as our shares of Common Stock are subject to the penny stock rules, the holders of such shares of Common Stock may find it more difficult to sell their securities.
The financial and operational projections that we may make from time to time are subject to inherent risks.
The projections that our management may provide from time to time reflect numerous assumptions made by management, including assumptions with respect to our specific as well as general business, economic, market and financial conditions and other matters, all of which are difficult to predict and many of which are beyond our control. Accordingly, there is a risk that the assumptions made in preparing the projections, or the projections themselves, will prove inaccurate. There will be differences between actual and projected results, and actual results may be materially different from those contained in the projections. The inclusion of the projections in this prospectus should not be regarded as an indication that we or our management or representatives considered or consider the projections to be a reliable prediction of future events, and the projections should not be relied upon as such.
If we were to dissolve, the holders of our securities may lose all or substantial amounts of their investments.
If we were to dissolve as a corporation, as part of ceasing to do business or otherwise, we may be required to pay all amounts owed to any creditors before distributing any assets to the investors. There is a risk that in the event of such a dissolution, there will be insufficient funds to repay amounts owed to holders of any of our indebtedness and insufficient assets to distribute to our other investors, in which case investors could lose their entire investment.
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USE OF PROCEEDS
Based upon an assumed public offering price of $ per Unit, we estimate that we will receive net proceeds from this offering, after deducting the underwriting discounts and the estimated offering expenses payable by us, of approximately $ million assuming the underwriter does not exercise its over-allotment option.
We plan to use the net proceeds we receive from this offering for the following purposes:
|
| Use of Net Proceeds |
| |
Working Capital |
| $ |
| |
Sales and Marketing |
| $ |
| |
Research and Development |
| $ |
| |
General Corporate Purposes |
| $ |
| |
We believe that our existing cash and cash equivalents, along with the net proceeds from this offering and any proceeds from the exercise of Warrants, together with interest on cash balances, will be sufficient to fund our operating expenses and capital expenditure requirements through at least the next 12 months. The foregoing represents our current intentions based upon our present plans and business conditions to use and allocate the net proceeds of this offering. However, the nature, amounts and timing of our actual expenditures may vary significantly depending on numerous factors. As a result, our management has and will retain broad discretion over the allocation of the net proceeds from this offering. We may find it necessary or advisable to use the net proceeds from this offering for other purposes, and we will have broad discretion in the application of net proceeds from this offering. To the extent that the net proceeds we receive from this offering are not immediately used for the above purposes, we intend to invest our net proceeds in short-term, interest-bearing bank deposits or debt instruments.
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MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
Market Information
Our Common Stock is quoted by OTC Markets under symbol “GLUC”. Any OTC Markets quotations of our Common Stock reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not necessarily represent actual transactions. Our common stock was initially quoted under symbol “GLUC” by OTC Markets on November 20, 2014.
We intend to apply for listing of our Common Stock and Warrants on the NYSE-American under the symbols “GLUC” and “GLUCW.”
As of March 31, 2022, there were approximately 121 registered holders of record of our Common Stock, and the last reported sale price of our Common Stock quoted by OTC Markets on March 31, 2022, was $1.13.
Dividend Policy
We have not historically declared dividends on our Common Stock, and we do not currently intend to pay dividends on our Common Stock. The declaration, amount, and payment of any future dividends on shares of our Common Stock, if any, will be at the sole discretion of our Board, out of funds legally available for dividends. Our ability to pay dividends to our shareholders in the future will depend upon our liquidity and capital requirements, as well as our earnings and financial condition, the general economic climate, contractual restrictions, our ability to service any equity or debt obligations senior to our Common Stock, and other factors deemed relevant by our Board.
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CAPITALIZATION
The following table sets forth our cash and cash equivalents and capitalization as of March 31, 2022.
| · | an actual basis. |
| · | on a pro-forma basis to give effect to (i) our sale of $_______________ of shares of common stock in this offering at the assumed public offering price of $________ per share, which is the last reported sale price of our common stock on the OTC Markets on ________, 2022, after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us. |
The as adjusted information below is illustrative only and our capitalization following the closing of this offering will be adjusted based on the actual public offering price and other terms of this offering determined at pricing. You should read this information together with our financial statements and the related notes thereto included elsewhere in this prospectus and the information set forth under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included elsewhere in this prospectus.
|
| As of March 31, 2022 |
| |||||
|
| Unaudited |
| |||||
|
| Actual |
|
| Pro Forma |
| ||
Cash and cash equivalents |
| $ | 641,061 |
|
| $ |
| |
Total liabilities |
| $ | 2,071 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred stock, Series A, $0.001 par value, 1,000 shares authorized, 1,000 shares issued and outstanding, at March 31, 2022; |
|
| 1 |
|
|
|
|
|
Preferred stock, Series B, $0.075 stated value, 3,466,668 shares authorized, 2,133,334 shares issued and outstanding, at March 31, 2022; |
| 2113 |
|
|
|
|
| |
Preferred stock, Series C, $0.075 stated value, 866,668 shares authorized, 866,668 shares issued and outstanding, at March 31, 2022; |
|
| 867 |
|
|
|
|
|
Preferred stock, Series D, $1.00 stated value, 300,000 shares authorized, 300,000 shares issued and outstanding, at March 31, 2022; |
|
| 300 |
|
|
|
|
|
Preferred stock, Series E, $2.00 stated value, 480,000 shares authorized, 480,000 shares issued and outstanding, at March 31, 2022; |
|
| 480 |
|
|
|
|
|
Common Stock, $0.001 par value, 40,000,000 shares authorized, 13,848,630 and 13,848,630 shares issued and outstanding, at March 31, 2022; |
|
| 13,849 |
|
|
|
|
|
Additional paid-in capital |
|
| 8,831,233 |
|
|
|
|
|
Accumulated (deficit) |
| $ | (7,918,484 | ) |
| $ |
| |
Total stockholders' equity |
| $ | 930,378 |
|
| $ |
| |
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| Table of Contents |
Each $1.00 increase (decrease) in the assumed public offering price of $____ per Unit would increase (decrease) the as adjusted amount of cash and cash equivalents, additional paid-in capital, total stockholders’ equity (deficit) and total capitalization by approximately $____ million, assuming that the number of Units offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us. We may also increase or decrease the number of Units we are offering. Each increase (decrease) of _________ Units in the number of Units we are offering would increase (decrease) the as adjusted amount of cash and cash equivalents, additional paid-in capital, total stockholders’ equity, and total capitalization by approximately $___ million, assuming that the assumed public offering price remains the same, and after deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us. The as adjusted information discussed above is illustrative only and will be adjusted based on the actual public offering price and other terms of this offering determined at pricing.
The number of shares of our Common Stock to be outstanding after this offering is based on __________ shares of our Common Stock outstanding as of [ ], and excludes:
| · | [*] shares of our common stock issuable upon exercise of the Warrants to be issued as part of the Units; |
| · | [*] shares of our common stock issuable upon exercise of the one-for-one (1-for-1) conversion option of our Series B, C, D and E preferred stock. |
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DILUTION
Each Unit, with an assumed public offering price of $____ per Unit, which is the last quoted sale price of our Common Stock by OTC Markets on __________, 2022, consists of one share of Common Stock and a Warrant to purchase one share of Common Stock.
If you invest in our Units, your interest will be diluted immediately to the extent of the difference between the offering price per Unit and the as adjusted net tangible book value per share of our Common Stock immediately after giving effect to this offering.
As of March 31, 2022, our historical net tangible book value was $927,083 or $0.07 per share of Common Stock. Historical net tangible book value per share represents the amount of our total tangible assets reduced by total liabilities, divided by 13,848,630 the number of shares of Common Stock outstanding on March 31, 2022.
After giving effect to the sale of _________ Units, at the assumed offering price of $____ per Unit , which is the last quoted sale price of our Common Stock by OTC Markets on __________, 2022, after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us, and (ii) our net tangible book value as of March 31, 2022 would have been $_________ or $____per share of Common Stock. This amount represents an immediate increase in net tangible book value of $____ per share to our existing stockholders. Investors purchasing our Common Stock in this offering will have paid $____ more than the as adjusted net tangible book value per share of Common Stock after this offering.
The following table illustrates this dilution on a per share basis:
Assumed offering price per Unit |
|
|
|
|
| $ |
|
|
Historical net tangible book value per share as of March 31, 2022 |
| $ | (927,083 | ) |
|
|
|
|
Increase in net tangible book value per share attributable to new investors |
| $ |
|
|
|
|
|
|
Net tangible book value per share after the offering |
|
|
|
|
|
|
|
|
Dilution per share to new investors |
|
|
|
|
| $ |
|
|
Each $1.00 increase (decrease) in the assumed public offering price of $____ per Unit would increase (decrease) our net tangible book value after this offering by approximately $____ per share, and increase (decrease) the dilution per share to new investors by approximately $____ per share, after deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us full.
The number of shares of our Common Stock to be outstanding after this offering is based on _________ shares of our Common Stock outstanding as of [ ], and excludes:
| · | [*] shares of our common stock issuable upon exercise of the Warrants to be issued as part of the Units; |
| · | [*] shares of our common stock issuable upon exercise of the one-for-one (1-for-1) conversion option of our Series B, C, D and E preferred stock. |
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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis of our financial condition and results of operations for the period ended March 31, 2022, and the years ended December 31, 2021, and 2020 should be read in conjunction with our financial statements and accompanying notes included elsewhere in this registration statement. In addition to historical information, this discussion and analysis contains forward-looking statements that involve risks, uncertainties, and assumptions. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of certain factors, including but not limited to those set forth in “Risk Factors”.
Business Overview
We are an own-label distributor of nutritional beverages. Our niche is the formulation, manufacturing, marketing, and distribution of soluble fiber infused nutritional beverages. In November 2017, we registered the trademark GLUCODOWN® and have since launched the first soluble fiber infused, powdered iced tea, and flavored drink mixes, in North America. We launched GLUCODOWN® because we identified an absence of product variety and/or nutritional suitability among the “healthier” beverage offerings from other companies, serving pre-diabetic and diabetic consumers. We are currently in the early stages of marketing and distributing GLUCODOWN® nutritional beverages.
Recent Developments
Building upon our knowledge capital gained from formulating, manufacturing, marketing, and distributing GLUCODOWN®, we registered the trademark FIBER UP® in September 2020, and are developing our second soluble fiber infused nutritional beverage brand. We plan to launch FIBER UP® as a ready-to-drink beverage and to initially focus our marketing and distribution efforts to persons 45 and older.
On January 25, 2022, we entered into an investment banking agreement with EF Hutton, which contemplates the Company raising additional capital and preparing a registration statement under the Securities Act.
Effective on March 11, 2022, we filed Articles of Conversion with the Nevada Secretary of State and a Certificate of Conversion and Certificate of Incorporation with the Delaware Department of State, Division of Corporations and converted to a Delaware corporation. On March 29, 2022, we merged with a subsidiary, created on March 23, 2022, for the sole purpose of the merger, amended and restated our Certificate of Incorporation, and the surviving corporation is Glucose Health, Inc. Our authorized capital stock consists of (i) 40,000,000 shares of common stock, $0.001 par value per share, (ii) 10,000,000 shares of preferred stock, $0.001 par value per share. Our issued and outstanding common shares are 13,848,630 and our issued and outstanding preferred shares are 3,781,002.
Impact of COVID-19 Pandemic
The COVID-19 pandemic continues to rapidly evolve. At this time, there continues to be significant volatility and uncertainty relating to the full extent to which the COVID-19 pandemic and the various responses to it will impact our business, operations, and financial results.
Most states and cities have at various times instituted quarantines, restrictions on travel, “stay at home” rules, social distancing measures and restrictions on the types of businesses that could continue to operate, as well as guidance in response to the pandemic and the need to contain it. As a result, the COVID-19 pandemic may affect the operations of the FDA and other health authorities, including such authorities in Europe, which could result in delays of reviews and approvals. While there have been no specific notices of delay from federal or foreign government authorities, potential interruptions, delays, or changes to the operations of the FDA, or of any foreign authority with which we might interact, might impact the approval of any applications we plan and will need to file in the future.
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In addition, we are dependent upon certain contract manufacturers and their ability to reliably and efficiently fulfill our purchase orders is critical to our business success. The COVID-19 pandemic has impacted and may continue to impact certain of our manufacturers. As a result, we have faced and may continue to face delays or difficulty sourcing certain products, which could negatively affect our business and financial results. Even if we are able to find alternate sources for such products, they may cost more, which could adversely impact our profitability and financial condition.
The global deterioration in economic conditions may have an adverse impact on discretionary consumer spending in markets that we plan to market our products, which could also impact our business and demand for our products. For instance, consumer spending may be negatively impacted by general macroeconomic conditions, including a rise in unemployment, and decreased consumer confidence resulting from the pandemic. Changing consumer behaviors as a result of the pandemic may therefore have a material impact on our expected future revenue.
The spread of COVID-19 has also adversely impacted global economic activity and has contributed to significant volatility and negative pressure in financial markets. The pandemic has resulted, and may continue to result, in a significant disruption of global financial markets, which may reduce our ability to access capital in the future, which could negatively affect our liquidity.
If the COVID-19 pandemic does not continue to slow and the spread of COVID-19 is not contained, our business operations, including those of contract manufacturers, could be further delayed or interrupted. In addition, our operations could be disrupted if any of our employees or employees of our subcontractors were to be tested positive for having COVID-19, which could require quarantine of some or all such employees or closure of our or their facilities for disinfection. The duration of any business disruption cannot be reasonably estimated at this time but may materially affect our ability to operate our business and result in additional costs.
The extent to which the COVID-19 pandemic may impact our results will depend on future developments, which are highly uncertain and cannot be predicted as of the date of this prospectus, including the effectiveness of vaccines and other treatments for COVID-19, the impact of variants of the COVID-19 virus and other new information that may emerge concerning the severity of the pandemic and steps taken to contain the pandemic or treat its impact. Nevertheless, the pandemic and the current financial, economic, and capital markets environment, and future developments in the global supply chain and other areas present material uncertainty and risk with respect to our performance, financial condition, results of operations and cash flows.
We have not developed a COVID-19 contingency plan to address the potential challenges and risks presented by this pandemic. If we were to prepare such a plan, there could be no assurance that it would be effective in mitigating the effects of the COVID-19 virus.
For a further discussion of the impact of the COVID-19 pandemic on our business, please see “Risk Factors” section.
Results Of Operations
The following section discusses the interim quarterly periods of fiscal 2022, ended March 31, 2022, and fiscal 2021, ended March 31, 2021.
Revenue
Revenue decreased by $23,652 or 10%, to $213,813 in the quarterly period ended March 31, 2022, from $237,465 in the quarterly period ended March 31, 2021. The decline in revenue was a result of product outages of certain of our eight GLUCODOWN® flavors during the quarter due to insufficient finished goods inventory.
Cost of Revenue and Gross Profit
Cost of revenue decreased by $43,532, or 32%, to $90,719 in the quarterly period ended March 31, 2022, from $134,251 in the quarterly period ended March 31, 2021. Gross profit increased by $19,880, or 19%, to $123.094 in the quarterly period ended March 31, 2022, from $103,214 in the quarterly period ended March 31, 2021. The increase in gross profit, was a result of the Company’s strategy of utilizing a tolling and contract manufacturing business model and managing procurement of all inputs to its products, such as ingredients and packaging, directly to control costs.
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Operating Expenses
Operating expenses increased by $222,754, or 244%, to $314,143 in the quarterly period ended March 31, 2022, from $91,389 in the quarterly period ended March 31, 2021. Operating expenses were higher in the quarterly period ended March 31, 2022, due to increased administrative and professional costs, in part associated with our planned filing of a registration statement and due to -0- expenses for advertising services paid in-stock in the quarterly period ended March 31, 2021.
Other Income (Expense) & Net Loss
Other income (expense) was -0- in the quarterly period ended March 31, 2022, vs. ($1,402) in the quarterly period ended March 31, 2021. Increased operating expenses resulted in a net loss of ($191,049) in the quarterly period ended March 31, 2022, vs. net income of $10,423 in the quarterly period ended March 31, 2021.
The following section discusses the fiscal years ended December 31, 2021 (fiscal 2021) and December 31, 2020 (fiscal 2020).
Revenue
Revenue increased by $472,968 or 98%, to $953,681 in the year ended December 31, 2021, from $480,713 in the year ended December 31, 2020. The 98% increase in fiscal 2021 revenue reflected growth in our direct-to-consumer sales through Amazon and our own Shopify online store plus the launch of four additional flavors of GLUCODOWN® in fiscal 2021, for a total of eight flavors, compared with fiscal 2020. In fiscal 2021, the Company added no new retailer customers, compared to one additional retailer customer in fiscal 2020, and as a result, experienced only modest growth of GLUCODOWN® sales to retailers.
Cost of Revenue & Gross Profit
Cost of revenue increased by $236,471, or 77%, to $543,639 in the year ended December 31, 2021, from $307,168 in the year ended December 31, 2020. Gross profit increased by $236,497, or 136%, to $410,042 in the year ended December 31, 2021, from $173,545. The increase in gross profit, was a result of the Company’s strategy of utilizing a tolling and contract manufacturing business model and managing procurement of all inputs to its products, such as ingredients and packaging, directly.
Operating Expenses
Operating expenses increased by $8,261, or 1%, to $746,161 in the year ended December 31, 2021, from $737,900 in the year ended December 31, 2020. Operating expenses were effectively unchanged due to reduced professional fees and services paid in stock, offset by increased sales and marketing expenses.
Other Income (Expense) & Net Loss
Other income (expense) was ($2,785) expense in the year ended December 31, 2021, from $146,677 income in the year ended December 31, 2020, as in the fiscal 2020 period, we benefitted from a recovery of claims deducted against our invoices by a retailer and a payment on a debt settlement was offset by a gain on forgiveness of accounts payables.
Liquidity And Financial Condition
Liquidity and Capital Resources
Our principal liquidity requirements are for working capital. We fund our liquidity requirements primarily through cash on hand, which are supplemented by cash flows from sales of equity and borrowings.
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As of March 31, 2022, we had cash of $641,061 and no cash equivalents. The following table summarizes our cash flows from operating, investing, and financing activities in the interim quarterly periods of fiscal 2022 and fiscal 2021:
|
| Quarter Ended March 31, |
| |||||
|
| 2022 |
|
| 2021 |
| ||
|
|
|
|
|
|
|
|
|
Net cash provided by (used in) operating activities |
| $ | (86,216) |
| $ | (65,195) |
| |
Net cash provided by (used in) investing activities |
|
| - |
|
| - | ||
Net cash provided by (used in) financing activities |
|
| (25,125) |
|
| 937,931 |
| |
|
|
|
|
|
|
|
|
|
Net increase (decrease) in cash, cash equivalents, and restricted cash |
| $ | (111,341) |
| $ | 872,736 |
| |
Operating Activities - The greater net cash used in operating activities in the quarter ended March 31, 2022, vs. March 31, 2021, was primarily a result of increased professional and administrative costs.
Investing Activities - No cash was used for investing activities in the quarters ended March 31, 2022, or March 31, 2021.
Financing Activities - The greater net cash used in financing activities in the quarter ended March 31, 2022, vs. March 31, 2021, was a result of preferred dividend payments and no cash raised from equity or debt financings. The net cash provided in the quarter ended March 31, 2021, consisted of proceeds from the sale of preferred stock offset by debt repayment and preferred dividend payments
As of December 31, 2021, we had cash of $752,402 and no cash equivalents. The following table summarizes our cash flows from operating, investing, and financing activities in the fiscal years of 2021 and 2020:
|
| Years Ended December 31, |
| |||||
|
| 2021 |
|
| 2020 |
| ||
|
|
|
|
|
|
| ||
Net cash provided by (used in) operating activities |
| $ | (72,739 | ) |
| $ | (68,937 | ) |
Net cash provided by (used in) investing activities |
| - |
|
|
| (3,295 | ) | |
Net cash provided by (used in) financing activities |
|
| 755,990 |
|
|
| 94,893 |
|
|
|
|
|
|
|
|
|
|
Net increase (decrease) in cash, cash equivalents, and restricted cash |
| $ | 683,251 |
|
| $ | 22,661 |
|
Operating Activities - The marginally $3,802 greater net cash used in operating activities during the year ended December 31, 2021, vs. December 31, 2020, was a result of costs associated with increased revenues in fiscal 2021 vs. fiscal 2020.
Investing Activities - No cash was used for investing activities in the year ended December 31, 2021, and net cash used for investing activities in the year ended December 31, 2020, consisted of website domain purchases.
Financing Activities - The $661,097 greater net cash provided by financing activities in the year ended December 31, 2021, vs. December 31, 2020, was a result of proceeds received from the sale of preferred stock, offset by debt repayment and preferred dividend payments. The net cash provided by financing activities in the year ended December 31, 2020, consisted of proceeds received from the sale of preferred stock, offset by debt repayment and preferred dividend payments.
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Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditure or capital resources that is material to investors.
Critical Accounting Policies
Our critical accounting estimates are detailed in our significant accounting policies as described in Note 2 of the financial statements included in this prospectus. These financial statements were prepared in accordance with generally accepted accounting principles in the United States. Critical accounting estimates are those that we believe are most important to the portrayal of our financial condition and results of operations. The preparation of our financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenue, and expense. Our estimates are evaluated on an ongoing basis and drawn from historical experience, current trends, and other factors that management believes to be relevant at the time our consolidated financial statements are prepared. Actual results may differ from our estimates.
Implications of Being a Smaller Reporting Company
We are a “smaller reporting company” as defined in Rule 10(f)(1) of Regulation S-K. Smaller reporting companies may take advantage of certain reduced disclosure obligations, including, among other things, providing only two years of audited financial statements. We will remain a smaller reporting company until the last day of the fiscal year in which (1) the market value of our shares held by non-affiliates equals or exceeds $250 million as of the prior June 30th, or (2) our annual revenues equaled or exceeded $100 million during such completed fiscal year and the market value of our shares held by non-affiliates equals or exceeds $700 million as of the prior June 30th. Such reduced disclosure and corporate governance obligations may make it more challenging for investors to analyze our results of operations and financial prospects.
We are a smaller reporting company within the meaning of the Securities Act, and if we take advantage of certain exemptions from disclosure requirements available to smaller reporting companies, this could make our securities less attractive to investors and may make it more difficult to compare our performance with other public companies” and “As a “smaller reporting company,” we may choose to exempt our company from certain corporate governance requirements that could have an adverse effect on our public shareholders.”
Implications of Being an Emerging Growth Company
We are an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012, as amended, or the JOBS Act. We will remain an emerging growth company until the earlier of (1) December 31, 2024 (2) the last day of the fiscal year in which we have total annual gross revenue of at least $1.07 billion, (3) the last day of the fiscal year in which we are deemed to be a “large accelerated filer” as defined in Rule 12b-2 under the Securities Exchange Act of 1934, as amended, or the Exchange Act, which would occur on the date on which we have issued more than $1.0 billion in non-convertible debt securities during the prior three-year period. An emerging growth company may take advantage of specified reduced reporting requirements and is relieved of certain other significant requirements that are otherwise generally applicable to public companies. As an emerging growth company, we may:
| · | present only two years of audited financial statements, plus unaudited condensed financial statements for any interim period, and related management’s discussion and analysis of financial condition and results of operations in this prospectus; |
| · | avail ourselves of the exemption from the requirement to obtain an attestation and report from our auditors on the assessment of our internal control over financial reporting pursuant to the Sarbanes-Oxley Act of 2002, or Sarbanes-Oxley; |
| · | provide reduced disclosure about our executive compensation arrangements; and |
| · | not require stockholder non-binding advisory votes on executive compensation or golden parachute arrangements. |
In addition, under the JOBS Act, an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have irrevocably elected not to avail ourselves of this extended transition period, and, as a result we will adopt new or revised accounting standards on relevant dates on which adoption of such standards is required for other public companies.
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BUSINESS
Overview
We are an own-label distributor of nutritional beverages. Our niche is the formulation, manufacturing, marketing, and distribution of soluble fiber infused nutritional beverages. In November 2017, we registered the trademark GLUCODOWN® and have since launched the first soluble fiber infused, powdered iced tea, and flavored drink mixes, in North America. We launched GLUCODOWN® because we identified an absence of product variety and/or nutritional suitability among the “healthier” beverage offerings from other companies, serving pre-diabetic and diabetic consumers. We are currently in the early stages of marketing and distributing GLUCODOWN® nutritional beverages.
Recent Developments
Building upon our knowledge capital gained from formulating, manufacturing, marketing, and distributing GLUCODOWN®, we registered the trademark FIBER UP® in September 2020 and are developing our second soluble fiber infused nutritional beverage brand. We plan to launch FIBER UP® as a ready-to-drink beverage and to initially focus our marketing and distribution efforts to persons 45 and older.
Corporate History
We were incorporated under the laws of the State of Nevada as Bio-Solutions Corp. on March 27, 2007. From inception, through the third quarter of 2014, we were engaged in various businesses which were unrelated to our current business and corporate officers. On November 19, 2014, we changed our name to Glucose Health, Inc., and our business to that of an own-label distributor of nutritional beverages, which is our business today.
Effective on March 11, 2022, we filed Articles of Conversion with the Nevada Secretary of State and a Certificate of Conversion and Certificate of Incorporation with the Delaware Department of State, Division of Corporations and converted to a Delaware corporation. On March 29, 2022, we merged with a subsidiary, created on March 23, 2022, for the sole purpose of the merger, amended and restated our Certificate of Incorporation, and the surviving corporation is Glucose Health, Inc. Our authorized capital stock consists of (i) 40,000,000 shares of common stock, $0.001 par value per share, (ii) 10,000,000 shares of preferred stock, $0.001 par value per share. Our issued and outstanding common shares are 13,848,630 and our issued and outstanding preferred shares are 3,781,002.
Market Opportunity - GLUCODOWN®
The National Diabetes Statistics Report (source: Centers for Disease Control and Prevention. www.cdc.gov/diabetes/data/statistics-report/index.html. Accessed April 10, 2022) estimates 96 million adults have pre-diabetes and 37.3 million adults have diabetes. We believe the National Diabetes Statistics Report points to a large and growing market of consumers likely receptive to nutritional beverages which help maintain healthy serum glucose levels (healthy blood sugar). Prior to the introduction of GLUCODOWN®, the only nutritional beverages formulated for healthy blood sugar by the companies addressing this large and growing consumer market, were dairy shakes (ready-to-drink and powder). By formulating a new form of nutritional beverage for this consumer market, delicious tasting iced tea, and drink mixes, we believe GLUCODOWN® will gain market share. We additionally believe, as this market of consumers becomes aware of GLUCODOWN®, they will discontinue purchasing sugar-free and low-calorie beverages from other companies which, while delicious tasting, do not provide the nutritional efficacy of GLUCODOWN®.
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Market Opportunity - FIBER UP®
FIBER UP® will expand our Company’s addressable consumer market, from pre-diabetic and diabetic persons, to also serve the 95% of Americans understood to be fiber deficient (source: Closing America’s Fiber Intake Gap. website https://www.ncbi.nlm.nih.gov/pmc/articles/PMC6124841/. Accessed April 10, 2022). In addition to helping maintain healthy post-prandial serum glucose levels, soluble fiber has other important physiological impacts, including supporting heart health, promoting weight loss, preserving bone density, and maintaining gut health. We believe consumer interest in the United States in the physiological benefits of soluble fiber is nascent, for reasons of an aging population and increasing health consciousness. While the beneficial impacts of increasing soluble fiber intake are applicable across all age cohorts, we plan to initially focus our launch of FIBER UP® to persons 45 and older - a consumer market we believe to be underserved by other beverage companies.
Products
In fourth quarter of 2017, we launched the first soluble fiber infused iced tea mix in North America in four flavors (Peach Tea, Lemon Tea, Raspberry Tea, and Mixed Berry Tea) under the GLUCODOWN® brand to principally serve pre-diabetic and diabetic persons.
We manufacture GLUCODOWN® in powder form which consumers can use to make their own beverages. In 2021, we launched four new GLUCODOWN® drink (not iced tea) mix flavors (Cherry, Strawberry-Banana, Peach Mango, and Watermelon) also in powder form.
Currently, we manufacture these eight GLUCODOWN® flavor variations in two packaging formats (foil resealable pouches and bulk containers).
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Additionally, we are formulating more GLUCODOWN® line extensions to serve prediabetic and diabetic persons, all to be manufactured in powder form, including flavored instant coffees, such as Mocha Coffee, and Horchata.
We are also developing new GLUCODOWN® packaging formats, including single-serve stick-packs for all our iced tea mix, drink mix and planned future flavor variations.
However, to launch more GLUCODOWN® line extensions in the current fiscal year, we require additional capital, which we do not presently have.
FIBER UP® will be our first ready-to-drink (not powder) nutritional beverage. To the present date, we have formulated multiple flavors of FIBER UP®, including Cherry and Grape. We evaluated many different forms of consumer packaging for FIBER UP® and determined aluminum bottles to be the most environmentally friendly due to their essentially infinite recyclability. We considered various aluminum bottle options from different manufacturers and opened an account with our chosen supplier. We have completed the graphic design and labeling for FIBER UP® including review by our FDA/FTC attorney for compliance with applicable regulations and industry guidance statements.
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We have also begun early manufacturing, marketing, and distribution planning for FIBER UP®, including hiring a brand management firm to assist us. However, to launch FIBER UP® in the current fiscal year, we require substantial additional capital, which we do not presently have.
Marketing and Distribution
Our most important marketing and distribution objectives are:
| (1) | Build awareness of GLUCODOWN® among the persons which comprise our identified pre-diabetic and diabetic consumer market for this brand. |
| (2) | Increase sales of GLUCODOWN® via direct consumer purchase at Amazon and our own Shopify online store. |
| (3) | Secure distribution of GLUCODOWN® at national and large regional retailers. |
| (4) | Grow sales of GLUCODOWN® at the national and large regional retailers who are already our customers. |
| (5) | Launch FIBER UP® in at least one regional market. |
We generate awareness of GLUCODOWN® through placement of advertising on cable television, satellite radio and digital media. We advertise in daytime and primetime on cable television channels such as Hallmark, Game Show Network and National Geographic. All our advertising scripts are vetted by our FDA/FTC attorney for compliance to applicable regulations. Although we do have a GLUCODOWN® Facebook page which facilitates customer questions, we do not expend significant resources utilizing social media platforms to bring awareness to our products. Customer experience or testimonial statements engendered by social media marketing, may be perceived as statements of disease mitigation or prevention. The utilization of such statements by an own-label distributor in marketing its products, is routinely cited in FDA warning letters.
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We launched GLUCODOWN® at Amazon in 2018 and at our own Shopify online store in 2021 and generate the majority of our revenue from these direct-to-consumer sales platforms. We use our GLUCODOWN® brand awareness advertising to drive sales on these platforms. We use the reporting and attribution tools developed by Amazon and Shopify to optimize our advertising campaigns. Optimization means we have visibility to monitor our return on investment from the advertising we place, to ensure it is achieving our revenue objectives.
We also seek to increase our revenue by becoming a supplier to national and large regional retailers. The process of securing product placement in-store and online at national and large regional retailers involves obtaining appointments with buyers; gaining buyer approval during annual or bi-annual reviews; may involve the payment of various fees or incentives to retailers, which may lower gross profits; and may involve payments to third-party agents and/or distributors to secure shelf space at retailers, which may lower gross profits. Once approval is received and we become a supplier to a retailer, significant expense may then be incurred for the filing and processing of various warehouse and logistics claims and disputes, to secure full payment for items shipped to the retailer.
Since we launched the GLUCODOWN® brand in the fourth quarter of 2017, our Company has become a supplier to national and large regional retailers, including Walmart, CVS Pharmacies and Woodland Partners (for Publix). We use our GLUCODOWN® brand awareness advertising to drive sales at our retailer customers. In addition, we have access to, or can implement on our own initiative, retailer marketing programs which include aisle displays and signage, flyer or digital flyer advertising, coupons or similar discount programs, and temporary price reductions.
We have begun early manufacturing, marketing, and distribution planning for FIBER UP®, including hiring a brand management firm to assist us. We plan to focus our FIBER UP® marketing and distribution efforts to persons 45 and older in one regional market of the United States. However, to launch FIBER UP® in the current fiscal year, we require substantial additional capital, which we do not presently have.
We presently rely upon our CEO/CFO to manage our Amazon and Shopify direct-to-consumer online sales efforts and to secure and increase sales at national and large regional retailers. We plan to build a sales and marketing organization in the future, which includes direct and/or contracted salespersons (brokers) for our brands GLUCODOWN® and FIBER UP®, if we are successful in obtaining more capital, of which there is no certainty.
Clinical Data
The establishment of clinical research support for the physiological benefit claims associated with the nutritional ingredients we select for our beverages is essential to earn the trust and loyalty of our customers and to ensure compliance with pertinent government regulations. The Food and Drug Administration (“FDA) permits "statements of nutritional support" for conventional foods without FDA pre-approval. Such statements may describe how particular nutritional ingredients affect the structure, function or general well-being of the body, or the mechanism of action by which a nutritional ingredient may affect body structure, function, or well-being (but may not state that a conventional food will diagnose, mitigate, treat, cure, or prevent a disease). Our soluble fiber ingredient supplier has sponsored clinical studies, numbering more than 100 over a period of two decades, in support of the statements of nutrition support we make, with respect to our beverages infused with this ingredient. We routinely access a study list provided by our soluble fiber ingredient supplier and other clinical studies, in support of our formulation and marketing activities. While the investment of capital related to conducting clinical studies is beyond the financial capability of our Company, and it is our purposeful strategy to rely upon this extensive body of data compiled by our soluble fiber ingredient supplier, rather than incurring expense conducting our own clinical studies (which necessarily will be small and limited in scope), we have received a proposal from a university for a costs-only clinical investigation of our nutrition formula, which we hope to conduct in future if we have available capital. Additionally, we are curating a growing compilation of clinical studies relating to the other nutritional ingredients in our beverages, particularly lagerstroemia speciosa and chromium picolinate. As time and resources permits, we endeavor to post the research we compile regarding all the ingredients in our products at our product information website (glucodown.com/clinical-data) and/or provide links to relevant clinical studies, many of which are archived at the National Institutes of Health, National Library of Medicine website. The information contained on, or that can be accessed through, our websites are not part of this prospectus. We have included our website address in this prospectus solely as an inactive textual reference.
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Supply Chain Management
We believe managing our own supply chain enables us to realize higher gross margins and faster production times than otherwise can be achieved by outsourcing the supply of finished products to us, to co-packers. Managing our own supply chain means we procure all primary inputs for our products. We routinely procure ingredients such as soluble fiber, flavorings, acidulants, micronutrients, sweeteners, and plant extracts, as well as consumer packaging, including HDPE containers, printed shrink sleeve labels, seals and closures, printed foil pouches and master and inner shipping cases. We source our product inputs directly from their manufacturers, whenever possible. From the formulation of GLUCODOWN® in 2017, to the present date, we have established and maintained direct relationships with a core group of industry leading ingredient companies, including Archer Daniels Midland/Matsutani, Jiaherb, DSM Fortitech and Virginia Dare, to provide the inputs for our products.
Managing our own supply chain also means we enter into "tolling" and “contract manufacturing” arrangements for the production of our products. Tolling means we ship primary ingredients to a third-party manufacturing facility for processing, in accordance with our master specifications, into a secondary ingredient, which is then shipped to another third-party manufacturing facility for assembly into a finished good, in accordance with our master specifications. Contract manufacturing means we ship primary and/or secondary ingredients, plus packaging, to a third-party manufacturing facility for assembly into a finished good, in accordance with our master specifications. We make these arrangements without general written contracts, but through the issuance of purchase orders and ensuring adherence to Current Good Manufacturing Practices (CGMP) via master specifications, and our FDA record-keeping, where applicable.
We ensure the quality of our supply chain by implementing Current Good Manufacturing Practices (CGMP). As an own-label distributor, our principal responsibility is FDA record-keeping and ensuring our master product specifications, are adhered to throughout our supply chain. While we have established relationships with industry leading ingredient companies, our master specifications nevertheless require testing of lots of the ingredients shipped to us organoleptically. We also specify testing of random lots of these ingredients at third-party laboratories for consistency with our ingredient manufacturer’s specifications. We further specify testing of random production batches of our products at third-party laboratories for standard microbiological contaminants. Additionally, we specify testing of random finished goods samples at third-party laboratories for stability and consistency with our Nutrition Facts label claims.
Competition
GLUCODOWN® competes directly on the shelves and/or online at the retailers who are our customers, and online at Amazon, with other nutritional beverages which serve our market niche of pre-diabetic and diabetic consumers. These nutritional beverages include Glucerna®, distributed by Abbott Laboratories; Boost®, distributed by Nestle; Splenda® distributed by Heartland Food Products Group, and Slimfast®, distributed by Glanbia, PLC. Our competitors are far larger companies than our Company, with much greater financial and human resources to allocate to their brands. Our competitor’s brands all have extensive retailer and online distribution, and established consumer recognition and loyalty.
Nevertheless, GLUCODOWN® has two competitive advantages over our much larger competitor’s brands: (1) its nutritional attributes and (2) its product differentiation.
GLUCODOWN® is the only brand which possesses the four nutritional attributes we believe to be essential when formulating a nutritional beverage for diabetic and pre-diabetic consumers:
| · | No sugar (including no added sugar) |
| · | No saturated fat |
| · | Low-calorie (10 calories per serving) |
| · | Good Source of Fiber (soluble) |
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GLUCODOWN® is also a unique and distinctive product compared to all others manufactured by our competitors. Our competitor’s products are all dairy shakes (powdered or ready-to-drink) with each brand offering a limited choice of flavors, typically chocolate, strawberry, and vanilla. In contrast, GLUCODOWN® offers an array of delicious iced tea mixes (Peach Tea, Lemon Tea, Raspberry Tea, and Mixed Berry Tea) and delicious (not iced tea) drink mixes (Cherry, Peach-Mango, Strawberry-Banana, and Watermelon).
GLUCODOWN® indirectly competes with supplements in tablet and capsule form found in brick-and-mortar retailers and online marketplaces, targeted to our consumer market niche. We believe the extensive clinical data, gained over two decades (see Clinical Data) for the soluble fiber in GLUCODOWN® both ensures that our statements of nutrition support are compliant with FDA regulations and industry guidance, and that, as our brand gains consumer recognition, we will effectively compete against all such supplement products.
FIBER UP® will face intense competition when it is launched. We believe that consumer preference for “healthier” soft drinks is a recognized industry trend. It is apparent that most, if not all leading beverage companies’ market healthier soft drinks with established brand recognition and extensive distribution. In addition, many small beverage companies also market healthier soft drinks, each with varying degrees of brand recognition and distribution.
Despite this intensely competitive market, we believe that FIBER UP® will be successful because it will have two important competitive advantages vs. other healthier soft drinks; (1) statements of nutritional support and (2) first-to-market status in our category segment.
The extensive body of clinical research underpinning the physiological benefits of the soluble fiber we will infuse in FIBER UP®, will enable us to incorporate the following four statements of nutritional support in our labeling and marketing of FIBER UP®:
· Supports a healthy heart
· Promotes weight loss
· Preserves bone strength
· Maintains a healthy gut
|
|
We believe many, if not most, healthier soft-drinks presently marketed in the United States, utilize only simple nutritive statements, such as no-sugar, caffeine-free, gluten-free, or low-calorie, to attract the interest of consumers. We believe FIBER UP®’s four statements of nutritional support will provide important brand differentiation because they are not apparent in the labeling and marketing of other healthier soft drink brands from other beverage companies. We believe consumers 45 and older, in particular, will be receptive to these four statements of nutritional support. If we obtain the capital to launch FIBER UP®, of which there is no certainty, it is our intention to focus our limited marketing resources on 45 and older consumers.
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In the last two decades, leading beverage companies have marketed, or test-marketed, various fiber infused soft drinks in the United States, without apparent commercial success. In contrast, in Asian countries, particularly with older populations such as Japan, fiber infused soft drinks are today marketed by leading beverage companies with apparent commercial success and brand longevity. We believe consumer interest in the United States in the physiological benefits of soluble fiber is nascent, for reasons of an aging population and increasing health consciousness but, is still not yet at scale for brand investment by leading beverage companies. This absence of leading beverage companies offers a first-to-market opportunity for small beverage companies, including our Company, to launch soluble fiber infused, healthier soft drinks, and to potentially gain brand recognition and meaningful distribution.
Intellectual Property
Our intellectual property consists of trade secrets, registered trademarks, and a pending patent. Our trade secrets consist of product formulas, composition and methods, research and development, and unpatentable know-how, all of which we seek to protect, in part, by confidentiality agreements. However, it is possible that parties may breach our confidentiality agreements, and we may not have adequate remedies for any breach. It is also possible that our trade secrets will otherwise become known or be independently developed by competitors. There can be no assurance that third parties will not assert infringement or other claims against us with respect to any existing or future products, or that licenses would be available if our formulas were successfully challenged by a third party. Litigation to protect our intellectual property or to determine the validity of any third-party claims could result in significant expense to us, whether or not we are successful in such litigation.
GLUCODOWN® and FIBER UP® are registered trademarks recorded on the Principal Register following our applications to the United States Patent and Trademark Office ("USPTO"). The Principal Register provides protection only for very distinctive marks or marks that have acquired secondary meaning. Most importantly, the Principal Register is only accepted by Amazon Brand Registry as an authorized trademark. Amazon Brand Registry provides enhanced protections for removing third-party sellers and other benefits such as enhanced listing features which gives us control of our product images at Amazon. Our trademarks can potentially exist in perpetuity if we file renewal documents including Section 8 and Section 9 Affidavits with USPTO. Section 9 Affidavits are generally filed in the 9th or 10th year of trademark registration, to provide a further 10 years of trademark registration.
We have a patent pending "Compositions and Methods for Metabolic Health" currently before the USPTO. However, any patent applications we file may not result in patents being issued. Patents we file may not provide us with adequate proprietary protection or advantages against competitors with similar or competing products. Also, because of potential conflicts with the proprietary rights of others, we may in the future have to prove that we are not infringing the patent rights of others or be required to obtain a license to the patent. We do not know whether such a license would be available on commercially reasonable terms, or at all.
While we have no knowledge that we are infringing the proprietary rights of any third party, there can be no assurance that such claims will not be asserted in the future with respect to our product formulas or future products. Any such assertion by a third party could require us to pay royalties, to participate in costly litigation or to refrain from selling an alleged infringing product.
Trademarks
We currently have the following registered trademarks:
GLUCODOWN® registered USPTO trademark filed November 6, 2017.
FIBER UP® registered USPTO trademark, filed September 10, 2020.
Patent Pending
We have one pending patent application in the United States for "Compositions and Methods for Metabolic Health", which was filed on December 27, 2021.
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Government Regulation
The formulating, manufacturing, packaging & labeling, distributing, marketing, and advertising of our products are subject to government regulation, principally by the Food and Drug Administration (hereinafter the "FDA"). We are classified as an own-label distributor because we contract with other firms to manufacture our products which we distribute under our trademarks. However, as an own-label distributor, we retain ultimate responsibility for the products we distribute into interstate commerce. We are required to be compliant with pertinent FDA regulations enacted in statue and deriving from TITLE 21--FOOD AND DRUGS, CHAPTER I--FOOD AND DRUG ADMINISTRATION, DEPARTMENT OF HEALTH AND HUMAN SERVICES, SUBCHAPTER B - FOOD FOR HUMAN CONSUMPTION.
We consider our soluble fiber infused nutritional beverages to be conventional foods. The FDA permits "statements of nutritional support" for conventional foods without FDA pre-approval. Such statements may describe how particular nutritional ingredients affect the structure, function or general well-being of the body, or the mechanism of action by which a nutritional ingredient may affect body structure, function, or well-being (but may not state that a conventional food will diagnose, mitigate, treat, cure, or prevent a disease). A company making a statement of nutritional support must possess substantiating evidence for the statement. We maintain a body of clinical research relating to the active ingredients in our products. Many of these clinical studies are also available at the National Institutes of Health, National Library of Medicine website at nlm.nih.gov. Failure to comply with applicable FDA requirements can result in various levels of regulatory actions being imposed, including but not limited to, action letters, product recalls and injunctions.
In addition to the FDA, the Federal Trade Commission (hereinafter the "FTC") has further jurisdiction to regulate the labeling, promotion, and advertising of conventional foods. The FTC is authorized to use a variety of processes and remedies for enforcement, both administratively and judicially, including compulsory process, cease and desist orders, and injunctions. FTC enforcement can result in orders requiring, among other things, limits on advertising, corrective advertising, consumer redress, divestiture of assets, rescission of contracts and such other relief as may be deemed necessary. State and local authorities can also regulate advertising and labeling for conventional foods. There can be no assurance that these federal, state, and local authorities will not commence regulatory actions that could restrict the permissible scope of our product claims.
Due to the complexity of federal, state, and local regulations and industry guidance, we have retained an experienced attorney specializing in food and beverage law since the inception of our current business. Our attorney routinely reviews our product labeling and marketing materials including television advertising scripts to maintain and ensure compliance with pertinent regulations. Additionally, we have in 2020 and 2021, retained the services of a consultant specializing in FDA record-keeping, to ensure our compliance, as an own-label distributor, with pertinent FDA record-keeping industry guidance.
Employees
We currently have no employees. All corporate and operations functions of the Company are carried out by our CEO/CFO and by contractors and consultants under the direction and supervision of our CEO/CFO.
Facilities
We hold no real property or leases on property. We utilize our third-party tolling and contract manufacturing and logistics partner’s facilities in Arkansas and Minnesota for purposes of warehousing our raw materials and finished goods. Our principal executive office is located at 609 SW 8th Street, Suite 600, Bentonville AR, 72712, tel. 479-802-3827, for which we have an annual executive office services agreement and utilize for purposes of in-person meetings (prior to COVID-19 pandemic) and maintaining a physical presence for our FDA facility registration and periodic on-premises inspection of records by FDA officers.
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Legal Proceedings
From time to time, we may become involved in various lawsuits and legal proceedings which arise in the ordinary course of business. However, litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm our business. We are not aware of any such legal proceedings or claims against us.
Corporate Information
Our principal executive office is located at 609 SW 8th Street, Suite 600, Bentonville, AR 72712, and our telephone number is 479-802-3827. Our corporate website is www.glucosehealthinc.com, and our product website is www.glucodown.com. Information available on this website is not incorporated by reference in and is not deemed a part of this prospectus or the registration statement of which this prospectus is a part.
COVID-19 Pandemic
Starting in late 2019, a novel strain of the coronavirus, or COVID-19, began to rapidly spread around the world and every state in the United States. At this time, there continues to be significant volatility and uncertainty relating to the full extent to which the COVID-19 pandemic and the various responses to it will impact our business, operations, and financial results.
Most states and cities have at various times instituted quarantines, restrictions on travel, “stay at home” rules, social distancing measures and restrictions on the types of businesses that could continue to operate, as well as guidance in response to the pandemic and the need to contain it. As a result, the COVID-19 pandemic may affect the operations of the FDA and other health authorities, including such authorities in Europe, which could result in delays of reviews and approvals. While there have been no specific notices of delay from federal or foreign government authorities, potential interruptions, delays, or changes to the operations of the FDA, or of any foreign authority with which we might interact, might impact the approval of any applications we plan and will need to file in the future.
In addition, we are dependent upon certain contract manufacturers and suppliers and their ability to reliably and efficiently fulfill our orders is critical to our business success. The COVID-19 pandemic has impacted and may continue to impact certain of our manufacturers and suppliers. As a result, we may face delays or difficulty sourcing certain products, which could negatively affect our business and financial results.
The global deterioration in economic conditions may have an adverse impact on discretionary consumer spending in markets that we plan to market our products, which could also impact our business and demand for our products. For instance, consumer spending may be negatively impacted by general macroeconomic conditions, including a rise in unemployment, and decreased consumer confidence resulting from the pandemic. Changing consumer behaviors because of the pandemic may therefore have a material impact on our expected future revenue.
The spread of COVID-19 has also adversely impacted global economic activity and has contributed to significant volatility and negative pressure in financial markets. The pandemic has resulted, and may continue to result, in a significant disruption of global financial markets, which may reduce our ability to access capital in the future, which could negatively affect our liquidity.
If the COVID-19 pandemic does not continue to slow and the spread of COVID-19 is not contained, our business operations, including those of contract manufacturers, could be further delayed or interrupted. We expect that government and health authorities may announce new or extend existing restrictions, which could require us or our subcontractors to make further adjustments to our operations to comply with any such restrictions. We or our subcontractors may also experience limitations in employee resources. In addition, our operations could be disrupted if any of our employees or employees of our subcontractors were to be tested positive for having COVID-19, which could require quarantine of some or all such employees or closure of our or their facilities for disinfection. The duration of any business disruption cannot be reasonably estimated at this time but may materially affect our ability to operate our business and result in additional costs.
The extent to which the COVID-19 pandemic may impact our results will depend on future developments, which are highly uncertain and cannot be predicted as of the date of this prospectus, including the effectiveness of vaccines and other treatments for COVID-19, the emergence of new strains of the virus and other new information that may emerge concerning the severity of the pandemic and steps taken to contain the pandemic or treat its impact. Nevertheless, the pandemic and the current financial, economic, and capital markets environment, and future developments in the global supply chain and other areas present material uncertainty and risk with respect to our performance, financial condition, results of operations and cash flows.
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We have not developed a COVID-19 contingency plan to address the potential challenges and risks presented by this pandemic. If we were to prepare such a plan, there could be no assurance that it would be effective in mitigating the effects of the COVID-19 virus.
For a further discussion of the impact of the COVID-19 pandemic on our business, please see “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Impact of COVID-19 Pandemic” and “Risk Factors” section.
Implications of Being a Smaller Reporting Company
We are a “smaller reporting company” as defined in Rule 10(f)(1) of Regulation S-K. Smaller reporting companies may take advantage of certain reduced disclosure obligations, including, among other things, providing only two years of audited financial statements. We will remain a smaller reporting company until the last day of the fiscal year in which (1) the market value of our shares held by non-affiliates equals or exceeds $250 million as of the prior June 30th, or (2) our annual revenues equaled or exceeded $100 million during such completed fiscal year and the market value of our shares held by non-affiliates equals or exceeds $700 million as of the prior June 30th. Such reduced disclosure and corporate governance obligations may make it more challenging for investors to analyze our results of operations and financial prospects.
We are a smaller reporting company within the meaning of the Securities Act, and if we take advantage of certain exemptions from disclosure requirements available to smaller reporting companies, this could make our securities less attractive to investors and may make it more difficult to compare our performance with other public companies” and “As a “smaller reporting company,” we may choose to exempt our company from certain corporate governance requirements that could have an adverse effect on our public shareholders.”
For further discussion of the implications of Smaller Reporting Company status, please see “Risk Factors”.
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Implications of Being an Emerging Growth Company
We are an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012, as amended, or the JOBS Act. We will remain an emerging growth company until the earlier of (1) December 31, 2024 (2) the last day of the fiscal year in which we have total annual gross revenue of at least $1.07 billion, (3) the last day of the fiscal year in which we are deemed to be a “large accelerated filer” as defined in Rule 12b-2 under the Securities Exchange Act of 1934, as amended, or the Exchange Act, which would occur on the date on which we have issued more than $1.0 billion in non-convertible debt securities during the prior three-year period. An emerging growth company may take advantage of specified reduced reporting requirements and is relieved of certain other significant requirements that are otherwise generally applicable to public companies. As an emerging growth company, we may:
| · | present only two years of audited financial statements, plus unaudited condensed financial statements for any interim period, and related management’s discussion and analysis of financial condition and results of operations in this prospectus; |
|
|
|
| · | avail ourselves of the exemption from the requirement to obtain an attestation and report from our auditors on the assessment of our internal control over financial reporting pursuant to the Sarbanes-Oxley Act of 2002, or Sarbanes-Oxley; |
|
|
|
| · | provide reduced disclosure about our executive compensation arrangements; and |
|
|
|
| · | not require stockholder non-binding advisory votes on executive compensation or golden parachute arrangements. |
In addition, under the JOBS Act, an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have irrevocably elected not to avail ourselves of this extended transition period, and, as a result we will adopt new or revised accounting standards on relevant dates on which adoption of such standards is required for other public companies.
For further discussion of the implications of Emerging Company status, please see “Risk Factors”.
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MANAGEMENT
Directors and Executive Officers
The following table sets forth information about our executive officers and director. We intend to appoint two independent directors immediately upon the effectiveness of the registration statement of which this prospectus forms a part.
Name |
| Age |
| Position(s) |
Executive Officers |
|
|
|
|
Murray Fleming |
| 59 |
| Chief Executive Officer (Principal Executive Officer) Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)* |
Directors |
|
|
|
|
Murray Fleming |
| 59 |
| Director* |
Robert Sipper |
| 68 |
| Independent Director** |
William Sipper |
| 55 |
| Independent Director** |
Hal Kravitz |
| n/a |
| Independent Director*** |
John Fieldly |
| n/a |
| Independent Director*** |
Gerry David |
| n/a |
| Independent Director**** |
*Murray Fleming provides services as CEO, CFO and as a director to the Company through BTB Management Company, a company owned by Mr. Fleming, pursuant to a consulting agreement with the Company. See Executive Compensation-Employment/Consulting Contracts, Termination of Employment, Change-in-Control Arrangements.”
**Robert Sipper and William Sipper have accepted nomination to the Board and will become a member of our board of directors immediately upon the effectiveness of the registration statement of which this prospectus forms a part.
***resigned March 14, 2022
****resigned March 21, 2022
Executive Officers, Director & Director Nominees
Murray Fleming, age 59, was appointed Director and Chief Executive Officer of Glucose Health, Inc. in November 2014. Mr. Fleming was appointed Chief Financial Officer and Chairman in February 2015. Mr. Fleming conceived soluble fiber infused iced tea and drink mixes and the brands GLUCODOWN® and FIBER UP®. Mr. Fleming also co-developed the ingredient composition which underpins GLUCODOWN®’s nutritional efficacy - a composition not previously invented based upon a worldwide patent search commissioned by Glucose Health Inc. in 2021. From 2014 through 2021, Mr. Fleming has been a significant source of growth capital for Glucose Health, Inc.
Robert Sipper, age 68, will be a member of our board of directors immediately upon the effectiveness of the registration statement of which this prospectus forms a part. Mr. Sipper has been a beverage industry executive and consultant for 15 years and is President of Cascadia Managing Brands, LLC (“CMB”) a brand management firm he co-founded with William Sipper. Mr. Sipper and CMB have advised established and emerging beverage brands, including Evian, Hint, Liquid Death, Zico, and C2O, in the implementation of sales, marketing, operations and distribution strategies. Prior to founding CMB, Mr. Sipper was Senior Vice President and COO of Mootch & Muck, a New York based beverage and specialty food distributor and was a former practicing business law attorney.
William Sipper, age 55, will be a member of our board of directors immediately upon the effectiveness of the registration statement of which this prospectus forms a part. Mr. Sipper has been a beverage industry executive and consultant for 15 years and is Managing Partner of Cascadia Managing Brands, LLC (“CMB”), a brand management firm he co-founded with Robert Sipper. Mr. Sipper has been a featured speaker at Columbia University School of Business, The Bottled Water Congress (Torino, Italy), and at virtually every major US food and beverage industry trade show, including Natural Products Expo, BevNet and Nosh Live. He has been featured on Food Network’s “Unwrapped” and in the PBS documentary “The Water Wars.” Prior to founding CMB, Mr. Sipper held senior positions at beverage companies including Nantucket Nectars, sold to Ocean Spray and Naked Juice, sold to PepsiCo.
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Family Relationships
Robert Sipper and William Sipper, nominees to our Board, are brothers. There are no other family relationships between or among any of our executive officers or other directors.
Corporate Governance Overview
Director Independence
NYSE-American listing standards require that a majority of our Board of Directors be independent. We have determined that Robert Sipper and William Sipper, nominees to our Board of Directors will qualify as “independent directors” as defined in the NYSE-American listing standards. Our independent directors will have regularly scheduled meetings at which only independent directors are present.
Committees of the Board of Directors
Audit Committee
We plan to designate an Audit Committee. The Audit Committee will be responsible for, among other things, the appointment, compensation, removal, and oversight of the work of the Company’s independent registered public accounting firm, overseeing the accounting and financial reporting process of the Company, and reviewing related person transactions. The Audit Committee will be comprised of nominees Robert Sipper and William Sipper, upon their appointment to our Board.
Under NYSE-American listing standards and applicable SEC rules, all directors on the audit committee must be independent and financially literate. Our Board has determined that Robert Sipper and William Sipper are independent directors and financially literate. Our Board has determined that Robert Sipper qualifies as an "audit committee financial expert" as defined in applicable SEC rules. Robert Sipper will serve as the Chairman of the committee. The Audit Committee will operate under a written charter adopted by the Board, which will be posted at our website at www.glucosehealthinc.com.
Compensation Committee
We plan to designate a Compensation Committee. The Compensation Committee will be responsible for, among other things, (a) reviewing all compensation arrangements for the executive officers of the Company and (b) administering the Company’s stock option plans. The Compensation Committee will be comprised of nominees Robert Sipper and William Sipper, upon their appointment to our Board.
Under NYSE-American listing standards, we are required to have at least two members of a compensation committee, all of whom must be independent directors. Our Board has determined that Robert Sipper and William Sipper are independent under NYSE-American listing standards. Robert Sipper will serve as Chairman of the committee. The Compensation Committee will operate under a written charter adopted by the Board, which will be posted at our website at www.glucosehealthinc.com.
Nominating and Corporate Governance Committee
We plan to designate a Nominating and Corporate Governance Committee. The Nominating and Corporate Governance Committee will be responsible for overseeing the appropriate and effective governance of the Company, including, among other things, (a) nominations to the Board of Directors and making recommendations regarding the size and composition of the Board of Directors and (b) the development and recommendation of appropriate corporate governance principles. The Nominating and Corporate Governance Committee will be comprised of nominees Robert Sipper and William Sipper, upon their appointment to our Board.
Under NYSE-American listing standards, we are required to have at least two members of a Nominating and Corporate Governance Committee, all of whom must be independent directors. Our Board has determined Robert Sipper and William Sipper are independent directors (as defined under Section 803 of the NYSE American LLC Company Guide). Robert Sipper will serve as Chairperson of the committee. The Nominating and Corporate Governance Committee will operate under a written charter adopted by the Board, which will be posted at our website at www.glucosehealthinc.com.
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Code of Business Conduct and Ethics
We plan to adopt a code of business conduct and ethics that applies to our Company’s directors, officers, and future employees, which will be posted at our website at www.glucosehealthinc.com.
Involvement in Certain Legal Proceedings
Our director, nominee directors and executive officers have not been involved in any of the following events during the past ten years, except as noted:
1. any bankruptcy petition filed by or against such person or any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time;
2. except for our director nominee, William Sipper, who agreed to an Alford plea to misdemeanor sexual abuse in the District of Columbia in 2013, relating to conduct at an industry trade show, any conviction in a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other minor offenses);
3. being subject to any order, judgment, or decree, not subsequently reversed, suspended, or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining him from or otherwise limiting his involvement in any type of business, securities, or banking activities or to be associated with any person practicing in banking or securities activities;
4. being found by a court of competent jurisdiction in a civil action, the Securities and Exchange Commission or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated;
5. being subject of, or a party to, any federal or state judicial or administrative order, judgment decree, or finding, not subsequently reversed, suspended, or vacated, relating to an alleged violation of any federal or state securities or commodities law or regulation, any law or regulation respecting financial institutions or insurance companies, or any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or
6. being subject of or party to any sanction or order, not subsequently reversed, suspended, or vacated, of any self-regulatory organization, any registered entity or any equivalent exchange, association, entity, or organization that has disciplinary authority over its members or persons associated with a member.
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EXECUTIVE COMPENSATION
Summary Compensation Table
The following table summarizes information concerning the compensation awarded to, earned by, or paid to, our Chief Executive Officer (Principal Executive Officer) and Chief Financial Officer (Principal Accounting Officer) during fiscal years 2021 and 2020.
Name and Principal Position |
| Year |
| Salary ($) |
|
| Bonus ($) |
|
| Stock Awards ($) |
|
| Options Awards ($) |
|
| All Other Compensation ($) |
|
| Total ($) |
| ||||||
Murray Fleming, | 2021 | 0 | 0 | 0 | 0 | 24,000 | 24,000 | |||||||||||||||||||
CEO/CFO | 2020 | 0 | 0 | 0 | 0 | 0 | 0 | |||||||||||||||||||
Outstanding Equity Awards at Fiscal Year-End
The Company had no outstanding equity awards at the end of fiscal year 2021.
Employment/Consulting Contracts, Termination of Employment, Change-in-Control Arrangements
On July 1, 2021, the Company entered into a consulting agreement with a company owned by our CEO/CFO and director, Murray Fleming. The agreement provides for quarterly payments of $12,000 for a period of 12 months and thereafter renews quarterly until terminated by either party.
On April 1, 2022, we entered into a revised consulting agreement with a company owned by our CEO/CFO and director, Murray Fleming. Pursuant to the consulting agreement, the company agreed that its Principal, Mr. Fleming, shall provide services to the Company including serving as CEO, CFO and as a director, with no fixed term. In consideration of Mr. Fleming’s services to the Company, we agreed to pay $8,000 per month, paid quarterly, to the company, and for bonus compensation of up to $100,000 to be paid, upon achievement of various corporate objectives.
The Company has not entered into employment agreements or other compensation agreements with its executive officers and there are no potential payments payable to its executive officers upon termination of employment (or contract) in connection with a change in control.
Director Compensation
On April 1, 2019, we issued a warrant to purchase 600,000 shares of Common Stock at an exercise price of $0.10 per share to Gerry David, upon his appointment as a Company director. We recorded an expense of $94,260 based upon the $0.16 quoted price of our Common Stock. The warrant was cancelled on March 22, 2022.
On July 15, 2019, we issued a warrant to purchase 600,000 shares of Common Stock at an exercise price of $0.10 per share to Hal Kravitz, upon his appointment as a Company director. We recorded an expense of $96,720 based upon the $0.16 quoted price of our Common Stock. The warrant was cancelled on March 22, 2022.
On June 10, 2020, we issued a warrant to purchase 600,000 shares of Common Stock at an exercise price of $0.10 per share to John Fieldly, upon his appointment as a Company director. We recorded an expense of $440,694 based upon the $0.735 quoted price of our Common Stock. The warrant was cancelled on March 22, 2022.
On February 1, 2022, we entered into a consulting agreement with Cascadia Managing Brands, LLC, a company owned by our director nominees, Robert Sipper, and William Sipper. Pursuant to the consulting agreement, Cascadia Managing Brands, LLC agreed to provide services to the Company and its President, Robert Sipper and Managing Partner, William Sipper, shall serve as directors of the Company immediately upon the effectiveness of the registration statement. In consideration of Cascadia Managing Brands, LLC, Robert Sipper, and William Sipper’s services to the Company, pursuant to the consulting agreement, we agreed to pay $5,000 per month to Cascadia Managing Brands, LLC, and issue 30,000 shares of the Company’s stock, which are to be earned over the 12-month period of the agreement.
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CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
In addition to the compensation arrangements, including employment, termination of employment, and change in control arrangements, and indemnification arrangements, discussed, when required, in the sections titled “Management” and “Executive Compensation,” the following is a description of each transaction for the prior two-year period and each currently proposed transaction in which:
· | we have been or are to be a participant; |
|
|
· | the amount involved exceeded or exceeds $120,000; and |
|
|
· | any of our directors, executive officers, or holders of more than 5% of our capital stock, or any immediate family member of, or person sharing the household with, any of these individuals, had or will have a direct or indirect material interest. |
Notes payable, related party:
During April 2019, the Company consolidated several notes issued to the Company’s CEO/CFO into a single $140,000 note bearing interest at 10% per annum. During the year ended December 31, 2020, the note was repaid in full and retired.
Convertible notes payable, related party:
The Company consolidated 18 separate convertible promissory notes of various principal amounts and fixed conversion prices, all bearing 5% interest per annum, issued to Murray Fleming, the Company’s CEO/CFO, between 2014 and 2016, into a single convertible promissory note of $112,157, bearing 5% interest per annum with a pro-rata fixed conversion price of $0.011, plus $5,939 accrued interest not subject to additional interest. The consolidation was for the purposes of administrative simplification and no inducement nor benefit was given to the Company’s CEO/CFO. During the year ended December 31, 2021, the note was repaid in full by issuing 690,000 shares (Note 3) and $105,950 in cash and retired.
Consulting Agreements, related party:
On July 1, 2021, the Company entered into a consulting agreement with a company owned by our CEO/CFO and director, Murray Fleming. The agreement provides for quarterly payments of $12,000 for a period of 12 months and thereafter renews quarterly until terminated by either party.
On April 1, 2022, we entered into a revised consulting agreement with a company owned by our CEO/CFO and director, Murray Fleming. Pursuant to the consulting agreement, the company agreed that its Principal, Mr. Fleming, shall provide services to the Company including serving as CEO, CFO and as a director, with no fixed term. In consideration of Mr. Fleming’s services to the Company, we agreed to pay $8,000 per month, paid quarterly, to the company, and for bonus compensation of up to $100,000 to be paid, upon achievement of various corporate objectives.
On February 1, 2022, we entered into a consulting agreement with Cascadia Managing Brands, LLC, a company owned by our director nominees, Robert Sipper, and William Sipper. Pursuant to the consulting agreement, Cascadia Managing Brands, LLC agreed to provide services to the Company and its President, Robert Sipper and Managing Partner, William Sipper, shall serve as directors of the Company immediately upon the effectiveness of the registration statement. In consideration of Cascadia Managing Brands, LLC, Robert Sipper, and William Sipper’s services to the Company, pursuant to the consulting agreement, we agreed to pay $5,000 per month to Cascadia Managing Brands, LLC, and issue 30,000 shares of the Company’s stock, which are to be earned over the 12-month period of the agreement.
Policy on Future Related-Party Transactions
Following this offering, all future transactions between us and our officers, directors, principal stockholders, and their affiliates will be approved by the audit committee, or a similar committee consisting of entirely independent directors, according to the terms of our Code of Business Conduct and Ethics.
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PRINCIPAL SHAREHOLDERS
The following table sets forth certain information with respect to the beneficially owned holdings of: (1) each person known to us to be the beneficial owner of more than 5% of our Common Stock; (2) each of our directors, nominees for director and named executive officers; and (3) all directors and executive officers as a group. Applicable percentage ownership before the offering is based on the 13,848,630 shares of Common Stock and 3,780,002 shares of Preferred Stock convertible to common stock, outstanding as of March 31, 2022. Applicable percentage ownership after the offering is based on the sale of [*] shares of Common Stock and [*] shares of Preferred Stock and convertible to Common Stock, and no exercise of the underwriter’s over-allotment option to purchase [*] shares of Common Stock. A person is considered to beneficially own any shares: (i) over which such person, directly or indirectly, exercises sole or shared voting or investment power, or (ii) of which such person has the right to acquire beneficial ownership at any time within 60 days through an exercise of stock options or warrants. To the best of our knowledge, each of the persons named in the table below as beneficially owning the shares set forth therein has sole voting power and sole investment power with respect to such shares, unless otherwise indicated. Unless otherwise specified, the address of each of the persons set forth below is in care of the Company, at 609 SW 8th Street, Suite 600, Bentonville, AR 72712.
Name and Address of Owner |
| Shares of Common Stock Beneficially Owned |
|
| Percent Beneficially Owned Before the Offering |
|
| Percent Beneficially Owned After the Offering | |||
|
|
|
|
|
|
|
|
| |||
5% Holders |
|
|
|
|
|
|
|
| |||
Christopher Jemapete (1) |
|
| 3,433,334 |
|
|
| 19 | % |
| [*] | % |
Edmund Burke (2) |
|
| 3,433,334 |
|
|
| 19 | % |
| [*] | % |
|
|
|
|
|
|
|
|
|
|
| |
Officers and Directors |
|
|
|
|
|
|
|
|
|
| |
Murray Fleming |
|
| 765,000 |
|
|
| 4 | % |
| [*] | % |
Robert Sipper* |
|
| 0 |
|
|
| 0 | % |
| [*] | % |
William Sipper* |
|
| 0 |
|
|
| 0 | % |
| [*] | % |
Hal Kravitz** |
|
| 0 |
|
|
| 0 | % |
| [*] | % |
John Fieldly** |
|
| 0 |
|
|
| 0 | % |
| [*] | % |
Gerry David*** |
|
| 0 |
|
|
| 0 | % |
| [*] | % |
Total of Officers and Directors |
|
| 765,000 |
|
|
| 4 | % |
| [*] | % |
(1) Includes 1,433,334 shares of common stock, which are issuable upon conversion of 1,066,667 shares of Series B Preferred Stock, 216,667 shares of Series C Preferred Stock, 50,000 shares of Series D Preferred Stock, and 100,000 shares of Series E Preferred Stock.
(2) Includes 1,433,334 shares of common stock, which are issuable upon the conversion of 1,066,667 shares of Series B Preferred Stock, 216,667 shares of Series C Preferred Stock, 50,000 shares of Series D Preferred Stock, and 100,000 shares of Series E Preferred Stock.
*nominee director
**resigned March 14, 2022
***resigned March 21, 2022
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DESCRIPTION OF SECURITIES
General
The following description of our Common Stock and provisions of our amended and restated certificate of incorporation (the “Amended and Restated Certificate of Incorporation”) and amended and restated bylaws (the “bylaws”) are summaries and are qualified by reference to such Amended and Restated Certificate of Incorporation and bylaws that will be in effect upon the closing of this offering. By becoming a shareholder in our Company, you will be deemed to have notice of and consented to these provisions of our Amended and Restated Certificate of Incorporation and bylaws.
Authorized Stock
Our Amended and Restated Certificate of Incorporation authorizes us to issue up to 50,000,000 shares of stock, consisting of (i) 40,000,000 shares of common stock, $0.001 par value per share, (ii) 10,000,000 shares of preferred stock (the “Preferred Stock”), $0.001 par value per share, among which 1,000 shares are designated as Series A Voting Preferred Stock, 3,466,668 shares are designated as Series B Preferred Stock, 866,668 shares are designated as Series C Preferred Stock, 300,000 shares are designated as Series D Preferred Stock, and 460,000 shares are designated as Series E Preferred Stock.
As of March 31, 2022, we had 13,848,630 shares of Common Stock outstanding and 3,781,002 shares of Preferred Stock outstanding. The authorized but unissued shares of our Common Stock and Preferred Stock are available for future issuance without shareholder approval. These additional shares may be used for a variety of corporate finance transactions, acquisitions, and employee benefit plans. The existence of authorized but unissued and unreserved Common Stock and preferred stock could make more difficult or discourage an attempt to obtain control of us by means of a proxy contest, tender offer, merger or otherwise.
In order to meet the listing standards of the NYSE-American, which include a minimum stock price, prior to consummation of this offering, we plan to effect a reverse stock split.
Common Stock
Voting Rights
Holders of our Common Stock are entitled to one vote for each share held on all matters submitted to a vote of shareholders and do not have cumulative voting rights. However, holders of Common Stock shall not be entitled to vote on any amendment to the Amended and Restated Certificate of Incorporation that relates solely to the terms of one or more outstanding series of Preferred Stock, if the holders of such affected series are entitled, either separately or together as a class with the holders of one or more other such series, to vote pursuant to the Amended and Restated Certificate of Incorporation. Holders of our Common Stock has the exclusive right to vote for the election of directors and for all other purposes, at any meeting of stockholders, and holders of shares of Preferred Stock and any series shall not be entitled to receive notice of any meeting of stockholders at which they are not otherwise entitled to vote.
Liquidation or Dissolution
In the event of our liquidation or dissolution, the holders of Common Stock are entitled to receive all assets of the Company available for distribution to its stockholders, subject to any preferential or other rights of any then-outstanding Preferred Stock.
Dividends
Holders of Common Stock are entitled to receive proportionately any dividends as may be declared by our board of directors, subject to any preferential dividend rights of outstanding preferred stock.
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Pre-emptive Rights
The holders of our Common Stock generally do not have pre-emptive rights to purchase or subscribe for any of our capital stock or other Common Stock.
Redemption
The shares of our Common Stock are not subject to redemption by operation of a sinking fund or otherwise.
Preferred Stock
Our board of directors is empowered, upon stockholder approval, to issue shares of preferred stock with dividend, liquidation, redemption, voting or other rights which could adversely affect the voting power or other rights of the holders of Common Stock. In addition, the preferred stock could be utilized as a method of discouraging, delaying, or preventing a change in control of us.
Series A Voting Preferred Stock
As of March 31, 2022, there are 1,000 shares of Series A Voting Preferred Stock outstanding. For so long as any shares of Series A Voting Preferred Stock remain issued and outstanding, the holders hereof shall possess more than 50% of the voting power of the capital stock of the Corporation. The Series A Voting Preferred Stock shall have the right to vote at any meeting of stockholders, or by consent pursuant to Section 228 of the Delaware General Corporation Law (the “DGCL”), the number of votes equal to all shares of Common Stock which are then issued and outstanding, plus an additional 10,000 shares.
The Company shall not have the right to redeem the Series A Voting Preferred Stock except upon receiving the consent and approval of the terms of conditions of redemption from the holders of at least 66-2/3% of all outstanding shares of Series A Voting Preferred Stock. Currently, our CEO/CFO owns 100% of our Series A Voting Preferred Stock.
Series A Voting Preferred Stock shall not be entitled to receive any dividends and does not have any conversion rights.
Series B Preferred Stock
As March 31, 2022, there are 2,133,334 shares of Series B Preferred Stock outstanding. During the time that any shares of Series B Preferred Stock are issued and outstanding, the holders shall be entitled to receive, and the Company shall pay, cumulative dividends on each share of Series B Preferred Stock at the rate of 10% of the stated value of $0.075 per share per year, payable quarterly commencing on July 1, 2019.
Holders of Series B Preferred Stock do not have the right to vote.
Each share of Series B Preferred Stock shall be convertible into one share of common stock at the holder’s election in a cashless conversion. Any accrued but unpaid dividends may be converted to shares of common stock in the Board of Directors’ discretion, in such amount determined by dividing (x) the stated value of such shares of Series B Preferred Stock by (y) the amount of accrued but unpaid dividends.
The Company has the right, in the sole and absolute discretion of the Board of Directors of the Company and at a time of its choosing, to redeem or convert to common shares, any or all of the shares of the Series B Preferred Stock.
During the year ended December 31, 2021, two Series B Preferred Stockholders elected to convert their 666,667 shares of Series B Preferred Stock into common shares. Accordingly, a total of 1,333,334 Series B Preferred Stock were canceled and 1,333,334 shares of common stock were issued.
Series C Preferred Stock
As of March 31, 2022, there are 866,668 Series C Preferred Stock outstanding. During the time that any shares of Series C Preferred Stock are issued and outstanding, the holders shall be entitled to receive, and the Company shall pay, cumulative dividends on each share of Series C Preferred Stock at the rate of 10% of the stated value of $0.075 per share per year, payable quarterly commencing on July 1, 2020.
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Holders of Series C Preferred Stock do not have the right to vote.
Each share of Series C Preferred Stock shall be convertible into one share of common stock at the holder’s election in a cashless conversion. Any accrued but unpaid dividends may be converted to shares of common stock in the Board of Directors’ discretion, in such amount determined by dividing (x) the stated value of such shares of Series C Preferred Stock by (y) the amount of accrued but unpaid dividends.
The Company has the right, in the sole and absolute discretion of the Board of Directors of the Company and at a time of its choosing, to redeem or convert to common shares, any or all of the shares of the Series C Preferred Stock.
Series D Preferred Stock
As of March 31, 2022, there are 300,000 Series D Preferred Stock outstanding. During the time that any shares of Series D preferred stock are issued and outstanding, the holders shall be entitled to receive, and the Company shall pay, cumulative dividends on each share of Series D preferred stock at the rate of 10% of the stated value of $1.00 per share per year, payable quarterly commencing on July 1, 2020.
Holders of Series D Preferred Stock do not have the right to vote.
Each share of Series D preferred stock shall be convertible into one share of common stock at the holder’s election in a cashless conversion. Any accrued but unpaid dividends may be converted to shares of common stock in the Board of Directors’ discretion, in such amount determined by dividing (x) the stated value of such shares of Series D Preferred Stock by (y) the amount of accrued but unpaid dividends.
The Company has the right, in the sole and absolute discretion of the Board of Directors of the Company and at a time of its choosing, to redeem or convert to common shares, any or all of the shares of the Series D Preferred Stock.
Series E Preferred Stock
As of March 31, 2022, there are 480,000 Series E Preferred Stock outstanding. During the time that any shares of Series E preferred stock are issued and outstanding, the holders shall be entitled to receive, and the Company shall pay, cumulative dividends on each share of Series E preferred stock at the rate of 5% of the stated value of $2.00 per share per year, payable quarterly commencing on April 1, 2021.
Holders of Series E Preferred Stock do not have the right to vote.
Each share of Series E preferred stock shall be convertible into one share of common stock at the holder’s election in a cashless conversion. Any accrued but unpaid dividends may be converted to shares of common stock in the Board of Directors’ discretion, in such amount determined by dividing (x) the stated value of such shares of Series E Preferred Stock by (y) the amount of accrued but unpaid dividends.
The Company has the right, in the sole and absolute discretion of the Board of Directors of the Company and at a time of its choosing, to redeem or convert to common shares, any or all of the shares of the Series E Preferred Stock.
Transfer Agent and Registrar
Our transfer agent is Nevada Agency and Transfer Company, 50 W Liberty Street, Suite 880, Reno, NV 89501, (775) 322-0626. Our transfer agent is registered with the Securities and Exchange Commission.
Warrants
We currently do not have any outstanding warrants.
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The following summary of certain terms and provisions of the Warrants that are being offered hereby is not complete and is subject to, and qualified in its entirety by, the provisions of the Warrants, the form of which is filed as an exhibit to the registration statement of which this prospectus forms a part. Prospective investors should carefully review the terms and provisions of the form of Warrant for a complete description of the terms and conditions of the Warrants.
Duration and Exercise Price. Each Warrant offered hereby will have an initial exercise price per share equal to $[*]. The Warrants will be immediately exercisable and will expire on the [*] anniversary of the original issuance date. The exercise price and number of shares of Common Stock issuable upon exercise is subject to appropriate adjustment in the event of stock dividends, stock splits, reorganizations or similar events affecting our Common Stock and the exercise price. The Warrants will be exercisable immediately upon issuance, will be issued separately from the Common Stock and may be transferred separately immediately thereafter. A Warrant to purchase one share of our Common Stock will be issued for every share of Common Stock purchased in this offering.
Exercisability. The Warrants will be exercisable, at the option of each holder, in whole or in part, by delivering to us a duly executed exercise notice accompanied by payment in full for the number of shares of our Common Stock purchased upon such exercise (except in the case of a cashless exercise as discussed below). A holder (together with its affiliates) may not exercise any portion of the Warrant to the extent that the holder would own more than 4.99% of the outstanding common stock immediately after exercise, except that upon at least 61 days’ prior notice from the holder to us, the holder may increase the amount of ownership of outstanding stock after exercising the holder’s Warrants up to 9.99% of the number of shares of our common stock outstanding immediately after giving effect to the exercise, as such percentage ownership is determined in accordance with the terms of the Warrants. No fractional shares of Common Stock will be issued in connection with the exercise of a Warrant. In lieu of fractional shares, we will round down to the next whole share.
Cashless Exercise. If, at the time a holder exercises its Warrants, a registration statement registering the issuance of the shares of common stock underlying the Warrants under the Securities Act is not then effective or available and an exemption from registration under the Securities Act is not available for the issuance of such shares, then in lieu of making the cash payment otherwise contemplated to be made to us upon such exercise in payment of the aggregate exercise price, the holder may elect instead to receive upon such exercise (either in whole or in part) the net number of shares of Common Stock determined according to a formula set forth in the Warrants.
Transferability. Subject to applicable laws, a Warrant in book entry form may be transferred at the option of the holder through the facilities of the Depository Trust Company and Warrants in physical form may be transferred upon surrender of the Warrant to the Warrant Agent together with the appropriate instruments of transfer. Pursuant to a warrant agency agreement between us and the Warrant Agent, the Warrants initially will be issued in book-entry form and will be represented by one or more global certificates deposited with The Depository Trust Company (“DTC”) and registered in the name of [*], a nominee of DTC, or as otherwise directed by DTC.
Exchange Listing. There is no established public trading market for the Warrants. We intend apply for listing of the Warrants that are part of the Units offered hereby on the NYSE under the symbol “GLUCW.” No assurance can be given that our listing application will be approved.
Right as a Stockholder. Except as otherwise provided in the Warrants or by virtue of such holder’s ownership of shares of our common stock, the holders of the Warrants do not have the rights or privileges of holders of our Common Stock, including any voting rights, until they exercise their Warrants.
Fundamental Transaction. In the event of any fundamental transaction, as described in the warrants and generally including any merger with or into another entity, sale of all or substantially all of our assets, tender offer or exchange offer, or reclassification of our shares of common stock, then upon any subsequent exercise of a warrant, the holder will have the right to receive as alternative consideration, for each share of common stock that would have been issuable upon such exercise immediately prior to the occurrence of such fundamental transaction, the number of shares of common stock of the successor or acquiring corporation of our company, if it is the surviving corporation, and any additional consideration receivable upon or as a result of such transaction by a holder of the number of shares of common stock for which the warrant is exercisable immediately prior to such event. Notwithstanding the foregoing, in the event of a fundamental transaction, the holders of the warrants have the right to require us or a successor entity to redeem the warrants for cash in the amount of the Black Scholes Value (as defined in each warrant) of the unexercised portion of the warrants concurrently with or within [30 days] following the consummation of a fundamental transaction. However, in the event of a fundamental transaction which is not in our control, including a fundamental transaction not approved by our board of directors, the holders of the warrants will only be entitled to receive from us or our successor entity, as of the date of consummation of such fundamental transaction the same type or form of consideration (and in the same proportion), at the Black Scholes Value of the unexercised portion of the warrant, that is being offered and paid to the holders of our common stock in connection with the fundamental transaction, whether that consideration is in the form of cash, stock or any combination of cash and stock, or whether the holders of our common stock are given the choice to receive alternative forms of consideration in connection with the fundamental transaction.
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Representative’s Warrants
Upon the closing of this offering, there will be up to [*] shares of Common Stock issuable upon exercise of the representative’s warrants. See “Underwriting-Representative’s Warrants” below for a description of the representative’s warrants.
Listing
We intend to apply to have our Common Stock and Warrants listed on the NYSE-American under the symbol “GLUC” and “GLUCW”. We will not proceed with this offering in the event our Common Stock is not approved for listing on the NYSE-American.
Holders
As of March 31, 2022, there were 13,848,630 shares of Common Stock outstanding, which were held by approximately 121 stockholders of record, including Cede & Co.
Certain Anti-Takeover Provisions of Delaware Law, the Company’s Certificate of Incorporation and Bylaws
Our Certificate of Incorporation provides that the Board is classified into three classes of directors of approximately equal size. As a result, in most circumstances, a person can gain control of the board only by successfully engaging in a proxy contest at three or more annual meetings. Furthermore, because the Board is classified, directors may be removed only with cause by a majority of our outstanding shares.
In addition, the Certificate of Incorporation does not provide for cumulative voting in the election of directors. Our authorized but unissued Common Stock and preferred stock are available for future issuances without stockholder approval and could be utilized for a variety of corporate purposes, including future offerings to raise additional capital, acquisitions, and employee benefit plans. The existence of authorized but unissued and unreserved Common Stock and preferred stock could render more difficult or discourage an attempt to obtain control of us by means of a proxy contest, tender offer, merger or otherwise.
SHARES ELIGIBLE FOR FUTURE SALE
Prior to this offering, shares of our Common Stock were quoted by OTC Markets under the symbol “GLUC.” Future sales of substantial amounts of our Common Stock in the public market, including shares issued upon the exercise of outstanding options or warrants, or upon debt conversion, or the anticipation of these sales, could adversely affect market prices prevailing from time to time and could impair our ability to raise capital through sales of equity securities.
Upon completion of this offering, we estimate that we will have [*] outstanding shares of our Common Stock, calculated as of [*], 2022, assuming no exercise of outstanding options or warrants, and no sale of shares reserved for the underwriter for over-allotment allocation, if any.
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Sale of Restricted Securities
The shares of our Common Stock sold pursuant to this offering will be registered under the Securities Act or 1933, as amended, and therefore freely transferable, except for our affiliates. Our affiliates will be deemed to own “control” securities that are not registered for resale under the registration statement covering this prospectus. Individuals who may be considered our affiliates after this offering include individuals who control, are controlled by or are under common control with us, as those terms generally are interpreted for federal securities law purposes. These individuals may include some or all of our directors and executive officers. Individuals who are our affiliates are not permitted to resell their shares of our Common Stock unless such shares are separately registered under an effective registration statement under the Securities Act or an exemption from the registration requirements of the Securities Act is available, such as Rule 144.
Rule 144
In general, under Rule 144 as currently in effect, a person (or persons whose shares are aggregated), including an affiliate, who beneficially owns “restricted securities” (i.e., securities that are not registered by an effective registration statement) of a “reporting company” may not sell these securities until the person has beneficially owned them for at least six months. Thereafter, affiliates may not sell within any three-month period a number of shares in excess of the greater of: (i) 1% of the then outstanding shares of Common Stock as shown by the most recent report or statement published by the issuer; and (ii) the average weekly reported trading volume in such securities during the four preceding calendar weeks.
Sales under Rule 144 by our affiliates will also be subject to restrictions relating to manner of sale, notice and the availability of current public information about us and may be affected only through unsolicited brokers’ transactions.
Persons not deemed to be affiliates who have beneficially owned “restricted securities” for at least six months but for less than one year may sell these securities, provided that current public information about the Company is “available,” which means that, on the date of sale, we have been subject to the reporting requirements of the Exchange Act for at least 90 days and are current in our Exchange Act filings. After beneficially owning “restricted securities” for one year, our non-affiliates may engage in unlimited re-sales of such securities.
Shares received by our affiliates in this offering or upon exercise of stock options or upon vesting of other equity-linked awards may be “control securities” rather than “restricted securities.” “Control securities” are subject to the same volume limitations as “restricted securities” but are not subject to holding period requirements.
Rule 701
Rule 701 generally allows a stockholder who purchased shares of the Company’s Common Stock pursuant to a written compensatory plan or contract and who is not deemed to have been an affiliate of the Company during the immediately preceding 90 days to sell these shares in reliance upon Rule 144, but without being required to comply with the public information, holding period, volume limitation, or notice provisions of Rule 144. Rule 701 also permits affiliates of the Company to sell their Rule 701 shares under Rule 144 without complying with the holding period requirements of Rule 144. All holders of Rule 701 shares, however, are required to wait until 90 days after the date of this prospectus before selling such shares pursuant to Rule 701 and until expiration of the lock-up period described below.
Lock-Up Agreements
The Company, each of our directors and executive officers, and our 5% and greater stockholders, have agreed not to, subject to certain limited exceptions, offer, pledge, sell, contract to sell, grant any option to purchase, or otherwise dispose of our Common Stock or any securities convertible into or exchangeable or exercisable for Common Stock, or to enter into any hedge or other arrangement or any transaction that transfers, directly or indirectly, the economic consequence of ownership of the shares of our Common Stock, in the case of the Company for a period of 360 days after the date of this prospectus, and in the case of our directors and executive officers and our 5% and greater stockholders for a period of 180 days after the date of this prospectus, without the prior written consent of the underwriter. See “Underwriting-Lock-up Agreements.”
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MATERIAL U.S. FEDERAL INCOME TAX CONSIDERATIONS
The following is a summary of the material U.S. federal income tax considerations relating to the purchase, ownership and disposition of our Common Stock and Warrants purchased in this offering, which we refer to collectively as our securities, but is for general information purposes only and does not purport to be a complete analysis of all the potential tax considerations. This summary is based upon the provisions of the Internal Revenue Code of 1986, as amended (the “Code”), final, temporary, and proposed Treasury regulations promulgated thereunder, administrative rulings and pronouncements and judicial decisions, all as of the date hereof. These authorities may change, possibly retroactively, resulting in U.S. federal income and estate tax consequences different from those set forth below. There can be no assurance that the Internal Revenue Service (the “IRS”) will not challenge one or more of the tax consequences described herein, and we have not obtained, and do not intend to obtain, an opinion of counsel or ruling from the IRS with respect to the U.S. federal income tax considerations relating to the purchase, ownership, or disposition of our securities.
This summary does not address any alternative minimum tax considerations, any considerations regarding the Medicare tax, any considerations regarding the tax on net investment income, or the tax considerations arising under the laws of any state, local or non-U.S. jurisdiction, or under any non-income tax laws, including U.S. federal gift and estate tax laws, except to the limited extent set forth below. In addition, this summary does not address all of the tax consequences that may be relevant to investors, nor does it address tax considerations applicable to an investor’s particular circumstances or to investors that may be subject to special tax rules, including, without limitation:
| · | banks, insurance companies or other financial institutions; |
| · | tax-exempt entities or governmental organizations, including agencies or instrumentalities thereof; |
| · | regulated investment companies and real estate investment trusts; |
| · | controlled foreign corporations, passive foreign investment companies and corporations that accumulate earnings to avoid U.S. federal income tax; |
| · | brokers or dealers in securities or currencies; |
| · | traders in securities that elect to use a mark-to-market method of accounting for their securities holdings; |
| · | persons that own, or are deemed to own, more than five percent of our capital stock (except to the extent specifically set forth below); |
| · | tax-qualified retirement plans; |
| · | certain former citizens or long-term residents of the United States; |
| · | partnerships or entities or arrangements classified as partnerships for U.S. federal income tax purposes and other pass-through entities including S corporations and trusts (and any investors therein); |
| · | persons who hold our securities as a position in a hedging transaction, “straddle,” “conversion transaction” or other risk reduction transaction or integrated investment; |
| · | persons who do not hold our securities as a capital asset within the meaning of Section 1221 of the Code; or |
| · | persons deemed to sell our securities under the constructive sale provisions of the Code, or persons holding the securities as part of a “straddle,” hedge, conversion transaction, integrated transaction, or other similar transaction. |
In addition, if a partnership (or entity or arrangement classified as a partnership for U.S. federal income tax purposes) holds our securities, the tax treatment of a partner generally will depend on the status of the partner and upon the activities of the partnership. Accordingly, partnerships that hold our securities, and partners in such partnerships, should consult their tax advisors.
You are urged to consult your own tax advisors with respect to the application of the U.S. federal income tax laws to your particular situation, as well as any tax consequences of the purchase, ownership and disposition of our securities arising under the U.S. federal estate or gift tax laws or under the laws of any state, local, non-U.S., or other taxing jurisdiction or under any applicable tax treaty.
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Consequences to U.S. Holders
The following is a summary of the U.S. federal income tax consequences that will apply to a U.S. holder of our securities. For purposes of this discussion, you are a U.S. holder if, for U.S. federal income tax purposes, you are a beneficial owner of our securities, other than a partnership, that is:
| · | an individual citizen or resident of the United States; |
| · | a corporation or other entity taxable as a corporation created or organized in the United States or under the laws of the United States, any State thereof or the District of Columbia; |
| · | an estate trust whose income is subject to U.S. federal income tax regardless of its source; or |
| · | a trust (x) whose administration is subject to the primary supervision of a U.S. court, and which has one or more “United States persons” (within the meaning of Section 7701(a)(30) of the Code) who have the authority to control all substantial decisions of the trust or (y) which has made a valid election to be treated as a “United States person.” |
Distributions
As described in the section titled “Market for Our Common Stock - Dividend Policy,” we have never declared or paid cash dividends on our Common Stock and do not anticipate paying any dividends on our Common Stock in the foreseeable future. However, if we do make distributions in cash or other property on our Common Stock, those payments will constitute dividends for U.S. tax purposes to the extent paid from our current or accumulated earnings and profits, as determined under U.S. federal income tax principles. To the extent our distributions exceed our current and accumulated earnings and profits, the excess will constitute a return of capital that will first reduce your basis in our Common Stock, but not below zero, and then will be treated as gain from the sale or other disposition of stock as described below under “-Sale, Exchange or Other Taxable Disposition of Common Stock and Warrants.”
Dividend income may be taxed to an individual U.S. holder at rates applicable to long-term capital gains, provided that a minimum holding period and other limitations and requirements are satisfied with certain exemptions. Any dividends that we pay to a U.S. holder that is a corporation will qualify for the dividends received deduction if the requisite holding period is satisfied, subject to certain limitations. U.S. holders should consult their own tax advisors regarding the holding period and other requirements that must be satisfied in order to qualify for the reduced tax rate on dividends or the dividends-received deduction.
Sale, Exchange or Other Taxable Disposition of Common Stock and Warrants
A U.S. holder will generally recognize capital gain or loss on the sale, exchange, or other taxable disposition of our securities. The amount of gain or loss will equal the difference between the amount realized on the sale and such U.S. holder’s adjusted tax basis in such securities. The amount realized will include the amount of any cash and the fair market value of any other property received in exchange for such securities. A U.S. holder’s adjusted tax basis in its securities will generally equal the U.S. holder’s acquisition cost or purchase price, less any prior distributions treated as a return of capital. Gain or loss will be long-term capital gain or loss if the U.S. holder has held the securities for more than one year. Long-term capital gains of non-corporate U.S. holders are generally taxed at preferential rates. The deductibility of capital losses is subject to certain limitations.
Information Reporting and Backup Withholding
In general, information reporting requirements may apply to dividends paid to a U.S. holder and to the proceeds of the sale or other disposition of our securities, unless the U.S. holder is an exempt recipient. Backup withholding may apply to such payments if the U.S. holder fails to provide a taxpayer identification number, a certification of exempt status or has been notified by the IRS that it is subject to backup withholding (and such notification has not been withdrawn).
Any amounts withheld under the backup withholding rules will be allowed as a refund or a credit against a U.S. holder’s U.S. federal income tax liability provided the required information is timely furnished to the IRS.
Unearned Income Medicare Tax
A 3.8% Medicare contribution tax will generally apply to all or some portion of the net investment income of a U.S. holder that is an individual with adjusted gross income that exceeds a threshold amount.
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Consequences to Non-U.S. Holders
The following is a summary of the U.S. federal income tax consequences that will apply to a non-U.S. holder of our securities. A “non-U.S. holder” is a beneficial owner of our securities (other than a partnership or an entity or arrangement treated as a partnership for U.S. federal income tax purposes) that, for U.S. federal income tax purposes, is not a U.S. holder. The term “non-U.S. holder” includes:
| · | a non-resident alien individual (other than certain former citizens and residents of the U.S. subject to U.S. tax as expatriates); |
| · | a foreign corporation; |
| · | an estate or trust that is not a U.S. holder; or |
| · | any other Person that is not a U.S. holder |
but generally does not include an individual who is present in the U.S. for 183 days or more or who is otherwise treated as a U.S. resident in the taxable year. If you are such an individual, you should consult your tax advisor regarding the U.S. federal income tax consequences of the acquisition, ownership or sale or other disposition of our securities.
Distributions
Subject to the discussion below regarding effectively connected income, any distribution paid to a non-U.S. holder, to the extent paid out of our current or accumulated earnings and profits (as determined under U.S. federal income tax principles) generally will constitute a dividend for U.S. federal income tax purposes and, provided such dividends are not effectively connected with the non-U.S. holder’s conduct of a trade or business within the U.S., will be subject to U.S. withholding tax either at a rate of 30% of the gross amount of the dividend or such lower rate as may be specified by an applicable income tax treaty. In order to receive a reduced treaty rate, a non-U.S. holder must provide us with an IRS Form W-8BEN, IRS Form W-8BEN-E or other applicable IRS Form W-8 properly certifying qualification for the reduced rate. These forms must be provided prior to the payment of dividends and must be updated periodically. A non-U.S. holder eligible for a reduced rate of U.S. withholding tax pursuant to an income tax treaty should consult with their individual tax advisor to determine if they may obtain a refund of any excess amounts withheld by timely filing an appropriate claim for refund with the IRS. If a non-U.S. holder holds our securities through a financial institution or other agent acting on the non-U.S. holder’s behalf, the non-U.S. holder will be required to provide appropriate documentation to the agent, which then may be required to provide certification to us or our paying agent, either directly or through other intermediaries.
Dividends received by a non-U.S. holder that are effectively connected with its conduct of a U.S. trade or business (and, if required by an applicable income tax treaty, attributable to a permanent establishment or fixed base maintained by the non-U.S. holder in the United States) are generally exempt from such withholding tax if the non-U.S. holder satisfies certain certification and disclosure requirements. In order to obtain this exemption, the non-U.S. holder must provide us with an IRS Form W-8ECI or other applicable IRS Form W-8 properly certifying such exemption. Such effectively connected dividends, although not subject to withholding tax, are taxed at the same graduated U.S. federal income tax rates applicable to U.S. holders, net of certain deductions and credits. In addition, dividends received by a corporate non-U.S. holder that are effectively connected with its conduct of a U.S. trade or business may also be subject to a branch profits tax at a rate of 30%, or such lower rate as may be specified by an applicable income tax treaty. Non-U.S. holders should consult their own tax advisors regarding any applicable tax treaties that may provide for different rules.
Any distribution not constituting a dividend will be treated first as reducing (but not below zero) the Non-U.S. holder’s adjusted tax basis in its Common Stock and, to the extent such distribution exceeds the Non-U.S. holder’s adjusted tax basis, as gain realized from the sale or other disposition of the Common Stock, which will be treated as described under “Non-U.S. Holders - Gain on Sale, Exchange or Other Taxable Disposition of Common Stock” below.
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Gain on Sale, Exchange or Other Taxable Disposition of Common Stock and Warrants
Subject to the discussion below regarding backup withholding and foreign accounts, a non-U.S. holder generally will not be required to pay U.S. federal income tax on any gain realized upon the sale, exchange, or other taxable disposition of our securities unless:
| · | the gain is effectively connected with the non-U.S. holder’s conduct of a U.S. trade or business (and, if required by an applicable income tax treaty, the gain is attributable to a permanent establishment or fixed base maintained by the non-U.S. holder in the United States); |
| · | the non-U.S. holder is a non-resident alien individual who is present in the United States for a period or periods aggregating 183 days or more during the calendar year in which the sale or disposition occurs and certain other conditions are met; or |
| · | shares of our Common Stock constitute U.S. real property interests by reason of our status as a “United States real property holding corporation” (a USRPHC) for U.S. federal income tax purposes at any time within the shorter of the five-year period preceding the non-U.S. holder’s disposition of, or the non- U.S. holder’s holding period for, our Common Stock (provided that an exception does not apply), and, in the case where shares of our Common Stock are regularly traded on an established securities market, the Non-U.S. holder has owned, directly or constructively, more than 5% of our Common Stock at any time within the shorter of the five-year period preceding the disposition or such Non-U.S. holder’s holding period for the shares of our Common Stock. |
We believe that we are not currently and will not become a USRPHC for U.S. federal income tax purposes, and the remainder of this discussion so assumes. However, because the determination of whether we are a USRPHC depends on the fair market value of our U.S. real property relative to the fair market value of our other business assets, there can be no assurance that we will not become a USRPHC in the future. Even if we become a USRPHC, however, as long as our Common Stock is regularly traded on an established securities market, such Common Stock will be treated as U.S. real property interests only if the non-U.S. holder actually or constructively hold more than five percent of such regularly traded Common Stock at any time during the shorter of the five-year period preceding the non-U.S. holder’s disposition of, or the non-U.S. holder’s holding period for, our Common Stock.
If the non-U.S. holder is described in the first bullet above, they will be required to pay tax on the net gain derived from the sale, exchange or other taxable disposition under regular graduated U.S. federal income tax rates, and a corporate non-U.S. holder described in the first bullet above also may be subject to the branch profits tax at a rate of 30%, or (in each case) such lower rate as may be specified by an applicable income tax treaty. An individual non-U.S. holder described in the second bullet above will be required to pay a flat 30% tax (or such lower rate specified by an applicable income tax treaty) on the gain derived from the sale, exchange, or other taxable disposition, which gain may be offset by U.S. source capital losses for the year (provided the non-U.S. holder has timely filed U.S. federal income tax returns with respect to such losses). Non-U.S. holders should consult their own tax advisors regarding any applicable income tax or other treaties that may apply.
Federal Estate Tax
Securities beneficially owned by an individual who is not a citizen or resident of the United States (as defined for U.S. federal estate tax purposes) at the time of their death will generally be includable in the decedent’s gross estate for U.S. federal estate tax purposes. Such shares, therefore, may be subject to U.S. federal estate tax, unless an applicable estate tax treaty provides otherwise.
Backup Withholding and Information Reporting
Generally, we must report annually to the IRS the amount of dividends paid to you, your name and address and the amount of tax withheld, if any. A similar report will be sent to you. Pursuant to applicable income tax treaties or other agreements, the IRS may make these reports available to tax authorities in your country of residence.
A Non-U.S. holder may have to comply with certification procedures to establish that it is not a United States person in order to avoid information reporting and backup withholding requirements. The certification procedures required to claim a reduced rate of withholding under a treaty generally will satisfy the certification requirements necessary to avoid the backup withholding as well for example, by properly certifying your non-U.S. status on an IRS Form W-8BEN or IRS Form W-8BEN-E or other applicable IRS Form W-8. Notwithstanding the foregoing, backup withholding and information reporting may apply if either we or our paying agent has actual knowledge, or reason to know, that you are a U.S. person.
Backup withholding is not an additional tax; rather, the U.S. federal income tax liability of persons subject to backup withholding will be reduced by the amount of tax withheld. If withholding results in an overpayment of taxes, a refund or credit may generally be obtained from the IRS, provided that the required information is furnished to the IRS in a timely manner.
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Foreign Account Tax Compliance
The Foreign Account Tax Compliance Act (“FATCA”) generally imposes withholding tax at a rate of 30% on dividends on and gross proceeds from the sale or other disposition of our securities paid to a “foreign financial institution” (as specially defined under these rules), unless any such institution (1) enters into, and complies with, an agreement with the IRS to report, on an annual basis, information with respect to interests in, and accounts maintained by, the institution that are owned by certain U.S. persons and by certain non-U.S. entities that are wholly or partially owned by U.S. persons and to withhold on certain payments, or (2) if required under an intergovernmental agreement between the United States and an applicable foreign country, reports such information to its local tax authority, which will exchange such information with the U.S. authorities. An intergovernmental agreement between the United States and an applicable foreign country may modify these requirements. Accordingly, the entity through which our securities are held will affect the determination of whether such withholding is required. Similarly, dividends in respect of our securities held by an investor that is a non-financial non-U.S. entity that does not qualify under certain exceptions will generally be subject to withholding at a rate of 30%, unless such entity either (1) certifies to us or the applicable withholding agent that such entity does not have any “substantial United States owners” or (2) provides certain information regarding the entity’s “substantial United States owners,” which will in turn be provided to the U.S. Department of Treasury. Non-U.S. holders should consult their own tax advisors regarding the possible implications of this legislation on their investment in our securities.
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UNDERWRITING
We are offering Units as described in this prospectus through the underwriters named below. EF Hutton, division of Benchmark Investments, LLC (“EF Hutton”) is acting as the representative of the underwriters. We have entered into an underwriting agreement with the underwriters. Subject to the terms and conditions of the underwriting agreement, each of the underwriters has severally agreed to purchase, and we have agreed to sell to the underwriters, the number of Units listed next to its name in the following table.
Underwriters |
| Number of Units |
| |
EF Hutton, division of Benchmark Investments, LLC |
|
| [*] |
|
Total |
|
|
|
|
The underwriting agreement provides that the underwriters must buy all of the Units if they buy any of them. The Units have no stand-alone rights and will not be certificated or issued as stand-alone securities. The Common Stock and the Warrants are immediately separable and will be issued separately in this offering. However, the underwriters are not required to take or pay for the Units covered by the underwriters’ option to purchase additional shares of Common Stock and/or Warrants as described below. Our shares of Common Stock and Warrants are offered subject to a number of conditions, including:
| · | receipt and acceptance of our shares of Common Stock and Warrants underlying the Units by the underwriters; and |
| · | the underwriters’ right to reject orders in whole or in part. |
We have been advised by EF Hutton that the underwriters intend to make a market in our Common Stock but that they are not obligated to do so and may discontinue making a market at any time without notice.
In connection with this offering, certain of the underwriters or securities dealers may distribute prospectuses electronically.
Option to Purchase Additional Units
We have granted the underwriters an option to buy up to an aggregate of [*] additional shares of Common Stock and/or [*] additional Warrants to purchase up to [*] share of Common Stock. The underwriters have 45 days from the date of this prospectus to exercise this option. If the underwriters exercise this option, they will each purchase additional securities approximately in proportion to the amounts specified in the table above.
Underwriting Discount
Units sold by the underwriters to the public will initially be offered at the initial offering price set forth on the cover of this prospectus. Any Units sold by the underwriters to securities dealers may be sold at a discount of up to $ per Unit from the public offering price. The underwriters may offer the shares through one or more of their affiliates or selling agents. If all the Units are not sold at the public offering price, EF Hutton may change the offering price and the other selling terms. Upon execution of the underwriting agreement, the underwriters will be obligated to purchase the shares at the prices and upon the terms stated therein.
The following table provides information regarding the amount of the discounts and commissions to be paid to the underwriters by us, before expenses:
| Total Per Unit |
| |
Public offering price | $ | [*] |
|
Underwriting discounts and commissions(1) | $ | [*] |
|
Proceeds, before expenses, to us | $ | [*] |
|
(1) We have agreed to allow the Representative an underwriting discount of 8.0% of the gross proceeds of this offering.
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We have agreed to pay EF Hutton’s out-of-pocket accountable expenses, including EF Hutton’s legal fees, up to a maximum amount of $229,500, irrespective of whether the offering is consummated. We have paid $50,000 to EF Hutton as an advance to be applied towards reasonable out-of-pocket expenses (which we refer to as the Advance). Any portion of the Advance shall be returned back to us to the extent not actually incurred. Additionally, we have agreed that one percent (1%) of the gross proceeds of the offering shall be provided to EF Hutton for non-accountable expenses.
We estimate that the total expenses of the offering payable by us, not including the underwriting discount, will be approximately $☑. We have also agreed to reimburse the underwriters for certain expenses incurred by them.
Representative’s Warrants
We have agreed to issue warrants to the representative to purchase a number of shares of Common Stock equal to 4% of the total number of shares sold in this offering at an exercise price equal to 120% of the public offering price of the Units sold in this offering. The underwriters’ warrants will be exercisable upon issuance and will terminate on the fifth anniversary of the commencement date of sales in this offering. The underwriters’ warrants are not exercisable or convertible for more than four and a half-year period commencing six (6) months from the effective date of sales in this offering. The underwriters’ warrants also provide for customary anti-dilution provisions, one-time demand registration right and unlimited “piggyback” registration rights with respect to the registration of the shares of common stock underlying the warrants. We have registered the underwriters’ warrants and the shares underlying the underwriters’ warrants in this offering.
The underwriters’ warrant and the underlying shares may be deemed to be compensation by FINRA, and therefore will be subject to FINRA Rule 5110(e)(1). In accordance with FINRA Rule 5110(e)(1), neither the underwriters’ warrant nor any of our shares of common stock issued upon exercise of the underwriters’ warrants may be sold, transferred, assigned, pledged or hypothecated, or be the subject of any hedging, short sale, derivative, put or call transaction that would result in the effective economic disposition of such securities by any person, for a period of 180 days immediately following the commencement date of sales in this offering, subject to certain exceptions. The underwriters’ warrant to be received by the Representative and related persons in connection with this offering: (i) fully comply with lock-up restrictions pursuant to FINRA Rule 5110(e)(1); and (ii) fully comply with transfer restrictions pursuant to FINRA Rule 5110(e)(2).
Right of First Refusal
We have also granted EF Hutton an irrevocable right of first refusal for a period of twelve (12) months after the date that this offering is completed, to act as sole investment banker, sole book-runner, and/or sole placement agent, at EF Hutton’s sole discretion, for each and every future public and private equity and debt offering, including all equity linked financings, during such twelve (12) month period, of the Company, or any successor to or subsidiary of the Company, on terms and conditions customary to EF Hutton for such transactions.
Tail Financing
We have also granted EF Hutton the right to receive a cash fee equal to eight percent (8.0%) of the gross proceeds received by us from the sale of securities to investors introduced to us by EF Hutton, in connection with any public or private financing or capital raise completed during the twelve (12) month period after the date that this offering is completed.
Advisory Services
EF Hutton will also provide us, from time to time, financial and M&A advisory services in the ordinary course of business for which they may receive customary fees and commissions.
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Lock-up Agreements
The Company, each of our directors and executive officers, and our 5% and greater stockholders, have agreed not to, subject to certain limited exceptions, offer, pledge, sell, contract to sell, grant any option to purchase, or otherwise dispose of our Common Stock or any securities convertible into or exchangeable or exercisable for Common Stock, or to enter into any hedge or other arrangement or any transaction that transfers, directly or indirectly, the economic consequence of ownership of the shares of our Common Stock, in the case of the Company for a period of 360 days after the date of this prospectus, and in the case of our directors and executive officers and our 5% and greater stockholders for a period of 180 days after the date of this prospectus, without the prior written consent of EF Hutton.
Indemnification
We have agreed to indemnify the several underwriters against certain liabilities, including certain liabilities under the Securities Act. If we are unable to provide this indemnification, we have agreed to contribute to payments the underwriters may be required to make in respect of those liabilities.
Other Relationships
Some of the underwriters and their affiliates have engaged in, and may in the future engage in, investment banking and other commercial dealings in the ordinary course of business with us or our affiliates. They have received, or may in the future receive, customary fees and commissions for these transactions.
Stock Exchange
We intend to apply for listing of our Common Stock and Warrants on the NYSE-American under the symbols “GLUC” and “GLUCW.” We will not proceed with this offering in the event our Common Stock is not approved for listing on the NYSE-American.
Price Stabilization, Short Positions
In connection with this offering, the underwriters may engage in activities that stabilize, maintain, or otherwise affect the price of our shares of Common Stock during and after this offering, including:
| · | stabilizing transactions; |
| · | short sales; |
| · | purchases to cover positions created by short sales; |
| · | imposition of penalty bids; and |
| · | syndicate covering transactions. |
Stabilizing transactions consist of bids or purchases made for the purpose of preventing or retarding a decline in the market price of our shares of Common Stock while this offering is in progress. Stabilization transactions permit bids to purchase the underlying security so long as the stabilizing bids do not exceed a specified maximum. These transactions may also include making short sales of our shares of Common Stock, which involve the sale by the underwriters of a greater number of shares of Common Stock than they are required to purchase in this offering and purchasing shares of Common Stock on the open market to cover short positions created by short sales. Short sales may be “covered short sales,” which are short positions in an amount not greater than the underwriters’ option to purchase additional shares referred to above, or may be “naked short sales,” which are short positions in excess of that amount.
The underwriters may close out any covered short position by either exercising their option, in whole or in part, or by purchasing shares in the open market. In making this determination, the underwriters will consider, among other things, the price of shares available for purchase in the open market as compared to the price at which they may purchase shares through the over-allotment option.
Naked short sales are short sales made in excess of the over-allotment option. The underwriters must close out any naked short position by purchasing shares in the open market. A naked short position is more likely to be created if the underwriters are concerned that there may be downward pressure on the price of the shares of Common Stock in the open market that could adversely affect investors who purchased in this offering.
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The underwriters also may impose a penalty bid. This occurs when a particular underwriter repays to the underwriters a portion of the underwriting discount received by it because EF Hutton has repurchased shares sold by or for the account of that underwriter in stabilizing or short covering transactions.
These stabilizing transactions, short sales, purchases to cover positions created by short sales, the imposition of penalty bids and syndicate covering transactions may have the effect of raising or maintaining the market price of our Common Stock or preventing or retarding a decline in the market price of our Common Stock. As a result of these activities, the price of our Common Stock may be higher than the price that otherwise might exist in the open market. The underwriters may carry out these transactions on the NYSE-American, in the over-the-counter market or otherwise. Neither we nor the underwriters make any representation or prediction as to the effect that the transactions described above may have on the price of the shares. Neither we, nor any of the underwriters make any representation that the underwriters will engage in these stabilization transactions or that any transaction, once commenced, will not be discontinued without notice.
Determination of Offering Price
The principal factors to be considered in determining the public offering price include:
| · | the information set forth in this prospectus and otherwise available to EF Hutton; |
| · | our history and prospects and the history and prospects for the industry in which we compete; |
| · | our past and present financial performance; |
| · | our prospects for future earnings and the present state of our development; |
| · | the general condition of the securities market at the time of this offering; |
| · | the recent market prices of, and demand for, publicly traded shares of generally comparable companies; and |
| · | other factors deemed relevant by the underwriters and us. |
The estimated public offering price range set forth on the cover page of this preliminary prospectus is subject to change as a result of market conditions and other factors. Neither we nor the underwriters can assure investors that an active trading market will develop for our shares of Common Stock or that the shares of Common Stock will trade in the public market at or above the public offering price.
Affiliations
The underwriters and their respective affiliates are full service financial institutions engaged in various activities, which may include securities trading, commercial and investment banking, financial advisory, investment management, investment research, principal investment, hedging, financing, and brokerage activities. The underwriters and their affiliates may from time to time in the future engage with us and perform services for us or in the ordinary course of their business for which they will receive customary fees and expenses. In the ordinary course of their various business activities, the underwriters and their respective affiliates may make or hold a broad array of investments and actively trade debt and equity securities (or related derivative securities) and financial instruments (including bank loans) for their own account and for the accounts of their customers, and such investment and securities activities may involve securities and/or instruments of us. The underwriters and their respective affiliates may also make investment recommendations and/or publish or express independent research views in respect of these securities or instruments and may at any time hold, or recommend to clients that they acquire, long and/or short positions in these securities and instruments.
Electronic Distribution
A prospectus in electronic format may be made available on the Internet sites or through other online services maintained by one or more of the underwriters participating in this offering, or by their affiliates. In those cases, prospective investors may view offering terms online and, depending upon the particular underwriter, prospective investors may be allowed to place orders online. The underwriters may agree with us to allocate a specific number of shares for sale to online brokerage account holders. Any such allocation for online distributions will be made by the underwriters on the same basis as other allocations. Other than the prospectus in electronic format, the information on any underwriter’s website and any information contained in any other website maintained by an underwriter is not part of the prospectus or the registration statement of which this prospectus forms a part, has not been approved and/or endorsed by us or any underwriter in its capacity as underwriter and should not be relied upon by investors.
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Selling Restrictions
Canada
The shares may be sold only to purchasers purchasing, or deemed to be purchasing, as principal that are accredited investors, as defined in National Instrument 45-106 Prospectus Exemptions or subsection 73.3(1) of the Securities Act (Ontario), and are permitted clients, as defined in National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations. Any resale of the shares must be made in accordance with an exemption from, or in a transaction not subject to, the prospectus requirements of applicable securities laws.
Securities legislation in certain provinces or territories of Canada may provide a purchaser with remedies for rescission or damages if this prospectus (including any amendment thereto) contains a misrepresentation, provided that the remedies for rescission or damages are exercised by the purchaser within the time limit prescribed by the securities legislation of the purchaser's province or territory. The purchaser should refer to any applicable provisions of the securities legislation of the purchaser's province or territory for particulars of these rights or consult with a legal advisor.
Pursuant to section 3A.3 (or, in the case of securities issued or guaranteed by the government of a non-Canadian jurisdiction, section 3A.4) of National Instrument 33-105 Underwriting Conflicts (NI 33-105), the underwriters are not required to comply with the disclosure requirements of NI 33-105 regarding underwriter conflicts of interest in connection with this offering.
European Economic Area
In relation to each Member State of the European Economic Area which has implemented the Prospectus Regulation, or each, a Relevant Member State, an offer to the public of any shares of our Common Stock may not be made in that Relevant Member State, except that an offer to the public in that Relevant Member State of any shares of our Common Stock may be made at any time under the following exemptions under the Prospectus Regulation, if they have been implemented in that Relevant Member State:
| (i) | to any legal entity which is a qualified investor as defined in the Prospectus Regulation; |
| (ii) | to fewer than 150 natural or legal persons (other than qualified investors as defined in the Prospectus Regulation), subject to obtaining the prior consent of the representatives for any such offer; or |
| (iii) | in any other circumstances falling within Article 1(4) of the Prospectus Regulation, provided that no such offer of shares of our Common Stock shall result in a requirement for the publication by us or any underwriter of a prospectus pursuant to Article 3 of the Prospectus Regulation. |
For the purposes of this provision, the expression an "offer to the public" in relation to any shares of our Common Stock in any Relevant Member State means the communication in any form and by any means of sufficient information on the terms of the offer and any shares of our Common Stock to be offered so as to enable an investor to decide to purchase any shares of our Common Stock, and the expression "Prospectus Regulation" means Regulation (EU) 2017/1129.
United Kingdom
Each underwriter has represented and agreed that:
| (a) | it has only communicated or caused to be communicated and will only communicate or cause to be communicated an invitation or inducement to engage in investment activity (within the meaning of Section 21 of the Financial Services and Markets Act 2000 (“FSMA”) received by it in connection with the issue or sale of the shares of our Common Stock in circumstances in which Section 21(1) of the FSMA does not apply to us; and |
|
|
|
| (b) | it has complied and will comply with all applicable provisions of the FSMA with respect to anything done by it in relation to the shares of our Common Stock in, from or otherwise involving the United Kingdom. |
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Hong Kong
Shares of our Common Stock may not be offered or sold by means of any document other than (i) in circumstances which do not constitute an offer to the public within the meaning of the Companies Ordinance (Cap.32, Laws of Hong Kong), (ii) to "professional investors" within the meaning of the Securities and Futures Ordinance (Cap.571, Laws of Hong Kong) and any rules made thereunder or (iii) in other circumstances which do not result in the document being a "prospectus" within the meaning of the Companies Ordinance (Cap.32, Laws of Hong Kong), and no advertisement, invitation or document relating to shares of our Common Stock may be issued or may be in the possession of any person for the purpose of issue (in each case whether in Hong Kong or elsewhere), which is directed at, or the contents of which are likely to be accessed or read by, the public in Hong Kong (except if permitted to do so under the laws of Hong Kong) other than with respect to shares of our Common Stock which are or are intended to be disposed of only to persons outside Hong Kong or only to "professional investors" within the meaning of the Securities and Futures Ordinance (Cap.571, Laws of Hong Kong) and any rules made thereunder.
Japan
No registration pursuant to Article 4, paragraph 1 of the Financial Instruments and Exchange Law of Japan (Law No. 25 of 1948, as amended) (the "FIEL") has been made or will be made with respect to the solicitation of the application for the acquisition of the shares of Common Stock.
Accordingly, the shares of Common Stock have not been, directly or indirectly, offered or sold and will not be, directly or indirectly, offered or sold in Japan or to, or for the benefit of, any resident of Japan (which term as used herein means any person resident in Japan, including any corporation or other entity organized under the laws of Japan) or to others for re-offering or re-sale, directly or indirectly, in Japan or to, or for the benefit of, any resident of Japan except pursuant to an exemption from the registration requirements, and otherwise in compliance with, the FIEL and the other applicable laws and regulations of Japan.
For Qualified Institutional Investors ("QII")
Please note that the solicitation for newly issued or secondary securities (each as described in Paragraph 2, Article 4 of the FIEL) in relation to the shares of Common Stock constitutes either a "QII only private placement" or a "QII only secondary distribution" (each as described in Paragraph 1, Article 23-13 of the FIEL). Disclosure regarding any such solicitation, as is otherwise prescribed in Paragraph 1, Article 4 of the FIEL, has not been made in relation to the shares of Common Stock. The shares of Common Stock may only be transferred to QIIs.
For Non-QII Investors
Please note that the solicitation for newly issued or secondary securities (each as described in Paragraph 2, Article 4 of the FIEL) in relation to the shares of Common Stock constitutes either a "small number private placement" or a "small number private secondary distribution" (each as is described in Paragraph 4, Article 23-13 of the FIEL). Disclosure regarding any such solicitation, as is otherwise prescribed in Paragraph 1, Article 4 of the FIEL, has not been made in relation to the shares of Common Stock. The shares of Common Stock may only be transferred en bloc without subdivision to a single investor.
Singapore
This prospectus has not been registered as a prospectus with the Monetary Authority of Singapore. Accordingly, this prospectus and any other document or material in connection with the offer or sale, or invitation for subscription or purchase, of shares of our Common Stock may not be circulated or distributed, nor may the shares of our Common Stock be offered or sold, or be made the subject of an invitation for subscription or purchase, whether directly or indirectly, to persons in Singapore other than (i) to an institutional investor under Section 274 of the Securities and Futures Act, Chapter 289 of Singapore, or the SFA, (ii) to a relevant person, or any person pursuant to Section 275(1A), and in accordance with the conditions, specified in Section 275 of the SFA or (iii) otherwise pursuant to, and in accordance with the conditions of, any other applicable provision of the SFA.
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Where shares of our Common Stock are subscribed or purchased under Section 275 by a relevant person which is: (i) a corporation (which is not an accredited investor) the sole business of which is to hold investments and the entire share capital of which is owned by one or more individuals, each of whom is an accredited investor; or (ii) a trust (where the trustee is not an accredited investor) whose sole purpose is to hold investments and each beneficiary is an accredited investor, shares, debentures and units of shares and debentures of that corporation or the beneficiaries' rights and interest in that trust shall not be transferable for 6 months after that corporation or that trust has acquired shares of our Common Stock under Section 275 except: (a) to an institutional investor under Section 274 of the SFA or to a relevant person, or any person pursuant to Section 275(1A), and in accordance with the conditions, specified in Section 275 of the SFA; (b) where no consideration is given for the transfer; or (c) by operation of law.
LEGAL MATTERS
The validity of the shares of Common Stock offered hereby and certain other legal matters will be passed upon for us by Lucosky Brookman LLP, Woodbridge, NJ. Carmel Milazzo & Feil LLP, is acting as counsel to the underwriters in connection with certain legal matters relating to this offering.
EXPERTS
The financial statements of Glucose Health, as of December 31, 2021, and 2020 appearing in this prospectus and Registration Statement, have been audited by FRUCI & Associates II, PLLC, independent registered public accounting firm, as set forth in their report thereon appearing elsewhere herein, and are included in reliance upon such report, given on the authority of such firm as experts in accounting and auditing.
WHERE YOU CAN FIND MORE INFORMATION
We have filed with the SEC a registration statement on Form S-1 under the Securities Act with respect to the Units (shares of Common Stock and Warrants) offered by this prospectus. This prospectus, which constitutes a part of the registration statement, does not contain all of the information set forth in the registration statement, some of which is contained in exhibits to the registration statement as permitted by the rules and regulations of the SEC. For further information with respect to us and our Common Stock, we refer you to the registration statement, including the exhibits filed as a part of the registration statement. Statements contained in this prospectus concerning the contents of any contract or any other document are not necessarily complete. If a contract or document has been filed as an exhibit to the registration statement, please see the copy of the contract or document that has been filed. Each statement in this prospectus relating to a contract or document filed as an exhibit is qualified in all respects by the filed exhibit.
You can read our SEC filings, including this registration statement, at the SEC’s website at http://www.sec.gov. In addition, upon effectiveness of this registration statement, we will make certain of our filings available at our corporate website, www.glucosehealthinc.com
Upon effectiveness of this registration statement we will become subject to the information reporting requirements of the Exchange Act, and we will file reports, proxy statements and other information with the SEC. These reports, proxy statements and other information will be available on the website of the SEC referred to above. The information contained in, or that can be accessed through, our website is not part of this prospectus, and you should not consider the contents of our website in making an investment decision with respect to our Common Stock.
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INDEX TO FINANCIAL STATEMENTS
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| PAGE |
Interim Financial Statements for the Three Months Ended March 31, 2022 (unaudited) |
| |
| F-2 | |
Statements of Operations for the three months ended December 31, 2022, and 2021 |
| F-3 |
| F-4 | |
Statements of Cash Flows for the three months ended December 31, 2022, and 2021 |
| F-5 |
| F-6 |
|
| PAGE |
Audited Financial Statements for the Years Ended December 31, 2021, and 2020 |
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| F-16 | |
| F-19 | |
Statements of Operations for the years ended December 31, 2021, and 2020 |
| F-20 |
| F-21 | |
Statements of Cash Flows for the years ended December 31, 2021, and 2020 |
| F-22 |
| F-23 |
| F-1 |
| Table of Contents |
GLUCOSE HEALTH, INC.
BALANCE SHEETS
ASSETS | ||||||||
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| March 31, |
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| December 31, |
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| 2022 |
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| 2021 |
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CURRENT ASSETS |
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Cash |
| $ |
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Accounts receivable, net of allowance for doubtful accounts of $ |
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Inventory |
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Prepaid expenses |
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Total current assets |
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Other Assets |
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Website domains |
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Intellectual assets, net of accumulated |
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amortization of $ |
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TOTAL ASSETS |
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LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
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CURRENT LIABILITIES |
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Accounts payable and accrued expenses |
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Total current liabilities |
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TOTAL LIABILITIES |
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COMMITMENTS AND CONTINGENCIES |
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STOCKHOLDERS' EQUITY |
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Preferred stock, Series A, $ |
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March 31, 2022 and December 31, 2021, respectively |
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Preferred stock, Series B, $ |
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March 31, 2022 and December 31, 2021, respectively |
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Preferred stock, Series C, $ |
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March 31, 2022 and December 31, 2021, respectively |
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Preferred stock, Series D, $ |
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March 31, 2022 and December 31, 2021, respectively |
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Preferred stock, Series E, $ |
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March 31, 2022 and December 31, 2021, respectively |
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Common stock, $ |
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March 31, 2022 and December 31, 2021, respectively |
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Additional paid in capital |
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Accumulated deficit |
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| ( | ) |
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Total stockholders' equity |
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY |
| $ |
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| $ |
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The accompanying notes are an integral part of these financial statements.
| F-2 |
| Table of Contents |
GLUCOSE HEALTH INC.
STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31,
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| 2022 |
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| 2021 |
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REVENUE, NET |
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| $ |
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COST OF REVENUES |
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Cost of revenues |
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GROSS PROFIT |
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OPERATING EXPENSES |
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Selling and marketing |
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General and administrative |
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Professional fees |
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Services paid in stock |
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Total operating expenses |
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INCOME (LOSS) FROM OPERATIONS |
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OTHER INCOME (EXPENSE) |
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Interest income (expense) |
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Total other expense |
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INCOME (LOSS) BEFORE INCOME TAXES |
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| ( | ) |
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PROVISION FOR (BENEFIT FROM) INCOME TAXES |
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NET INCOME (LOSS) |
| $ | ( | ) |
| $ |
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WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING - BASIC AND DILUTED |
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NET INCOME (LOSS) PER SHARE - BASIC AND DILUTED |
| $ | ( | ) |
| $ |
| |
The accompanying notes are an integral part of these financial statements.
| F-3 |
| Table of Contents |
GLUCOSE HEALTH, INC.
STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE THREE MONTHS ENDED MARCH 31, 2022 AND 2021
|
| Preferred Stock, Series A |
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| Preferred Stock, Series B - E (1) |
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| Common Stock |
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| Additional Paid-In |
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| Accumulated |
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| ||||||||||||||||||
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| Shares |
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| Amount |
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| Shares |
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| Amount |
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| Shares |
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| Amount |
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| Capital |
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| Deficit |
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| Total |
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Balance - December 31, 2020 |
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| $ |
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| $ |
|
|
|
|
| $ |
|
| $ |
|
| $ | ( | ) |
| $ |
| ||||||||
|
|
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends to preferred stock holders |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| ( | ) |
|
| ( | ) |
|
|
|
|
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|
|
|
|
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|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares issued for cash received |
|
| - |
|
|
| - |
|
|
|
|
|
|
|
|
| - |
|
|
| - |
|
|
|
|
|
| - |
|
|
|
| ||||
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
|
|
|
|
| ||
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|
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|
|
|
|
Balance - March 31, 2021 |
|
|
|
| $ |
|
|
|
|
| $ |
|
|
|
|
| $ |
|
| $ |
|
| $ | ( | ) |
| $ |
| ||||||||
|
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|
|
|
|
|
Balance - December 31, 2021 |
|
|
|
| $ |
|
|
|
|
| $ |
|
|
|
|
| $ |
|
| $ |
|
| $ | ( | ) |
| $ |
| ||||||||
|
|
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|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends to preferred stock holders |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| ( | ) |
|
| ( | ) |
|
|
|
|
|
|
|
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| ( | ) |
|
| ( | ) |
|
|
|
|
|
|
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|
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|
|
|
|
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|
|
|
|
|
|
|
|
|
Balance - March 31, 2022 |
|
|
|
| $ |
|
|
|
|
| $ |
|
|
|
|
| $ |
|
| $ |
|
| $ | ( | ) |
| $ |
| ||||||||
(1) The preferred stock Series D shares authorized, issued and outstanding have been adjusted to reflect a 10 to 1 reverse split, which was effective in March 2022.
The accompanying notes are an integral part of these financial statements.
| F-4 |
| Table of Contents |
GLUCOSE HEALTH, INC.
STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31,
|
| 2022 |
|
| 2021 |
| ||
OPERATING ACTIVITIES: |
|
|
|
|
|
| ||
Net loss |
| $ | ( | ) |
| $ |
| |
|
|
|
|
|
|
|
|
|
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: |
|
|
|
|
|
|
|
|
Common stock issued for services |
|
|
|
|
|
| ||
Change in assets and liabilities |
|
|
|
|
|
|
|
|
(Increase) decrease in accounts receivable |
|
| ( | ) |
|
| ( | ) |
(Increase) decrease in inventory |
|
|
|
|
| ( | ) | |
Increase (decrease) in accounts payable and accrued expenses |
|
| ( | ) |
|
| ( | ) |
Total adjustments |
|
|
|
|
| ( | ) | |
Net cash provided by (used in) operating activities |
|
| ( | ) |
|
| ( | ) |
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM INVESTING ACTIVITIES: |
|
|
|
|
|
|
|
|
Net cash used in investing activities |
|
|
|
|
|
| ||
|
|
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|
|
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES: |
|
|
|
|
|
|
|
|
Dividends paid to preferred stockholders |
|
| ( | ) |
|
| ( | ) |
Proceeds from preferred stock |
|
|
|
|
|
| ||
Net cash provided by (used in) financing activities |
|
| ( | ) |
|
|
| |
|
|
|
|
|
|
|
|
|
NET INCREASE (DECREASE) IN CASH |
|
| ( | ) |
|
|
| |
CASH - BEGINNING OF PERIOD |
|
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
CASH - END OF PERIOD |
| $ |
|
| $ |
| ||
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL CASH FLOW INFORMATION: |
|
|
|
|
|
|
|
|
Cash paid for interest |
| $ |
|
| $ |
| ||
Cash paid for income taxes |
| $ |
|
| $ |
| ||
The accompanying notes are an integral part of these financial statements.
| F-5 |
| Table of Contents |
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - ORGANIZATION AND BASIS OF PRESENTATION
Overview
We are an own-label distributor of nutritional beverages. Our niche is the formulation, production, marketing, and distribution of soluble fiber infused nutritional beverages. On November 6, 2017, we registered the trademark GLUCODOWN® and have since launched the first soluble fiber infused, powdered iced tea, and flavored drink mixes, in North America. On September 10, 2020, we registered the trademark FIBER UP® and are currently in the early stages of developing our first ready-to-drink nutritional beverage. We were incorporated under the laws of the State of Nevada as Bio-Solutions Corp. on March 27, 2007. From inception, through the third quarter of 2014, we were engaged in various businesses which were unrelated to our current business and corporate officers. On November 19, 2014, we changed our name to Glucose Health, Inc., and our business to that of an own-label distributor of nutritional beverages.
Effective on March 11, 2022, we filed Articles of Conversion with the Nevada Secretary of State and a Certificate of Conversion and Certificate of Incorporation with the Delaware Department of State, Division of Corporations and converted to a Delaware corporation. On March 29, 2022, we merged with a subsidiary, created on March 23, 2022, for the sole purpose of the merger, amended and restated our Certificate of Incorporation, and the surviving corporation is Glucose Health, Inc. Our issued and outstanding common shares are
Going Concern
The accompanying financial statements have been prepared assuming the Company will continue as a going concern, which contemplates, among other things, the realization of assets and satisfaction of liabilities in the normal course of business. At March 31, 2022, the Company had an accumulated deficit of $
Basis of Presentation
The accompanying unaudited financial information as of and for the three months ended March 31, 2022, and 2021 has been prepared in accordance with GAAP for interim financial information and with the instructions to Quarterly Report on Form 10-Q and Article 10 of Regulation S-X. In the opinion of management, such financial information includes all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair presentation of our financial position at such date and the operating results and cash flows for such periods. Operating results for the three months ended March 31, 2022, are not necessarily indicative of the results that may be expected for the entire year or for any other subsequent interim period.
Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been omitted pursuant to the rules of the U.S. Securities and Exchange Commission, or the SEC. These unaudited financial statements and related notes should be read in conjunction with our audited financial statements for the year ended December 31, 2021, included in the Company’s Form S-1 registration statement filed herein.
| F-6 |
| Table of Contents |
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 requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues, and expenses, and related disclosure of contingent assets and liabilities. On an ongoing basis, we evaluate our estimates, including those related to revenue recognition, bad debts, investments, intangible assets, and income taxes. Our estimates are based on historical experience and on various other assumptions that are believed to be reasonable under the circumstances. Actual results may differ from these estimates.
Cash Flow Reporting
The Company follows ASC 230, Statement of Cash Flows, for cash flow 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 at March 31, 2022, and 2021.
The Company maintains its cash balances at one financial institution that is insured by the Federal Deposit Insurance Corporation. At March 31, 2022, and December 31, 2021, $
Accounts Receivable
Accounts receivable consists of invoiced and unpaid product sales. The Company records an allowance for doubtful accounts to allow for any amounts that may not be recoverable, which is based on an analysis of the Company’s prior collection experience, customer credit worthiness, and current economic trends. At March 31, 2022, and December 31, 2021, our allowance for doubtful accounts was $
On October 4, 2016, the Company executed a non-recourse receivables financing agreement with Citibank whereby receivables due to the Company are assumed from a large customer by Citibank and paid to the Company in a shorter period than otherwise provided for in accordance with the supplier agreement with the large customer, subject to a fixed interest premium based upon LIBOR.
| F-7 |
| Table of Contents |
Inventory
Inventory is stated at the lower of cost (FIFO: first-in, first-out) or market, and includes finished goods and raw materials. The cost of finished goods includes the cost of packaging supplies, direct and indirect labor, and other indirect manufacturing costs. Inventory impairment is considered quarterly based on the expiration date of the product. At March 31, 2022, the Company had total inventory of $
Prepaid Expenses
The Company considers all items incurred for future services to be prepaid expenses. At March 31, 2022, and December 31, 2021, the Company had prepaid expenses for advertising services totaling $
Recoverability of Long-Lived Assets
The Company's long-lived assets and other assets are reviewed for impairment in accordance with the guidance of the ASC 350, Intangibles - Goodwill and Other, and ASC 205, Presentation of Financial Statements. The Company tests for impairment losses on long-lived assets used in operations whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. Recoverability of an asset to be held and used is measured by a comparison of the carrying amount of an asset to the future undiscounted cash flows expected to be generated by the asset. If such asset is considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the asset exceeds its fair value. Impairment evaluations involve management's estimates on asset useful lives and future cash flows. Actual useful lives and cash flows could be different from those estimated by management which could have a material effect on our reporting results and financial positions. Fair value is determined through various valuation techniques including discounted cash flow models, quoted market values and third-party independent appraisals, as considered necessary. During the three months ended March 31, 2022, and 2021, the Company had not experienced impairment losses on its long-lived 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. |
| F-8 |
| Table of Contents |
Fair value estimates discussed herein are based upon certain market assumptions and pertinent information available to management as of March 31, 2022. The respective carrying value of certain on-balance-sheet financial instruments approximated their fair values due to the short-term nature of these instruments.
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 (Note 5).
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. The Company has adopted ASC 740-10, and evaluates its tax positions on an annual basis, and as of December 31, 2021, 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 and the prior three fiscal years 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
We follow a five-step process to recognize revenue. When our customer is a retailer, we are in receipt of purchase orders which, upon our acceptance, are binding contracts to deliver our products and invoice for payment. Our performance obligations are set forth in the purchase order and some retailer customers may also require separate agreements covering additional performance obligations or terms of service. The purchase orders we receive from retailers set forth the price we are to invoice for our products upon satisfaction of the performance obligations set forth in the purchase order (or separate agreement). When a retailer’s carrier picks up our product, at a designated shipping point, legal transfer of ownership occurs upon our receipt of a signed bill of lading, from the retailer’s carrier (FOB Shipping Point). When the designated shipping point is our contracted warehouse, we consider our shipping and handling activities to be fulfillment and not promised services creating a performance obligation under ASC 606. Upon the receipt of the signed bill of lading, we then proceed to invoice the retailer and recognize revenue. For retailers whose purchase orders require shipment of product to their warehouse using our designated carrier, legal transfer of ownership occurs upon our receipt of confirmation of delivery to the retailer’s warehouse, from our carrier (FOB Destination). We also consider this fulfillment activity and not promised services creating a performance obligation. Upon receipt of confirmation of delivery from our carrier, we invoice the retailer and recognize revenue.
When we sell our product directly to an end-user customer and not a retailer, following payment by the customer, legal transfer of ownership occurs upon delivery by our designated carrier (FOB Destination). We consider this fulfillment activity and not promised services creating a performance obligation. Upon receipt of confirmation of delivery from our carrier, we recognize revenue.
| F-9 |
| Table of Contents |
Whether the customer we sell our products to is a direct customer or retailer, our terms are final sale. In the case of sales through an online retailer, we are a direct seller (not a supplier) with fulfillment/customer service provided by the online retailer as our agent. However, the online retailer’s refund policy is 30 days.
When our products are sold to retailers, they may be sold on credit terms provided by us, which are established in accordance with local and industry practices, and typically require payment within 60 days of delivery, and may allow discounts for early payment. We estimate and reserve for our bad debt exposure based on our experience with past due accounts and collectability, the aging of accounts receivable and our analysis of customer data.
Advertising Expense
We promote our products and our company with television, radio, and digital advertising and with consumer incentives, such as coupons. We classify the costs to produce and schedule our advertising and the costs of consumer incentives, as advertising expenses. Advertising expenses are recorded in “Selling and marketing” and “Stock issued for services” in the accompanying statements of operations. We recorded advertising expenses of $
Share Based Compensation
The Company may issue restricted stock to officers, directors, or employees for their services. The Company measures compensation cost for all employee stock-based awards at their fair values on the date of grant. Stock-based awards issued to non-employees are measured at their fair values on the date of grant and are re-measured at each reporting period through their vesting dates, as applicable. The fair value of stock-based awards is recognized as expense over the service period, net of estimated forfeitures, using the straight-line method.
(Loss) Income Per Share of Common Stock
Basic net loss/income per common share is computed using the weighted average number of common shares outstanding. Diluted earnings per share (EPS) include additional dilution from common stock equivalents, such as stock issuable pursuant to the exercise of stock options, warrants and convertible notes. Common stock equivalents are not included in the computation of diluted earnings per share when the Company reports a loss because to do so would be anti-dilutive for periods presented.
The Company had potential dilutive securities outstanding at March 31, 2022, and 2021, as follows.
|
| Potential Additional Shares of Common Stock: |
| |||||
Potential Dilutive Securities: |
| 2022 |
|
| 2021 |
| ||
Preferred stock |
|
|
|
|
|
| ||
Warrants |
|
| - |
|
|
|
| |
Convertible debt |
|
| - |
|
|
|
| |
Total |
|
|
|
|
|
| ||
The Company had total fully diluted shares of common stock (potential dilutive securities outstanding plus issued securities outstanding) of
Reclassifications
Certain prior period amounts have been reclassified to conform with the current period presentation.
Recently Issued Accounting Standards
In August 2020, the FASB issued ASU 2020-06, Debt - Debt with Conversion and Other Options (Subtopic 470- 20) and Derivatives and Hedging - Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity (“ASU 2020-06”), which simplifies the accounting for certain financial instruments with characteristics of liabilities and equity. This ASU (1) simplifies the accounting for convertible debt instruments and convertible preferred stock by removing the existing guidance in ASC 470-20, Debt: Debt with Conversion and Other Options, that requires entities to account for beneficial conversion features and cash conversion features in equity, separately from the host convertible debt or preferred stock; (2) revises the scope exception from derivative accounting in ASC 815-40 for freestanding financial instruments and embedded features that are both indexed to the issuer’s own stock and classified in stockholders’ equity, by removing certain criteria required for equity classification; and (3) revises the guidance in ASC 260, Earnings Per Share, to require entities to calculate diluted earnings per share (EPS) for convertible instruments by using the if-converted method.
In addition, entities must presume share settlement for purposes of calculating diluted EPS when an instrument may be settled in cash or shares. For SEC filers, excluding smaller reporting companies, ASU 2020-06 is effective for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020. For all other entities, ASU 2020-06 is effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. Entities should adopt the guidance as of the beginning of the fiscal year of adoption and cannot adopt the guidance in an interim reporting period. The Company is currently evaluating the impact that ASU 2020-06 may have on its financial statements and related disclosures.
During the quarter ended March 31, 2022, there were several new accounting pronouncements issued by the FASB. Each of these pronouncements, as applicable, has been or will be adopted by the Company. Management does not believe the adoption of any of these accounting pronouncements has had or will have a material impact on the Company’s financial statements.
NOTE 3 - STOCKHOLDER’S EQUITY
Our current authorized common and preferred shares are
As of March 31, 2022, the number of shares issued and outstanding for each respective class of stock are as follows:
Shares of common stock |
|
| par value $ | |
Shares Series A preferred stock |
|
| par value $ | |
Shares Series B preferred stock |
|
| stated value $ | |
Shares Series C preferred stock |
|
| stated value $ | |
Shares Series D preferred stock |
|
| stated value $ | |
Shares Series E preferred stock |
|
| stated value $ |
| F-10 |
Preferred Stock
Our board of directors is empowered, upon stockholder approval, to issue shares of preferred stock with dividend, liquidation, redemption, voting or other rights which could adversely affect the voting power or other rights of the holders of Common Stock. In addition, the preferred stock could be utilized as a method of discouraging, delaying, or preventing a change in control of us.
Series A Voting Preferred Stock
For so long as any shares of Series A Voting Preferred Stock remain issued and outstanding, the holders hereof shall possess more than 50% of the voting power of the capital stock of the Corporation. The
Series B Preferred Stock
During the time that any shares of Series B Preferred Stock are issued and outstanding, the holders shall be entitled to receive, and the Company shall pay, cumulative dividends on each share of
During the year ended December 31, 2021, two Series B Preferred Stockholders elected to convert their
Series C Preferred Stock
During the time that any shares of Series C Preferred Stock are issued and outstanding, the holders shall be entitled to receive, and the Company shall pay, cumulative dividends on each share of
Series D Preferred Stock
During the time that any shares of Series D preferred stock are issued and outstanding, the holders shall be entitled to receive, and the Company shall pay, cumulative dividends on each share of
Series E Preferred Stock
During the time that any shares of Series E preferred stock are issued and outstanding, the holders shall be entitled to receive, and the Company shall pay, cumulative dividends on each share of
| F-11 |
| Table of Contents |
During the three months ended March 31, 2022, and 2021, total dividends paid were $
Issuances pursuant to debt conversions
During May 2020, the Company issued
During June 2021, the Company issued
Issuances pursuant to agreements
During May 2021 and June 2020, the Company issued
Warrants outstanding
During the year ended December 31, 2020, the Company issued a warrant for the purchase of
On March 14, 2022,
A summary of the status of the Company’s warrant grants as of March 31, 2022, and 2021 and the changes during the periods then ended is presented below:
|
|
|
|
| Weighted-Average |
| ||
|
| Warrants |
|
| Exercise Price |
| ||
Outstanding, January 1, 2021 |
|
|
|
| $ |
| ||
Granted |
|
| - |
|
| - |
| |
Exercised |
|
| - |
|
| - |
| |
Expired |
|
| - |
|
| - |
| |
Outstanding, March 31, 2021 |
|
|
|
| $ |
| ||
|
|
|
|
|
|
|
|
|
Outstanding, January 1, 2022 |
|
|
|
| $ |
| ||
Granted |
|
| - |
|
|
| - |
|
Exercised |
|
| - |
|
|
| - |
|
Expired / cancelled |
|
| ( | ) |
|
| ( | ) |
Outstanding, March 31, 2022 |
|
| - |
|
| $ | - |
|
|
|
|
|
|
|
|
|
|
Warrants exercisable at March 31, 2022 |
|
| - |
|
| - |
| |
| F-12 |
| Table of Contents |
NOTE 4 - NOTES PAYABLE
Notes payable, related party:
During April 2019, the Company consolidated several notes issued to the Company’s CEO/CFO into a single $
Convertible notes payable, related party
The Company consolidated
Convertible notes payable:
During November 2017, the Company and a corporation entered into a debt agreement. The agreement bore interest at
Other notes payable:
During December 2013, the Company issued a $
During December 2013, the Company issued a $
During April 2012, the Company issued a $
Accrued Interest
At March 31, 2022, and 2021, there was no accrued interest outstanding.
| F-13 |
| Table of Contents |
NOTE 5 - FEDERAL INCOME TAX
The Company accounts for income taxes under ASC 740-10, which provides for an asset and liability approach of accounting for income taxes. Under this approach, deferred tax assets and liabilities are recognized based on anticipated future tax consequences, using currently enacted tax laws, attributed to temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts calculated for income tax purposes. The provision (benefit) for income taxes for the three months ended March 31, 2022, and 2021 assumes a
At March 31, 2022, and 2021, the Company had approximately $
|
| 2022 |
|
| 2021 |
| ||
Net operating loss carryforwards |
| $ |
|
| $ |
| ||
Temporary differences |
|
| - |
|
|
| ( | ) |
Permanent differences |
|
| ( | ) |
|
|
| |
Valuation allowance |
|
| ( | ) |
|
| ( | ) |
Significant components of the Company’s deferred tax assets as of March 31, 2022, and 2021 are summarized below.
|
| 2022 |
|
| 2021 |
| ||
Federal tax statutory rate |
|
| % |
|
| % | ||
Temporary differences |
|
| % |
|
| % | ||
Permanent differences |
|
| - | % |
|
| - | % |
Valuation allowance |
|
| - | % |
|
| - | % |
Effective rate |
|
| % |
|
| % | ||
The Company provides for a valuation allowance when it is more likely than not that it will not realize a portion of the deferred tax assets. The Company has established a valuation allowance against the net deferred tax asset due to the uncertainty that enough taxable income will be generated in those taxing jurisdictions to utilize the assets. Therefore, we have not reflected any benefit of such deferred tax assets in the accompanying financial statements. Our net deferred tax asset and valuation allowance increased by $
To the extent that the tax deduction is included in a net operating loss carry forward and is in excess of amounts recognized for book purposes, no benefit will be recognized until the loss carry forward is recognized. Upon utilization and realization of the carry forward, the corresponding change in the deferred asset and valuation allowance will be recorded as additional paid-in capital.
NOTE 6 - COMMITMENTS/CONTINGENCIES
From time to time, we may be involved in litigation in the ordinary course of business. We are currently not involved in any litigation that we believe could have a material adverse effect on our financial condition or results of operations.
On January 25, 2022, we entered into an investment banking agreement with EF Hutton, which contemplates the Company raising additional capital and preparing a registration statement under the Securities Act.
| F-14 |
| Table of Contents |
NOTE 7 - REVENUE CONCENTRATION and ACCOUNTS RECEIVABLE
The Company has
NOTE 8 - RECOVERY OF RETAILER CHARGEBACKS
During the year ended December 31, 2020, the Company recognized $
NOTE 9 - RELATED PARTY TRANSACTIONS
On July 1, 2021, the Company entered into a consulting agreement with a company owned by our CEO/CFO and director, Murray Fleming. The agreement provides for quarterly payments of $
NOTE 10 - SUBSEQUENT EVENTS
The Company has evaluated subsequent events from the balance sheet through the date of this filing and determined there were no events to disclose except the following.
On April 1, 2022, we entered into a revised consulting agreement with a company owned by our CEO/CFO and director, Murray Fleming. The agreement provides for quarterly payments of $
On May 6, 2022, we issued invoices totaling $
| F-15 |
| Table of Contents |
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Shareholders of Glucose Health, Inc.
Opinion on the Financial Statements
We have audited the accompanying balance sheets of Glucose Health, Inc. (“the Company”) as of December 31, 2021 and 2020, and the related statements of operations, changes in stockholders’ equity (deficit), and cash flows for each of the years in the two-year period ended December 31, 2021, and the related notes (collectively referred to as the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2021 and 2020 and the results of its operations and its cash flows for each of the years in the two-year period ended December 31, 2021, in conformity with accounting principles generally accepted in the United States of America.
Going Concern
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 has an accumulated deficit, net losses, and negative cash flows from operations. These factors raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, 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.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
| F-16 |
| Table of Contents |
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.
Revenue Recognition
Description of the Critical Audit Matter
As discussed in Note 2, the Company recognizes revenue upon transfer of control of promised products to customers in an amount that reflects the consideration the Company expects to receive in exchange for those products or services.
Significant judgment is exercised by the Company in determining revenue recognition for its products, and includes the following:
| · | Identification and treatment of contract terms that may impact the timing and amount of revenue recognized. |
How the Critical Audit Matter Was Addressed in the Audit
Our principal audit procedures related to the Company's revenue recognition for these customer agreements included the following, among others:
| · | We evaluated management's significant accounting policies related to revenue recognition and reviewed underlying customer invoices for reasonableness of the application of ASC 606. |
| · | We obtained and read contract source documents for selected revenue invoices and tested management’s treatment of those terms. |
| · | We tested the mathematical accuracy of management's calculations of revenue and the associated timing of revenue recognized in the financial statements. |
Valuation of Inventory
Description of the Critical Audit Matter
As discussed in Note 2 to the financial statements, the Company periodically assess and estimates its allowances and reserves for stagnant, or obsolete inventory. At year end, the Company has recorded no allowance for obsolescence. Also discussed in Note 2 to the financial statements, the cost of inventory includes certain costs associated with preparation of inventory for resale, including packaging and other indirect overhead costs. The recognition and evaluation of inventory costs and reserves involves significant complexity and judgment in applying the relevant accounting standards when auditing management’s estimates and conclusions on inventory transactions.
How the Critical Audit Matter Was Addressed in the Audit
Our principal audit procedures to evaluate management’s calculation of capitalized inventory costs and reserves included, among other procedures, the following:
| · | We evaluated the appropriateness and consistency of management's methods and assumptions used in the identification, recognition, and measurement of the inventory costs and reserves in considering applicable generally accepted accounting standards. |
| · | We tested the significant inputs, sampled underlying transactions, and analyzed historical trends associated with management’s reserve estimates and recognition of indirect costs. |
| · | We evaluated whether management had appropriately considered new information that could significantly change the measurement or disclosure of the inventory valuation, and evaluated the disclosures related to the financial statement impacts of the transactions. |
We have served as the Company’s auditor since 2022.
Spokane, Washington | |
May 2, 2022 |
|
| F-17 |
| Table of Contents |
GLUCOSE HEALTH, INC.
BALANCE SHEETS
ASSETS | ||||||||
|
| December 31, |
|
| December 31, |
| ||
|
| 2021 |
|
| 2020 |
| ||
CURRENT ASSETS |
|
|
|
|
|
| ||
Cash |
| $ |
|
| $ |
| ||
Accounts receivable, net of allowance for doubtful accounts of $ |
|
|
|
|
|
| ||
Inventory |
|
|
|
|
|
| ||
Prepaid expenses |
|
|
|
|
|
| ||
Total current assets |
|
|
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|
|
| ||
|
|
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|
|
Other Assets |
|
|
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|
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|
|
Website domains |
|
|
|
|
|
| ||
Intellectual assets, net of accumulated amortization of $ |
|
| - |
|
|
|
| |
|
|
|
|
|
|
|
|
|
TOTAL ASSETS |
| $ |
|
| $ |
| ||
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
|
|
|
|
|
|
|
|
|
CURRENT LIABILITIES |
|
|
|
|
|
|
|
|
Accounts payable and accrued expenses |
| $ |
|
| $ |
| ||
Accrued interest |
|
|
|
|
|
| ||
Convertible note payable, related party |
|
|
|
|
|
| ||
Total current liabilities |
|
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES |
|
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
COMMITMENTS AND CONTINGENCIES |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
STOCKHOLDERS' EQUITY |
|
|
|
|
|
|
|
|
Preferred stock, Series A, $ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
December 31, 2021 and 2020, respectively |
|
|
|
|
|
| ||
Preferred stock, Series B, $ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
December 31, 2021 and 2020, respectively |
|
|
|
|
|
| ||
Preferred stock, Series C, $ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
December 31, 2021 and 2020, respectively |
|
|
|
|
|
| ||
Preferred stock, Series D, $ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
December 31, 2021 and 2020, respectively |
|
|
|
|
|
| ||
Preferred stock, Series E, $ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
December 31, 2021 and 2020, respectively |
|
|
|
|
|
| ||
Common stock, $ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
December 31, 2021 and 2020, respectively |
|
|
|
|
|
| ||
Additional paid in capital |
|
|
|
|
|
| ||
Accumulated deficit |
|
| ( | ) |
|
| ( | ) |
Total stockholders' equity |
|
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY |
| $ |
|
| $ |
| ||
The accompanying notes are an integral part of these financial statements.
| F-18 |
| Table of Contents |
GLUCOSE HEALTH INC.
STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31,
|
| 2021 |
|
| 2020 |
| ||
|
|
|
|
|
|
| ||
REVENUE, NET |
| $ |
|
| $ |
| ||
|
|
|
|
|
|
|
|
|
COST OF REVENUES |
|
|
|
|
|
|
|
|
Cost of revenues |
|
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
GROSS PROFIT |
|
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
OPERATING EXPENSES |
|
|
|
|
|
|
|
|
Selling and marketing |
|
|
|
|
|
| ||
General and administrative |
|
|
|
|
|
| ||
Professional fees |
|
|
|
|
|
| ||
Uncollectible receivables |
|
|
|
|
|
| ||
Services paid in stock |
|
|
|
|
|
| ||
Total operating expenses |
|
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
INCOME (LOSS) FROM OPERATIONS |
|
| ( | ) |
|
| ( | ) |
|
|
|
|
|
|
|
|
|
OTHER INCOME (EXPENSE) |
|
|
|
|
|
|
|
|
Interest income (expense) |
|
| ( | ) |
|
| ( | ) |
Interest income (expense), non-cash item |
|
|
|
|
| ( | ) | |
Recovery of retailer chargebacks |
|
|
|
|
|
| ||
Loss on debt settlement |
|
|
|
|
| ( | ) | |
Gain on forgiveness of accounts payable |
|
|
|
|
|
| ||
Total other expense |
|
| ( | ) |
|
|
| |
|
|
|
|
|
|
|
|
|
INCOME (LOSS) BEFORE INCOME TAXES |
|
| ( | ) |
|
| ( | ) |
|
|
|
|
|
|
|
|
|
PROVISION FOR (BENEFIT FROM) INCOME TAXES |
|
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
NET INCOME (LOSS) |
| $ | ( | ) |
| $ | ( | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING - BASIC AND DILUTED |
|
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
NET INCOME (LOSS) PER SHARE - BASIC AND DILUTED |
| $ | ( | ) |
| $ | ( | ) |
The accompanying notes are an integral part of these financial statements.
| F-19 |
| Table of Contents |
GLUCOSE HEALTH, INC.
STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020
|
| Preferred Stock, Series A |
|
| Preferred Stock, Series B - E (1) |
|
| Common Stock |
|
| Additional Paid-In |
|
| Accumulated |
|
|
|
| ||||||||||||||||||
|
| Shares |
|
| Amount |
|
| Shares |
|
| Amount |
|
| Shares |
|
| Amount |
|
| Capital |
|
| Deficit |
|
| Total |
| |||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Balance - December 31, 2019 |
|
|
|
| $ |
|
|
|
|
| $ |
|
|
|
|
| $ |
|
| $ |
|
| $ | ( | ) |
| $ | ( | ) | |||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends to preferred stock holders |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| ( | ) |
|
| ( | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares issued for cash received |
|
| - |
|
|
| - |
|
|
|
|
|
|
|
|
| - |
|
|
| - |
|
|
|
|
|
| - |
|
|
|
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares issued for settlement of notes payable |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
| - |
|
|
|
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares issued for services |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
| - |
|
|
|
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock warrant issued for services |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
|
|
|
| - |
|
|
|
| ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| ( | ) |
|
| ( | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance - December 31, 2020 |
|
|
|
| $ |
|
|
|
|
| $ |
|
|
|
|
| $ |
|
| $ |
|
| $ | ( | ) |
|
|
| ||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends to preferred stock holders |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| ( | ) |
|
| ( | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares issued for cash received |
|
| - |
|
|
| - |
|
|
|
|
|
|
|
|
| - |
|
|
| - |
|
|
|
|
|
| - |
|
|
|
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Conversion of preferred shares to common shares |
|
| - |
|
|
| - |
|
|
| ( | ) |
|
| ( | ) |
|
|
|
|
|
|
|
| - |
|
|
| - |
|
|
| - |
| ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares issued for settlement of notes payable |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
| - |
|
|
|
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares issued for services |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
| - |
|
|
|
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| ( | ) |
|
| ( | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance - December 31, 2021 |
|
|
|
| $ |
|
|
|
|
| $ |
|
|
|
|
| $ |
|
| $ |
|
| $ | ( | ) |
| $ |
| ||||||||
(1) The preferred stock Series D shares authorized, issued and outstanding have been adjusted to reflect a 10 to 1 reverse split, which was effective in March 2022.
The accompanying notes are an integral part of these financial statements.
| F-20 |
| Table of Contents |
GLUCOSE HEALTH, INC.
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31,
|
| 2021 |
|
| 2020 |
| ||
OPERATING ACTIVITIES: |
|
|
|
|
|
| ||
Net loss |
| $ | ( | ) |
| $ | ( | ) |
|
|
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Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: |
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Amortization of intangible asset |
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Allowance for doubtful accounts |
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Gain on forgiveness of accounts payable |
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Warrants issued for services |
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Common stock issued for services |
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Change in assets and liabilities |
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(Increase) decrease in accounts receivable |
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(Increase) decrease in inventory |
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Increase (decrease) in accounts payable and accrued expenses |
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Total adjustments |
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Net cash provided by (used in) operating activities |
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CASH FLOWS FROM INVESTING ACTIVITIES: |
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Purchase of website domains |
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Net cash used in investing activities |
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CASH FLOWS FROM FINANCING ACTIVITIES: |
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Payments on notes and loans payable |
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Payments on notes payable, related party |
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Dividends paid to preferred stock holders |
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Proceeds from preferred stock |
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Net cash provided by financing activities |
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NET INCREASE IN CASH |
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CASH - BEGINNING OF YEAR |
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CASH - END OF YEAR |
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SUPPLEMENTAL CASH FLOW INFORMATION: |
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Cash paid for interest |
| $ |
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| $ |
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Cash paid for income taxes |
| $ |
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NONCASH FINANCING ACTIVITIES: |
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Conversion of notes payable and accrued interest to common stock |
| $ |
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| $ |
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Conversion of Series B preferred stock to Common stock |
| $ |
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| $ |
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Issuance of common stock for prepaid marketing expense |
| $ |
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| $ |
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The accompanying notes are an integral part of these financial statements.
| F-21 |
| Table of Contents |
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - ORGANIZATION AND BASIS OF PRESENTATION
Overview
We are an own-label distributor of nutritional beverages. Our niche is the formulation, production, marketing, and distribution of soluble fiber infused nutritional beverages. On November 6, 2017, we registered the trademark GLUCODOWN® and have since launched the first soluble fiber infused, powdered iced tea, and flavored drink mixes, in North America. On September 10, 2020, we registered the trademark FIBER UP® and are currently in the early stages of developing our first ready-to-drink nutritional beverage. We were incorporated under the laws of the State of Nevada as Bio-Solutions Corp. on March 27, 2007. From inception, through the third quarter of 2014, we were engaged in various businesses which were unrelated to our current business and corporate officers. On November 19, 2014, we changed our name to Glucose Health, Inc., and our business to that of an own-label distributor of nutritional beverages.
Basis of Presentation
This summary of significant accounting policies is presented to assist in understanding the Company’s financial statements. These accounting policies conform to accounting principles, generally accepted in the United States of America (GAAP) and have been consistently applied in the preparation of the financial statements.
Going Concern
The accompanying financial statements have been prepared assuming the Company will continue as a going concern, which contemplates, among other things, the realization of assets and satisfaction of liabilities in the normal course of business. At December 31, 2021, the Company had an accumulated deficit of $
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 requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues, and expenses, and related disclosure of contingent assets and liabilities. On an ongoing basis, we evaluate our estimates, including those related to revenue recognition, bad debts, investments, intangible assets, and income taxes. Our estimates are based on historical experience and on various other assumptions that are believed to be reasonable under the circumstances. Actual results may differ from these estimates.
| F-22 |
| Table of Contents |
Cash Flow Reporting
The Company follows ASC 230, Statement of Cash Flows, for cash flow 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 at December 31, 2021, and 2020.
The Company maintains its cash balances at one financial institution that is insured by the Federal Deposit Insurance Corporation. At December 31, 2021, and 2020, $
Accounts Receivable
Accounts receivable consists of invoiced and unpaid product sales. The Company records an allowance for doubtful accounts to allow for any amounts that may not be recoverable, which is based on an analysis of the Company’s prior collection experience, customer credit worthiness, and current economic trends. At December 31, 2021, and 2020, our allowance for doubtful accounts was $
On October 4, 2016, the Company executed a non-recourse receivables financing agreement with Citibank whereby receivables due to the Company are assumed from a large customer by Citibank and paid to the Company in a shorter period than otherwise provided for in accordance with the supplier agreement with the large customer, subject to a fixed interest premium based upon LIBOR.
Inventory
Inventory is stated at the lower of cost (FIFO: first-in, first-out) or market, and includes finished goods and raw materials. The cost of finished goods includes the cost of packaging supplies, direct and indirect labor, and other indirect manufacturing costs. Inventory impairment is considered quarterly based on the expiration date of the product. At December 31, 2021, the Company had total inventory of $
Prepaid Expenses
The Company considers all items incurred for future services to be prepaid expenses. At December 31, 2021, and 2020 the Company had prepaid expenses for advertising services (Note 3).
Recoverability of Long-Lived Assets
The Company's long-lived assets and other assets are reviewed for impairment in accordance with the guidance of the ASC 350, Intangibles - Goodwill and Other, and ASC 205, Presentation of Financial Statements. The Company tests for impairment losses on long-lived assets used in operations whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. Recoverability of an asset to be held and used is measured by a comparison of the carrying amount of an asset to the future undiscounted cash flows expected to be generated by the asset. If such asset is considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the asset exceeds its fair value. Impairment evaluations involve management's estimates on asset useful lives and future cash flows. Actual useful lives and cash flows could be different from those estimated by management which could have a material effect on our reporting results and financial positions. Fair value is determined through various valuation techniques including discounted cash flow models, quoted market values and third-party independent appraisals, as considered necessary. During the years ended December 31, 2021, and 2020, the Company had not experienced impairment losses on its long-lived assets.
| F-23 |
| Table of Contents |
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 |
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|
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. |
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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, 2021. The respective carrying value of certain on-balance-sheet financial instruments approximated their fair values due to the short-term nature of these instruments.
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 (Note 5).
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. The Company has adopted ASC 740-10, and evaluates its tax positions on an annual basis, and as of December 31, 2021, 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 and the prior three fiscal years 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.
| F-24 |
| Table of Contents |
Revenue Recognition
We follow a five-step process to recognize revenue. When our customer is a retailer, we are in receipt of purchase orders which, upon our acceptance, are binding contracts to deliver our products and invoice for payment. Our performance obligations are set forth in the purchase order and some retailer customers may also require separate agreements covering additional performance obligations or terms of service. The purchase orders we receive from retailers set forth the price we are to invoice for our products upon satisfaction of the performance obligations set forth in the purchase order (or separate agreement). When a retailer’s carrier picks up our product, at a designated shipping point, legal transfer of ownership occurs upon our receipt of a signed bill of lading, from the retailer’s carrier (FOB Shipping Point). When the designated shipping point is our contracted warehouse, we consider our shipping and handling activities to be fulfillment and not promised services creating a performance obligation under ASC 606. Upon the receipt of the signed bill of lading, we then proceed to invoice the retailer and recognize revenue. For retailers whose purchase orders require shipment of product to their warehouse using our designated carrier, legal transfer of ownership occurs upon our receipt of confirmation of delivery to the retailer’s warehouse, from our carrier (FOB Destination). We also consider this fulfillment activity and not promised services creating a performance obligation. Upon receipt of confirmation of delivery from our carrier, we invoice the retailer and recognize revenue.
When we sell our product directly to an end-user customer and not a retailer, following payment by the customer, legal transfer of ownership occurs upon delivery by our designated carrier (FOB Destination). We consider this fulfillment activity and not promised services creating a performance obligation. Upon receipt of confirmation of delivery from our carrier, we recognize revenue.
Whether the customer we sell our products to is direct customer or retailer, our terms are final sale. In the case of sales through an online retailer, we are a direct seller (not a supplier) with fulfillment/customer service provided by the online retailer as our agent. However, the online retailer’s refund policy is 30 days.
When our products are sold to retailers, they may be sold on credit terms provided by us, which are established in accordance with local and industry practices, and typically require payment within 60 days of delivery, and may allow discounts for early payment. We estimate and reserve for our bad debt exposure based on our experience with past due accounts and collectability, the aging of accounts receivable and our analysis of customer data.
Advertising Expense
We promote our products and our company with television, radio, and digital advertising and with consumer incentives, such as coupons. We classify the costs to produce and schedule our advertising and the costs of consumer incentives, as advertising expenses. Advertising expenses are recorded in “Selling and marketing” and “Stock issued for services” in the accompanying statements of operations. We recorded advertising expenses of $
Share Based Compensation
The Company may issue restricted stock to officers, directors, or employees for their services. The Company measures compensation cost for all employee stock-based awards at their fair values on the date of grant. Stock-based awards issued to non-employees are measured at their fair values on the date of grant and are re-measured at each reporting period through their vesting dates, as applicable. The fair value of stock-based awards is recognized as expense over the service period, net of estimated forfeitures, using the straight-line method.
| F-25 |
| Table of Contents |
(Loss) Income Per Share of Common Stock
Basic net loss/income per common share is computed using the weighted average number of common shares outstanding. Diluted earnings per share (EPS) include additional dilution from common stock equivalents, such as stock issuable pursuant to the exercise of stock options, warrants and convertible notes. Common stock equivalents are not included in the computation of diluted earnings per share when the Company reports a loss because to do so would be anti-dilutive for periods presented.
The Company had potential dilutive securities outstanding at December 31, 2021, and 2020, as follows.
|
| Potential Additional Shares of Common Stock: |
| |||||
Potential Dilutive Securities: |
| 2021 |
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| 2020 |
| ||
Preferred stock |
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| ||
Warrants |
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Convertible debt |
|
| - |
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Total |
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| ||
The Company had total fully diluted shares of common stock (potential dilutive securities outstanding plus issued securities outstanding) of
Reclassifications
Certain prior period amounts have been reclassified to conform with the current period presentation.
Recently Issued Accounting Standards
In August 2020, the FASB issued ASU 2020-06, Debt - Debt with Conversion and Other Options (Subtopic 470- 20) and Derivatives and Hedging - Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity (“ASU 2020-06”), which simplifies the accounting for certain financial instruments with characteristics of liabilities and equity. This ASU (1) simplifies the accounting for convertible debt instruments and convertible preferred stock by removing the existing guidance in ASC 470-20, Debt: Debt with Conversion and Other Options, that requires entities to account for beneficial conversion features and cash conversion features in equity, separately from the host convertible debt or preferred stock; (2) revises the scope exception from derivative accounting in ASC 815-40 for freestanding financial instruments and embedded features that are both indexed to the issuer’s own stock and classified in stockholders’ equity, by removing certain criteria required for equity classification; and (3) revises the guidance in ASC 260, Earnings Per Share, to require entities to calculate diluted earnings per share (EPS) for convertible instruments by using the if-converted method.
In addition, entities must presume share settlement for purposes of calculating diluted EPS when an instrument may be settled in cash or shares. For SEC filers, excluding smaller reporting companies, ASU 2020-06 is effective for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020. For all other entities, ASU 2020-06 is effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. Entities should adopt the guidance as of the beginning of the fiscal year of adoption and cannot adopt the guidance in an interim reporting period. The Company is currently evaluating the impact that ASU 2020-06 may have on its financial statements and related disclosures.
| F-26 |
| Table of Contents |
During the year ended December 31, 2021, there were several new accounting pronouncements issued by the FASB. Each of these pronouncements, as applicable, has been or will be adopted by the Company. Management does not believe the adoption of any of these accounting pronouncements has had or will have a material impact on the Company’s financial statements.
NOTE 3 - STOCKHOLDER’S EQUITY
Our current authorized common and preferred shares are
As of December 31, 2021, the number of shares issued and outstanding for each respective class of stock are as follows:
Shares of common stock |
|
| par value $ | |
Shares Series A preferred stock |
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| par value $ | |
Shares Series B preferred stock |
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| stated value $ | |
Shares Series C preferred stock |
|
| stated value $ | |
Shares Series D preferred stock |
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| stated value $ | |
Shares Series E preferred stock |
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| stated value $ |
Preferred Stock
Our board of directors is empowered, upon stockholder approval, to issue shares of preferred stock with dividend, liquidation, redemption, voting or other rights which could adversely affect the voting power or other rights of the holders of Common Stock. In addition, the preferred stock could be utilized as a method of discouraging, delaying, or preventing a change in control of us.
Series A Voting Preferred Stock
For so long as any shares of Series A Voting Preferred Stock remain issued and outstanding, the holders hereof shall possess more than 50% of the voting power of the capital stock of the Corporation. The
Series B Preferred Stock
During the time that any shares of Series B Preferred Stock are issued and outstanding, the holders shall be entitled to receive, and the Company shall pay, cumulative dividends on each share of
During the year ended December 31, 2021, two Series B Preferred Stockholders elected to convert their
| F-27 |
| Table of Contents |
Series C Preferred Stock
During the time that any shares of Series C Preferred Stock are issued and outstanding, the holders shall be entitled to receive, and the Company shall pay, cumulative dividends on each share of
Series D Preferred Stock
During the time that any shares of Series D preferred stock are issued and outstanding, the holders shall be entitled to receive, and the Company shall pay, cumulative dividends on each share of
Series E Preferred Stock
During the time that any shares of Series E preferred stock are issued and outstanding, the holders shall be entitled to receive, and the Company shall pay, cumulative dividends on each share of
During the years ending December 31, 2021, and 2020, total dividends paid were $
Reclassification of Accumulated Other Comprehensive Income
During 2014, the Company ceased its prior business operations in Canada, which were unrelated to its current business and officers, creating the realization of other comprehensive income based on the foreign exchange rate. Based on FASB ASC 830-30-40, upon the sale or liquidation of an investment in a foreign entity, the amount attributable to that entity and accumulated in the translation adjustment component of equity shall be both removed from the separate component of equity and reported as part of the gain or loss on sale or liquidation of the investment. Accordingly, since the cessation happened in 2014, the Company reclassified the accumulated other comprehensive income/loss from foreign currency translation to accumulated deficit in the accompanying financial statements.
Issuances pursuant to debt conversions
During May 2020, the Company issued
| F-28 |
| Table of Contents |
During June 2021, the Company issued
Issuances pursuant to agreements
During May 2021 and June 2020, the Company issued
Warrants outstanding
During the year ended December 31, 2020, the Company issued a warrant for the purchase of
The Company estimated the fair value of the warrants based on weighted probabilities of assumptions used in the Black Scholes pricing model. The weighted average volatility for the warrants at issuance was
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| Weighted-Average |
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| Warrants |
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| Exercise Price |
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Outstanding, January 1, 2020 |
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Granted |
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Exercised |
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Expired |
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| - |
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Outstanding, December 31, 2020 |
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Outstanding, January 1, 2021 |
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Granted |
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Exercised |
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| - |
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Expired |
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Outstanding, December 31, 2021 |
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Warrants exercisable at December 31, 2021 |
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| $ |
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NOTE 4 - NOTES PAYABLE
Notes payable, related party:
During April 2019, the Company consolidated several notes issued to the Company’s CEO/CFO into a single $
| F-29 |
| Table of Contents |
Convertible notes payable, related party
The Company consolidated
Convertible notes payable:
During November 2017, the Company and a corporation entered into a debt agreement. The agreement bore interest at
Other notes payable:
During December 2013, the Company issued a $
During December 2013, the Company issued a $
During April 2012, the Company issued a $
Accrued Interest
At December 31, 2021, and 2020, accrued interest on all notes and convertible notes amounted to $-0- and $
NOTE 5 - FEDERAL INCOME TAX
The Company accounts for income taxes under ASC 740-10, which provides for an asset and liability approach of accounting for income taxes. Under this approach, deferred tax assets and liabilities are recognized based on anticipated future tax consequences, using currently enacted tax laws, attributed to temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts calculated for income tax purposes. The provision (benefit) for income taxes for the years ended December 31, 2021, and 2020 assumes a
At December 31, 2021, and 2020, the Company had approximately $
|
| 2021 |
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| 2020 |
| ||
Net operating loss carryforwards |
| $ |
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| $ |
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Temporary differences |
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| ( | ) |
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Permanent differences |
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| ( | ) |
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| ( | ) |
Valuation allowance |
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| ( | ) |
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| ( | ) |
| F-30 |
| Table of Contents |
Significant components of the Company’s deferred tax assets as of December 31, 2021, and 2020 are summarized below.
|
| 2021 |
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| 2020 |
| ||
Federal tax statutory rate |
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| % |
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| % | ||
Temporary differences |
|
| - | % |
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| % | |
Permanent differences |
|
| - | % |
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| - | % |
Valuation allowance |
|
| % |
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| - | % | |
Effective rate |
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| % |
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| % | ||
The Company provides for a valuation allowance when it is more likely than not that it will not realize a portion of the deferred tax assets. The Company has established a valuation allowance against the net deferred tax asset due to the uncertainty that enough taxable income will be generated in those taxing jurisdictions to utilize the assets. Therefore, we have not reflected any benefit of such deferred tax assets in the accompanying financial statements. Our net deferred tax asset and valuation allowance increased by $
To the extent that the tax deduction is included in a net operating loss carry forward and is in excess of amounts recognized for book purposes, no benefit will be recognized until the loss carry forward is recognized. Upon utilization and realization of the carry forward, the corresponding change in the deferred asset and valuation allowance will be recorded as additional paid-in capital.
NOTE 6 - COMMITMENTS/CONTINGENCIES
From time to time, we may be involved in litigation in the ordinary course of business. We are currently not involved in any litigation that we believe could have a material adverse effect on our financial condition or results of operations.
NOTE 7 - REVENUE CONCENTRATION and ACCOUNTS RECEIVABLE
The Company has
NOTE 8 - RECOVERY OF RETAILER CHARGEBACKS
During the year ended December 31, 2020, the Company recognized $
NOTE 9 - RELATED PARTY TRANSACTIONS
On July 1, 2021, the Company entered into a consulting agreement with a company owned by our CEO/CFO and director, Murray Fleming. The agreement provides for quarterly payments of $
| F-31 |
| Table of Contents |
NOTE 10 - SUBSEQUENT EVENTS
The Company has evaluated subsequent events from the balance sheet through the date of this filing and determined there were no events to disclose except the following.
On January 25, 2022, we entered into an investment banking agreement with EF Hutton, which contemplates the Company raising additional capital and preparing a registration statement under the Securities Act.
Effective on March 11, 2022, we filed Articles of Conversion with the Nevada Secretary of State and a Certificate of Conversion and Certificate of Incorporation with the Delaware Department of State, Division of Corporations and converted to a Delaware corporation. On March 29, 2022, we merged with a subsidiary, created on March 23, 2022, for the sole purpose of the merger, amended and restated our Certificate of Incorporation, and the surviving corporation is Glucose Health, Inc. Our authorized common shares are
On March 14, 2022, we requested and received the resignations of our two independent directors. On March 21, 2022, our third independent director voluntarily resigned. Each independent director held
On April 1, 2022, we entered into a revised consulting agreement with a company owned by our CEO/CFO and director, Murray Fleming. The agreement provides for quarterly payments of $
| F-32 |
Units
Each Unit Consisting of One Share of Common Stock and
One Warrant to Purchase One Share of Common Stock
Glucose Health, Inc.
____________________________
PROSPECTUS
____________________________
Sole Bookrunner
EF HUTTON
division of Benchmark Investments, LLC
, 2022
Through and including , 2022 (the 25th day after the date of this prospectus), all dealers effecting transactions in these securities, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to a dealer’s obligation to deliver a prospectus when acting as an underwriter and with respect to an unsold allotment or subscription.
| 74 |
| Table of Contents |
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 13. Other Expenses of Issuance and Distribution
The following table sets forth the costs and expenses payable in connection with the sale and distribution of the securities being registered. All amounts are estimated except the SEC registration fee and FINRA filing fee. Except as otherwise noted, all the expenses below will be paid by us.
Offering Expenses |
|
|
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SEC registration fee |
| $ | [*] |
|
FINRA filing fee |
| $ | [*] |
|
Legal fees and expenses |
| $ | [*] |
|
Total |
| $ | [*] |
|
Item 14. Indemnification of Directors and Officers
We are a Delaware corporation and generally governed by the Delaware General Corporation Law (the “DGCL”).
Section 102(b)(7) of the DGCL enables a corporation in its certificate of incorporation, or an amendment thereto, to eliminate or limit the personal liability of a director to the corporation or its stockholders for monetary damages for violations of the director’s fiduciary duty as a director, except (i) for any breach of the director’s duty of loyalty to the corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) pursuant to Section 174 of the DGCL (providing for director liability with respect to unlawful payment of dividends or unlawful stock purchases or redemptions) or (iv) for any transaction from which a director derived an improper personal benefit. Our A&R Charter provides for such limitation of liability.
Our Certificate of Incorporation and Bylaws provide that, to the fullest extent permitted by the DGCL, a member of the Board shall not be personally liable to the Company or its stockholders for monetary damages for breach of fiduciary duty owed to the Company its stockholders.
We maintain standard policies of insurance that provide coverage (1) to our directors and officers against loss rising from claims made by reason of breach of duty or other wrongful act, and (2) to us with respect to indemnification payments that we may make to such directors and officers.
At the present time, there is no pending litigation or proceeding involving a director, officer, employee, or other agent of ours in which indemnification would be required or permitted. We are not aware of any threatened litigation or proceeding that may result in a claim for such indemnification. Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers or persons controlling the registrant pursuant to the foregoing provisions, the registrant has been informed that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is therefore unenforceable.
Item 15. Recent Sales of Unregistered Securities
The following information is given with regard to unregistered securities sold during the preceding three years including the dates and amounts of securities sold, the persons or class of persons to whom we sold the securities, the consideration received in connection with such sales and, if the securities were issued or sold other than for cash, the description of the transaction and the type and amount of consideration received. The unregistered securities were made in reliance upon the exemptions provided by Section 3(a)(9) of the Securities Act, Section 4(a)(1) of the Securities Act, Section 4(a)(2) of the Securities Act and/or Rule 506 of Regulation D promulgated thereunder for the offer and sale of securities not involving a public offering. With respect to each transaction noted below, no general solicitation was made by either the Company or any person acting on its behalf. All securities issued were restricted securities under the Securities Act and appropriate legends were placed on the documents evidencing the securities, indicating they may not be offered or sold absent registration or pursuant to an exemption. The following transactions noted below do not reflect our planned reverse split.
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On April 1, 2019, we issued a warrant to purchase 600,000 shares of Common Stock at an exercise price of $0.10 per share to an individual upon appointment as a Company director. We recorded an expense of $94,260 based upon the $0.16 quoted price of our Common Stock. The warrant was cancelled on March 22, 2022.
On May 1, 2019, we entered into a stock purchase agreement with four investors. Pursuant to the stock purchase agreement we issued 4,000,000 shares of our Common Stock at a price of $0.05 per share and 3,466,668 shares of our Series B Preferred Stock, at a price of $0.075 per share, to the investors for consideration of an aggregate amount of $460,000.
On June 3, 2019, we issued 40,000 shares of our Common Stock to an individual for services rendered to the Company pursuant to a verbal agreement. We valued the consideration received at $6,800 based upon the $0.17 quoted price of our Common Stock.
On June 3, 2019, we issued 57,500 shares of our Common Stock to an individual for services rendered to the Company pursuant to a verbal agreement. We valued the consideration received at $9,775 based upon the $0.17 quoted price of our Common Stock.
On July 15, 2019, we issued a warrant to purchase 600,000 shares of Common Stock at an exercise price of $0.10 per share to an individual upon appointment as a Company director. We recorded an expense of $96,720 based upon the $0.16 quoted price of our Common Stock. The warrant was cancelled on March 22, 2022.
On April 30, 2020, we entered into a stock purchase agreement with four investors. Pursuant to the stock purchase agreement, we issued 866,668 shares of our Series C Preferred Stock, at a price of $0.075 per share, to the investors in consideration of an aggregate amount of $65,000.
On May 4, 2020, we issued 226,164 shares of our Common Stock pursuant to a notice of conversion of $3,392.47 principal and interest owing on a December 10, 2013, convertible promissory note issued by the Company acquired by the holder on November 1, 2017.
On June 1, 2020, we issued 200,000 shares of our Common Stock to a corporation pursuant to an agreement for advertising services. We valued the consideration received at $84,000 based upon the $0.42 quoted price of our Common Stock.
On June 10, 2020, we issued a warrant to purchase 600,000 shares of Common Stock at an exercise price of $0.10 per share to an individual upon appointment as a Company director. We recorded an expense of $440,694 based upon the $0.735 quoted price of our Common Stock. The warrant was cancelled on March 22, 2022.
On June 17, 2020, we entered into a stock purchase agreement with eight investors. Pursuant to the stock purchase agreement, we issued a total of 3,000,000 shares of our Series D Preferred Stock to the investors, at a price of $0.10 per share, in consideration of an aggregate amount of $300,000.
On February 11, 2021, we entered into stock purchase agreements with eleven investors. Pursuant to the stock purchase agreements, we issued a total of 480,000 shares of our Series E Preferred Stock to the investors, at a price of $2.00 per share, in consideration of an aggregate amount of $960,000.
On May 15, 2021, we issued 197,347 shares of our Common Stock to a corporation pursuant to an agreement for advertising services. We valued the consideration received at $412,455 based upon the $2.09 quoted price of our Common Stock.
On May 28, 2021, we converted 666,667 shares of our Series B Preferred Stock, held by a trust into 666,667 shares of our Common Stock pursuant a notice of conversion.
On June 15, 2021, we issued 690,000 shares of our Common Stock to our CEO/CFO, pursuant to a notice of conversion of $7,590 principal and interest owing on an April 1, 2016, consolidated convertible promissory note, which consolidated 18 convertible promissory notes issued by the Company prior to April 1, 2016, without additional consideration to the holder.
On June 21, 2021, we converted 666,667 shares of our Series B Preferred Stock, held by a corporation into 666,667 shares of our Common Stock pursuant to a notice of conversion.
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Item 16. Exhibits and Financial Statement Schedules
(a) | Exhibits. |
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1.1* |
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| Amended and Restated Certificate of Incorporation of Glucose Health, Inc., March 29, 2022 |
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4.1* |
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5.1* |
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101.INS |
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101.SCH |
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* To be filed by amendment.
† Executive compensation plan or arrangement
(b) | Financial statement schedules. |
No financial statement schedules are provided because the information called for is not required or is shown in the financial statements or related notes.
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Item 17. Undertakings
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than 20 percent change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement.
(iii) To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement;
(2) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.
(4) That, for the purpose of determining liability under the Securities Act to any purchaser, each prospectus filed pursuant to Rule 424(b) as part of a registration statement relating to an offering, other than registration statements relying on Rule 430B or other than prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and included in the registration statement as of the date it is first used after effectiveness. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such first use, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such date of first use.
Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-1 and has duly caused this registration statement or amendment thereto to be signed on its behalf by the undersigned, thereunto duly authorized, in Bentonville, AR, on June 1, 2022.
| Glucose Health, Inc. |
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| By: | /s/ Murray Fleming |
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| Murray Fleming |
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| Chief Executive Officer |
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Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities held on the dates indicated.
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/s/ Murray Fleming |
| Chief Executive Officer |
| June 1, 2022 |
Murray Fleming |
| (principal executive officer) and Director |
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/s/ Murray Fleming |
| Chief Financial Officer |
| June 1, 2022 |
Murray Fleming |
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| 79 |
EXHIBIT 2.1
PLAN AND AGREEMENT OF MERGER
BETWEEN
GLUCOSE HEALTH MERGER SUB, INC.
(A DELAWARE CORPORATION)
AND
GLUCOSE HEALTH, INC.
(A DELAWARE CORPORATION)
THIS PLAN AND AGREEMENT OF MERGER (this “Agreement”) is entered into as of the ____ day of March, 2022, by and between Glucose Health Merger Sub, Inc., a Delaware corporation (“Merger Sub”), and Glucose Health, Inc., a Delaware corporation (the “Company”).
ARTICLE I
THE MERGER
1.1 Merger of Merger Sub With and Into the Company. In accordance with the provisions of this Agreement and the General Corporation Law of the State of Delaware (the “DGCL”), Merger Sub will be merged with and into the Company, with the Company being the surviving entity (hereinafter sometimes referred to as the “Surviving Entity”). After the Effective Time, the Company will continue its existence as a Delaware corporation, and will conduct its business as the Surviving Entity under the name of “Glucose Health, Inc.” or such other name as the sole stockholder of the Company may determine either before or after the Effective Time. At the Effective Time, the separate corporate existence of Merger Sub will cease. The actions described in this Section 1.1 are collectively the “Merger.”
1.2 Effect of the Merger.
(a) At the Effective Time, the effect of the Merger will be as provided in the applicable provisions of the DGCL. Without limiting the generality of the foregoing, at the Effective Time, the Company will thereupon and thereafter possess all the rights, privileges, powers, franchises, patents, trademarks, licenses, registrations and other assets of every kind and description of both Merger Sub and the Company, and be subject to all the restrictions, disabilities and duties of both Merger Sub and the Company; and all of the rights, obligations, agreements and arrangements to which the stock or other securities of Merger Sub were theretofore subject will thereupon be applicable to the stock or other securities of the Company into which such stock or other securities of Merger Sub have been converted as a result of the Merger; and all the rights, privileges, powers and franchises of both Merger Sub and the Company, and all the property, real, personal and mixed, and all debts due to both Merger Sub and the Company, on whatever account as well as for subscriptions and all other things in action belonging to either Merger Sub or the Company, will be vested in the Company; and all property (real and personal), rights, privileges, powers, franchises, patents, trademarks, licenses, registrations and other assets of every kind and description of Merger Sub, and all and every other interest of Merger Sub, will be thereafter as effectually the property of the Company as they were of Merger Sub, and the title to any real estate vested in Merger Sub under any applicable laws by deed or otherwise will not revert or be in any way impaired by reason of the DGCL; but all rights of creditors and all liens upon any property of Merger Sub will be preserved unimpaired, and all debts, liabilities and duties of Merger Sub will thenceforth attach to the Company and may be enforced against the Company to the same extent as if said debts, liabilities and duties had been incurred or contracted by the Company.
| -1- |
(b) From and after the Effective Time and until altered, amended or repealed in accordance with applicable law, the Bylaws of the Company will be the Bylaws of the Company as the entity surviving the Merger.
1.3 Additional Actions. If, at any time after the Effective Time, the Company will consider or be advised that any further assignments or assurances in law or any other acts are necessary or desirable (a) to vest, perfect or confirm, of record or otherwise, in the Company, title to and possession of any property or right of Merger Sub acquired or to be acquired by reason of, in connection with, or as a result of the Merger, or (b) otherwise to carry out the purposes of this Agreement, Merger Sub and its stockholders, directors and officers will be deemed to have granted to the Company an irrevocable power of attorney to execute and deliver all such proper deeds, assignments and assurances in law and to do all acts necessary or proper to vest, perfect or confirm title to and possession of such property or rights in the Company and otherwise to carry out the purposes of this Agreement; and the officers of the Company are fully authorized in the name of Merger Sub or otherwise to take any and all such action.
1.4 Effective Time. The Merger shall be effective (the “Effective Time”) as prescribed by law.
ARTICLE II
CONVERSION OF CAPITAL STOCK
2.1 Conversion of Capital Stock.
(a) Merger Sub Capital Stock. At the Effective Time, by virtue of the Merger and without any action on the part of any of the parties hereto, each share of capital stock of Merger Sub issued and outstanding immediately prior to the Effective Time shall be cancelled without any consideration or other payment therefor.
(b) Company Capital Stock. At the Effective Time, by virtue of the Merger and without any action on the part of any of the parties hereto, each share of capital stock of the Company issued and outstanding immediately prior to the Effective Time shall remain issued and outstanding and shall not be effected by the Merger.
| -2- |
ARTICLE III
AMENDMENT AND TERMINATION
3.1 Amendment. This Agreement may be amended at any time by Merger Sub and the Company to the fullest extent permitted by law, and at any time upon the action of Merger Sub and the Company, by an amendment duly executed by the parties hereto, at any time prior to the Effective Time.
3.2 Termination. At any time prior to the Effective Time, this Agreement may be terminated and the Merger abandoned by agreement of Merger Sub and the Company. The filing of this Agreement or a Certificate of Merger with the Secretary of State of the State of Delaware will constitute certification that this Agreement has not theretofore been terminated. If terminated as provided in this Section, this Agreement will forthwith become wholly void and of no further force or effect.
ARTICLE IV
CONDITIONS
4.1 Conditions to Obligations of the Company. The obligation of the Company to consummate the Merger is subject to the fulfillment, prior to or at the Effective Time, of each of the following conditions:
(a) Stockholder Approval. This Agreement will have been approved by the duly adopted resolutions of the sole stockholder of Merger Sub.
(b) Consents. All consents, authorizations, orders or approvals of any governmental commission, board, other regulatory body or any third party required in connection with the execution, delivery and performance of this Agreement will have been obtained.
(c) Satisfaction of Conditions. Any obligations of Merger Sub to be performed pursuant to this Agreement prior to the Effective Time will have been performed in all material respects.
4.2 Conditions to Obligations of Merger Sub. The obligation of Merger Sub to consummate the Merger is subject to the fulfillment, prior to or at the Effective Time, of each of the following conditions:
(a) Board Approval. This Agreement will have been approved by the duly adopted resolutions of the board of directors of the Company.
(b) Consents. All consents, authorizations, orders or approvals of any governmental commission, board, other regulatory body or any third party required in connection with the execution, delivery and performance of this Agreement will have been obtained.
(c) Satisfaction Of Conditions. Any obligations of the Company to be performed pursuant to this Agreement prior to the Effective Time will have been performed in all material respects.
| -3- |
ARTICLE V
MISCELLANEOUS
5.1 Counterparts. This Agreement may be executed in one or more counterparts, each of which will be deemed to be an original, but all of which together will constitute one agreement.
5.2 Waiver. Any party may, at its option, extend the time for performance of any of the obligations or acts of any other party and may waive in writing any or all of the conditions contained herein to which its obligations hereunder are subject or compliance by other parties with any other matter in this Agreement.
5.3 Governing Law. This Agreement will be governed in all respects, including, but not limited to validity, interpretation, effect and performance, by the internal laws of the State of Delaware.
[The Remainder of this Page Intentionally Left Blank]
| -4- |
IN WITNESS WHEREOF, the parties hereto have executed or caused to be executed this Agreement as of the date first written above.
| Glucose Health, Inc., | |||
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| Name: | Murray Fleming | |
| Office: | Chief Executive Officer | ||
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| Glucose Health Merger Sub, Inc., |
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| a Delaware corporation |
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| Name: | Murray Fleming |
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| Office: | President |
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| -5- |
EXHIBIT 2.2
CERTIFICATE OF MERGER
OF
GLUCOSE HEALTH MERGER SUB, INC.
(a Delaware corporation)
WITH AND INTO
GLUCOSE HEALTH, INC.
(a Delaware corporation)
Pursuant to Section 251 of the General Corporation Law of the State of Delaware
The undersigned does hereby certify:
FIRST: The name of the surviving corporation is Glucose Health, Inc., a Delaware corporation, and the name of the corporation being merged into this surviving corporation is Glucose Health Merger Sub, Inc. a Delaware corporation (“Merger Sub”).
SECOND: The Agreement and Plan of Merger has been approved, adopted, certified, executed and acknowledged by the constituent corporations pursuant to Section 251 of the General Corporation Law of the State of Delaware.
THIRD: The name of the surviving corporation shall be Glucose Health, Inc. (the “Surviving Corporation”).
FOURTH: The Certificate of Incorporation of the Surviving Corporation shall be amended and restated in its entirety as set forth on Exhibit A attached hereto, as of the Effective Time (as defined below), be the Certificate of Incorporation of the Surviving Corporation.
FIFTH: The Bylaws (the “Bylaws”) of the Surviving Corporation immediately prior to the Effective Time shall, from and after the Effective Time, be the Bylaws of the Surviving Corporation.
SIXTH: The Board of Directors of the Surviving Corporation, immediately prior to the Effective Time shall, from and after the Effective Time, be the Board of Directors of the Surviving Corporation.
SEVENTH: The officers of the Surviving Corporation, immediately prior to the Effective Time shall, from and after the Effective Time, be the officers of the Surviving Corporation.
EIGHTH: The Agreement and Plan of Merger is on file at Glucose Health, Inc., 609 SW 8th Street, Suite 600, Bentonville, Arkansas 72712.
| 1 |
NINTH: A copy of the Agreement and Plan of Merger will be furnished by the surviving corporation on request, without cost, to any stockholder of the constituent corporations.
TENTH: The merger shall be effective upon the filing of this Certificate of Merger with the Secretary of State of the State of Delaware (the “Effective Time”).
[The Remainder of this Page Intentionally Left Blank]
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IN WITNESS WHEREOF, the Surviving Corporation has caused this Certificate of Merger to be executed as of the Effective Time set forth above
| GLUCOSE HEALTH, INC. | |||
| By: | /s/ Murray Fleming | ||
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| Name: | Murray Fleming | |
| Office: | Chief Executive Officer | ||
| 3 |
Exhibit A
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
GLUCOSE HEALTH, INC.
ARTICLE I
The name of the Corporation is Glucose Health, Inc. (the “Corporation”).
ARTICLE II
The address of the registered office of the Corporation in the State of Delaware is 1201 N. Market Street, Suite 2300, Wilmington, New Castle County, Delaware 19801. The name of its registered agent at such address is ATA Corporate Services, LLC.
ARTICLE III
The nature of the business or purposes to be conducted or promoted by the Corporation is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of the State of Delaware (the “DGCL”).
ARTICLE IV
The total number of shares of all classes of stock which the Corporation shall have authority to issue is 50,000,000, consisting of (a) 40,000,000 shares of Common Stock, $0.001 par value per share (“Common Stock”), and (b) 10,000,000 shares of Preferred Stock, $0.001 par value per share (“Preferred Stock”). 1,000 shares of the authorized Preferred Stock are hereby designated as “Series A Voting Preferred Stock;” 3,466,668 shares of the authorized Preferred Stock are hereby designated as “Series B Preferred Stock;” 866,668 shares of the authorized Preferred Stock are hereby designated as “Series C Preferred Stock;” 300,000 shares of the authorized Preferred Stock are hereby designated as “Series D Preferred Stock;” and 460,000 shares of the authorized Preferred Stock are hereby designated as “Series E Preferred Stock.”
Upon the filing of this Amended and Restated Certificate of Incorporation, each previously issued and outstanding share of Series D Preferred Stock shall automatically be 10-to-1 reverse stock split, with no further action required by the Corporation or any Series D Holder.
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The following is a statement of the designations and the powers, privileges and rights, and the qualifications, limitations or restrictions thereof in respect of each class of capital stock of the Corporation.
| A. | COMMON STOCK |
| 1. | General. The voting, dividend and liquidation rights of the holders of the Common Stock are subject to and qualified by the rights of the holders of the Preferred Stock of any series as may be designated by the board of directors of the Corporation (the “Board of Directors”) upon any issuance of the Preferred Stock of any series. |
| 2. | Voting. |
| i. | The holders of the Common Stock shall have voting rights at all meetings of stockholders, each such holder being entitled to one vote for each share thereof held by such holder; provided, however, that, except as otherwise required by law, holders of Common Stock shall not be entitled to vote on any amendment to this Certificate of Incorporation (which, as used herein, shall mean the certificate of incorporation of the Corporation, as amended from time to time, including the terms of any certificate of designations of any series of Preferred Stock) that relates solely to the terms of one or more outstanding series of Preferred Stock, if the holders of such affected series are entitled, either separately or together as a class with the holders of one or more other such series, to vote thereon pursuant to this Certificate of Incorporation or the DGCL. There shall be no cumulative voting in the election of directors or on any other matter. |
| ii. | Except as may otherwise be provided by applicable law, in this Certificate of Incorporation or in a Preferred Stock Designation (as defined below), the holders of shares of Common Stock shall have the exclusive right to vote for the election of directors and for all other purposes, at any meeting of stockholders, and holders of shares of Preferred Stock and any series thereof shall not be entitled to receive notice of any meeting of stockholders at which they are not otherwise entitled to vote. |
| iii. | The number of authorized shares of Common Stock may be increased or decreased (but not below the number of shares thereof then outstanding) by the affirmative vote of the holders of more than 50% of the voting power of the capital stock of the Corporation entitled to vote thereon, voting as a single class, irrespective of the provisions of Section 242(b)(2) of the DGCL. |
| 3. | Dividends. Dividends may be declared and paid on the Common Stock from funds lawfully available therefor as and when determined by the Board of Directors and subject to any preferential dividend or other rights of any then outstanding Preferred Stock and to the requirements of applicable law. |
| 4. | Liquidation. Upon the dissolution or liquidation of the Corporation, whether voluntary or involuntary, holders of Common Stock will be entitled to receive all assets of the Corporation available for distribution to its stockholders, subject to any preferential or other rights of any then-outstanding Preferred Stock. |
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| B. | PREFERRED STOCK. |
| 1. | The Preferred Stock may be issued from time to time in one or more series. The Board of Directors is expressly authorized to provide for the issuance of shares of Preferred Stock in one or more series and, by filing a certificate pursuant to the applicable law of the State of Delaware (hereinafter referred to as a “Preferred Stock Designation”), to establish from time to time the number of shares to be included in each such series, to determine the designations, powers, preferences and voting and other rights, and the qualifications, limitations and restrictions granted to or imposed upon the Preferred Stock or any wholly unissued series thereof or any holders thereof, and to increase or decrease, within the limits stated in any resolution of the Board of Directors originally fixing the number of shares constituting any series (but not below the number of such shares then outstanding), the number of shares of any such series subsequent to the issuance of shares of that series. The authority of the Board of Directors with respect to each series shall include, but not be limited to, determination of the following: |
| i. | the designation of the series, which may be by distinguishing number, letter or title; |
| ii. | the number of shares of the series, which number the Board of Directors may thereafter (except where otherwise provided in the Preferred Stock Designation) increase or decrease (but not below the number of shares thereof then outstanding); |
| iii. | the amounts payable on, and the preferences, if any, of shares of the series in respect of dividends, and whether such dividends, if any, shall be cumulative or noncumulative; |
| iv. | the dates on which dividends, if any, shall be payable in respect of shares of the series; |
| v. | the redemption rights and price or prices, if any, for shares of the series; |
| vi. | the terms and amount of any sinking fund provided for the purchase or redemption of shares of the series; |
| vii. | whether the shares of the series shall be convertible into or exchangeable for shares of any other class or series, or any other security, of the Corporation or any other corporation, and, if so, the specification of such other class or series of such other security, the conversion or exchange price or prices or rate or rates, any adjustments thereof, the date or dates at which such shares shall be convertible or exchangeable and all other terms and conditions upon which such conversion or exchange may be made; |
| viii. | the rights of the holders of the shares of such series upon the dissolution of, or upon the subsequent distribution of assets of, the Corporation; |
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| ix. | restrictions on the issuance of shares of the same series or of any other class or series; |
| x. | the voting powers, full or limited, or no voting powers, of the holders of shares of the series; and |
| xi. | the manner in which any facts ascertainable outside of this Certificate of Incorporation or the resolution or resolutions providing for the issuance of such series shall operate upon the voting powers, designations, preferences, rights, and qualifications, limitations, or restrictions of such series. |
| 2. | Dividends. |
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| i. | Series A Voting Preferred Stock. The holders of the Series A Voting Preferred Stock shall not be entitled to receive any dividends. |
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| ii. | Series B Preferred Stock. During the time that any shares of Series B Preferred Stock are issued and outstanding, the Series B Holders holding such issued and outstanding shares of Series B Preferred Stock shall be entitled to receive, and the Corporation shall pay, cumulative dividends on each share of Series B Preferred Stock at the rate of 10% of the Stated Value per annum, payable quarterly commencing on July 1, 2019, and thereafter on October 1, January 1, April 1 and July 1 of each following year (each a “Dividend Payment Date”), with any partial period to be pro-rated. Dividends shall be paid in cash and will be payable to holders of record as they appear in the stockholder records of the Corporation at the close of business on the applicable Dividend Payment Date. With respect to any given time period, no dividends shall be paid upon, or declared and set apart for, any shares of Common Stock or any other securities of the Corporation if the Board of Directors of the Corporation shall have failed duly and lawfully to declare and pay in full the cash dividend to the Series B Holders as required herein. If such dividends on the Series B Preferred Stock shall not have been paid in full for the Series B Preferred Stock, the aggregate deficiency shall be cumulative and shall be fully paid prior to the payment of any dividend by the Corporation (other than a dividend payable solely with respect to the Series B Preferred Stock) with respect to Common Stock or any other securities of the Corporation. Accumulations of dividends on the Series B Preferred Stock shall not bear interest. |
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| iii. | Series C Preferred Stock. During the time that any shares of Series C Preferred Stock are issued and outstanding, the Series C Holders holding such issued and outstanding shares of Series C Preferred Stock shall be entitled to receive, and the Corporation shall pay, cumulative dividends on each share of Series C Preferred Stock at the rate of 10% of the Stated Value per annum, payable quarterly commencing on July 1, 2020, and thereafter on each Dividend Payment Date, with any partial period to be pro-rated. Dividends shall be paid in cash and will be payable to holders of record as they appear in the stockholder records of the Corporation at the close of business on the applicable Dividend Payment Date. With respect to any given time period, no dividends shall be paid upon, or declared and set apart for, any shares of Common Stock or any other securities of the Corporation if the Board of Directors of the Corporation shall have failed duly and lawfully to declare and pay in full the cash dividend to the Series C Holders as required herein. If such dividends on the Series C Preferred Stock shall not have been paid in full for the Series C Preferred Stock, the aggregate deficiency shall be cumulative and shall be fully paid prior to the payment of any dividend by the Corporation (other than a dividend payable solely with respect to the Series C Preferred Stock) with respect to Common Stock or any other securities of the Corporation. Accumulations of dividends on the Series C Preferred Stock shall not bear interest. |
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| iv. | Series D Preferred Stock Dividends. During the time that any shares of Series D Preferred Stock are issued and outstanding, the Series D Holders holding such issued and outstanding shares of Series D Preferred Stock shall be entitled to receive, and the Corporation shall pay, cumulative dividends on each share of Series D Preferred Stock at the rate of 10% of the Stated Value per annum, payable quarterly commencing on July 1, 2020, and thereafter each Dividend Payment Date, with any partial period to be pro-rated. Dividends shall be paid in cash and will be payable to holders of record as they appear in the stockholder records of the Corporation at the close of business on the applicable Dividend Payment Date. With respect to any given time period, no dividends shall be paid upon, or declared and set apart for, any shares of Common Stock or any other securities of the Corporation if the Board of Directors of the Corporation shall have failed duly and lawfully to declare and pay in full the cash dividend to the Series D Holders as required herein. If such dividends on the Series D Preferred Stock shall not have been paid in full for the Series D Preferred Stock, the aggregate deficiency shall be cumulative and shall be fully paid prior to the payment of any dividend by the Corporation (other than a dividend payable solely with respect to the Series D Preferred Stock) with respect to Common Stock or any other securities of the Corporation. Accumulations of dividends on the Series D Preferred Stock shall not bear interest. |
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| v. | Series E Preferred Stock Dividends. During the time that any shares of Series E Preferred Stock are issued and outstanding, the Series E Holders holding such issued and outstanding shares of Series E Preferred Stock shall be entitled to receive, and the Corporation shall pay, cumulative dividends on each share of Series E Preferred Stock at the rate of 5% of the Stated Value per annum, payable quarterly commencing on April 1, 2021, and thereafter each Dividend Payment Date, with any partial period to be pro-rated. Dividends shall be paid in cash and will be payable to holders of record as they appear in the stockholder records of the Corporation at the close of business on the applicable Dividend Payment Date. With respect to any given time period, no dividends shall be paid upon, or declared and set apart for, any shares of Common Stock or any other securities of the Corporation if the Board of Directors of the Corporation shall have failed duly and lawfully to declare and pay in full the cash dividend to the Series E Holders as required herein. If such dividends on the Series E Preferred Stock shall not have been paid in full for the Series E Preferred Stock, the aggregate deficiency shall be cumulative and shall be fully paid prior to the payment of any dividend by the Corporation (other than a dividend payable solely with respect to the Series E Preferred Stock) with respect to Common Stock or any other securities of the Corporation. Accumulations of dividends on the Series E Preferred Stock shall not bear interest. |
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| 3. | Stated Value. The Stated Value of the Series B Preferred Stock is $0.075 per share. The Stated Value of the Series C Preferred Stock is $0.075 per share. The Stated Value of the Series D Preferred Stock is $1.00 per share. The Stated Value of the Series E Preferred Stock is $2.00 per share. |
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| 4. | The number of authorized shares of Preferred Stock may be increased or decreased (but not below the number of shares then outstanding) by the affirmative vote of the holders of more than 50% of the voting power of the capital stock of the Corporation entitled to vote thereon, voting as a single class, irrespective of the provisions of Section 242(b)(2) of the DGCL. |
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| 5. | Redemption Rights. The Corporation shall not have the right to redeem the Series A Voting Preferred Stock except upon receiving the consent and approval of the terms and conditions of redemption from the holders of at least 66-2/3% of all outstanding shares of Series A Voting Preferred Stock. The Corporation shall have the right, in the sole and absolute discretion of the Board of Directors and at a time of its choosing, to redeem any or all of the shares of the Series B Preferred Stock, the Series C Preferred Stock, the Series D Preferred Stock and the Series E Preferred Stock for the Stated Value of such shares, plus any accrued but unpaid Dividends. |
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| 6. | Conversion Rights. The Corporation shall not have the right to convert the Series A Voting Preferred Stock to Common Stock. The Corporation shall have the right, in its sole and absolute discretion of the Board of Directors and a time of its choosing, to convert any or all of the shares of the Series B Preferred Stock, the Series C Preferred Stock, the Series D Preferred Stock and the Series E Preferred Stock into shares of Common Stock, on a one-to-one ratio. To the extent that the shares of Preferred Stock being converted are entitled to any accrued but unpaid Dividends, the Board of Directors, in its sole and absolute discretion, may distribute shares of Common Stock in lieu of such Dividends, in such amounts as determined by dividing (x) the respective Stated Value of such shares of Preferred Stock by (y) the amount of the accrued but unpaid Dividends. |
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| 6. | Voting. The holders of Series A Voting Preferred Stock will have the voting rights described in this Section or as required by law. For so long as any shares of Series A Preferred Voting Stock remain issued and outstanding, the holders hereof shall possess more than 50% of the voting power of the capital stock of the Corporation. The Series A Voting Preferred Stock shall have the right to vote at any meeting of stockholders, or by consent pursuant to Section 228 of the DGCL, the number of votes equal to all shares of Common Stock which are then issued and outstanding, plus an additional 10,000 shares. For example, if there are 75,000,000 shares of Common Stock issued and outstanding on the day of a meeting of stockholders, the holders of Series A Voting Preferred Stock shall have the right to vote an aggregate 75,010,000 shares on all matters to be voted upon at the meeting or otherwise enacted by consent pursuant to Section 228 of the DGCL. Except as expressly required by the DGCL, no other series of Preferred Stock shall be entitled to vote on any matter. |
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| C. | REGISTERED OWNERS. The Corporation shall be entitled to treat the person in whose name any share of its stock is registered as the owner thereof for all purposes and shall not be bound to recognize any equitable or other claim to, or interest in, such share on the part of any other person, whether or not the Corporation shall have notice thereof, except as expressly provided by applicable law. |
ARTICLE V
The name and address of the incorporator is as follows:
Jennifer R. Fitzgerald
1201 N. Market Street
Suite 2300
Wilmington
New Castle County
State of Delaware, 19801
ARTICLE VI
To the fullest extent permitted by law, a director of the Corporation shall not be personally liable to the Corporation or to its stockholders for monetary damages for any breach of fiduciary duty as a director. No amendment to, modification of or repeal of this Article VI shall apply to or have any effect on the liability or alleged liability of any director of the Corporation for or with respect to any acts or omissions of such director occurring prior to such amendment.
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ARTICLE VII
The Corporation shall indemnify, advance expenses, and hold harmless, to the fullest extent permitted by applicable law as it presently exists or may hereafter be amended, any person (a “Covered Person”) who was or is made or is threatened to be made a party or is otherwise involved in any action, suit or proceeding, whether civil, criminal, administrative or investigative (a “Proceeding”), by reason of the fact that he or she, or a person for whom he or she is the legal representative, is or was a director or officer of the Corporation or, while a director or officer of the Corporation, is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation or of a partnership, joint venture, trust, enterprise or non-profit entity, including service with respect to employee benefit plans, against all liability and loss suffered and expenses (including attorneys’ fees) reasonably incurred by such Covered Person. Notwithstanding the preceding sentence, except for claims for indemnification (following the final disposition of such Proceeding) or advancement of expenses not paid in full, the Corporation shall be required to indemnify a Covered Person in connection with a Proceeding (or part thereof) commenced by such Covered Person only if the commencement of such Proceeding (or part thereof) by the Covered Person was authorized in the specific case by the Board of Directors. Any amendment, repeal or modification of this Article VII shall not adversely affect any right or protection hereunder of any person in respect of any act or omission occurring prior to the time of such repeal or modification. The rights conferred on any Covered Person by this Article VII shall not be exclusive of any other rights which such Covered Person may have or hereafter acquire under any statute, any other provision of this Certificate of Incorporation, the Bylaws, or any agreement, vote of stockholders or disinterested directors or otherwise.
ARTICLE VIII
In furtherance and not in limitation of the powers conferred by statute, the Board of Directors is expressly authorized to adopt, amend or repeal the Bylaws or adopt new Bylaws without any action on the part of the stockholders. The stockholders of the Corporation may not adopt, amend or repeal the Bylaws, or adopt any provision inconsistent therewith, unless such action is approved, in addition to any other vote required by this Certificate of Incorporation, by the affirmative vote of the holders of more than 50% of the voting power of the capital stock of the Corporation entitled to vote thereon.
ARTICLE IX
The Corporation shall have the right, subject to any express provisions or restrictions contained in this Certificate of Incorporation or the Bylaws, from time to time, to amend, alter or repeal any provision of this Certificate of Incorporation or a Preferred Stock Designation in any manner now or hereafter provided by law, upon the affirmative vote of the holders of more than 50% of the voting power of the capital stock of the Corporation entitled to vote thereon, and all rights and powers of any kind conferred upon a director or stockholder of the Corporation by this Certificate of Incorporation or any amendment thereof are conferred subject to such right.
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ARTICLE X
Any action required or permitted to be taken at any meeting of the stockholders may be taken without a meeting, and without notice of a meeting, subject to Section 228 of the DGCL, if stockholders holding more than 50% voting power of the capital stock of the Corporation consent thereto and deliver to the secretary of the Corporation, by means of mail or electronic communication, such written consent for filing with the minutes of the Corporation.
ARTICLE XI
Special meetings of stockholders may be called only by a majority of the Board of Directors, the officers, or stockholders holding more than 50% voting power of the capital stock of the Corporation. Business transacted at any special meeting of stockholders shall be limited to matters relating to the purpose or purposes stated in accordance with the Bylaws. Advance notice of stockholder nominations for the election of directors and of the proposal by stockholders of any other action to be taken by the stockholders at a meeting of stockholders shall be given in the manner provided by the Bylaws.
ARTICLE XII
Unless the Corporation consents in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware shall, to the fullest extent permitted by law, be the sole and exclusive forum for (a) any derivative action or proceeding brought on behalf of the Corporation, (b) any action asserting a claim of breach of a fiduciary duty owed by, or other wrongdoing by, any director, officer, employee or agent of the Corporation to the Corporation or the Corporation’s stockholders, creditors or other constituents, (c) any action asserting a claim arising pursuant to any provision of the DGCL or this Certificate of Incorporation or the Bylaws, (d) any action to interpret, apply, enforce or determine the validity of this Certificate of Incorporation or the Bylaws or (e) any action asserting a claim governed by the internal affairs doctrine, in each case subject to said Court of Chancery having personal jurisdiction over the indispensable parties named as defendants therein; provided that, if and only if the Court of Chancery of the State of Delaware dismisses any such action for lack of subject matter jurisdiction, such action may be brought in another state or federal court sitting in the State of Delaware. To the fullest extent permitted by applicable law, any person or entity purchasing or otherwise acquiring any interest in shares of capital stock of the Corporation shall be deemed to have notice of and consented to the provisions of this Article XII. If any provision or provisions of this Article XII shall be held to be invalid, illegal or unenforceable as applied to any person or entity or circumstance for any reason whatsoever, then, to the fullest extent permitted by law, the validity, legality and enforceability of such provisions in any other circumstance and of the remaining provisions of this Article XII (including, without limitation, each portion of any sentence of this Article XII containing any such provision held to be invalid, illegal or unenforceable that is not itself held to be invalid, illegal or unenforceable) and the application of such provision to other persons or entities and circumstances shall not in any way be affected or impaired thereby.
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ARTICLE XIII
Notwithstanding any other provisions of law, this Certificate of Incorporation or the Bylaws, and notwithstanding the fact that a lesser percentage may be specified by law, the affirmative vote of the holders of 50% of more of the voting power of the capital stock of the Corporation entitled to vote thereon, shall be required to amend or repeal, or to adopt any provision inconsistent with, this Article XIII or Article I through XII of this Certificate of Incorporation.
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EXHIBIT 3.1
EXHIBIT 3.2
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EXHIBIT 3.3
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
GLUCOSE HEALTH, INC.
ARTICLE I
The name of the Corporation is Glucose Health, Inc. (the “Corporation”).
ARTICLE II
The address of the registered office of the Corporation in the State of Delaware is 1201 N. Market Street, Suite 2300, Wilmington, New Castle County, Delaware 19801. The name of its registered agent at such address is ATA Corporate Services, LLC.
ARTICLE III
The nature of the business or purposes to be conducted or promoted by the Corporation is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of the State of Delaware (the “DGCL”).
ARTICLE IV
The total number of shares of all classes of stock which the Corporation shall have authority to issue is 50,000,000, consisting of (a) 40,000,000 shares of Common Stock, $0.001 par value per share (“Common Stock”), and (b) 10,000,000 shares of Preferred Stock, $0.001 par value per share (“Preferred Stock”). 1,000 shares of the authorized Preferred Stock are hereby designated as “Series A Voting Preferred Stock;” 3,466,668 shares of the authorized Preferred Stock are hereby designated as “Series B Preferred Stock;” 866,668 shares of the authorized Preferred Stock are hereby designated as “Series C Preferred Stock;” 300,000 shares of the authorized Preferred Stock are hereby designated as “Series D Preferred Stock;” and 460,000 shares of the authorized Preferred Stock are hereby designated as “Series E Preferred Stock.”
Upon the filing of this Amended and Restated Certificate of Incorporation, each previously issued and outstanding share of Series D Preferred Stock shall automatically be 10-to-1 reverse stock split, with no further action required by the Corporation or any Series D Holder.
The following is a statement of the designations and the powers, privileges and rights, and the qualifications, limitations or restrictions thereof in respect of each class of capital stock of the Corporation.
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| A. | COMMON STOCK |
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| 1. | General. The voting, dividend and liquidation rights of the holders of the Common Stock are subject to and qualified by the rights of the holders of the Preferred Stock of any series as may be designated by the board of directors of the Corporation (the “Board of Directors”) upon any issuance of the Preferred Stock of any series. |
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| 2. | Voting. |
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| i. | The holders of the Common Stock shall have voting rights at all meetings of stockholders, each such holder being entitled to one vote for each share thereof held by such holder; provided, however, that, except as otherwise required by law, holders of Common Stock shall not be entitled to vote on any amendment to this Certificate of Incorporation (which, as used herein, shall mean the certificate of incorporation of the Corporation, as amended from time to time, including the terms of any certificate of designations of any series of Preferred Stock) that relates solely to the terms of one or more outstanding series of Preferred Stock, if the holders of such affected series are entitled, either separately or together as a class with the holders of one or more other such series, to vote thereon pursuant to this Certificate of Incorporation or the DGCL. There shall be no cumulative voting in the election of directors or on any other matter. |
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| ii. | Except as may otherwise be provided by applicable law, in this Certificate of Incorporation or in a Preferred Stock Designation (as defined below), the holders of shares of Common Stock shall have the exclusive right to vote for the election of directors and for all other purposes, at any meeting of stockholders, and holders of shares of Preferred Stock and any series thereof shall not be entitled to receive notice of any meeting of stockholders at which they are not otherwise entitled to vote. |
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| iii. | The number of authorized shares of Common Stock may be increased or decreased (but not below the number of shares thereof then outstanding) by the affirmative vote of the holders of more than 50% of the voting power of the capital stock of the Corporation entitled to vote thereon, voting as a single class, irrespective of the provisions of Section 242(b)(2) of the DGCL. |
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| 3. | Dividends. Dividends may be declared and paid on the Common Stock from funds lawfully available therefor as and when determined by the Board of Directors and subject to any preferential dividend or other rights of any then outstanding Preferred Stock and to the requirements of applicable law. |
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| 4. | Liquidation. Upon the dissolution or liquidation of the Corporation, whether voluntary or involuntary, holders of Common Stock will be entitled to receive all assets of the Corporation available for distribution to its stockholders, subject to any preferential or other rights of any then-outstanding Preferred Stock.
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| B. | PREFERRED STOCK. |
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| 1. | The Preferred Stock may be issued from time to time in one or more series. The Board of Directors is expressly authorized to provide for the issuance of shares of Preferred Stock in one or more series and, by filing a certificate pursuant to the applicable law of the State of Delaware (hereinafter referred to as a “Preferred Stock Designation”), to establish from time to time the number of shares to be included in each such series, to determine the designations, powers, preferences and voting and other rights, and the qualifications, limitations and restrictions granted to or imposed upon the Preferred Stock or any wholly unissued series thereof or any holders thereof, and to increase or decrease, within the limits stated in any resolution of the Board of Directors originally fixing the number of shares constituting any series (but not below the number of such shares then outstanding), the number of shares of any such series subsequent to the issuance of shares of that series. The authority of the Board of Directors with respect to each series shall include, but not be limited to, determination of the following: |
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| i. | the designation of the series, which may be by distinguishing number, letter or title; |
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| ii. | the number of shares of the series, which number the Board of Directors may thereafter (except where otherwise provided in the Preferred Stock Designation) increase or decrease (but not below the number of shares thereof then outstanding); |
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| iii. | the amounts payable on, and the preferences, if any, of shares of the series in respect of dividends, and whether such dividends, if any, shall be cumulative or noncumulative; |
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| iv. | the dates on which dividends, if any, shall be payable in respect of shares of the series; |
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| v. | the redemption rights and price or prices, if any, for shares of the series; |
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| vi. | the terms and amount of any sinking fund provided for the purchase or redemption of shares of the series; |
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| vii. | whether the shares of the series shall be convertible into or exchangeable for shares of any other class or series, or any other security, of the Corporation or any other corporation, and, if so, the specification of such other class or series of such other security, the conversion or exchange price or prices or rate or rates, any adjustments thereof, the date or dates at which such shares shall be convertible or exchangeable and all other terms and conditions upon which such conversion or exchange may be made; |
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| viii. | the rights of the holders of the shares of such series upon the dissolution of, or upon the subsequent distribution of assets of, the Corporation; |
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| ix. | restrictions on the issuance of shares of the same series or of any other class or series; |
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| x. | the voting powers, full or limited, or no voting powers, of the holders of shares of the series; and |
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| xi. | the manner in which any facts ascertainable outside of this Certificate of Incorporation or the resolution or resolutions providing for the issuance of such series shall operate upon the voting powers, designations, preferences, rights, and qualifications, limitations, or restrictions of such series. |
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| 2. | Dividends. |
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| i. | Series A Voting Preferred Stock. The holders of the Series A Voting Preferred Stock shall not be entitled to receive any dividends. |
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| ii. | Series B Preferred Stock. During the time that any shares of Series B Preferred Stock are issued and outstanding, the Series B Holders holding such issued and outstanding shares of Series B Preferred Stock shall be entitled to receive, and the Corporation shall pay, cumulative dividends on each share of Series B Preferred Stock at the rate of 10% of the Stated Value per annum, payable quarterly commencing on July 1, 2019, and thereafter on October 1, January 1, April 1 and July 1 of each following year (each a “Dividend Payment Date”), with any partial period to be pro-rated. Dividends shall be paid in cash and will be payable to holders of record as they appear in the stockholder records of the Corporation at the close of business on the applicable Dividend Payment Date. With respect to any given time period, no dividends shall be paid upon, or declared and set apart for, any shares of Common Stock or any other securities of the Corporation if the Board of Directors of the Corporation shall have failed duly and lawfully to declare and pay in full the cash dividend to the Series B Holders as required herein. If such dividends on the Series B Preferred Stock shall not have been paid in full for the Series B Preferred Stock, the aggregate deficiency shall be cumulative and shall be fully paid prior to the payment of any dividend by the Corporation (other than a dividend payable solely with respect to the Series B Preferred Stock) with respect to Common Stock or any other securities of the Corporation. Accumulations of dividends on the Series B Preferred Stock shall not bear interest. |
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| iii. | Series C Preferred Stock. During the time that any shares of Series C Preferred Stock are issued and outstanding, the Series C Holders holding such issued and outstanding shares of Series C Preferred Stock shall be entitled to receive, and the Corporation shall pay, cumulative dividends on each share of Series C Preferred Stock at the rate of 10% of the Stated Value per annum, payable quarterly commencing on July 1, 2020, and thereafter on each Dividend Payment Date, with any partial period to be pro-rated. Dividends shall be paid in cash and will be payable to holders of record as they appear in the stockholder records of the Corporation at the close of business on the applicable Dividend Payment Date. With respect to any given time period, no dividends shall be paid upon, or declared and set apart for, any shares of Common Stock or any other securities of the Corporation if the Board of Directors of the Corporation shall have failed duly and lawfully to declare and pay in full the cash dividend to the Series C Holders as required herein. If such dividends on the Series C Preferred Stock shall not have been paid in full for the Series C Preferred Stock, the aggregate deficiency shall be cumulative and shall be fully paid prior to the payment of any dividend by the Corporation (other than a dividend payable solely with respect to the Series C Preferred Stock) with respect to Common Stock or any other securities of the Corporation. Accumulations of dividends on the Series C Preferred Stock shall not bear interest. |
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| iv. | Series D Preferred Stock Dividends. During the time that any shares of Series D Preferred Stock are issued and outstanding, the Series D Holders holding such issued and outstanding shares of Series D Preferred Stock shall be entitled to receive, and the Corporation shall pay, cumulative dividends on each share of Series D Preferred Stock at the rate of 10% of the Stated Value per annum, payable quarterly commencing on July 1, 2020, and thereafter each Dividend Payment Date, with any partial period to be pro-rated. Dividends shall be paid in cash and will be payable to holders of record as they appear in the stockholder records of the Corporation at the close of business on the applicable Dividend Payment Date. With respect to any given time period, no dividends shall be paid upon, or declared and set apart for, any shares of Common Stock or any other securities of the Corporation if the Board of Directors of the Corporation shall have failed duly and lawfully to declare and pay in full the cash dividend to the Series D Holders as required herein. If such dividends on the Series D Preferred Stock shall not have been paid in full for the Series D Preferred Stock, the aggregate deficiency shall be cumulative and shall be fully paid prior to the payment of any dividend by the Corporation (other than a dividend payable solely with respect to the Series D Preferred Stock) with respect to Common Stock or any other securities of the Corporation. Accumulations of dividends on the Series D Preferred Stock shall not bear interest. |
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| v. | Series E Preferred Stock Dividends. During the time that any shares of Series E Preferred Stock are issued and outstanding, the Series E Holders holding such issued and outstanding shares of Series E Preferred Stock shall be entitled to receive, and the Corporation shall pay, cumulative dividends on each share of Series E Preferred Stock at the rate of 5% of the Stated Value per annum, payable quarterly commencing on April 1, 2021, and thereafter each Dividend Payment Date, with any partial period to be pro-rated. Dividends shall be paid in cash and will be payable to holders of record as they appear in the stockholder records of the Corporation at the close of business on the applicable Dividend Payment Date. With respect to any given time period, no dividends shall be paid upon, or declared and set apart for, any shares of Common Stock or any other securities of the Corporation if the Board of Directors of the Corporation shall have failed duly and lawfully to declare and pay in full the cash dividend to the Series E Holders as required herein. If such dividends on the Series E Preferred Stock shall not have been paid in full for the Series E Preferred Stock, the aggregate deficiency shall be cumulative and shall be fully paid prior to the payment of any dividend by the Corporation (other than a dividend payable solely with respect to the Series E Preferred Stock) with respect to Common Stock or any other securities of the Corporation. Accumulations of dividends on the Series E Preferred Stock shall not bear interest. |
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| 3. | Stated Value. The Stated Value of the Series B Preferred Stock is $0.075 per share. The Stated Value of the Series C Preferred Stock is $0.075 per share. The Stated Value of the Series D Preferred Stock is $1.00 per share. The Stated Value of the Series E Preferred Stock is $2.00 per share. |
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| 4. | The number of authorized shares of Preferred Stock may be increased or decreased (but not below the number of shares then outstanding) by the affirmative vote of the holders of more than 50% of the voting power of the capital stock of the Corporation entitled to vote thereon, voting as a single class, irrespective of the provisions of Section 242(b)(2) of the DGCL. |
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| 5. | Redemption Rights. The Corporation shall not have the right to redeem the Series A Voting Preferred Stock except upon receiving the consent and approval of the terms and conditions of redemption from the holders of at least 66-2/3% of all outstanding shares of Series A Voting Preferred Stock. The Corporation shall have the right, in the sole and absolute discretion of the Board of Directors and at a time of its choosing, to redeem any or all of the shares of the Series B Preferred Stock, the Series C Preferred Stock, the Series D Preferred Stock and the Series E Preferred Stock for the Stated Value of such shares, plus any accrued but unpaid Dividends. |
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| 6. | Conversion Rights. The Corporation shall not have the right to convert the Series A Voting Preferred Stock to Common Stock. The Corporation shall have the right, in its sole and absolute discretion of the Board of Directors and a time of its choosing, to convert any or all of the shares of the Series B Preferred Stock, the Series C Preferred Stock, the Series D Preferred Stock and the Series E Preferred Stock into shares of Common Stock, on a one-to-one ratio. To the extent that the shares of Preferred Stock being converted are entitled to any accrued but unpaid Dividends, the Board of Directors, in its sole and absolute discretion, may distribute shares of Common Stock in lieu of such Dividends, in such amounts as determined by dividing (x) the respective Stated Value of such shares of Preferred Stock by (y) the amount of the accrued but unpaid Dividends. |
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| 6. | Voting. The holders of Series A Voting Preferred Stock will have the voting rights described in this Section or as required by law. For so long as any shares of Series A Preferred Voting Stock remain issued and outstanding, the holders hereof shall possess more than 50% of the voting power of the capital stock of the Corporation. The Series A Voting Preferred Stock shall have the right to vote at any meeting of stockholders, or by consent pursuant to Section 228 of the DGCL, the number of votes equal to all shares of Common Stock which are then issued and outstanding, plus an additional 10,000 shares. For example, if there are 75,000,000 shares of Common Stock issued and outstanding on the day of a meeting of stockholders, the holders of Series A Voting Preferred Stock shall have the right to vote an aggregate 75,010,000 shares on all matters to be voted upon at the meeting or otherwise enacted by consent pursuant to Section 228 of the DGCL. Except as expressly required by the DGCL, no other series of Preferred Stock shall be entitled to vote on any matter. |
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| C. | REGISTERED OWNERS. The Corporation shall be entitled to treat the person in whose name any share of its stock is registered as the owner thereof for all purposes and shall not be bound to recognize any equitable or other claim to, or interest in, such share on the part of any other person, whether or not the Corporation shall have notice thereof, except as expressly provided by applicable law. |
ARTICLE V
The name and address of the incorporator is as follows:
Murray Fleming
Glucose Health, Inc.
609 SW 8th Street
Suite 600
Bentonville, Arkansas 72712
ARTICLE VI
To the fullest extent permitted by law, a director of the Corporation shall not be personally liable to the Corporation or to its stockholders for monetary damages for any breach of fiduciary duty as a director. No amendment to, modification of or repeal of this Article VI shall apply to or have any effect on the liability or alleged liability of any director of the Corporation for or with respect to any acts or omissions of such director occurring prior to such amendment.
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ARTICLE VII
The Corporation shall indemnify, advance expenses, and hold harmless, to the fullest extent permitted by applicable law as it presently exists or may hereafter be amended, any person (a “Covered Person”) who was or is made or is threatened to be made a party or is otherwise involved in any action, suit or proceeding, whether civil, criminal, administrative or investigative (a “Proceeding”), by reason of the fact that he or she, or a person for whom he or she is the legal representative, is or was a director or officer of the Corporation or, while a director or officer of the Corporation, is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation or of a partnership, joint venture, trust, enterprise or non-profit entity, including service with respect to employee benefit plans, against all liability and loss suffered and expenses (including attorneys’ fees) reasonably incurred by such Covered Person. Notwithstanding the preceding sentence, except for claims for indemnification (following the final disposition of such Proceeding) or advancement of expenses not paid in full, the Corporation shall be required to indemnify a Covered Person in connection with a Proceeding (or part thereof) commenced by such Covered Person only if the commencement of such Proceeding (or part thereof) by the Covered Person was authorized in the specific case by the Board of Directors. Any amendment, repeal or modification of this Article VII shall not adversely affect any right or protection hereunder of any person in respect of any act or omission occurring prior to the time of such repeal or modification. The rights conferred on any Covered Person by this Article VII shall not be exclusive of any other rights which such Covered Person may have or hereafter acquire under any statute, any other provision of this Certificate of Incorporation, the Bylaws, or any agreement, vote of stockholders or disinterested directors or otherwise.
ARTICLE VIII
In furtherance and not in limitation of the powers conferred by statute, the Board of Directors is expressly authorized to adopt, amend or repeal the Bylaws or adopt new Bylaws without any action on the part of the stockholders. The stockholders of the Corporation may not adopt, amend or repeal the Bylaws, or adopt any provision inconsistent therewith, unless such action is approved, in addition to any other vote required by this Certificate of Incorporation, by the affirmative vote of the holders of more than 50% of the voting power of the capital stock of the Corporation entitled to vote thereon.
ARTICLE IX
The Corporation shall have the right, subject to any express provisions or restrictions contained in this Certificate of Incorporation or the Bylaws, from time to time, to amend, alter or repeal any provision of this Certificate of Incorporation or a Preferred Stock Designation in any manner now or hereafter provided by law, upon the affirmative vote of the holders of more than 50% of the voting power of the capital stock of the Corporation entitled to vote thereon, and all rights and powers of any kind conferred upon a director or stockholder of the Corporation by this Certificate of Incorporation or any amendment thereof are conferred subject to such right.
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ARTICLE X
Any action required or permitted to be taken at any meeting of the stockholders may be taken without a meeting, and without notice of a meeting, subject to Section 228 of the DGCL, if stockholders holding more than 50% voting power of the capital stock of the Corporation consent thereto and deliver to the secretary of the Corporation, by means of mail or electronic communication, such written consent for filing with the minutes of the Corporation.
ARTICLE XI
Special meetings of stockholders may be called only by a majority of the Board of Directors, the officers, or stockholders holding more than 50% voting power of the capital stock of the Corporation. Business transacted at any special meeting of stockholders shall be limited to matters relating to the purpose or purposes stated in accordance with the Bylaws. Advance notice of stockholder nominations for the election of directors and of the proposal by stockholders of any other action to be taken by the stockholders at a meeting of stockholders shall be given in the manner provided by the Bylaws.
ARTICLE XII
Unless the Corporation consents in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware shall, to the fullest extent permitted by law, be the sole and exclusive forum for (a) any derivative action or proceeding brought on behalf of the Corporation, (b) any action asserting a claim of breach of a fiduciary duty owed by, or other wrongdoing by, any director, officer, employee or agent of the Corporation to the Corporation or the Corporation’s stockholders, creditors or other constituents, (c) any action asserting a claim arising pursuant to any provision of the DGCL or this Certificate of Incorporation or the Bylaws, (d) any action to interpret, apply, enforce or determine the validity of this Certificate of Incorporation or the Bylaws or (e) any action asserting a claim governed by the internal affairs doctrine, in each case subject to said Court of Chancery having personal jurisdiction over the indispensable parties named as defendants therein; provided that, if and only if the Court of Chancery of the State of Delaware dismisses any such action for lack of subject matter jurisdiction, such action may be brought in another state or federal court sitting in the State of Delaware. To the fullest extent permitted by applicable law, any person or entity purchasing or otherwise acquiring any interest in shares of capital stock of the Corporation shall be deemed to have notice of and consented to the provisions of this Article XII. If any provision or provisions of this Article XII shall be held to be invalid, illegal or unenforceable as applied to any person or entity or circumstance for any reason whatsoever, then, to the fullest extent permitted by law, the validity, legality and enforceability of such provisions in any other circumstance and of the remaining provisions of this Article XII (including, without limitation, each portion of any sentence of this Article XII containing any such provision held to be invalid, illegal or unenforceable that is not itself held to be invalid, illegal or unenforceable) and the application of such provision to other persons or entities and circumstances shall not in any way be affected or impaired thereby.
ARTICLE XIII
Notwithstanding any other provisions of law, this Certificate of Incorporation or the Bylaws, and notwithstanding the fact that a lesser percentage may be specified by law, the affirmative vote of the holders of 50% of more of the voting power of the capital stock of the Corporation entitled to vote thereon, shall be required to amend or repeal, or to adopt any provision inconsistent with, this Article XIII or Article I through XII of this Certificate of Incorporation.
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EXHIBIT 3.4
AMENDED AND RESTATED
BYLAWS
OF
GLUCOSE HEALTH, INC.
(a Delaware corporation)
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ARTICLE I
CORPORATE OFFICES
1.1 REGISTERED OFFICE.
The registered office of Glucose Health, Inc. (the “Corporation”) shall be fixed in the Corporation’s certificate of incorporation, as the same may be amended from time to time (the “Certificate of Incorporation”).
1.2 OTHER OFFICES.
The Corporation’s board of directors (the “Board”) may at any time establish other offices at any place or places where the Corporation is qualified to do business.
ARTICLE II
MEETINGS OF STOCKHOLDERS
2.1 PLACE OF MEETINGS.
Meetings of stockholders may be held at any place, within or outside the State of Delaware, designated by the Board. The Board may, in its sole discretion, determine that a meeting of stockholders may not be held at any place, but may instead be held solely by means of remote communication as authorized by Section 211(a)(2) of the General Corporation Law of the State of Delaware (the “DGCL”).
2.2 ANNUAL MEETING.
The Board shall designate the date and time of the annual meeting. At the annual meeting, directors may be elected and other business properly brought before the meeting in accordance with Section 2.4 of these bylaws (the “Bylaws”) may be transacted.
2.3 SPECIAL MEETING.
A special meeting of the stockholders may be called at any time by a majority of the Board, an officer or officers, and any stockholder(s) holding more than 50% in voting power of the capital stock of the Corporation entitled to vote at the special meeting, including any preferred shares of capital stock so designated.
2.4 NOTICE PROCEDURES FOR BUSINESS BROUGHT BEFORE A MEETING.
(a) At an annual meeting of the stockholders, only such business shall be conducted as shall have been properly brought before the meeting. To be properly brought before the meeting, business must be (i) brought before the meeting by or at the direction of the Board, or (ii) properly brought before the meeting by a stockholder who (A) was a stockholder of record of the Corporation, and (B) is entitled to vote at the meeting, and (C) has complied with this Section 2.4 as to such business. Stockholders seeking to nominate persons for election to the Board must comply with Section 2.5 of these Bylaws, and this Section 2.4 shall not be applicable to nominations except as expressly provided in Section 2.5 of these Bylaws.
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(b) Without qualification, for business to be properly brought before an annual meeting by a stockholder, the stockholder must (i) provide timely notice (as defined below) thereof in writing or by means of electronic transmission, and in proper form, to the secretary of the Corporation and (ii) provide any updates or supplements to such notice at the times and in the forms required by this Section 2.4. To be timely, a stockholder’s notice must be received, by the secretary of the Corporation not less than fifteen days prior to the annual meeting.
(c) To be in proper form for purposes of this Section 2.4, a stockholder’s notice to the secretary of the Corporation shall set forth:
(i) As to each item of business that the stockholder proposes to bring before the annual meeting, (A) a reasonably brief description of the business desired to be brought before the annual meeting, the reasons for conducting such business at the annual meeting and any material interest in such business of each stockholder, (B) the text of the proposal or business (including, without limitation, the text of any resolutions proposed for consideration and in the event that such business includes a proposal to amend the Bylaws of the Corporation, the language of the proposed amendment), (C) a reasonably detailed description of all agreements, arrangements and understandings between or among any of the stockholders or between or among any other person or entity (including, without limitation, their names) in connection with the proposal of such business by such stockholder, (D) a representation that the stockholder is a holder of record of stock of the Corporation entitled to vote at such meeting and intends to appear in person or by proxy at the meeting to propose such business.
(d) The foregoing notice requirements of this Section 2.4 shall be deemed satisfied by a stockholder with respect to business other than a nomination if the stockholder has notified the secretary of the Corporation of his, her or its intention to present a proposal at an annual meeting in compliance with applicable rules and regulations promulgated under the Exchange Act and such stockholder’s proposal has been included in a proxy statement that has been prepared by the Corporation to solicit proxies for such annual meeting. Nothing in this Section 2.4 shall be deemed to affect the rights of stockholders to request inclusion of proposals in the Corporation’s proxy statement pursuant to Rule 14a-8 under the Exchange Act.
(e) Notwithstanding the foregoing provisions of this Section 2.4, unless otherwise required by law, if the stockholder (or a qualified representative of the stockholder) does not appear at the annual meeting to present proposed business, such proposed business shall not be transacted, notwithstanding that proxies in respect of such vote may have been received by the Corporation. For purposes of this Section 2.4, to be considered a qualified representative of the stockholder, a person must be a duly authorized officer, manager or partner of such stockholder or must be authorized by a writing executed by such stockholder or an electronic transmission delivered by such stockholder to act for such stockholder as proxy at the annual meeting and such person must produce such writing or electronic transmission, or a reliable reproduction of the writing or electronic transmission, at the annual meeting.
2.5 NOTICE PROCEDURES FOR NOMINATIONS OF DIRECTORS.
(a) Nominations of any person for election to the Board at an annual meeting or at a special meeting may be made at such meeting only (i) by or at the direction of the Board, or (ii) by a stockholder who (A) was a stockholder of record of the Corporation (and, with respect to any beneficial owner, if different, on whose behalf such nomination is proposed to be made, only if such beneficial owner was the beneficial owner of shares of the Corporation) both at the time of giving the notice provided for in this Section 2.5 and at the time of the meeting, (B) is entitled to vote at the meeting, and (C) has complied with this Section 2.5 as to such nomination.
(b) Without qualification, for a stockholder to make any nomination of a person or persons for election to the Board at an annual meeting, the stockholder must (i) provide timely notice (as defined in Section 2.4 of these Bylaws) thereof in writing or by means of electronic communication and in proper form to the secretary of the Corporation.
(c) Without qualification, if the election of directors is a matter specified in the notice of meeting given by or at the direction of the person calling such special meeting, then for a stockholder to make any nomination of a person or persons for election to the Board at a special meeting, the stockholder must (i) provide timely notice thereof in writing and in proper form to the secretary of the Corporation. To be timely, a stockholder’s notice for nominations to be made at a special meeting must be delivered in writing by means of electronic communication, or mailed, and received by, the secretary of the Corporation fifteen days prior to such special meeting
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(d) In addition to the requirements of this Section 2.5 with respect to any nomination proposed to be made at a meeting, each person making such nomination(s) shall comply with all applicable requirements of the Exchange Act with respect to any such nominations.
(e) Notwithstanding the foregoing provisions of this Section 2.5, unless otherwise required by law, if the stockholder (or a qualified representative of the stockholder) does not appear at the meeting to present the proposed nomination, such proposed nomination shall not be considered, notwithstanding that proxies in respect of such vote may have been received by the Corporation. For purposes of this Section 2.5, to be considered a qualified representative of the stockholder, a person must be a duly authorized officer, manager or partner of such stockholder or must be authorized by a writing executed by such stockholder or an electronic transmission delivered by such stockholder to act for such stockholder as proxy at the meeting of stockholders and such person must produce such writing or electronic transmission, or a reliable reproduction of the writing or electronic transmission, at the meeting.
2.6 NOTICE OF STOCKHOLDERS’ MEETINGS.
Unless otherwise provided by law, the Certificate of Incorporation or these Bylaws, the notice of any meeting of stockholders shall be sent or otherwise given in accordance with either Section 2.7 or Section 8.1 of these Bylaws not less than fifteen (15) days before the date of the meeting to each stockholder entitled to vote at such meeting as of the record date for determining the stockholders entitled to notice of the meeting. The notice shall specify the place, if any, date and hour of the meeting, the record date for determining the stockholders entitled to vote at the meeting (if such date is different from the record date for stockholders entitled to notice of the meeting), the means of remote communication, if any, by which stockholders and proxy holders may be deemed to be present in person and vote at such meeting, and, in the case of a special meeting, the purpose or purposes for which the meeting is called.
2.7 MANNER OF GIVING NOTICE; AFFIDAVIT OF NOTICE.
Notice of any meeting of stockholders shall be deemed given:
(a) if mailed, when deposited in the United States mail, postage prepaid, directed to the stockholder at such stockholder’s address as it appears on the Corporation’s records; or
(b) if electronically transmitted as provided in Section 8.1 of these Bylaws.
An affidavit of the secretary of the Corporation or of the transfer agent or any other agent of the Corporation that the notice has been given by mail or by a form of electronic transmission, as applicable, shall, in the absence of fraud, be prima facie evidence of the facts stated therein.
2.8 QUORUM.
Unless otherwise provided by law, the Certificate of Incorporation or these Bylaws, the holders of a majority in voting power of the capital stock issued and outstanding and entitled to vote, present in person, or by remote communication, if applicable, or represented by proxy, shall constitute a quorum for the transaction of business at all meetings of the stockholders. A quorum, once established at a meeting shall not be broken by the withdrawal of enough votes to leave less than a quorum. If, however, a quorum is not present or represented at any meeting of the stockholders, then either (a) the chairperson of the meeting or (b) a majority in voting power of the stockholders entitled to vote thereon, present in person, or by remote communication, if applicable, or represented by proxy, shall have power to adjourn the meeting from time to time in the manner provided in Section 2.9 of these Bylaws until a quorum is present or represented. At such adjourned meeting at which a quorum is present or represented, any business may be transacted that might have been transacted at the meeting as originally noticed.
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2.9 ADJOURNED MEETING; NOTICE.
When a meeting is adjourned to another time or place, unless these Bylaws otherwise require, notice need not be given of the adjourned meeting if the time, place, if any, thereof, and the means of remote communications, if any, by which stockholders and proxy holders may be deemed to be present in person and vote at such adjourned meeting are announced at the meeting at which the adjournment is taken. At the adjourned meeting, the Corporation may transact any business which might have been transacted at the original meeting.
2.10 CONDUCT OF BUSINESS.
Except to the extent inconsistent with such rules and regulations as adopted by the Board, the person presiding over any meeting of stockholders shall have the right and authority to convene and (for any or no reason) to recess and/or adjourn the meeting, to prescribe such rules, regulations and procedures (which need not be in writing) and to do all such acts as, in the judgment of such presiding person, are appropriate for the proper conduct of the meeting. The presiding person at any meeting of stockholders, in addition to making any other determinations that may be appropriate to the conduct of the meeting (including, without limitation, determinations with respect to the administration and/or interpretation of any of the rules, regulations or procedures of the meeting, whether adopted by the Board or prescribed by the person presiding over the meeting), shall, if the facts warrant, determine and declare to the meeting that a matter or business was not properly brought before the meeting and if such presiding person should so determine, such presiding person shall so declare to the meeting and any such matter or business not properly brought before the meeting shall not be transacted or considered. Unless and to the extent determined by the Board or the person presiding over the meeting, meetings of stockholders shall not be required to be held in accordance with the rules of parliamentary procedure.
2.11 VOTING.
The stockholders entitled to vote at any meeting of stockholders shall be determined in accordance with the provisions of Section of these Bylaws, subject to Section 217 (relating to voting rights of fiduciaries, pledgors and joint owners of stock) and Section 218 (relating to voting trusts and other voting agreements) of the DGCL.
Except as may be otherwise provided in the Certificate of Incorporation or these Bylaws, each stockholder shall be entitled to one (1) vote for each share of capital stock held by such stockholder and registered in such stockholder’s name on the books of the Corporation on the date fixed pursuant to these bylaws as the record date for the determination of stockholders entitled to vote at such meeting. Persons holding stock in a fiduciary capacity shall be entitled to vote the shares so held.
At all duly called or convened meetings of stockholders, at which a quorum is present, for the election of directors, a plurality of the votes cast shall be sufficient to elect a director. Except as otherwise provided by the Certificate of Incorporation, these Bylaws, the rules or regulations of any stock exchange applicable to the Corporation, or applicable law or pursuant to any regulation applicable to the Corporation or its securities, all other elections and matters presented to the stockholders at a duly called or convened meeting, at which a quorum is present, shall be decided by the affirmative vote of the holders of a majority in voting power of the votes cast affirmatively or negatively (excluding abstentions and broker non-votes) at the meeting by the holders entitled to vote thereon.
2.12 RECORD DATE FOR STOCKHOLDER NOTICE; VOTING.
In order that the Corporation may determine the stockholders entitled to notice of any meeting of stockholders or any adjournment thereof, the Board may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the Board, and which record date shall, unless otherwise required by law, at least ten (10) days before the date of such meeting. If the Board so fixes a date, such date shall also be the record date for determining the stockholders entitled to vote at such meeting unless the Board determines, at the time it fixes such record date, that a later date on or before the date of the meeting shall be the date for making such determination. If no record date is fixed by the Board, the record date for determining stockholders entitled to notice of or to vote at a meeting of stockholders shall be at the close of business on the day next preceding the day on which notice is given, or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the Board may fix a new record date for determination of stockholders entitled to vote at the adjourned meeting, and in such case shall also fix as the record date for stockholders entitled to notice of such adjourned meeting the same or an earlier date as that fixed for determination of stockholders entitled to vote in accordance herewith at the adjourned meeting.
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In order that the Corporation may determine the stockholders entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action, the Board may fix a record date, which shall not be more than ten days prior to such other action. If no such record date is fixed, the record date for determining stockholders for any such purpose shall be at the close of business on the day on which the Board adopts the resolution relating thereto.
2.13 PROXIES.
Each stockholder entitled to vote at a meeting of stockholders may authorize another person or persons to act for such stockholder by proxy authorized by an instrument in writing or by a transmission permitted by law filed in accordance with the procedure established for the meeting, but no such proxy shall be voted or acted upon after three (3) years from its date, unless the proxy provides for a longer period. The revocability of a proxy that states on its face that it is irrevocable shall be governed by the provisions of Section 212 of the DGCL. A proxy may be in the form of electronic transmission which sets forth or is submitted with information from which it can be determined that the electronic transmission was authorized by the stockholder.
A proxy executed by any principal officer of such other corporation or other entity or assistant thereto shall be conclusive evidence of the signer’s authority to act, in the absence of express notice to the Corporation, given in writing to the Secretary of the Corporation, of the designation of some other person by the board of directors or the bylaws of such other corporation.
2.14 LIST OF STOCKHOLDERS ENTITLED TO VOTE.
The officer who has charge of the stock ledger of the Corporation shall prepare and make, at least ten (10) days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting (provided, however, if the record date for determining the stockholders entitled to vote is less than ten (10) days before the date of the meeting, the list shall reflect the stockholders entitled to vote as of the tenth (10th) day before the date of the meeting), arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder. The Corporation shall not be required to include electronic mail addresses or other electronic contact information on such list. Such list shall be open to the examination of any stockholder.
2.15 POSTPONEMENT AND CANCELLATION OF MEETING.
Any previously scheduled annual or special meeting of the stockholders may be postponed, and any previously scheduled annual or special meeting of the stockholders may be canceled, by resolution of the Board upon public notice given prior to the time previously scheduled for such meeting.
2.16 STOCKHOLDER ACTION BY WRITTEN CONSENT WITHOUT A MEETING.
Any action required or permitted to be taken at any meeting of the stockholders may be taken without a meeting, and without notice of a meeting, pursuant to Section 228 of the DGCL, if stockholders holding more than 50% in voting power of the capital stock of the Corporation consent thereto and deliver to the secretary of the Corporation, by means of mail or electronic communication, such written consent for filing with the minutes of the Corporation.
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ARTICLE III
DIRECTORS
3.1 POWERS.
Subject to the provisions of the DGCL and any limitations in the Certificate of Incorporation, the corporate powers of the Corporation shall be exercised by or under the direction of the Board.
3.2 NUMBER OF DIRECTORS.
The authorized number of directors shall be determined from time to time by resolution of the Board, provided the Board shall consist of at least one (1) member. No reduction of the authorized number of directors shall have the effect of removing any director before that director’s term of office expires.
3.3 ELECTION, QUALIFICATION AND TERM OF OFFICE OF DIRECTORS.
Except as otherwise provided in these Bylaws, each director shall hold office until the expiration of the term for which elected, which may be perpetual, and until such director’s successor is elected and qualified or until such director’s earlier death, resignation or removal. Directors need not be stockholders unless so required by the Certificate of Incorporation or these Bylaws. The Corporation may also have, at the discretion of the Board, a chairperson of the Board. The Certificate of Incorporation or these Bylaws may prescribe other qualifications for directors.
3.4 PLACE OF MEETINGS; MEETINGS BY TELEPHONE.
The Board may hold meetings, both regular and special, either within or outside the State of Delaware.
Unless otherwise restricted by the Certificate of Incorporation or these Bylaws, members of the Board, or any committee designated by the Board, may participate in a meeting of the Board, or any committee, by means of telephone or other electronic communications of which all persons participating in the meeting can hear each other, and such participation in a meeting pursuant to this bylaw shall constitute presence in person at the meeting.
3.6 REGULAR MEETINGS.
Regular meetings of the Board may be held without notice at such time and at such place as shall from time to time be determined by the Board; provided, that any director who is absent when such determination is made shall be given notice of the determination.
3.7 SPECIAL MEETINGS; NOTICE.
Special meetings of the Board for any purpose or purposes may be called at any time by a majority of the members of the Board or any officer of the Corporation.
Notice of the time and place of special meetings shall be:
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| (c) | sent by electronic transmission; and |
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directed to each director at that director’s address, telephone number, or electronic transmission address, as the case may be, as shown on the Corporation’s records.
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3.8 QUORUM.
One or more directors may constitute a quorum of the Board for the transaction of business. The vote of a majority of the directors present at any meeting at which a quorum is present shall be the act of the Board, except as may be otherwise specifically provided by statute, the Certificate of Incorporation or these Bylaws.
3.9 FEES AND COMPENSATION OF DIRECTORS.
Unless otherwise restricted by the Certificate of Incorporation or these Bylaws, the Board shall have the authority to fix the compensation of directors. The Board or any individual director’s compensation may be amended at a special or annual meeting, by the affirmative vote of the holders of more than 50% in voting power of the capital stock of the Corporation entitled to vote thereon, including preferred shares of capital stock so designated.
3.10 REMOVAL OF DIRECTORS.
The Board or any individual director may be removed from office by the affirmative vote of the holders of more than 50% in voting power of the outstanding shares of capital stock of the Corporation entitled to vote thereon, including preferred shares of capital stock so designated.
3.11 BOARD ACTION BY CONSENT WITHOUT A MEETING.
Unless otherwise restricted by the Certificate of Incorporation or these Bylaws, any action required or permitted to be taken at any meeting of the Board, or of any committee thereof, may be taken without a meeting if a quorum of the Board or committee, as the case may be, consent thereto in writing or by electronic transmission and the writing or electronic transmissions are filed with the minutes of the Corporation.
ARTICLE IV
COMMITTEES
4.1 COMMITTEES OF DIRECTORS.
The Board may designate one (1) or more committees, each committee to consist of one (1) or more of the directors of the Corporation. The Board may designate one (1) or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. In the absence or disqualification of a member of a committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not such member or members constitute a quorum, may unanimously appoint another member of the Board to act at the meeting in the place of any such absent or disqualified member. Any such committee, to the extent provided in the resolution of the Board or in these Bylaws, shall have and may exercise all the powers and authority of the Board in the management of the business and affairs of the Corporation, including the power and authority to designate other committees of the Board, and may authorize the seal of the Corporation to be affixed to all papers that may require it.
4.2 COMMITTEE MINUTES.
Each committee shall keep regular minutes of its meetings and report the same to the Board when required.
ARTICLE V
OFFICERS
5.1 OFFICERS.
The officers of the Corporation shall be a president or chief executive officer, a treasurer or chief financial officer and a secretary. Any number of offices may be held by the same person.
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5.2 APPOINTMENT OF OFFICERS.
The Board shall appoint the officers of the Corporation.
5.3 REMOVAL AND RESIGNATION OF OFFICERS.
Subject to the rights, if any, of an officer under any contract of employment, any officer may be removed, either with or without cause, by the Board at any regular or special meeting of the Board or, except in the case of an officer chosen by the Board, by any officer upon whom such power of removal may be conferred by the Board.
ARTICLE VI
RECORDS AND REPORTS
6.1 MAINTENANCE OF RECORDS.
The Corporation shall, either at its principal executive office and/or at a qualified stock transfer agent, keep a record of its stockholders listing their names and addresses and the number and class of shares held by each stockholder, a copy of these Bylaws as amended to date, accounting books and other records.
ARTICLE VII
GENERAL MATTERS
7.1 EXECUTION OF CORPORATE CONTRACTS AND INSTRUMENTS.
Upon appointment by the Board, an officer or officers, are authorized to enter into any contract or execute any instrument in the name of and on behalf of the Corporation; such authority may be general or confined to specific instances. Unless so authorized or ratified by an officer or officers, no agent or employee shall have any power or authority to bind the Corporation by any contract or engagement or to pledge its credit or to render it liable for any purpose or for any amount.
7.2 STOCK CERTIFICATES; PARTLY PAID SHARES.
The shares of the Corporation shall be represented by certificates or shall be uncertificated. Certificates for the shares of stock, if any, shall be in such form as is consistent with the Certificate of Incorporation and applicable law. Every holder of stock represented by a certificate shall be entitled to have a certificate signed by, or in the name of the Corporation by an officer or officers representing the number of shares registered in certificate form. Any or all of the signatures on the certificate may be a facsimile. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate has ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the Corporation with the same effect as if he were such officer, transfer agent or registrar at the date of issue.
The Corporation may issue the whole or any part of its shares as partly paid and subject to call for the remainder of the consideration to be paid therefor. Upon the face or back of each stock certificate issued to represent any such partly paid shares, or upon the books and records of the Corporation in the case of uncertificated partly paid shares, the total amount of the consideration to be paid therefor and the amount paid thereon shall be stated. Upon the declaration of any dividend on fully paid shares, the Corporation shall declare a dividend upon partly paid shares of the same class, but only upon the basis of the percentage of the consideration actually paid thereon.
7.3 LOST CERTIFICATES.
Except as provided in this Section, no new certificates for shares shall be issued to replace a previously issued certificate unless the latter is surrendered to the Corporation and cancelled at the same time. The Corporation may issue a new certificate of stock or uncertificated shares in the place of any certificate theretofore issued by it, alleged to have been lost, stolen or destroyed, and the Corporation may require the owner of the lost, stolen or destroyed certificate, or such owner’s legal representative, to give the Corporation a bond sufficient to indemnify it against any claim that may be made against it on account of the alleged loss, theft or destruction of any such certificate or the issuance of such new certificate or uncertificated shares.
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7.4 CONSTRUCTION; DEFINITIONS.
Unless the context requires otherwise, the general provisions, rules of construction and definitions in the DGCL shall govern the construction of these Bylaws. Without limiting the generality of this provision, the singular number includes the plural, the plural number includes the singular, and the term “person” includes both a corporation and a natural person.
7.5 DIVIDENDS.
The Board, subject to any restrictions contained in either (a) the DGCL or (b) the Certificate of Incorporation, may declare and pay dividends upon the shares of its capital stock. Dividends may be paid in cash, in property or in shares of the Corporation’s capital stock.
The Board may set apart out of any of the funds of the Corporation available for dividends a reserve or reserves for any proper purpose and may abolish any such reserve. Such purposes shall include but not be limited to equalizing dividends, repairing or maintaining any property of the Corporation, and meeting contingencies.
7.6 FISCAL YEAR.
The fiscal year of the Corporation shall be the calendar year unless fixed by resolution of the Board and may be changed by the Board.
7.7 SEAL.
The Corporation may adopt a corporate seal, which shall be adopted and which may be altered by the Board. The Corporation may use the corporate seal by causing it or a facsimile thereof to be impressed or affixed or in any other manner reproduced.
7.8 TRANSFER OF STOCK.
Shares of the Corporation shall be transferable in the manner prescribed by law and in these Bylaws. Shares of stock of the Corporation shall be transferred on the books of the Corporation only by the holder of record thereof or by such holder’s attorney duly authorized in writing, upon surrender to the Corporation of the certificate or certificates representing such shares endorsed by the appropriate person or persons (or by delivery of duly executed instructions with respect to uncertificated shares), with such evidence of the authenticity of such endorsement or execution, transfer, authorization and other matters as the Corporation may reasonably require, and accompanied by all necessary stock transfer stamps. No transfer of stock shall be valid as against the Corporation for any purpose until it shall have been entered in the stock records of the Corporation by an entry showing the names of the persons from and to whom it was transferred.
7.9 STOCK TRANSFER AGREEMENTS.
The Corporation shall have power to enter into and perform any agreement with any number of stockholders of any one or more classes of stock of the Corporation to restrict the transfer of shares of stock of the Corporation of any one or more classes owned by such stockholders in any manner not prohibited by the DGCL.
7.10 REGISTERED STOCKHOLDERS.
The Corporation:
(a) shall be entitled to recognize the exclusive right of a person registered on its books as the owner of shares to receive dividends and to vote as such owner;
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(b) shall be entitled to hold liable for calls and assessments the person registered on its books as the owner of shares; and
(c) shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of another person, whether or not it shall have express or other notice thereof, except as otherwise provided by the laws of Delaware.
7.11 WAIVER OF NOTICE.
Whenever notice is required to be given under any provision of the DGCL, the Certificate of Incorporation or these Bylaws, a written waiver, signed by the person entitled to notice, or a waiver by electronic transmission by the person entitled to notice, whether before or after the time of the event for which notice is to be given, shall be deemed equivalent to notice. Attendance of a person at a meeting shall constitute a waiver of notice of such meeting, except when the person attends a meeting for the express purpose of objecting at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the stockholders need be specified in any written waiver of notice or any waiver by electronic transmission unless so required by the Certificate of Incorporation.
ARTICLE VIII
NOTICE BY ELECTRONIC TRANSMISSION
8.1 NOTICE BY ELECTRONIC TRANSMISSION.
Without limiting the manner by which notice otherwise may be given effectively to stockholders pursuant to the DGCL, the Certificate of Incorporation or these Bylaws, any notice to stockholders given by the Corporation under any provision of the DGCL, the Certificate of Incorporation or these Bylaws, shall be effective if given by electronic transmission to which stockholders consent. Any such consent shall be revocable by the stockholder by written notice to the Corporation. Any such consent shall be deemed revoked if:
(a) the Corporation is unable to deliver by electronic transmission two (2) consecutive notices given by the Corporation in accordance with such consent; and
(b) such inability becomes known to the secretary of the Corporation or to the transfer agent, or other person responsible for the giving of notice.
However, the inadvertent failure to treat such inability as a revocation shall not invalidate any meeting or other action.
An affidavit of the secretary of the Corporation or of the transfer agent or other agent of the Corporation that the notice has been given by a form of electronic transmission shall, in the absence of fraud, be prima facie evidence of the facts stated therein.
8.2 DEFINITION OF ELECTRONIC TRANSMISSION.
For the purposes of these Bylaws, an “electronic transmission” means any form of communication, not directly involving the physical transmission of paper, that creates a record that may be retained, retrieved and reviewed by a recipient thereof, and that may be directly reproduced in paper form by such a recipient through an automated process.
ARTICLE IX
INDEMNIFICATION AND ADVANCEMENT
The Corporation may, but shall not be required to, indemnify and/or advance expenses to any person, as contemplated by Section 145 of the DGCL. Any decision to indemnify and/or advance expenses pursuant to this Article shall be made by a vote of the Board (such vote to exclude any director seeking indemnification). The Corporation shall be entitled to condition such indemnification and/or advancement of expenses on such terms as the Board so determines.
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The Corporation may purchase and maintain insurance, at its expense, to protect itself and any against any expense, liability or loss incurred by him or her in any such capacity, or arising out of his or her status as such, whether or not the Corporation would have the power to indemnify such person against such expense, liability or loss under the DGCL.
ARTICLE X
AMENDMENTS
Subject to the limitations set forth in these Bylaws or the provisions of the Certificate of Incorporation, the Board is empowered to adopt, amend or repeal the Bylaws of the Corporation. The stockholders also shall have power to adopt, amend or repeal the Bylaws of the Corporation; provided, however, that, in addition to any vote of the holders of any class or series of stock of the Corporation required by law or by the Certificate of Incorporation, such action by stockholders shall require the affirmative vote of the holders of more than 50% in voting power of the capital stock of the Corporation entitled to vote thereon. Subject to the DCGL, the stockholders shall have primacy in the event of any disagreement with the respect to any provision of Bylaws of the Corporation.
ARTICLE XI
SEVERABILITY AND INCONSISTENCY
If any provision or provisions of these bylaws shall be held to be invalid, illegal, or unenforceable for any reason whatsoever: (1) the validity, legality, and enforceability of the remaining provisions of these bylaws (including, without limitation, each portion of any paragraph or clause containing any such provision held to be invalid, illegal, or unenforceable, that is not itself held to be invalid, illegal, or unenforceable) shall not in any way be affected or impaired thereby; and (2) to the fullest extent possible, the provisions of these bylaws (including, without limitation, each such portion of any paragraph or clause containing any such provision held to be invalid, illegal, or unenforceable) shall be construed so as to give effect to the intent manifested by the provision held invalid, illegal, or unenforceable. If any provision of these bylaws is or becomes inconsistent with any provision of the certificate of incorporation, the DGCL or any other applicable law, the provision of these bylaws shall not be given any effect to the extent of the inconsistency, but shall otherwise be given full force and effect.
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EXHIBIT 3.5
CERTIFICATE OF CORRECTION
TO THE
CERTIFICATE OF INCORPORATION
OF
GLUCOSE HEALTH, INC.
Glucose Health, Inc., a corporation organized and existing under and by virtue of the General Corporation Law of the State of Delaware (the “Corporation”)
DOES HEREBY CERTIFY:
1. The name of the Corporation is Glucose Health, Inc.
2. That a Certificate of Incorporation was filed with the Secretary of State of the State of Delaware on March 29, 2022 (the “Certificate”), and such Certificate requires correction as permitted by Section 103(f) of the General Corporation Law of the State of Delaware.
3. The inaccuracy or defect of said Certificate is that the Certificate incorrectly designates the number of shares of Series E Preferred Stock.
4. The Certificate is hereby corrected by deleting the first paragraph of Article IV in its entirety and replacing it with the following:
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| The total number of shares of all classes of stock which the Corporation shall have authority to issue is 50,000,000, consisting of (a) 40,000,000 shares of Common Stock, $0.001 par value per share (“Common Stock”), and (b) 10,000,000 shares of Preferred Stock, $0.001 par value per share (“Preferred Stock”). 1,000 shares of the authorized Preferred Stock are hereby designated as “Series A Voting Preferred Stock;” 3,466,668 shares of the authorized Preferred Stock are hereby designated as “Series B Preferred Stock;” 866,668 shares of the authorized Preferred Stock are hereby designated as “Series C Preferred Stock;” 300,000 shares of the authorized Preferred Stock are hereby designated as “Series D Preferred Stock;” and 480,000 shares of the authorized Preferred Stock are hereby designated as “Series E Preferred Stock.” |
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IN WITNESS WHEREOF, the Corporation has caused this Certificate of Correction to be duly executed and acknowledged as of this 8th day of April, 2022.
| GLUCOSE HEALTH, INC. | |||
| By: | /s/ Murray Fleming | ||
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| Name: | Murray Fleming | |
| Office: | Chief Executive Officer | ||
EXHIBIT 10.2
Stock Purchase Agreement
GLUCOSE HEALTH, INC.
(Purchaser)
THIS STOCK PURCHASE AGREEMENT (the “Agreement”) is entered into as of May 1, 2019 (the “Effective Date”), by and between GLUCOSE HEALTH, INC., a Nevada corporation (the “Company”) and [ ] (“Purchaser”). Each of the Company and Purchaser may be referred to herein individually as a “Party” and collectively as the “Parties.”
RECITALS
WHEREAS, the Company desires to raise from interested investors up to an aggregate amount of $410,000.00; $200,000.00 being received from the offer and sale of 4,000,000 shares of common stock, par value $0.001, of the Company (the “Common Stock”) at a price of $0.05 per share and $210,000.00 being received from the offer and sale of 2,800,000 shares of Series B Cumulative Preferred Shares, no par value, of the Company (the “Series B Preferred Stock”) at a price of $0.075 per share;
WHEREAS, the Purchaser wishes to purchase from the Company and the Company wishes to sell to the Purchaser, upon the terms and conditions stated in this Agreement, certain shares of the Series B Preferred Stock certain shares of the Common Stock, and the Parties shall undertake such additional actions as set forth herein;
WHEREAS, Company and Purchaser are executing and delivering this Agreement in reliance upon the exemption from securities registration afforded by Rule 506 promulgated under Regulation D pursuant to the Securities Act of 1933, as amended (the “Securities Act”), and such other Federal and state securities exemptions as may be deemed available;
NOW, THEREFORE, in consideration of the mutual covenants contained in this Agreement, and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the Company and the Purchaser hereby agree as follows:
| 1. | Definitions. In addition to the other terms as defined herein, for purposes of this Agreement the following terms shall have the following meaning: |
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“Affiliate” means, with respect to any Person, any other Person directly or indirectly Controlling, Controlled by, or under common Control with such Person.
“Business Day” shall mean any day on which commercial banks in the State of Nevada are generally open for business.
“Control” of a Person means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities, by contract, or otherwise. “Controlled”, “Controlling” and “under common Control with” have correlative meanings. Without limiting the foregoing a Person (the “Controlled Person”) shall be deemed Controlled by (a) any other Person (the “10% Owner”) (i) owning beneficially, as meant in Rule 13d-3 under the Exchange Act, securities entitling such Person to cast 10% or more of the votes for election of directors or equivalent governing authority of the Controlled Person or (ii) entitled to be allocated or receive 10% or more of the profits, losses, or distributions of the Controlled Person; (b) an officer, director, general partner, partner (other than a limited partner), manager, or member (other than a member having no management authority that is not a 10% Owner ) of the Controlled Person; or (c) a spouse, parent, lineal descendant, sibling, aunt, uncle, niece, nephew, mother-in-law, father-in-law, sister-in-law, or brother-in-law of an Affiliate of the Controlled Person or a trust for the benefit of an Affiliate of the Controlled Person or of which an Affiliate of the Controlled Person is a trustee. |
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| “Damages” means any loss, claim, damage, liability, cost and expense (including, without limitation, reasonable attorneys’ fees and disbursements and costs and expenses of expert witnesses and investigation), provided, however, that “Damages” shall not include punitive damages, except to the extent actually awarded to any Governmental Authority or other third party, or consequential damages or lost profits in any case.
“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.
“Governmental Authority” means any federal, state, local or foreign government or political subdivision thereof, or any agency or instrumentality of such government or political subdivision, or any self-regulated organization or other non-governmental regulatory authority or quasi-governmental authority (to the extent that the rules, regulations or orders of such organization or authority have the force of law), or any arbitrator, court or tribunal of competent jurisdiction.
“Lien” means a lien, charge, pledge, security interest, encumbrance, right of first refusal, preemptive right or any other restriction.
“Person” means an individual, a corporation, a partnership, an association, a trust or other entity or organization, including a government or political subdivision or an agency or instrumentality thereof.
“Transaction Documents” means this Agreement, the Note Redemption Agreement, the Certificate of Designation and any other agreements or documents entered into in connection herewith or therewith. | |
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| 2. | Purchase and Sale. | |
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| 2.1. | Upon the terms and conditions set forth herein, on the Closing Date, the Company will issue and sell to Purchaser, and the Purchaser shall purchase from the Company, the following: |
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| (i) One Million, Sixty Six Thousand, Six Hundred, Sixty-Seven (1,066,667) shares of Series B Preferred Stock (“Purchased Series B Preferred Stock”), for the price of $0.075 per share of Purchased Series B Stock, for an aggregate purchase price of $80,000.03 (the “Series B Purchase Price”); and
(ii) Two Million (2,000,000) shares of Common Stock (“Purchased Common Stock” and, together with the Purchased Series B Preferred Stock, the “Purchased Stock”), for the price of $0.05 per share of Purchased Common Stock, for an aggregate purchase price of $100,000.00 (the “Common Stock Purchase Price”).
The Series B Preferred Purchase Price and the Common Stock Purchase Price, totaling $180,000.03, shall be referred to herein collectively as the “Purchase Price.” | |
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| 2.2. | The “Closing” of the transaction contemplated hereby shall be held within five (5) business days after the date that the Company has provided written notice to the Purchaser that the conditions set forth in Sections 3.1 and 3.2 below have been satisfied, which notice shall contain copies of the Amendment to the Articles of Incorporation and the Certificate of Designation for the Series B Preferred Stock as filed with the Nevada Secretary of State and which are in full force and effect. The Closing shall be conducted without a formal meeting of the Parties unless otherwise mutually agreed to by the Parties. The date Closing actually occurs is referred to herein as the “Closing Date” |
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| 2.3. | On the Closing Date: |
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| 2.3.1. | The Purchaser shall pay the Purchase Price by wire transfer of immediately available funds to the Company, in accordance with the Company’s written wiring instructions provided prior to the Closing; and |
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| 2.3.2. | The Company shall instruct its transfer agent to deliver to Purchaser a statement indicating the journal entry recording the Purchased Stock, provided, that if so requested by Purchaser, the Company shall deliver to Purchaser certificates representing the Purchased Stock; and |
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| 2.3.3. | The Company and Purchaser shall execute and deliver such other documents or instruments as may be reasonably necessary to consummate and effect the transactions contemplated by this Agreement and the Transaction Documents. |
| 3. | Conditions to Closing. The obligations of the Purchaser to consummate the purchase and acquisition of the Purchased Stock as provided for herein is subject to the fulfillment by the Company, or the written waiver of Purchaser, at or prior to the Closing Date, of each of the following conditions: | |
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| 3.1 | The Company shall have filed with the Nevada Secretary of State an Amendment to its Articles of Incorporation which changes its authorized capital to increase the number of authorized shares of preferred stock from 1,000 shares up to 3,000,000 shares, which the Board of Directors shall have the right to designate the rights, preferences, class, series, limitations and other rights with respect to any and all such shares of authorized preferred stock of the Company; and |
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| 3.2 | The Company shall have filed with the Nevada Secretary of State a Certificate of Designation for the Series B Preferred Stock in the form attached hereto as Exhibit A. |
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| 4. | Use of Proceeds. The Company covenants and agrees that it shall utilize a sufficient portion of the Purchase Price to repay in full any and all amounts which remain due and owing under the terms of that certain $169,065 Consolidated Convertible Promissory Note dated April 1, 2017 (the “Note”) made by the Company and payable to [ ] and thereby redeem such Note. The Company and [ ] are in the process of executing and delivering a Note Redemption Agreement as attached hereto as Exhibit B (the “Note Redemption Agreement”), a fully executed copy of which will be provided to the Purchaser when received but in any event prior to or on the Closing Date. As promptly as possible on, or immediately after, the Closing Date, the Company shall provide to Purchaser reasonable evidence of the consummation of the transactions as set forth in the Note Redemption Agreement. |
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| 5. | Representations and Warranties of the Company. The Company hereby represents and warrants to the Purchaser as of the Closing Date as follows: |
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| 5.1. | The Company is a corporation duly incorporated, validly existing and in good standing under the laws of the State of Nevada, with the requisite power and authority to own and use its properties and assets and to carry on its business as currently conducted. The Company is not in violation or default of any of the provisions of its Articles of Incorporation, bylaws or other organizational or charter documents. The Company is duly qualified to conduct business and is in good standing as a foreign corporation in each jurisdiction in which the nature of the business conducted or property owned by it makes such qualification necessary. |
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| 5.2. | The Company has the requisite corporate power and authority to enter into and perform its obligations under this Agreement and the Transaction Documents. The execution and delivery of this Agreement and the Transaction Documents by the Company and the consummation by it of the transactions contemplated hereby and thereby have been duly authorized by all necessary corporate action and no further consent or authorization of the Company or its Board of Directors or stockholders is required. This Agreement has been duly executed and delivered by the Company and constitutes a valid and binding obligation of the Company enforceable against the Company in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, or similar laws relating to, or affecting generally the enforcement of, creditors’ rights and remedies or by other equitable principles of general application. |
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| 5.3. | There are no stockholders’ agreements, voting agreements or other similar agreements with respect to the Company’s capital stock to which the Company is a party or, to the knowledge of the Company, between or among any of the Company’s stockholders; |
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| 5.4. | Immediately prior to the Closing, the authorized capital stock of the Company consists of the following: |
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| (a) 200,000,000 shares of Common Stock, of which 6,533,891 shares of Common Stock are issued and outstanding; and |
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| (b) 3,000,000 shares of preferred stock, no par value per share, whereby 1,000 shares have been designated as the Series A Preferred Stock, no par value per share, of which 1,000 shares are issued and outstanding; whereby 2,800,000 shares have been designated as the Series B Stock, none of which are issued and outstanding, and whereby the remaining 190,000 shares have not yet been designated and none of which are issued and outstanding. |
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| 5.5. | The Purchased Stock is duly authorized and, when issued and paid for in accordance with this Agreement, will be validly issued, fully paid, and non-assessable, free and clear of all Liens, other than restrictions on transfer provided for in the Transaction Documents and under the Securities Act or other applicable laws. |
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| 5.6. | The execution, delivery and performance of this Agreement and the other Transaction Documents by the Company, and the consummation by the Company of the transactions contemplated hereby, including, without limitation, the issuance of the Purchase Stock, do not and will not: (a) result in a violation of the Company’s Articles of Incorporation, bylaws or other organizational or charter documents, (b) conflict with, or constitute a material default (or an event that with notice or lapse of time or both would become a material default) under, result in the creation of any Lien upon any of the properties or assets of the Company, or give to others any rights of termination, amendment, acceleration or cancellation of, any agreement, indenture or other instrument to which the Company is a party, or (c) result in a violation of any federal, state or local law, rule, regulation, order, judgment or decree (including federal and state securities laws and regulations) applicable to the Company or by which any property or asset of the Company is bound or affected, nor is the Company otherwise in violation of, conflict with or in default under any of the foregoing. The Company is not required under federal, state or local law, rule or regulation to obtain any consent, authorization or order of, or make any filing or registration with, any court or governmental agency in order for it to execute, deliver or perform any of its obligations under this Agreement or the other Transaction Documents except for filing a Form D with the U.S. Securities and Exchange Commission and with the State of residence of any purchaser acquiring shares of Common Stock and/or Series B Preferred Stock which are being sold by the Company |
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| 5.7. | The Company acknowledges and agrees that the Purchaser is acting solely in the capacity of arm’s length purchaser with respect to the transactions contemplated by the Transaction Documents. The Company further acknowledges that the Purchaser is not acting as a financial advisor or fiduciary of the Company (or in any similar capacity) with respect to the Transaction Documents and the transactions contemplated hereby and thereby and any advice given by the Purchaser or any of its representatives or agents in connection with the Transaction Documents and the transactions contemplated hereby and thereby is merely incidental to the Purchaser’s purchase of the Purchased Stock. The Company further represents to the Purchaser that the Company’s decision to enter into the Transaction Documents has been based solely on the independent evaluation by the Company and its representatives and advisors. |
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| 5.8. | Neither the Company nor any of its Affiliates, nor any Person acting on their behalf, has engaged in any form of general solicitation or general advertising (within the meaning of Regulation D under the Securities Act) in connection with the offer or sale of the Purchased Stock. Neither the Company nor any of its Affiliates, nor any Person acting on their behalf has, directly or indirectly, made any offers or sales of any security or solicited any offers to buy any security, under circumstances that would require registration of such offer and sale under the Securities Act, whether through integration with prior offerings or otherwise, or cause this offering of the Purchased Stock to be integrated with prior offerings by the Company in a manner that would require stockholder approval. |
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| 5.9. | None of the Company, any of its predecessors, any Affiliated issuer, any director, executive officer, other officer of the Company participating in the offering contemplated hereby, any beneficial owner of 20% or more of the Company’s outstanding voting equity securities, calculated on the basis of voting power, nor any promoter (as that term is defined in Rule 405 under the Securities Act) connected with the Company in any capacity at the time of sale (each, an “Issuer Covered Person”) is subject to any of the “Bad Actor” disqualifications described in Rule 506(d)(1)(i) to (viii) under the Securities Act (a “Disqualification Event”), except for a Disqualification Event covered by Rule 506(d)(2) or (d)(3) under the Securities Act. The Company has exercised reasonable care to determine whether any Issuer Covered Person is subject to a Disqualification Event. |
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| 6. | Representations and Warranties of Purchaser. Purchaser hereby represents and warrants to the Company as of the Closing Date as follows: | |
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| 6.1. | Purchaser has all power and authority to execute, deliver and perform this Agreement. |
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| 6.2. | This Agreement is the valid and binding obligation of Purchaser, enforceable against Purchaser in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, or similar laws relating to, or affecting generally the enforcement of, creditors’ rights and remedies or by other equitable principles of general application. |
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| 6.3. | The Purchased Stock will be acquired for investment for the account of Purchaser and not with a view to the distribution or public offering thereof. In connection therewith, Purchasers confirms that Purchaser is an “accredited investor” within the meaning of Rule 501(a) under Regulation D under the Securities Act. |
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| 6.4. | Purchaser has not been contacted concerning the acquired Purchased Stock or the matters set forth in this Agreement by means of any advertisement or other general solicitation. |
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| 6.5. | Purchaser understands that the Company does not have a class of securities registered and is not subject to the Exchange Act. |
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| 6.6. | Purchaser understands that (i) the Purchased Stock has not been registered under either the Securities Act or the securities laws of any state by reason of specific exemptions therefrom and that such securities may be resold in the United States without registration under the Securities Act only in certain limited circumstances. Purchaser acknowledges that any certificates representing the Purchased Stock will bear a restrictive legend substantially as follows: |
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| THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR THE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES. THE SECURITIES REPRESENTED HEREBY ARE RESTRICTED AND MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO REGISTRATION UNDER THE SECURITIES ACT OR AN AVAILABLE REGISTRATION EXEMPTION TO THE SATISFACTION OF THE COMPANY AND IN COMPLIANCE WITH THE TERMS HEREIN. | |
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| 6.7. | Purchaser has access to information relating to Company, and has had an opportunity to ask questions of, and receive answers from, the Company and its authorized representatives, as Purchaser deems necessary to make an informed investment decision in connection with the Purchased Stock including, without limitation, the Company’s quarterly and annual reports posted at OTC Markets.com. Purchaser acknowledges that Purchaser is aware of Purchaser’s obligations under the Exchange Act, including, but not limited to those filing obligations that are triggered as a result of the consummation of the sale of Purchased Stock pursuant to Sections 13 and 16 of the Exchange Act. |
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| 7. | Pre-Emptive Rights. | |
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| 7.1. | Subject to the terms and conditions of this Section 7 and applicable securities laws, for so long as Purchaser continues to hold any of the Series B Preferred Stock (the “Rights Term”), if the Company proposes to offer or sell any New Securities (as defined below) during the Rights Term, the Company shall first offer such New Securities to the Purchaser pursuant to the terms and conditions of this Section 7. Purchaser shall thereafter have the right to acquire its Pro Rata Portion (as defined below) of the New Securities in accordance with the terms and conditions of this Section 7. |
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| 7.2. | For purposes of this Section 7: |
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| 7.2.1. | “New Securities” means, collectively, equity securities or debt securities of the Company, whether or not currently authorized, as well as rights, options, or warrants to purchase such equity securities, or securities of any type whatsoever that are, or may become, convertible or exchangeable into or exercisable for such equity securities. The New Securities shall not apply to, or include, any of the Common Stock or Series B Preferred Stock which the Company seeks to offer and sell as set forth in the Recitals of this Agreement. |
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| 7.2.2. | “Pro Rata Portion” means a fraction (A) the numerator of which is equal to the number of shares of Series B Preferred Stock purchased by the Purchaser on the Closing Date and (B) the denominator of which is equal to the total number of shares of Series B Preferred Stock purchased by all purchasers of such Series B Preferred Stock. |
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| 7.3. | The Company shall give written notice (the “Offer Notice”) to the Purchaser stating (i) its bona fide intention to offer such New Securities, (ii) the number of such New Securities to be offered, and (iii) the price and terms, if any, upon which it proposes to offer such New Securities. By written notification to the Company within ten (10) Business Days after the Offer Notice is given, Purchaser may elect to purchase or otherwise acquire, at the price and on the terms specified in the Offer Notice, up to that portion of such New Securities which equals Purchaser’s Pro Rata Portion, or a specifically designated part thereof. The closing of any sale pursuant to this Section 7.3 shall occur within ten (10) Business Days of the date that the Purchaser provides written notification of its election to purchase or otherwise acquire his Pro Rata Portion, or designated part thereof, of the New Securities. |
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| 7.4. | In the event that the Purchaser does not elect to purchase all of Purchaser’s Pro Rata Portion, or a designated part thereof, of the New Securities, as provided in Section 7.3, the Company may, following the expiration of the ten (10) Business Day period commencing on the delivery of the Offer Notice, offer and sell the New Securities, within the offering period established by the Company for the sale of the New Securities, to any Person or Persons at a price not less than those specified in the Offer Notice. The rights provided for in this Section 7 shall apply with respect to any subsequent offer and sale by the Company of New Securities not covered by, or referenced in, the applicable Offer Notice. |
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| 7.5. | Notwithstanding the foregoing or anything herein to the contrary, the rights of the Purchaser set forth in this Section 7 shall not be applicable to any New Securities issued: |
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| 7.5.1. | for compensatory or incentive purposes to officers, employees or directors of, or consultants to, the Company or any of its Affiliates including, without limitation, the grant of stock options, deferred share units, restricted share units or restricted shares, duly adopted for such purposes by a majority of the non-employee members of the Board of Directors of the Company or a majority of the members of the committee of non-employee members of the Board of Directors established for such purpose; |
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| 7.5.2. | pursuant to a rights offering by the Company or pursuant to a stockholder rights plan of the Company that is carried out on a pro rata basis among all holders of the applicable class of securities of the Company; |
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| 7.5.3. | upon the exercise, conversion or exchange of any securities exercisable, convertible or exchangeable for or into shares of Common Stock; |
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| 7.5.4. | pursuant to any over-allotment option granted to the underwriters in a securities offering; |
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| 7.5.5. | as a result of the consolidation or subdivision of any securities of the Company, or as a special distribution or stock dividend or similar transaction that is carried out on a pro rata basis among all holders of the applicable class of securities of the Company; or |
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| 7.5.6. | in connection with or pursuant to any merger, business combination, joint venture, exchange offer, take-over bid, arrangement, amalgamation, asset purchase transaction or acquisition of assets or shares of a third party where such transaction is approved by a majority of the disinterested directors of the Company. |
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| 7.6. | Purchaser, as a condition precedent to the exercise of Purchaser’s right pursuant to this Section 7, shall execute such documents and complete such actions as reasonably required by the Company in connection therewith. |
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| 7.7. | The rights of Purchaser pursuant to this Section 7 shall terminate and be of no further force or effect upon the expiration of the Rights Term; upon any liquidation, dissolution or winding up of the Company, either voluntarily or involuntarily; a merger or consolidation of the Company where the Company is not a surviving entity; or a sale of all or substantially all of the assets of the Company. |
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| 8. | Miscellaneous | |
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| 8.1. | Notices.All notices, demands, requests, consents, approvals, and other communications required or permitted hereunder shall be in writing and, unless otherwise specified herein, shall be (a) personally served, (b) deposited in the mail, registered or certified, return receipt requested, postage prepaid, (c) delivered by reputable air courier service with charges prepaid, or (d) transmitted by hand delivery or e-mail as a PDF with return receipt requested, addressed as set forth below or to such other address as such Party shall have specified most recently by written notice given in accordance herewith. Any notice or other communication required or permitted to be given hereunder shall be deemed effective (i) upon hand delivery if personally served; (ii) upon receipt of a return receipt if sent via e-mail; or (iii) on the second Business Day following the date of mailing if sent by a nationally recognized overnight courier, or on the fifth Business Day if deposited in the United States mail, in each case, fully prepaid, addressed to such address, or upon actual receipt of such mailing, whichever shall first occur. Notices shall be sent to the Parties as follows: |
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| If to the Purchaser: |
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| [_______________] |
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| [_______________] |
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| Email: |
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| With a copy, which shall not constitute notice, to: | |
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| Anthony L.G., PLLC |
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| Attn: Laura Anthony |
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| 625 N. Flagler Drive, Suite 600 |
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| West Palm Beach, FL 33401 |
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| Email: lanthony@anthonypllc.com |
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| If to the Company: |
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| Glucose Health, Inc. |
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| Attn: Murray Fleming |
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| 609 SW 8th Street, Suite 600 |
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| Bentonville, AR 72712 |
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| Email: murray@glucosehealthinc.com |
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| 8.2. | Entire Agreement; Amendments; and Waivers. This Agreement constitutes the entire understanding and agreement among the Parties relative to the subject matter hereof. Any amendments to the Agreement must be in writing, signed by each Party. The failure of any Party to enforce at any time any provision of this Agreement shall not be construed to be a waiver of the provision, nor in any way to affect the validity of this Agreement or any part hereof or the right of such Party thereafter to enforce each and every such provision. No waiver of any breach of this Agreement shall be held to constitute a waiver of any other or subsequent breach. |
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| 8.3. | Assignment. This Agreement shall not be assignable by either Party without the prior written consent of the other Party, in such other Party’s sole discretion. This Agreement shall be binding upon and inure to the benefit of the Parties and their permitted successors and assigns. |
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| 8.4. | Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Nevada, without application of the conflicts of laws provisions thereof. Each Party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such Party at the address in effect for notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof, provided that nothing in this Agreement will affect the right of any Party to this Agreement to serve process in any other manner permitted by law. |
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| 8.5. | Arbitration. |
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| 8.5.1. | If the Company and Purchaser are unable to resolve any dispute, claim, or controversy arising out of or relating to this Agreement, including with respect to the meaning, effect, validity, termination, interpretation, performance, or enforcement of this Agreement, or any alleged breach thereof, and including any action in tort, contract, equity, or otherwise (each, a “Dispute”), the Parties agree that for a 30-day period following written notice from either Party, an officer or representative designated by each Party shall attempt to resolve such Dispute. |
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| 8.5.2. | If the Company and Purchaser are unable to resolve a Dispute within the period set forth in Section 8.6.1 above, either Party may initiate a binding arbitration process as set forth herein by sending written notice to the other Party (the “Arbitration Notice”). Binding arbitration shall be the sole means of resolving any Dispute. |
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| 8.5.3. | Within fifteen (15) Business Days after a Party delivers an Arbitration Notice, the Parties shall mutually agree on a single arbitrator (“Arbitrator”) who has not performed professional services for any Party of any of their respective Affiliates during the previous five (5) years. If the Parties cannot agree upon the identity of the Arbitrator within such time period, each Party to the Dispute shall select one arbitrator and the arbitrators so selected shall select the sole Arbitrator, who shall resolve the Dispute. |
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| 8.5.4. | In any arbitration hereunder, this Agreement and any agreement contemplated hereby shall be governed by the laws of the State of Nevada but the specific procedure to be followed shall be determined by the Arbitrator in accordance with the Commercial Arbitration Rules of the American Arbitration Association (“AAA”), as conducted and processed under the Expedited Procedures thereof, to the extent that such rules do not conflict with the terms of this Agreement.. The Arbitrator shall issue On application to the Arbitrator, any Party shall have rights to discovery to the same extent as would be provided under the Federal Rules of Civil Procedure, and the Federal Rules of Evidence shall apply to any arbitration under this Agreement. The arbitration shall be held in Denver, Colorado. |
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| 8.5.5. | The Arbitrator shall issue a written decision, setting forth findings of fact and conclusions of law, within thirty (30) days after the conclusion of the arbitration proceeding at which the Parties present their respective evidence, witness testimony and arguments concerning the Dispute. The Arbitrator shall have no authority to award punitive or other exemplary damages. The determination of the Arbitrator shall be final and binding upon the Parties and not subject to appeal |
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| 8.5.6. | The costs incurred in employing the Arbitrator shall be borne 50% by the Company and 50% by the Purchaser. The Arbitrator, as part of his final decision, shall award the prevailing party its reasonable attorneys’ fees, expert witness fees and related out-of-pocket costs incurred with respect to the arbitration, provided, however, that in the event each party prevails in part, all of such costs and expenses shall be allocated according to the relative degree which each Party is a prevailing Party. |
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| 8.5.7. | Any judgment upon any award rendered by the Arbitrator may be entered in and enforced by any court of competent jurisdiction. The Parties expressly consent to the non-exclusive jurisdiction of the courts (Federal and state) in the City nad County of Denver, Colorado to enforce any award of the Arbitrator or to render any provisional, temporary, or injunctive relief in connection with or in aid of the Arbitration. The Parties expressly consent to the personal and subject matter jurisdiction of the Arbitrator to arbitrate any and all matters to be submitted to arbitration hereunder. |
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| 8.6. | No Brokers. No brokerage or finder’s fees or commissions are or will be payable by the Company, Purchaser or any other party to any broker, financial advisor or consultant, finder, placement agent, investment banker, bank or other Person with respect to the transactions contemplated by the Transaction Documents as a result of any agreement of the Company or its Affiliates or the Purchaser or its Affiliates. |
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| 8.7. | Successors and Assigns. The Agreement shall be binding upon and inure to the benefit of the Parties and their respective heirs, administrators, successors and assigns. |
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| 8.8. | No Third Party Beneficiaries. This Agreement is intended for the benefit of the Company and the Purchaser and their respective successors, and is not for the benefit of, nor may any provision hereof be enforced by, any other Person.. |
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| 8.9. | Fees and Expenses. Except as expressly set forth in the Transaction Documents or any other writing to the contrary, each Party shall pay the fees and expenses of its advisers, counsel, accountants and other experts, if any, and all other expenses incurred by such Party incident to the negotiation, preparation, execution, delivery and performance of this Agreement. The Company shall pay all Transfer Agent fees (including, without limitation, any fees required for same-day processing of any instruction letter delivered by the Company), stamp taxes and other taxes and duties levied in connection with the delivery of any Purchased Stock to the Purchaser. |
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| 8.10. | Partial Invalidity. In case any one or more of the provisions contained in this Agreement shall for any reason be held to be invalid, illegal, or unenforceable in any respect, such invalidity, illegality, or unenforceability shall not affect any other provision hereof, and this Agreement shall be construed as if such invalid, illegal, or unenforceable provision had never been contained herein, unless the deletion of the provision of provisions would result in such a material change as to cause completion of the transactions contemplated herein to be unreasonable. |
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| 8.11. | Further Assurances. Each Party shall do and perform, or cause to be done and performed, all such further acts and things, and shall execute and deliver all such other agreements, certificates, instruments and documents, as the other Party may reasonably request in order to carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions contemplated hereby. |
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| 8.12. | No Strict Construction. The language used in this Agreement will be deemed to be the language chosen by the Parties to express their mutual intent, and no rules of strict construction will be applied against any Party. |
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| 8.13. | Equitable Relief. Each Party acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to the other Party by vitiating the intent and purpose of the transaction contemplated hereby. Accordingly, each Party acknowledges that the remedy at law for a breach of its obligations under this Agreement will be inadequate and agrees, in the event of a breach or threatened breach by such Party of the provisions of this Agreement, that the other Party shall be entitled, in addition to all other available remedies at law or in equity, and in addition to the penalties assessable herein, to an injunction or injunctions restraining, preventing or curing any breach of this Agreement and to enforce specifically the terms and provisions hereof, without the necessity of showing economic loss and without any bond or other security being required. No remedy conferred upon a Party hereunder is intended to be exclusive of any other remedy provided for in this Agreement, and each remedy provided to a Party this Agreement will be cumulative and in addition to every other remedy available to such Party under this Agreement. No single or partial exercise of any remedy will preclude any other or further exercise thereof. |
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| 8.14. | Interpretation. The headings, titles and subtitles used in this Agreement are used for the convenience of reference and are not to be considered in construing or interpreting this Agreement. For purposes of this Agreement, (a) the words “include,” “includes” and “including” shall be deemed to be followed by the words “without limitation”; (b) the word “or” is not exclusive; and (c) the words “herein,” “hereof,” “hereby,” “hereto” and “hereunder” refer to this Agreement as a whole. Unless the context otherwise requires, references herein: (x) to Articles and Sections means the Articles and Sections of this Agreement; (y) to an agreement, instrument or other document means such agreement, instrument or other document as amended, supplemented and modified from time to time to the extent permitted by the provisions thereof and (z) to a statute means such statute as amended from time to time and includes any successor legislation thereto and any regulations promulgated thereunder. |
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| 8.15. | Limitation on Damages. NOTWITHSTANDING ANYTHING IN THIS AGREEMENT OR THE TRANSACTION DOCUMENTS TO THE CONTRARY, EACH PARTY HEREBY EXPRESSLY DISCLAIMS, RELEASES AND WAIVES ANY CLAIMS AGAINST THE OTHER PARTY FOR ANY CONSEQUENTIAL, PUNITIVE, EXEMPLARY, SPECIAL OR INDIRECT DAMAGES. |
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| 8.16. | Joint Preparation. This Agreement shall be deemed for all purposes to have been prepared through the joint efforts of the Parties hereto and shall not be construed for or against one Party or any other Party as a result of the preparation, submittal, drafting, execution or other event of negotiation thereof. |
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| 8.17. | Counterparts. This Agreement may be executed in multiple counterparts which shall together be constitute one and the same instrument. This Agreement may be delivered to Parties by e-mail of a PDF copy of this Agreement bearing the signature of the Parties so delivering this Agreement, which shall be deemed to have the same legal effect as delivery of an original signed copy of this Agreement. |
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IN WITNESS WHEREOF, the Parties have either individually or by their duly authorized officers executed and delivered is Agreement as of the Effective Date.
| COMPANY: | |||
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| GLUCOSE HEALTH, INC. |
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| By: | |||
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| Name: | Murray Fleming | |
| Title: | Chief Executive Officer | ||
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| PURCHASER: |
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| By: |
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| Name: |
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| 14 |
Exhibit A
Note Redemption Agreement
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Exhibit B
Certificate of Designations and Rights of Series B Cumulative Preferred Stock
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EXHIBIT 10.3
Stock Purchase Agreement
GLUCOSE HEALTH, INC.
THIS STOCK PURCHASE AGREEMENT (the “Agreement”) is entered into effective as of April 30, 2020 (the “Closing Date”), by and between GLUCOSE HEALTH, INC., a Nevada corporation (the “Company”) and each of the purchasers as set forth on the signature pages hereof (each, a “Purchaser” and collectively, the “Purchasers”). Each of the Company and each Purchaser may be referred to herein individually as a “Party” and collectively as the “Parties.”
RECITALS
WHEREAS, the Company desires to raise from interested investors up to an aggregate amount of $65,000.12 from the offer and sale of 866,668 shares of Series C Preferred Stock, par value $0.001, of the Company (the “Series C Preferred Stock”) at a price of $0.075 per share;
WHEREAS, each Purchaser wishes to purchase from the Company and the Company wishes to sell to such Purchaser, upon the terms and conditions stated in this Agreement, certain shares of the Series C Preferred Stock, and the Parties shall undertake such additional actions as set forth herein;
WHEREAS, Company and each Purchaser are executing and delivering this Agreement in reliance upon the exemption from securities registration afforded by Rule 506 promulgated under Regulation D pursuant to the Securities Act of 1933, as amended (the “Securities Act”), and such other Federal and state securities exemptions as may be deemed available;
NOW, THEREFORE, in consideration of the mutual covenants contained in this Agreement, and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the Parties hereby agree as follows:
| 1. | Definitions. In addition to the other terms as defined herein, for purposes of this Agreement the following terms shall have the following meaning: |
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| “Affiliate” means, with respect to any Person, any other Person directly or indirectly Controlling, Controlled by, or under common Control with such Person.
“Business Day” shall mean any day on which commercial banks in the State of Nevada are generally open for business.
“Certificate of Designation” means the Certificate of Designation as filed with the Secretary of State of the State of Nevada, as attached hereto as Exhibit B.
“Control” of a Person means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities, by contract, or otherwise. “Controlled”, “Controlling” and “under common Control with” have correlative meanings. Without limiting the foregoing a Person (the “Controlled Person”) shall be deemed Controlled by (a) any other Person (the “10% Owner”) (i) owning beneficially, as meant in Rule 13d-3 under the Exchange Act, securities entitling such Person to cast 10% or more of the votes for election of directors or equivalent governing authority of the Controlled Person or (ii) entitled to be allocated or receive 10% or more of the profits, losses, or distributions of the Controlled Person; (b) an officer, director, general partner, partner (other than a limited partner), manager, or member (other than a member having no management authority that is not a 10% Owner ) of the Controlled Person; or (c) a spouse, parent, lineal descendant, sibling, aunt, uncle, niece, nephew, mother-in-law, father-in-law, sister-in-law, or brother-in-law of an Affiliate of the Controlled Person or a trust for the benefit of an Affiliate of the Controlled Person or of which an Affiliate of the Controlled Person is a trustee. |
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| “Damages” means any loss, claim, damage, liability, cost and expense (including, without limitation, reasonable attorneys’ fees and disbursements and costs and expenses of expert witnesses and investigation), provided, however, that “Damages” shall not include punitive damages, except to the extent actually awarded to any Governmental Authority or other third party, or consequential damages or lost profits in any case.
“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.
“Governmental Authority” means any federal, state, local or foreign government or political subdivision thereof, or any agency or instrumentality of such government or political subdivision, or any self-regulated organization or other non-governmental regulatory authority or quasi-governmental authority (to the extent that the rules, regulations or orders of such organization or authority have the force of law), or any arbitrator, court or tribunal of competent jurisdiction.
“Lien” means a lien, charge, pledge, security interest, encumbrance, right of first refusal, preemptive right or any other restriction.
“Person” means an individual, a corporation, a partnership, an association, a trust or other entity or organization, including a government or political subdivision or an agency or instrumentality thereof.
“Transaction Documents” means this Agreement, the Certificate of Designation and any other agreements or documents entered into in connection herewith or therewith. | |
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| 2. | Purchase and Sale. | |
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| 2.1. | Upon the terms and conditions set forth herein, on the Closing Date, and immediately following the execution of this Agreement, the Company will issue and sell to each Purchaser, and each Purchaser shall purchase from the Company, (i) the number of shares of Series C Preferred Stock as set forth for each Purchaser on Exhibit A (as to each applicable Purchaser, the “Purchased Series C Preferred Stock”) at the price of $0.075 per share of Purchased Series C Preferred Stock, being an aggregate purchase price as set forth for each Purchaser on Exhibit A (as to each applicable Purchaser, the “Series C Purchase Price”). The Series C Preferred Purchase Price, as to each Purchaser and as set forth on Exhibit A in the column entitled “Total Purchase Price,” shall be referred to herein collectively as the “Purchase Price.” The Purchased Series C Preferred Stock, as to each Purchaser and as set forth on Exhibit A, shall be referred to herein collectively as the “Purchased Stock.” |
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| 2.2. | The “Closing” of the transaction contemplated hereby shall be held on the Closing Date immediately following the execution of this Agreement. The Closing shall be conducted without a formal meeting of the Parties unless otherwise mutually agreed to by the Parties. |
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| 2.3. | At the Closing: |
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| 2.3.1. | Each Purchaser shall pay the Purchase Price identified for such Purchaser on Exhibit A, by wire transfer of immediately available funds to the Company, in accordance with the Company’s written wire transfer instructions provided prior to the Closing; and |
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| 2.3.2. | The Company shall instruct its transfer agent to deliver to each Purchaser a statement indicating the journal entry recording the Purchased Stock being acquired by such Purchaser hereunder, provided, that if so requested by a Purchaser, the Company shall deliver to such Purchaser certificates representing the Purchased Stock; and |
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| 2.3.3. | The Company and each Purchaser shall execute and deliver such other documents or instruments as may be reasonably necessary to consummate and effect the transactions contemplated by this Agreement and the Transaction Documents. |
| 3. | Use of Proceeds. The Company covenants and agrees that it shall utilize the total Purchase Price paid by all Purchasers in furtherance of its business and financial affairs including, without limitation, efforts to prepare and ship its glucose products to new pharmacy and drug store chains. |
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| 4. | Representations and Warranties of the Company. The Company hereby represents and warrants to each Purchaser as of the Closing Date as follows: |
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| 4.1. | The Company is a corporation duly incorporated, validly existing and in good standing under the laws of the State of Nevada, with the requisite power and authority to own and use its properties and assets and to carry on its business as currently conducted. The Company is not in violation or default of any of the provisions of its Articles of Incorporation, bylaws or other organizational or charter documents. The Company is duly qualified to conduct business and is in good standing as a foreign corporation in each jurisdiction in which the nature of the business conducted or property owned by it makes such qualification necessary. |
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| 4.2. | The Company has the requisite corporate power and authority to enter into and perform its obligations under this Agreement and the Transaction Documents. The execution and delivery of this Agreement and the Transaction Documents by the Company and the consummation by it of the transactions contemplated hereby and thereby have been duly authorized by all necessary corporate action and no further consent or authorization of the Company or its Board of Directors or stockholders is required. This Agreement has been duly executed and delivered by the Company and constitutes a valid and binding obligation of the Company enforceable against the Company in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, or similar laws relating to, or affecting generally the enforcement of, creditors’ rights and remedies or by other equitable principles of general application. |
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| 4.3. | There are no stockholders’ agreements, voting agreements or other similar agreements with respect to the Company’s capital stock to which the Company is a party or, to the knowledge of the Company, between or among any of the Company’s stockholders. |
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| 4.4. | The authorized capital stock of the Company shall consist of the following: |
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| 4.4.1. | 200,000,000 shares of Common Stock, of which 11,104,285 shares of Common Stock are issued and outstanding; and |
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| 4.4.2. | 4,334,336 shares of preferred stock, par value $0.001 per share, whereby 1,000 shares have been designated as the Series A Preferred Stock, par value $0.001 per share, of which 1,000 shares are issued and outstanding; whereby 3,466,668 shares have been designated as the Series B Preferred Stock, par value $0.001 per share, of which 3,466,668 shares are issued and outstanding; and whereby 866,668 shares shall be designated as the Series C Preferred Stock, none of which are issued and outstanding. |
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| 4.5. | The Certificate of Designation has been filed with, and has been declared effective by, the Secretary of State of the State of Nevada effective as of the Closing Date. |
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| 4.6. | The Purchased Stock being acquired by each Purchaser is duly authorized and, when issued and paid for in accordance with this Agreement, will be validly issued, fully paid, and non-assessable, free and clear of all Liens, other than restrictions on transfer provided for in the Transaction Documents and under the Securities Act or other applicable laws. |
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| 4.7. | The execution, delivery and performance of this Agreement and the other Transaction Documents by the Company, and the consummation by the Company of the transactions contemplated hereby, including, without limitation, the issuance of the Purchased Stock, do not and will not: (a) result in a violation of the Company’s Articles of Incorporation, bylaws or other organizational or charter documents, (b) conflict with, or constitute a material default (or an event that with notice or lapse of time or both would become a material default) under, result in the creation of any Lien or encumbrance upon any of the properties or assets of the Company, or give to others any rights of termination, amendment, acceleration or cancellation of, any agreement, indenture or other instrument to which the Company is a party, or (c) result in a violation of any federal, state or local law, rule, regulation, order, judgment or decree (including federal and state securities laws and regulations) applicable to the Company or by which any property or asset of the Company is bound or affected, nor is the Company otherwise in violation of, conflict with or in default under any of the foregoing. The Company is not required under federal, state or local law, rule or regulation to obtain any consent, authorization or order of, or make any filing or registration with, any court or governmental agency in order for it to execute, deliver or perform any of its obligations under this Agreement or the other Transaction Documents except for filing a Form D with the U.S. Securities and Exchange Commission and with the State of residence of any purchaser acquiring shares of Common Stock and/or Series B Preferred Stock which are being sold by the Company |
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| 4.8. | The Company acknowledges and agrees that each Purchaser is acting solely in the capacity of an arm’s length purchaser with respect to the transactions contemplated by the Transaction Documents. The Company further acknowledges that no Purchaser is acting as a financial advisor or fiduciary of the Company (or in any similar capacity) with respect to the Transaction Documents and the transactions contemplated hereby and thereby and any advice given by any Purchaser or any of its representatives or agents in connection with the Transaction Documents and the transactions contemplated hereby and thereby is merely incidental to such Purchaser’s purchase of the Purchased Stock. The Company further represents to each Purchaser that the Company’s decision to enter into the Transaction Documents has been based solely on the independent evaluation by the Company and its representatives and advisors. |
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| 4.9. | Neither the Company nor any of its Affiliates, nor any Person acting on their behalf, has engaged in any form of general solicitation or general advertising (within the meaning of Regulation D under the Securities Act) in connection with the offer or sale of the Purchased Stock. Neither the Company nor any of its Affiliates, nor any Person acting on their behalf has, directly or indirectly, made any offers or sales of any security or solicited any offers to buy any security, under circumstances that would require registration of such offer and sale under the Securities Act, whether through integration with prior offerings or otherwise, or cause this offering of the Purchased Stock to be integrated with prior offerings by the Company in a manner that would require stockholder approval. |
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| 4.10. | None of the Company, any of its predecessors, any Affiliated issuer, any director, executive officer, other officer of the Company participating in the offering contemplated hereby, any beneficial owner of 20% or more of the Company’s outstanding voting equity securities, calculated on the basis of voting power, nor any promoter (as that term is defined in Rule 405 under the Securities Act) connected with the Company in any capacity at the time of sale (each, an “Issuer Covered Person”) is subject to any of the “Bad Actor” disqualifications described in Rule 506(d)(1)(i) to (viii) under the Securities Act (a “Disqualification Event”), except for a Disqualification Event covered by Rule 506(d)(2) or (d)(3) under the Securities Act. The Company has exercised reasonable care to determine whether any Issuer Covered Person is subject to a Disqualification Event. |
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| 5. | Representations and Warranties of Each Purchaser. Each Purchaser, severally and not jointly and severely and solely with respect to such Purchaser and the Purchased Stock being acquired by such Purchaser hereunder, hereby represents and warrants to the Company as of the Closing Date as follows: | |
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| 5.1. | Such Purchaser has all power and authority to execute, deliver and perform this Agreement. |
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| 5.2. | This Agreement is the valid and binding obligation of such Purchaser, enforceable against such Purchaser in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, or similar laws relating to, or affecting generally the enforcement of, creditors’ rights and remedies or by other equitable principles of general application. |
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| 5.3. | The Purchased Stock being acquired by such Purchaser is being acquired for investment for the account of such Purchaser and not with a view to the distribution or public offering thereof. In connection therewith, such Purchaser confirms that such Purchaser is an “accredited investor” within the meaning of Rule 501(a) under Regulation D under the Securities Act. |
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| 5.4. | Such Purchaser has not been contacted concerning the acquired Purchased Stock being acquired by such Purchaser or the matters set forth in this Agreement by means of any advertisement or other general solicitation. |
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| 5.5. | Such Purchaser understands that the Company does not have a class of securities registered and is not subject to the Exchange Act. |
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| 5.6. | Such Purchaser understands that (i) the Purchased Stock being acquired by such Purchaser has not been registered under either the Securities Act or the securities laws of any state by reason of specific exemptions therefrom and that such securities may be resold in the United States without registration under the Securities Act only in certain limited circumstances. Such Purchaser acknowledges that any certificates representing the Purchased Stock being acquired by such Purchaser will bear a restrictive legend substantially as follows: |
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| THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR THE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES. THE SECURITIES REPRESENTED HEREBY ARE RESTRICTED AND MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO REGISTRATION UNDER THE SECURITIES ACT OR AN AVAILABLE REGISTRATION EXEMPTION TO THE SATISFACTION OF THE COMPANY AND IN COMPLIANCE WITH THE TERMS HEREIN. |
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| 5.7. | Such Purchaser has access to information relating to Company, and has had an opportunity to ask questions of, and receive answers from, the Company and its authorized representatives, as such Purchaser deems necessary to make an informed investment decision in connection with the Purchased Stock being acquired by such Purchaser including, without limitation, the Company’s quarterly and annual reports posted at OTC Markets.com. |
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| 6. | Indemnification. | |
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| 6.1. | Each Party (an “Indemnifying Party”) agrees to indemnify and hold harmless the other Parties along with their respective Affiliates, officers, directors, employees, representatives and authorized agents (an “Indemnified Party”) from and against any Damages, joint or several, and any action in respect thereof to which the Indemnified Party becomes subject to, resulting from, arising out of or relating to any misrepresentation contained in this Agreement, breach of representation or warranty contained in this Agreement or nonfulfillment of or failure to perform any covenant or agreement contained in this Agreement, in each case on the part of the Indemnifying Party, in each case except to the extent such Damages result from the Indemnified Party’s misrepresentation hereunder, breach of any representation or warranty hereunder or failure to perform any covenant or agreement hereunder or the Indemnified Party’s negligence, recklessness or bad faith in performing its obligations under this Agreement. |
| 6 |
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| 6.2. | The Indemnifying Party agrees to pay the Indemnified Party, promptly as such expenses are incurred and are due and payable, for any reasonable legal fees or other reasonable expenses incurred by them in connection with investigating or defending any such claim. |
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| 6.3. | The indemnity provisions contained herein shall be in addition to (i) any cause of action or similar rights of the Indemnified Party against the Indemnifying Party or others, and (ii) any liabilities to which the Indemnifying Party may be subject. |
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| 7. | Miscellaneous | |
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| 7.1. | Notices.All notices, demands, requests, consents, approvals, and other communications required or permitted hereunder shall be in writing and, unless otherwise specified herein, shall be (a) personally served, (b) deposited in the mail, registered or certified, return receipt requested, postage prepaid, (c) delivered by reputable air courier service with charges prepaid, or (d) transmitted by hand delivery or e-mail as a PDF with return receipt requested, addressed as set forth below or to such other address as such Party shall have specified most recently by written notice given in accordance herewith. Any notice or other communication required or permitted to be given hereunder shall be deemed effective (i) upon hand delivery if personally served; (ii) upon receipt of a return receipt if sent via e-mail; or (iii) on the second Business Day following the date of mailing if sent by a nationally recognized overnight courier, or on the fifth Business Day if deposited in the United States mail, in each case, fully prepaid, addressed to such address, or upon actual receipt of such mailing, whichever shall first occur. Notices shall be sent to the Parties as follows: |
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| If to a Purchaser, to the address as set forth on Exhibit A attached hereto. | |
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| If to the Company: |
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| Glucose Health, Inc. |
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| Attn: Murray Fleming |
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| 609 SW 8th Street, Suite 600 |
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| Bentonville, AR 72712 |
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| Email: murray@glucosehealthinc.com |
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| With a copy, which shall not constitute notice, to: |
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| Allen Vellone Wolf Helfrich & Factor, P.C. |
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| Attn: Patrick J. Russell |
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| 1600 Stout Street, Suite 1100 |
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| Denver, CO 80202 |
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| Email: prussell@allen-vellone.com |
| 7 |
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| 7.2. | Entire Agreement; Amendments; and Waivers. This Agreement constitutes the entire understanding and agreement among the Parties relative to the subject matter hereof. Any amendments to the Agreement must be in writing, signed by each Party. The failure of any Party to enforce at any time any provision of this Agreement shall not be construed to be a waiver of the provision, nor in any way to affect the validity of this Agreement or any part hereof or the right of such Party thereafter to enforce each and every such provision. No waiver of any breach of this Agreement shall be held to constitute a waiver of any other or subsequent breach. |
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| 7.3. | Assignment. This Agreement shall not be assignable by any Party without the prior written consent of each of the other Parties, in each such other Party’s sole discretion. This Agreement shall be binding upon and inure to the benefit of the Parties and their permitted successors and assigns. |
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| 7.4. | Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Nevada, without application of the conflicts of laws provisions thereof. Each Party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such Party at the address in effect for notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof, provided that nothing in this Agreement will affect the right of any Party to this Agreement to serve process in any other manner permitted by law. |
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| 7.5. | JURY TRIAL WAIVER. EACH PARTY HEREBY WAIVES A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM BROUGHT BY ANY OF THE PARTIES AGAINST ANY OTHER PARTY IN RESPECT OF ANY MATTER ARISING OUT OF OR IN CONNECTION WITH THE TRANSACTION DOCUMENTS. EACH PARTY TO THIS AGREEMENT CERTIFIES AND ACKNOWLEDGES THAT (A) NO REPRESENTATIVE OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT SEEK TO ENFORCE THE FOREGOING WAIVER IN THE EVENT OF A LEGAL ACTION, (B) SUCH PARTY HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (C) SUCH PARTY MAKES THIS WAIVER VOLUNTARILY, AND (D) SUCH PARTY HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 8.5. |
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| 7.6. | Arbitration. |
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| 7.6.1. | If any Parties are unable to resolve any dispute, claim, or controversy arising out of or relating to this Agreement, including with respect to the meaning, effect, validity, termination, interpretation, performance, or enforcement of this Agreement, or any alleged breach thereof, and including any action in tort, contract, equity, or otherwise (each, a “Dispute”), the Parties agree that for a 30-day period following written notice from any Party which is a party to or involved in the Dispute (each a “Dispute Party”), an officer or representative designated by each such Dispute Party shall attempt to resolve such Dispute. |
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| 7.6.2. | If the Dispute Parties are unable to resolve a Dispute within the period set forth in Section 8.6.1 above, any Dispute Party which may initiate a binding arbitration process as set forth herein by sending written notice to the other Dispute Party(ies) (the “Arbitration Notice”). Binding arbitration shall be the sole means of resolving any Dispute. |
| 8 |
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| 7.6.3. | Within fifteen (15) Business Days after a Dispute Party delivers an Arbitration Notice, the Dispute Parties shall mutually agree on a single arbitrator (“Arbitrator”) who has not performed professional services for any Dispute Party or any of their respective Affiliates during the previous five (5) years. If the Dispute Parties cannot agree upon the identity of the Arbitrator within such time period, each Dispute Party shall select one arbitrator and the arbitrators so selected shall select the sole Arbitrator, who shall resolve the Dispute. |
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| 7.6.4. | In any arbitration hereunder, this Agreement and any agreement contemplated hereby shall be governed by the laws of the State of Nevada but the specific procedure to be followed shall be determined by the Arbitrator in accordance with the Commercial Arbitration Rules of the American Arbitration Association (“AAA”), as conducted and processed under the Expedited Procedures thereof, to the extent that such rules do not conflict with the terms of this Agreement. On application to the Arbitrator, any Dispute Party shall have rights to discovery to the same extent as would be provided under the Federal Rules of Civil Procedure, and the Federal Rules of Evidence shall apply to any arbitration under this Agreement. The arbitration shall be held in Denver, Colorado. |
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| 7.6.5. | The Arbitrator shall issue a written decision, setting forth findings of fact and conclusions of law, within thirty (30) days after the conclusion of the arbitration proceeding at which the Dispute Parties present their respective evidence, witness testimony and arguments concerning the Dispute. The determination of the Arbitrator shall be final and binding upon the Dispute Parties and not subject to appeal. |
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| 7.6.6. | The costs incurred in employing the Arbitrator shall be borne equally by the Dispute Parties. The Arbitrator, as part of his final decision, shall award the prevailing party its reasonable attorneys’ fees, expert witness fees and related out-of-pocket costs incurred with respect to the arbitration, provided, however, that in the event each party prevails in part, all of such costs and expenses shall be allocated according to the relative degree which each Dispute Party is a prevailing Party. |
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| 7.6.7. | Any judgment upon any award rendered by the Arbitrator may be entered in and enforced by any court of competent jurisdiction. The Parties expressly consent to the non-exclusive jurisdiction of the courts (Federal and state) in the City and County of Denver, Colorado to enforce any award of the Arbitrator or to render any provisional, temporary, or injunctive relief in connection with or in aid of the Arbitration. The Parties expressly consent to the personal and subject matter jurisdiction of the Arbitrator to arbitrate any and all matters to be submitted to arbitration hereunder. |
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| 7.7. | No Brokers. Each Party represents and warrants that no brokerage or finder’s fees or commissions are or will be payable by any Party or any other party to any broker, financial advisor or consultant, finder, placement agent, investment banker, bank or other Person with respect to the transactions contemplated by the Transaction Documents as a result of any agreement of the representing Party or its Affiliates. |
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| 7.8. | Successors and Assigns. The Agreement shall be binding upon and inure to the benefit of the Parties and their respective heirs, administrators, successors and assigns. |
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| 7.9. | No Third Party Beneficiaries. This Agreement is intended for the benefit of the Parties and their respective successors, and is not for the benefit of, nor may any provision hereof be enforced by, any other Person, except as set forth in Section 7. |
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| 7.10. | Fees and Expenses. Except as expressly set forth in the Transaction Documents or any other writing to the contrary, each Party shall pay the fees and expenses of its advisers, counsel, accountants and other experts, if any, and all other expenses incurred by such Party incident to the negotiation, preparation, execution, delivery and performance of this Agreement. The Company shall pay all Transfer Agent fees (including, without limitation, any fees required for same-day processing of any instruction letter delivered by the Company), stamp taxes and other taxes and duties levied in connection with the delivery of any Purchased Stock to the Purchasers. |
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| 7.11. | Partial Invalidity. In case any one or more of the provisions contained in this Agreement shall for any reason be held to be invalid, illegal, or unenforceable in any respect, such invalidity, illegality, or unenforceability shall not affect any other provision hereof, and this Agreement shall be construed as if such invalid, illegal, or unenforceable provision had never been contained herein, unless the deletion of the provision of provisions would result in such a material change as to cause completion of the transactions contemplated herein to be unreasonable. |
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| 7.12. | Further Assurances. Each Party shall do and perform, or cause to be done and performed, without further consideration, all such further acts and things, and shall execute and deliver all such other agreements, certificates, instruments and documents, as any other Party may reasonably request in order to carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions contemplated hereby. |
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| 7.13. | No Strict Construction. The language used in this Agreement will be deemed to be the language chosen by the Parties to express their mutual intent, and no rules of strict construction will be applied against any Party. |
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| 7.14. | Equitable Relief. Each Party acknowledges that a breach by it or him of its or his obligations hereunder will cause irreparable harm to the other Parties by vitiating the intent and purpose of the transaction contemplated hereby. Accordingly, each Party acknowledges that the remedy at law for a breach of its or his obligations under this Agreement will be inadequate and agrees, in the event of a breach or threatened breach by such Party of the provisions of this Agreement, that the other Parties shall be entitled, in addition to all other available remedies at law or in equity, to an injunction or injunctions restraining, preventing or curing any breach of this Agreement and to enforce specifically the terms and provisions hereof, without the necessity of showing economic loss and without any bond or other security being required. No remedy conferred upon a Party hereunder is intended to be exclusive of any other remedy provided for in this Agreement, and each remedy provided to a Party by this Agreement will be cumulative and in addition to every other remedy available to such Party under this Agreement. No single or partial exercise of any remedy will preclude any other or further exercise thereof. |
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| 7.15. | Interpretation. The headings, titles and subtitles used in this Agreement are used for the convenience of reference and are not to be considered in construing or interpreting this Agreement. For purposes of this Agreement, (a) the words “include,” “includes” and “including” shall be deemed to be followed by the words “without limitation”; (b) the word “or” is not exclusive; and (c) the words “herein,” “hereof,” “hereby,” “hereto” and “hereunder” refer to this Agreement as a whole. Unless the context otherwise requires, references herein: (x) to Articles and Sections means the Articles and Sections of this Agreement; (y) to an agreement, instrument or other document means such agreement, instrument or other document as amended, supplemented and modified from time to time to the extent permitted by the provisions thereof and (z) to a statute means such statute as amended from time to time and includes any successor legislation thereto and any regulations promulgated thereunder. |
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| 7.16. | Limitation on Damages. NOTWITHSTANDING ANYTHING IN THIS AGREEMENT OR THE TRANSACTION DOCUMENTS TO THE CONTRARY, EACH PARTY HEREBY EXPRESSLY DISCLAIMS, RELEASES AND WAIVES ANY CLAIMS AGAINST THE OTHER PARTY FOR ANY CONSEQUENTIAL, PUNITIVE, EXEMPLARY, SPECIAL OR INDIRECT DAMAGES. |
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| 7.17. | Joint Preparation. This Agreement shall be deemed for all purposes to have been prepared through the joint efforts of the Parties hereto and shall not be construed for or against one Party or any other Party as a result of the preparation, submittal, drafting, execution or other event of negotiation thereof. |
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| 7.18. | Counterparts. This Agreement may be executed in multiple counterparts which shall together be constitute one and the same instrument. This Agreement may be delivered to Parties by e-mail of a PDF copy of this Agreement bearing the signature of the Parties so delivering this Agreement, which shall be deemed to have the same legal effect as delivery of an original signed copy of this Agreement. |
| 11 |
IN WITNESS WHEREOF, the Parties have either individually or by their duly authorized officers executed and delivered this Agreement as of the Closing Date.
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| COMPANY: |
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| GLUCOSE HEALTH, INC. |
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| By: | |||
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| Name: | Murray Fleming | |
| Title: | Chief Executive Officer | ||
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| PURCHASERS: |
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| By: |
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| Name: |
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| 12 |
Exhibit A
Purchased Stock, Purchase Price and Address for Notices
| Purchaser |
| Purchased Series C Preferred Stock |
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| Series C Purchase Price |
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| Total Purchase Price |
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| Address for Notices | ||||
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| Totals: |
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| 866,668 |
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| $ | 65,000.12 |
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| $ | 65,000.12 |
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| 13 |
Exhibit B
Certificate of Designation of Series C Preferred Stock
(Attached)
| 14 |
EXHIBIT 10.4
Stock Purchase Agreement
GLUCOSE HEALTH, INC.
THIS STOCK PURCHASE AGREEMENT (the “Agreement”) is entered into effective as of June 17, 2020 (the “Closing Date”), by and between GLUCOSE HEALTH, INC., a Nevada corporation (the “Company”) and each of the purchasers as set forth on the signature pages hereof (each, a “Purchaser” and collectively, the “Purchasers”). Each of the Company and each Purchaser may be referred to herein individually as a “Party” and collectively as the “Parties.”
RECITALS
WHEREAS, the Company desires to raise from interested investors up to an aggregate amount of $300,000.00 from the offer and sale of 3,000,000 shares of Series D Preferred Stock, par value $0.001, of the Company (the “Series D Preferred Stock”) at a price of $0.10 per share;
WHEREAS, each Purchaser wishes to purchase from the Company and the Company wishes to sell to such Purchaser, upon the terms and conditions stated in this Agreement, certain shares of the Series D Preferred Stock, and the Parties shall undertake such additional actions as set forth herein;
WHEREAS, Company and each Purchaser are executing and delivering this Agreement in reliance upon the exemption from securities registration afforded by Rule 506 promulgated under Regulation D pursuant to the Securities Act of 1933, as amended (the “Securities Act”), and such other Federal and state securities exemptions as may be deemed available;
NOW, THEREFORE, in consideration of the mutual covenants contained in this Agreement, and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the Parties hereby agree as follows:
| 1. | Definitions. In addition to the other terms as defined herein, for purposes of this Agreement the following terms shall have the following meaning: |
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| “Affiliate” means, with respect to any Person, any other Person directly or indirectly Controlling, Controlled by, or under common Control with such Person.
“Business Day” shall mean any day on which commercial banks in the State of Nevada are generally open for business.
“Certificate of Designation” means the Certificate of Designation as filed with the Secretary of State of the State of Nevada, as attached hereto as Exhibit B.
“Control” of a Person means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities, by contract, or otherwise. “Controlled”, “Controlling” and “under common Control with” have correlative meanings. Without limiting the foregoing a Person (the “Controlled Person”) shall be deemed Controlled by (a) any other Person (the “10% Owner”) (i) owning beneficially, as meant in Rule 13d-3 under the Exchange Act, securities entitling such Person to cast 10% or more of the votes for election of directors or equivalent governing authority of the Controlled Person or (ii) entitled to be allocated or receive 10% or more of the profits, losses, or distributions of the Controlled Person; (b) an officer, director, general partner, partner (other than a limited partner), manager, or member (other than a member having no management authority that is not a 10% Owner ) of the Controlled Person; or (c) a spouse, parent, lineal descendant, sibling, aunt, uncle, niece, nephew, mother-in-law, father-in-law, sister-in-law, or brother-in-law of an Affiliate of the Controlled Person or a trust for the benefit of an Affiliate of the Controlled Person or of which an Affiliate of the Controlled Person is a trustee. |
| 1 |
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| “Damages” means any loss, claim, damage, liability, cost and expense (including, without limitation, reasonable attorneys’ fees and disbursements and costs and expenses of expert witnesses and investigation), provided, however, that “Damages” shall not include punitive damages, except to the extent actually awarded to any Governmental Authority or other third party, or consequential damages or lost profits in any case.
“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.
“Governmental Authority” means any federal, state, local or foreign government or political subdivision thereof, or any agency or instrumentality of such government or political subdivision, or any self-regulated organization or other non-governmental regulatory authority or quasi-governmental authority (to the extent that the rules, regulations or orders of such organization or authority have the force of law), or any arbitrator, court or tribunal of competent jurisdiction.
“Lien” means a lien, charge, pledge, security interest, encumbrance, right of first refusal, preemptive right or any other restriction.
“Person” means an individual, a corporation, a partnership, an association, a trust or other entity or organization, including a government or political subdivision or an agency or instrumentality thereof.
“Transaction Documents” means this Agreement, the Certificate of Designation and any other agreements or documents entered into in connection herewith or therewith. |
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| 2. | Purchase and Sale. |
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| 2.1. | Upon the terms and conditions set forth herein, on the Closing Date, and immediately following the execution of this Agreement, the Company will issue and sell to each Purchaser, and each Purchaser shall purchase from the Company, (i) the number of shares of Series D Preferred Stock as set forth for each Purchaser on Exhibit A (as to each applicable Purchaser, the “Purchased Series D Preferred Stock”) at the price of $0.10 per share of Purchased Series D Preferred Stock, being an aggregate purchase price as set forth for each Purchaser on Exhibit A (as to each applicable Purchaser, the “Series D Purchase Price”). The Series D Preferred Purchase Price, as to each Purchaser and as set forth on Exhibit A in the column entitled “Total Purchase Price,” shall be referred to herein collectively as the “Purchase Price.” The Purchased Series D Preferred Stock, as to each Purchaser and as set forth on Exhibit A, shall be referred to herein collectively as the “Purchased Stock.” |
| 2 |
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| 2.2. | The “Closing” of the transaction contemplated hereby shall be held on the Closing Date immediately following the execution of this Agreement. The Closing shall be conducted without a formal meeting of the Parties unless otherwise mutually agreed to by the Parties. |
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| 2.3. | At the Closing: |
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| 2.3.1. | Each Purchaser shall pay the Purchase Price identified for such Purchaser on Exhibit A, by wire transfer of immediately available funds to the Company, in accordance with the Company’s written wire transfer instructions provided prior to the Closing; and |
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| 2.3.2. | The Company shall instruct its transfer agent to deliver to each Purchaser a statement indicating the journal entry recording the Purchased Stock being acquired by such Purchaser hereunder, provided, that if so requested by a Purchaser, the Company shall deliver to such Purchaser certificates representing the Purchased Stock; and |
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| 2.3.3. | The Company and each Purchaser shall execute and deliver such other documents or instruments as may be reasonably necessary to consummate and effect the transactions contemplated by this Agreement and the Transaction Documents. |
| 3. | Use of Proceeds. The Company covenants and agrees that it shall utilize the total Purchase Price paid by all Purchasers in furtherance of its business and financial affairs including, without limitation, efforts to prepare and ship its glucose products to new pharmacy and drug store chains. |
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| 4. | Representations and Warranties of the Company. The Company hereby represents and warrants to each Purchaser as of the Closing Date as follows: |
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| 4.1. | The Company is a corporation duly incorporated, validly existing and in good standing under the laws of the State of Nevada, with the requisite power and authority to own and use its properties and assets and to carry on its business as currently conducted. The Company is not in violation or default of any of the provisions of its Articles of Incorporation, bylaws or other organizational or charter documents. The Company is duly qualified to conduct business and is in good standing as a foreign corporation in each jurisdiction in which the nature of the business conducted or property owned by it makes such qualification necessary. |
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| 4.2. | The Company has the requisite corporate power and authority to enter into and perform its obligations under this Agreement and the Transaction Documents. The execution and delivery of this Agreement and the Transaction Documents by the Company and the consummation by it of the transactions contemplated hereby and thereby have been duly authorized by all necessary corporate action and no further consent or authorization of the Company or its Board of Directors or stockholders is required. This Agreement has been duly executed and delivered by the Company and constitutes a valid and binding obligation of the Company enforceable against the Company in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, or similar laws relating to, or affecting generally the enforcement of, creditors’ rights and remedies or by other equitable principles of general application. |
| 3 |
| 4.3. | There are no stockholders’ agreements, voting agreements or other similar agreements with respect to the Company’s capital stock to which the Company is a party or, to the knowledge of the Company, between or among any of the Company’s stockholders. |
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| 4.4. | The authorized capital stock of the Company shall consist of the following: |
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| 4.4.1. | 200,000,000 shares of Common Stock, of which 11,104,285 shares of Common Stock are issued and outstanding; and |
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| 4.4.2. | 7,334,336 shares of preferred stock, par value $0.001 per share, whereby 1,000 shares have been designated as the Series A Preferred Stock, par value $0.001 per share, of which 1,000 shares are issued and outstanding; whereby 3,466,668 shares have been designated as the Series B Preferred Stock, par value $0.001 per share, of which 3,466,668 shares are issued and outstanding; and whereby 866,668 shares shall be designated as the Series C Preferred Stock, of which 866,668 shares are issued and outstanding; and whereby 3,000,000 shares have been designated as the Series D Preferred Stock, none of which are issued and outstanding. |
| 4.5. | The Certificate of Designation has been filed with, and has been declared effective by, the Secretary of State of the State of Nevada effective as of the Closing Date. |
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| 4.6. | The Purchased Stock being acquired by each Purchaser is duly authorized and, when issued and paid for in accordance with this Agreement, will be validly issued, fully paid, and non-assessable, free and clear of all Liens, other than restrictions on transfer provided for in the Transaction Documents and under the Securities Act or other applicable laws. |
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| 4.7. | The execution, delivery and performance of this Agreement and the other Transaction Documents by the Company, and the consummation by the Company of the transactions contemplated hereby, including, without limitation, the issuance of the Purchased Stock, do not and will not: (a) result in a violation of the Company’s Articles of Incorporation, bylaws or other organizational or charter documents, (b) conflict with, or constitute a material default (or an event that with notice or lapse of time or both would become a material default) under, result in the creation of any Lien or encumbrance upon any of the properties or assets of the Company, or give to others any rights of termination, amendment, acceleration or cancellation of, any agreement, indenture or other instrument to which the Company is a party, or (c) result in a violation of any federal, state or local law, rule, regulation, order, judgment or decree (including federal and state securities laws and regulations) applicable to the Company or by which any property or asset of the Company is bound or affected, nor is the Company otherwise in violation of, conflict with or in default under any of the foregoing. The Company is not required under federal, state or local law, rule or regulation to obtain any consent, authorization or order of, or make any filing or registration with, any court or governmental agency in order for it to execute, deliver or perform any of its obligations under this Agreement or the other Transaction Documents except for filing a Form D with the U.S. Securities and Exchange Commission and with the State of residence of any purchaser acquiring shares of Common Stock and/or Series B Preferred Stock which are being sold by the Company |
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| 4.8. | The Company acknowledges and agrees that each Purchaser is acting solely in the capacity of an arm’s length purchaser with respect to the transactions contemplated by the Transaction Documents. The Company further acknowledges that no Purchaser is acting as a financial advisor or fiduciary of the Company (or in any similar capacity) with respect to the Transaction Documents and the transactions contemplated hereby and thereby and any advice given by any Purchaser or any of its representatives or agents in connection with the Transaction Documents and the transactions contemplated hereby and thereby is merely incidental to such Purchaser’s purchase of the Purchased Stock. The Company further represents to each Purchaser that the Company’s decision to enter into the Transaction Documents has been based solely on the independent evaluation by the Company and its representatives and advisors. |
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| 4.9. | Neither the Company nor any of its Affiliates, nor any Person acting on their behalf, has engaged in any form of general solicitation or general advertising (within the meaning of Regulation D under the Securities Act) in connection with the offer or sale of the Purchased Stock. Neither the Company nor any of its Affiliates, nor any Person acting on their behalf has, directly or indirectly, made any offers or sales of any security or solicited any offers to buy any security, under circumstances that would require registration of such offer and sale under the Securities Act, whether through integration with prior offerings or otherwise, or cause this offering of the Purchased Stock to be integrated with prior offerings by the Company in a manner that would require stockholder approval. |
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| 4.10. | None of the Company, any of its predecessors, any Affiliated issuer, any director, executive officer, other officer of the Company participating in the offering contemplated hereby, any beneficial owner of 20% or more of the Company’s outstanding voting equity securities, calculated on the basis of voting power, nor any promoter (as that term is defined in Rule 405 under the Securities Act) connected with the Company in any capacity at the time of sale (each, an “Issuer Covered Person”) is subject to any of the “Bad Actor” disqualifications described in Rule 506(d)(1)(i) to (viii) under the Securities Act (a “Disqualification Event”), except for a Disqualification Event covered by Rule 506(d)(2) or (d)(3) under the Securities Act. The Company has exercised reasonable care to determine whether any Issuer Covered Person is subject to a Disqualification Event. |
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| 5.
| Representations and Warranties of Each Purchaser. Each Purchaser, severally and not jointly and severely and solely with respect to such Purchaser and the Purchased Stock being acquired by such Purchaser hereunder, hereby represents and warrants to the Company as of the Closing Date as follows: | |
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| 5.1. | Such Purchaser has all power and authority to execute, deliver and perform this Agreement. |
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| 5.2. | This Agreement is the valid and binding obligation of such Purchaser, enforceable against such Purchaser in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, or similar laws relating to, or affecting generally the enforcement of, creditors’ rights and remedies or by other equitable principles of general application. |
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| 5.3. | The Purchased Stock being acquired by such Purchaser is being acquired for investment for the account of such Purchaser and not with a view to the distribution or public offering thereof. In connection therewith, such Purchaser confirms that such Purchaser is an “accredited investor” within the meaning of Rule 501(a) under Regulation D under the Securities Act. |
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| 5.4. | Such Purchaser has not been contacted concerning the acquired Purchased Stock being acquired by such Purchaser or the matters set forth in this Agreement by means of any advertisement or other general solicitation. |
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| 5.5. | Such Purchaser understands that the Company does not have a class of securities registered and is not subject to the Exchange Act. |
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| 5.6. | Such Purchaser understands that (i) the Purchased Stock being acquired by such Purchaser has not been registered under either the Securities Act or the securities laws of any state by reason of specific exemptions therefrom and that such securities may be resold in the United States without registration under the Securities Act only in certain limited circumstances. Such Purchaser acknowledges that any certificates representing the Purchased Stock being acquired by such Purchaser will bear a restrictive legend substantially as follows: |
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| THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR THE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES. THE SECURITIES REPRESENTED HEREBY ARE RESTRICTED AND MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO REGISTRATION UNDER THE SECURITIES ACT OR AN AVAILABLE REGISTRATION EXEMPTION TO THE SATISFACTION OF THE COMPANY AND IN COMPLIANCE WITH THE TERMS HEREIN. | |
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| 5.7. | Such Purchaser has access to information relating to Company, and has had an opportunity to ask questions of, and receive answers from, the Company and its authorized representatives, as such Purchaser deems necessary to make an informed investment decision in connection with the Purchased Stock being acquired by such Purchaser including, without limitation, the Company’s quarterly and annual reports posted at OTC Markets.com. |
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| 6. | Indemnification. | |
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| 6.1. | Each Party (an “Indemnifying Party”) agrees to indemnify and hold harmless the other Parties along with their respective Affiliates, officers, directors, employees, representatives and authorized agents (an “Indemnified Party”) from and against any Damages, joint or several, and any action in respect thereof to which the Indemnified Party becomes subject to, resulting from, arising out of or relating to any misrepresentation contained in this Agreement, breach of representation or warranty contained in this Agreement or nonfulfillment of or failure to perform any covenant or agreement contained in this Agreement, in each case on the part of the Indemnifying Party, in each case except to the extent such Damages result from the Indemnified Party’s misrepresentation hereunder, breach of any representation or warranty hereunder or failure to perform any covenant or agreement hereunder or the Indemnified Party’s negligence, recklessness or bad faith in performing its obligations under this Agreement. |
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| 6.2. | The Indemnifying Party agrees to pay the Indemnified Party, promptly as such expenses are incurred and are due and payable, for any reasonable legal fees or other reasonable expenses incurred by them in connection with investigating or defending any such claim. |
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| 6.3. | The indemnity provisions contained herein shall be in addition to (i) any cause of action or similar rights of the Indemnified Party against the Indemnifying Party or others, and (ii) any liabilities to which the Indemnifying Party may be subject. |
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| 7. | Miscellaneous | |
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| 7.1. | Notices.All notices, demands, requests, consents, approvals, and other communications required or permitted hereunder shall be in writing and, unless otherwise specified herein, shall be (a) personally served, (b) deposited in the mail, registered or certified, return receipt requested, postage prepaid, (c) delivered by reputable air courier service with charges prepaid, or (d) transmitted by hand delivery or e-mail as a PDF with return receipt requested, addressed as set forth below or to such other address as such Party shall have specified most recently by written notice given in accordance herewith. Any notice or other communication required or permitted to be given hereunder shall be deemed effective (i) upon hand delivery if personally served; (ii) upon receipt of a return receipt if sent via e-mail; or (iii) on the second Business Day following the date of mailing if sent by a nationally recognized overnight courier, or on the fifth Business Day if deposited in the United States mail, in each case, fully prepaid, addressed to such address, or upon actual receipt of such mailing, whichever shall first occur. Notices shall be sent to the Parties as follows: |
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| If to a Purchaser, to the address as set forth on Exhibit A attached hereto. | |
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| If to the Company: | |
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| Glucose Health, Inc. |
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| Attn: Murray Fleming |
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| 609 SW 8th Street, Suite 600 |
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| Bentonville, AR 72712 |
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| Email: murray@glucosehealthinc.com |
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| With a copy, which shall not constitute notice, to: |
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| Allen Vellone Wolf Helfrich & Factor, P.C. |
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| Attn: Patrick J. Russell |
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| 1600 Stout Street, Suite 1100 |
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| Denver, CO 80202 |
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| Email: prussell@allen-vellone.com |
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| 7.2. | Entire Agreement; Amendments; and Waivers. This Agreement constitutes the entire understanding and agreement among the Parties relative to the subject matter hereof. Any amendments to the Agreement must be in writing, signed by each Party. The failure of any Party to enforce at any time any provision of this Agreement shall not be construed to be a waiver of the provision, nor in any way to affect the validity of this Agreement or any part hereof or the right of such Party thereafter to enforce each and every such provision. No waiver of any breach of this Agreement shall be held to constitute a waiver of any other or subsequent breach. |
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| 7.3. | Assignment. This Agreement shall not be assignable by any Party without the prior written consent of each of the other Parties, in each such other Party’s sole discretion. This Agreement shall be binding upon and inure to the benefit of the Parties and their permitted successors and assigns. |
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| 7.4. | Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Nevada, without application of the conflicts of laws provisions thereof. Each Party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such Party at the address in effect for notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof, provided that nothing in this Agreement will affect the right of any Party to this Agreement to serve process in any other manner permitted by law. |
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| 7.5. | JURY TRIAL WAIVER. EACH PARTY HEREBY WAIVES A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM BROUGHT BY ANY OF THE PARTIES AGAINST ANY OTHER PARTY IN RESPECT OF ANY MATTER ARISING OUT OF OR IN CONNECTION WITH THE TRANSACTION DOCUMENTS. EACH PARTY TO THIS AGREEMENT CERTIFIES AND ACKNOWLEDGES THAT (A) NO REPRESENTATIVE OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT SEEK TO ENFORCE THE FOREGOING WAIVER IN THE EVENT OF A LEGAL ACTION, (B) SUCH PARTY HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (C) SUCH PARTY MAKES THIS WAIVER VOLUNTARILY, AND (D) SUCH PARTY HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 7.5. |
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| 7.6. | Arbitration. |
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| 7.6.1. | If any Parties are unable to resolve any dispute, claim, or controversy arising out of or relating to this Agreement, including with respect to the meaning, effect, validity, termination, interpretation, performance, or enforcement of this Agreement, or any alleged breach thereof, and including any action in tort, contract, equity, or otherwise (each, a “Dispute”), the Parties agree that for a 30-day period following written notice from any Party which is a party to or involved in the Dispute (each a “Dispute Party”), an officer or representative designated by each such Dispute Party shall attempt to resolve such Dispute. |
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| 7.6.2. | If the Dispute Parties are unable to resolve a Dispute within the period set forth in Section 7.6.1 above, any Dispute Party which may initiate a binding arbitration process as set forth herein by sending written notice to the other Dispute Party(ies) (the “Arbitration Notice”). Binding arbitration shall be the sole means of resolving any Dispute. |
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| 7.6.3. | Within fifteen (15) Business Days after a Dispute Party delivers an Arbitration Notice, the Dispute Parties shall mutually agree on a single arbitrator (“Arbitrator”) who has not performed professional services for any Dispute Party or any of their respective Affiliates during the previous five (5) years. If the Dispute Parties cannot agree upon the identity of the Arbitrator within such time period, each Dispute Party shall select one arbitrator and the arbitrators so selected shall select the sole Arbitrator, who shall resolve the Dispute. |
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| 7.6.4. | In any arbitration hereunder, this Agreement and any agreement contemplated hereby shall be governed by the laws of the State of Nevada but the specific procedure to be followed shall be determined by the Arbitrator in accordance with the Commercial Arbitration Rules of the American Arbitration Association (“AAA”), as conducted and processed under the Expedited Procedures thereof, to the extent that such rules do not conflict with the terms of this Agreement. On application to the Arbitrator, any Dispute Party shall have rights to discovery to the same extent as would be provided under the Federal Rules of Civil Procedure, and the Federal Rules of Evidence shall apply to any arbitration under this Agreement. The arbitration shall be held in Denver, Colorado. |
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| 7.6.5. | The Arbitrator shall issue a written decision, setting forth findings of fact and conclusions of law, within thirty (30) days after the conclusion of the arbitration proceeding at which the Dispute Parties present their respective evidence, witness testimony and arguments concerning the Dispute. The determination of the Arbitrator shall be final and binding upon the Dispute Parties and not subject to appeal. |
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| 7.6.6. | The costs incurred in employing the Arbitrator shall be borne equally by the Dispute Parties. The Arbitrator, as part of his final decision, shall award the prevailing party its reasonable attorneys’ fees, expert witness fees and related out-of-pocket costs incurred with respect to the arbitration, provided, however, that in the event each party prevails in part, all of such costs and expenses shall be allocated according to the relative degree which each Dispute Party is a prevailing Party. |
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| 7.6.7. | Any judgment upon any award rendered by the Arbitrator may be entered in and enforced by any court of competent jurisdiction. The Parties expressly consent to the non-exclusive jurisdiction of the courts (Federal and state) in the City and County of Denver, Colorado to enforce any award of the Arbitrator or to render any provisional, temporary, or injunctive relief in connection with or in aid of the Arbitration. The Parties expressly consent to the personal and subject matter jurisdiction of the Arbitrator to arbitrate any and all matters to be submitted to arbitration hereunder. |
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| 7.7. | No Brokers. Each Party represents and warrants that no brokerage or finder’s fees or commissions are or will be payable by any Party or any other party to any broker, financial advisor or consultant, finder, placement agent, investment banker, bank or other Person with respect to the transactions contemplated by the Transaction Documents as a result of any agreement of the representing Party or its Affiliates. |
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| 7.8. | Successors and Assigns. The Agreement shall be binding upon and inure to the benefit of the Parties and their respective heirs, administrators, successors and assigns. |
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| 7.9. | No Third Party Beneficiaries. This Agreement is intended for the benefit of the Parties and their respective successors, and is not for the benefit of, nor may any provision hereof be enforced by, any other Person, except as set forth in Section 6. |
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| 7.10. | Fees and Expenses. Except as expressly set forth in the Transaction Documents or any other writing to the contrary, each Party shall pay the fees and expenses of its advisers, counsel, accountants and other experts, if any, and all other expenses incurred by such Party incident to the negotiation, preparation, execution, delivery and performance of this Agreement. The Company shall pay all Transfer Agent fees (including, without limitation, any fees required for same-day processing of any instruction letter delivered by the Company), stamp taxes and other taxes and duties levied in connection with the delivery of any Purchased Stock to the Purchasers. |
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| 7.11. | Partial Invalidity. In case any one or more of the provisions contained in this Agreement shall for any reason be held to be invalid, illegal, or unenforceable in any respect, such invalidity, illegality, or unenforceability shall not affect any other provision hereof, and this Agreement shall be construed as if such invalid, illegal, or unenforceable provision had never been contained herein, unless the deletion of the provision of provisions would result in such a material change as to cause completion of the transactions contemplated herein to be unreasonable. |
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| 7.12. | Further Assurances. Each Party shall do and perform, or cause to be done and performed, without further consideration, all such further acts and things, and shall execute and deliver all such other agreements, certificates, instruments and documents, as any other Party may reasonably request in order to carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions contemplated hereby. |
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| 7.13. | No Strict Construction. The language used in this Agreement will be deemed to be the language chosen by the Parties to express their mutual intent, and no rules of strict construction will be applied against any Party. |
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| 7.14. | Equitable Relief. Each Party acknowledges that a breach by it or him of its or his obligations hereunder will cause irreparable harm to the other Parties by vitiating the intent and purpose of the transaction contemplated hereby. Accordingly, each Party acknowledges that the remedy at law for a breach of its or his obligations under this Agreement will be inadequate and agrees, in the event of a breach or threatened breach by such Party of the provisions of this Agreement, that the other Parties shall be entitled, in addition to all other available remedies at law or in equity, to an injunction or injunctions restraining, preventing or curing any breach of this Agreement and to enforce specifically the terms and provisions hereof, without the necessity of showing economic loss and without any bond or other security being required. No remedy conferred upon a Party hereunder is intended to be exclusive of any other remedy provided for in this Agreement, and each remedy provided to a Party by this Agreement will be cumulative and in addition to every other remedy available to such Party under this Agreement. No single or partial exercise of any remedy will preclude any other or further exercise thereof. |
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| 7.15. | Interpretation. The headings, titles and subtitles used in this Agreement are used for the convenience of reference and are not to be considered in construing or interpreting this Agreement. For purposes of this Agreement, (a) the words “include,” “includes” and “including” shall be deemed to be followed by the words “without limitation”; (b) the word “or” is not exclusive; and (c) the words “herein,” “hereof,” “hereby,” “hereto” and “hereunder” refer to this Agreement as a whole. Unless the context otherwise requires, references herein: (x) to Articles and Sections means the Articles and Sections of this Agreement; (y) to an agreement, instrument or other document means such agreement, instrument or other document as amended, supplemented and modified from time to time to the extent permitted by the provisions thereof and (z) to a statute means such statute as amended from time to time and includes any successor legislation thereto and any regulations promulgated thereunder. |
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| 7.16. | Limitation on Damages. NOTWITHSTANDING ANYTHING IN THIS AGREEMENT OR THE TRANSACTION DOCUMENTS TO THE CONTRARY, EACH PARTY HEREBY EXPRESSLY DISCLAIMS, RELEASES AND WAIVES ANY CLAIMS AGAINST THE OTHER PARTY FOR ANY CONSEQUENTIAL, PUNITIVE, EXEMPLARY, SPECIAL OR INDIRECT DAMAGES. |
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| 7.17. | Joint Preparation. This Agreement shall be deemed for all purposes to have been prepared through the joint efforts of the Parties hereto and shall not be construed for or against one Party or any other Party as a result of the preparation, submittal, drafting, execution or other event of negotiation thereof. |
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| 7.18. | Counterparts. This Agreement may be executed in multiple counterparts which shall together be constitute one and the same instrument. This Agreement may be delivered to Parties by e-mail of a PDF copy of this Agreement bearing the signature of the Parties so delivering this Agreement, which shall be deemed to have the same legal effect as delivery of an original signed copy of this Agreement. |
| 11 |
IN WITNESS WHEREOF, the Parties have either individually or by their duly authorized officers executed and delivered this Agreement as of the Closing Date.
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| COMPANY: |
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| GLUCOSE HEALTH, INC. |
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| By: |
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| Name: | Murray Fleming |
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| Title: | Chief Executive Officer |
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| PURCHASERS: |
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| 12 |
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| 13 |
Exhibit A
Purchased Stock, Purchase Price and Address for Notices
| Purchaser |
| Purchased Series D Preferred Stock |
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| Series D Purchase Price |
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| Total Purchase Price |
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| Address for Notices | ||||
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| Totals: |
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| 3,000,000 |
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| $ | 300,000 |
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| $ | 300,000 |
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| 14 |
Exhibit B
Certificate of Designation of Series D Preferred Stock
| 15 |
EXHIBIT 10.5
Stock Purchase Agreement
GLUCOSE HEALTH, INC.
THIS STOCK PURCHASE AGREEMENT (the “Agreement”) is entered into as of February 11, 2021 (the “Closing Date”), by and between GLUCOSE HEALTH, INC., a Nevada corporation (the “Company”) and each of the purchaser(s) as set forth on the signature pages hereof (each, a “Purchaser” and collectively, the “Purchasers”). Each of the Company and each Purchaser may be referred to herein individually as a “Party” and collectively as the “Parties.”
RECITALS
WHEREAS, the Company desires to raise from interested investors up to an aggregate amount of $960,000.00 from the offer and sale of 480,000 shares of Series E Preferred Stock, par value $0.001, of the Company (the “Series E Preferred Stock”) at a price of $2.00 per share;
WHEREAS, each Purchaser wishes to purchase from the Company and the Company wishes to sell to such Purchaser, upon the terms and conditions stated in this Agreement, certain shares of the Series E Preferred Stock, and the Parties shall undertake such additional actions as set forth herein;
WHEREAS, Company and each Purchaser are executing and delivering this Agreement in reliance upon the exemption from securities registration afforded by Rule 506 promulgated under Regulation D pursuant to the Securities Act of 1933, as amended (the “Securities Act”), and such other Federal and state securities exemptions as may be deemed available;
NOW, THEREFORE, in consideration of the mutual covenants contained in this Agreement, and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the Parties hereby agree as follows:
| 1. | Definitions. In addition to the other terms as defined herein, for purposes of this Agreement the following terms shall have the following meaning: |
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“Affiliate” means, with respect to any Person, any other Person directly or indirectly Controlling, Controlled by, or under common Control with such Person.
“Business Day” shall mean any day on which commercial banks in the State of Nevada are generally open for business.
“Certificate of Designation” means the Certificate of Designation as filed with the Secretary of State of the State of Nevada, as attached hereto as Exhibit B.
“Control” of a Person means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities, by contract, or otherwise. “Controlled”, “Controlling” and “under common Control with” have correlative meanings. Without limiting the foregoing a Person (the “Controlled Person”) shall be deemed Controlled by (a) any other Person (the “10% Owner”) (i) owning beneficially, as meant in Rule 13d-3 under the Exchange Act, securities entitling such Person to cast 10% or more of the votes for election of directors or equivalent governing authority of the Controlled Person or (ii) entitled to be allocated or receive 10% or more of the profits, losses, or distributions of the Controlled Person; (b) an officer, director, general partner, partner (other than a limited partner), manager, or member (other than a member having no management authority that is not a 10% Owner ) of the Controlled Person; or (c) a spouse, parent, lineal descendant, sibling, aunt, uncle, niece, nephew, mother-in-law, father-in-law, sister-in-law, or brother-in-law of an Affiliate of the Controlled Person or a trust for the benefit of an Affiliate of the Controlled Person or of which an Affiliate of the Controlled Person is a trustee. |
| 1 |
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| “Damages” means any loss, claim, damage, liability, cost and expense (including, without limitation, reasonable attorneys’ fees and disbursements and costs and expenses of expert witnesses and investigation), provided, however, that “Damages” shall not include punitive damages, except to the extent actually awarded to any Governmental Authority or other third party, or consequential damages or lost profits in any case.
“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.
“Governmental Authority” means any federal, state, local or foreign government or political subdivision thereof, or any agency or instrumentality of such government or political subdivision, or any self-regulated organization or other non-governmental regulatory authority or quasi-governmental authority (to the extent that the rules, regulations or orders of such organization or authority have the force of law), or any arbitrator, court or tribunal of competent jurisdiction.
“Lien” means a lien, charge, pledge, security interest, encumbrance, right of first refusal, preemptive right or any other restriction.
“Person” means an individual, a corporation, a partnership, an association, a trust or other entity or organization, including a government or political subdivision or an agency or instrumentality thereof.
“Transaction Documents” means this Agreement, the Certificate of Designation and any other agreements or documents entered into in connection herewith or therewith. | |
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| 2. | Purchase and Sale. | |
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| 2.1. | Upon the terms and conditions set forth herein, on the Closing Date, and immediately following the execution of this Agreement, the Company will issue and sell to each Purchaser, and each Purchaser shall purchase from the Company, (i) the number of shares of Series E Preferred Stock as set forth for each Purchaser on Exhibit A (as to each applicable Purchaser, the “Purchased Series E Preferred Stock”) at the price of $2.00 per share of Purchased Series E Preferred Stock, being an aggregate purchase price as set forth for each Purchaser on Exhibit A (as to each applicable Purchaser, the “Series E Purchase Price”). The Series E Preferred Purchase Price, as to each Purchaser and as set forth on Exhibit A in the column entitled “Total Purchase Price,” shall be referred to herein collectively as the “Purchase Price.” The Purchased Series E Preferred Stock, as to each Purchaser and as set forth on Exhibit A, shall be referred to herein collectively as the “Purchased Stock.” |
| 2 |
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| 2.2. | The “Closing” of the transaction contemplated hereby shall be held on the Closing Date immediately following the execution of this Agreement. The Closing shall be conducted without a formal meeting of the Parties unless otherwise mutually agreed to by the Parties. |
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| 2.3. | At the Closing: |
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| 2.3.1. | Each Purchaser shall pay the Purchase Price identified for such Purchaser on Exhibit A, by check payable to the Company or wire transfer of immediately available funds to the Company, in accordance with the Company’s written wire transfer instructions provided prior to, or at, the Closing; and |
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| 2.3.2. | Upon receipt of the Purchase Price paid by a specific Purchaser, the Company shall instruct its transfer agent to deliver to such Purchaser a statement indicating the journal entry recording the Purchased Stock being acquired by such Purchaser hereunder, provided, that if so requested by a Purchaser, the Company shall deliver to such Purchaser certificates representing the Purchased Stock; and |
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| 2.3.3. | The Company and each Purchaser shall execute and deliver such other documents or instruments as may be reasonably necessary to consummate and effect the transactions contemplated by this Agreement and the Transaction Documents. |
| 3. | Use of Proceeds. The Company covenants and agrees that it shall utilize the total Purchase Price paid by all Purchasers in furtherance of its business and financial affairs including, without limitation, efforts to prepare and ship its glucose products to new pharmacy and drug store chains. |
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| 4. | Representations and Warranties of the Company. The Company hereby represents and warrants to each Purchaser as of the Closing Date as follows: |
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| 4.1. | The Company is a corporation duly incorporated, validly existing and in good standing under the laws of the State of Nevada, with the requisite power and authority to own and use its properties and assets and to carry on its business as currently conducted. The Company is not in violation or default of any of the provisions of its Articles of Incorporation, bylaws or other organizational or charter documents. The Company is duly qualified to conduct business and is in good standing as a foreign corporation in each jurisdiction in which the nature of the business conducted or property owned by it makes such qualification necessary. |
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| 4.2. | The Company has the requisite corporate power and authority to enter into and perform its obligations under this Agreement and the Transaction Documents. The execution and delivery of this Agreement and the Transaction Documents by the Company and the consummation by it of the transactions contemplated hereby and thereby have been duly authorized by all necessary corporate action and no further consent or authorization of the Company or its Board of Directors or stockholders is required. This Agreement has been duly executed and delivered by the Company and constitutes a valid and binding obligation of the Company enforceable against the Company in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, or similar laws relating to, or affecting generally the enforcement of, creditors’ rights and remedies or by other equitable principles of general application. |
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| 4.3. | There are no stockholders’ agreements, voting agreements or other similar agreements with respect to the Company’s capital stock to which the Company is a party or, to the knowledge of the Company, between or among any of the Company’s stockholders. |
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| 4.4. | The authorized capital stock of the Company shall consist of the following: |
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| 4.4.1. | 200,000,000 shares of Common Stock, of which 11,104,285 shares of Common Stock are issued and outstanding; and |
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| 4.4.2. | 8,334,336 shares of preferred stock, par value $0.001 per share, whereby 1,000 shares have been designated as the Series A Preferred Stock, par value $0.001 per share, of which 1,000 shares are issued and outstanding; whereby 3,466,668 shares have been designated as the Series B Preferred Stock, par value $0.001 per share, of which 3,466,668 shares are issued and outstanding; and whereby 866,668 shares shall be designated as the Series C Preferred Stock, of which 866,668 shares are issued and outstanding; whereby 3,000,000 shares have been designated as the Series D Preferred Stock, of which 3,000,000 shares are issued and outstanding; and whereby 480,000 shares have been designated as the Series E Preferred Stock, none of which are issued and outstanding. |
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| 4.5. | The Certificate of Designation has been filed with, and has been declared effective by, the Secretary of State of the State of Nevada effective as of the Closing Date. |
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| 4.6. | The Purchased Stock being acquired by each Purchaser is duly authorized and, when issued and paid for in accordance with this Agreement, will be validly issued, fully paid, and non-assessable, free and clear of all Liens, other than restrictions on transfer provided for in the Transaction Documents and under the Securities Act or other applicable laws. |
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| 4.7. | The execution, delivery and performance of this Agreement and the other Transaction Documents by the Company, and the consummation by the Company of the transactions contemplated hereby, including, without limitation, the issuance of the Purchased Stock, do not and will not: (a) result in a violation of the Company’s Articles of Incorporation, bylaws or other organizational or charter documents, (b) conflict with, or constitute a material default (or an event that with notice or lapse of time or both would become a material default) under, result in the creation of any Lien or encumbrance upon any of the properties or assets of the Company, or give to others any rights of termination, amendment, acceleration or cancellation of, any agreement, indenture or other instrument to which the Company is a party, or (c) result in a violation of any federal, state or local law, rule, regulation, order, judgment or decree (including federal and state securities laws and regulations) applicable to the Company or by which any property or asset of the Company is bound or affected, nor is the Company otherwise in violation of, conflict with or in default under any of the foregoing. The Company is not required under federal, state or local law, rule or regulation to obtain any consent, authorization or order of, or make any filing or registration with, any court or governmental agency in order for it to execute, deliver or perform any of its obligations under this Agreement or the other Transaction Documents except for filing a Form D with the U.S. Securities and Exchange Commission and with the State of residence of any purchaser acquiring shares of Common Stock and/or Series E Preferred Stock which are being sold by the Company |
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| 4.8. | The Company acknowledges and agrees that each Purchaser is acting solely in the capacity of an arm’s length purchaser with respect to the transactions contemplated by the Transaction Documents. The Company further acknowledges that no Purchaser is acting as a financial advisor or fiduciary of the Company (or in any similar capacity) with respect to the Transaction Documents and the transactions contemplated hereby and thereby and any advice given by any Purchaser or any of its representatives or agents in connection with the Transaction Documents and the transactions contemplated hereby and thereby is merely incidental to such Purchaser’s purchase of the Purchased Stock. The Company further represents to each Purchaser that the Company’s decision to enter into the Transaction Documents has been based solely on the independent evaluation by the Company and its representatives and advisors. |
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| 4.9. | Neither the Company nor any of its Affiliates, nor any Person acting on their behalf, has engaged in any form of general solicitation or general advertising (within the meaning of Regulation D under the Securities Act) in connection with the offer or sale of the Purchased Stock. Neither the Company nor any of its Affiliates, nor any Person acting on their behalf has, directly or indirectly, made any offers or sales of any security or solicited any offers to buy any security, under circumstances that would require registration of such offer and sale under the Securities Act, whether through integration with prior offerings or otherwise, or cause this offering of the Purchased Stock to be integrated with prior offerings by the Company in a manner that would require stockholder approval. |
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| 4.10. | None of the Company, any of its predecessors, any Affiliated issuer, any director, executive officer, other officer of the Company participating in the offering contemplated hereby, any beneficial owner of 20% or more of the Company’s outstanding voting equity securities, calculated on the basis of voting power, nor any promoter (as that term is defined in Rule 405 under the Securities Act) connected with the Company in any capacity at the time of sale (each, an “Issuer Covered Person”) is subject to any of the “Bad Actor” disqualifications described in Rule 506(d)(1)(i) to (viii) under the Securities Act (a “Disqualification Event”), except for a Disqualification Event covered by Rule 506(d)(2) or (d)(3) under the Securities Act. The Company has exercised reasonable care to determine whether any Issuer Covered Person is subject to a Disqualification Event. |
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| 5. | Representations and Warranties of Each Purchaser. Each Purchaser, severally and not jointly and severely and solely with respect to such Purchaser and the Purchased Stock being acquired by such Purchaser hereunder, hereby represents and warrants to the Company as of the Closing Date as follows: | |
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| 5.1. | Such Purchaser has all power and authority to execute, deliver and perform this Agreement. |
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| 5.2. | This Agreement is the valid and binding obligation of such Purchaser, enforceable against such Purchaser in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, or similar laws relating to, or affecting generally the enforcement of, creditors’ rights and remedies or by other equitable principles of general application. |
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| 5.3. | The Purchased Stock being acquired by such Purchaser is being acquired for investment for the account of such Purchaser and not with a view to the distribution or public offering thereof. In connection therewith, such Purchaser confirms that such Purchaser is an “accredited investor” within the meaning of Rule 501(a) under Regulation D under the Securities Act since the designated beneficiary of the self-directed IRA account in which Purchaser acts as custodian is an “accredited investor.”. |
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| 5.4. | Such Purchaser has not been contacted concerning the acquired Purchased Stock being acquired by such Purchaser or the matters set forth in this Agreement by means of any advertisement or other general solicitation. |
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| 5.5. | Such Purchaser understands that the Company does not have a class of securities registered and is not subject to the Exchange Act. |
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| 5.6. | Such Purchaser understands that (i) the Purchased Stock being acquired by such Purchaser has not been registered under either the Securities Act or the securities laws of any state by reason of specific exemptions therefrom and that such securities may be resold in the United States without registration under the Securities Act only in certain limited circumstances. Such Purchaser acknowledges that any certificates representing the Purchased Stock being acquired by such Purchaser will bear a restrictive legend substantially as follows: |
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| THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR THE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES. THE SECURITIES REPRESENTED HEREBY ARE RESTRICTED AND MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO REGISTRATION UNDER THE SECURITIES ACT OR AN AVAILABLE REGISTRATION EXEMPTION TO THE SATISFACTION OF THE COMPANY AND IN COMPLIANCE WITH THE TERMS HEREIN. |
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| 5.7. | Such Purchaser has access to information relating to Company, and has had an opportunity to ask questions of, and receive answers from, the Company and its authorized representatives, as such Purchaser deems necessary to make an informed investment decision in connection with the Purchased Stock being acquired by such Purchaser including, without limitation, the Company’s quarterly and annual reports posted at OTC Markets.com. |
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| 6. | Indemnification. | |
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| 6.1. | Each Party (an “Indemnifying Party”) agrees to indemnify and hold harmless the other Parties along with their respective Affiliates, officers, directors, employees, representatives and authorized agents (an “Indemnified Party”) from and against any Damages, joint or several, and any action in respect thereof to which the Indemnified Party becomes subject to, resulting from, arising out of or relating to any misrepresentation contained in this Agreement, breach of representation or warranty contained in this Agreement or nonfulfillment of or failure to perform any covenant or agreement contained in this Agreement, in each case on the part of the Indemnifying Party, in each case except to the extent such Damages result from the Indemnified Party’s misrepresentation hereunder, breach of any representation or warranty hereunder or failure to perform any covenant or agreement hereunder or the Indemnified Party’s negligence, recklessness or bad faith in performing its obligations under this Agreement. |
| 6 |
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| 6.2. | The Indemnifying Party agrees to pay the Indemnified Party, promptly as such expenses are incurred and are due and payable, for any reasonable legal fees or other reasonable expenses incurred by them in connection with investigating or defending any such claim. |
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| 6.3. | The indemnity provisions contained herein shall be in addition to (i) any cause of action or similar rights of the Indemnified Party against the Indemnifying Party or others, and (ii) any liabilities to which the Indemnifying Party may be subject. |
| 7. | Miscellaneous | |
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| 7.1. | Notices.All notices, demands, requests, consents, approvals, and other communications required or permitted hereunder shall be in writing and, unless otherwise specified herein, shall be (a) personally served, (b) deposited in the mail, registered or certified, return receipt requested, postage prepaid, (c) delivered by reputable air courier service with charges prepaid, or (d) transmitted by hand delivery or e-mail as a PDF with return receipt requested, addressed as set forth below or to such other address as such Party shall have specified most recently by written notice given in accordance herewith. Any notice or other communication required or permitted to be given hereunder shall be deemed effective (i) upon hand delivery if personally served; (ii) upon receipt of a return receipt if sent via e-mail; or (iii) on the second Business Day following the date of mailing if sent by a nationally recognized overnight courier, or on the fifth Business Day if deposited in the United States mail, in each case, fully prepaid, addressed to such address, or upon actual receipt of such mailing, whichever shall first occur. Notices shall be sent to the Parties as follows: |
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| If to a Purchaser, to the address as set forth on Exhibit A attached hereto. |
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| If to the Company: |
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| Glucose Health, Inc. |
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| Attn: Murray Fleming |
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| 609 SW 8th Street, Suite 600 |
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| Bentonville, AR 72712 |
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| Email: murray@glucosehealthinc.com |
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| With a copy, which shall not constitute notice, to: |
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| Allen Vellone Wolf Helfrich & Factor, P.C. |
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| Attn: Patrick J. Russell |
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| 1600 Stout Street, Suite 1900 |
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| Denver, CO 80202 |
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| Email: prussell@allen-vellone.com |
| 7 |
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| 7.2. | Entire Agreement; Amendments; and Waivers. This Agreement constitutes the entire understanding and agreement among the Parties relative to the subject matter hereof. Any amendments to the Agreement must be in writing, signed by each Party. The failure of any Party to enforce at any time any provision of this Agreement shall not be construed to be a waiver of the provision, nor in any way to affect the validity of this Agreement or any part hereof or the right of such Party thereafter to enforce each and every such provision. No waiver of any breach of this Agreement shall be held to constitute a waiver of any other or subsequent breach. |
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| 7.3. | Assignment. This Agreement shall not be assignable by any Party without the prior written consent of each of the other Parties, in each such other Party’s sole discretion. This Agreement shall be binding upon and inure to the benefit of the Parties and their permitted successors and assigns. |
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| 7.4. | Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Nevada, without application of the conflicts of laws provisions thereof. Each Party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such Party at the address in effect for notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof, provided that nothing in this Agreement will affect the right of any Party to this Agreement to serve process in any other manner permitted by law. |
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| 7.5. | JURY TRIAL WAIVER. EACH PARTY HEREBY WAIVES A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM BROUGHT BY ANY OF THE PARTIES AGAINST ANY OTHER PARTY IN RESPECT OF ANY MATTER ARISING OUT OF OR IN CONNECTION WITH THE TRANSACTION DOCUMENTS. EACH PARTY TO THIS AGREEMENT CERTIFIES AND ACKNOWLEDGES THAT (A) NO REPRESENTATIVE OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT SEEK TO ENFORCE THE FOREGOING WAIVER IN THE EVENT OF A LEGAL ACTION, (B) SUCH PARTY HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (C) SUCH PARTY MAKES THIS WAIVER VOLUNTARILY, AND (D) SUCH PARTY HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 7.5. |
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| 7.6. | Arbitration. |
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| 7.6.1. | If any Parties are unable to resolve any dispute, claim, or controversy arising out of or relating to this Agreement, including with respect to the meaning, effect, validity, termination, interpretation, performance, or enforcement of this Agreement, or any alleged breach thereof, and including any action in tort, contract, equity, or otherwise (each, a “Dispute”), the Parties agree that for a 30-day period following written notice from any Party which is a party to or involved in the Dispute (each a “Dispute Party”), an officer or representative designated by each such Dispute Party shall attempt to resolve such Dispute. |
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| 7.6.2. | If the Dispute Parties are unable to resolve a Dispute within the period set forth in Section 7.6.1 above, any Dispute Party which may initiate a binding arbitration process as set forth herein by sending written notice to the other Dispute Party(ies) (the “Arbitration Notice”). Binding arbitration shall be the sole means of resolving any Dispute. |
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| 7.6.3. | Within fifteen (15) Business Days after a Dispute Party delivers an Arbitration Notice, the Dispute Parties shall mutually agree on a single arbitrator (“Arbitrator”) who has not performed professional services for any Dispute Party or any of their respective Affiliates during the previous five (5) years. If the Dispute Parties cannot agree upon the identity of the Arbitrator within such time period, each Dispute Party shall select one arbitrator and the arbitrators so selected shall select the sole Arbitrator, who shall resolve the Dispute. |
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| 7.6.4. | In any arbitration hereunder, this Agreement and any agreement contemplated hereby shall be governed by the laws of the State of Nevada but the specific procedure to be followed shall be determined by the Arbitrator in accordance with the Commercial Arbitration Rules of the American Arbitration Association (“AAA”), as conducted and processed under the Expedited Procedures thereof, to the extent that such rules do not conflict with the terms of this Agreement. On application to the Arbitrator, any Dispute Party shall have rights to discovery to the same extent as would be provided under the Federal Rules of Civil Procedure, and the Federal Rules of Evidence shall apply to any arbitration under this Agreement. The arbitration shall be held in Denver, Colorado. |
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| 7.6.5. | The Arbitrator shall issue a written decision, setting forth findings of fact and conclusions of law, within thirty (30) days after the conclusion of the arbitration proceeding at which the Dispute Parties present their respective evidence, witness testimony and arguments concerning the Dispute. The determination of the Arbitrator shall be final and binding upon the Dispute Parties and not subject to appeal. |
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| 7.6.6. | The costs incurred in employing the Arbitrator shall be borne equally by the Dispute Parties. The Arbitrator, as part of his final decision, shall award the prevailing party its reasonable attorneys’ fees, expert witness fees and related out-of-pocket costs incurred with respect to the arbitration, provided, however, that in the event each party prevails in part, all of such costs and expenses shall be allocated according to the relative degree which each Dispute Party is a prevailing Party. |
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| 7.6.7. | Any judgment upon any award rendered by the Arbitrator may be entered in and enforced by any court of competent jurisdiction. The Parties expressly consent to the non-exclusive jurisdiction of the courts (Federal and state) in the City and County of Denver, Colorado to enforce any award of the Arbitrator or to render any provisional, temporary, or injunctive relief in connection with or in aid of the Arbitration. The Parties expressly consent to the personal and subject matter jurisdiction of the Arbitrator to arbitrate any and all matters to be submitted to arbitration hereunder. |
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| 7.7. | No Brokers. Each Party represents and warrants that no brokerage or finder’s fees or commissions are or will be payable by any Party or any other party to any broker, financial advisor or consultant, finder, placement agent, investment banker, bank or other Person with respect to the transactions contemplated by the Transaction Documents as a result of any agreement of the representing Party or its Affiliates. |
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| 7.8. | Successors and Assigns. The Agreement shall be binding upon and inure to the benefit of the Parties and their respective heirs, administrators, successors and assigns. |
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| 7.9. | No Third Party Beneficiaries. This Agreement is intended for the benefit of the Parties and their respective successors, and is not for the benefit of, nor may any provision hereof be enforced by, any other Person, except as set forth in Section 6. |
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| 7.10. | Fees and Expenses. Except as expressly set forth in the Transaction Documents or any other writing to the contrary, each Party shall pay the fees and expenses of its advisers, counsel, accountants and other experts, if any, and all other expenses incurred by such Party incident to the negotiation, preparation, execution, delivery and performance of this Agreement. The Company shall pay all Transfer Agent fees (including, without limitation, any fees required for same-day processing of any instruction letter delivered by the Company), stamp taxes and other taxes and duties levied in connection with the delivery of any Purchased Stock to the Purchasers. |
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| 7.11. | Partial Invalidity. In case any one or more of the provisions contained in this Agreement shall for any reason be held to be invalid, illegal, or unenforceable in any respect, such invalidity, illegality, or unenforceability shall not affect any other provision hereof, and this Agreement shall be construed as if such invalid, illegal, or unenforceable provision had never been contained herein, unless the deletion of the provision of provisions would result in such a material change as to cause completion of the transactions contemplated herein to be unreasonable. |
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| 7.12. | Further Assurances. Each Party shall do and perform, or cause to be done and performed, without further consideration, all such further acts and things, and shall execute and deliver all such other agreements, certificates, instruments and documents, as any other Party may reasonably request in order to carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions contemplated hereby. |
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| 7.13. | No Strict Construction. The language used in this Agreement will be deemed to be the language chosen by the Parties to express their mutual intent, and no rules of strict construction will be applied against any Party. |
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| 7.14. | Equitable Relief. Each Party acknowledges that a breach by it or him of its or his obligations hereunder will cause irreparable harm to the other Parties by vitiating the intent and purpose of the transaction contemplated hereby. Accordingly, each Party acknowledges that the remedy at law for a breach of its or his obligations under this Agreement will be inadequate and agrees, in the event of a breach or threatened breach by such Party of the provisions of this Agreement, that the other Parties shall be entitled, in addition to all other available remedies at law or in equity, to an injunction or injunctions restraining, preventing or curing any breach of this Agreement and to enforce specifically the terms and provisions hereof, without the necessity of showing economic loss and without any bond or other security being required. No remedy conferred upon a Party hereunder is intended to be exclusive of any other remedy provided for in this Agreement, and each remedy provided to a Party by this Agreement will be cumulative and in addition to every other remedy available to such Party under this Agreement. No single or partial exercise of any remedy will preclude any other or further exercise thereof. |
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| 7.15. | Interpretation. The headings, titles and subtitles used in this Agreement are used for the convenience of reference and are not to be considered in construing or interpreting this Agreement. For purposes of this Agreement, (a) the words “include,” “includes” and “including” shall be deemed to be followed by the words “without limitation”; (b) the word “or” is not exclusive; and (c) the words “herein,” “hereof,” “hereby,” “hereto” and “hereunder” refer to this Agreement as a whole. Unless the context otherwise requires, references herein: (x) to Articles and Sections means the Articles and Sections of this Agreement; (y) to an agreement, instrument or other document means such agreement, instrument or other document as amended, supplemented and modified from time to time to the extent permitted by the provisions thereof and (z) to a statute means such statute as amended from time to time and includes any successor legislation thereto and any regulations promulgated thereunder. |
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| 7.16. | Limitation on Damages. NOTWITHSTANDING ANYTHING IN THIS AGREEMENT OR THE TRANSACTION DOCUMENTS TO THE CONTRARY, EACH PARTY HEREBY EXPRESSLY DISCLAIMS, RELEASES AND WAIVES ANY CLAIMS AGAINST THE OTHER PARTY FOR ANY CONSEQUENTIAL, PUNITIVE, EXEMPLARY, SPECIAL OR INDIRECT DAMAGES. |
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| 7.17. | Joint Preparation. This Agreement shall be deemed for all purposes to have been prepared through the joint efforts of the Parties hereto and shall not be construed for or against one Party or any other Party as a result of the preparation, submittal, drafting, execution or other event of negotiation thereof. |
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| 7.18. | Counterparts. This Agreement may be executed in multiple counterparts which shall together be constitute one and the same instrument. This Agreement may be delivered to Parties by e-mail of a PDF copy of this Agreement bearing the signature of the Parties so delivering this Agreement, which shall be deemed to have the same legal effect as delivery of an original signed copy of this Agreement. |
| 11 |
IN WITNESS WHEREOF, the Parties have either individually or by their duly authorized officers executed and delivered this Agreement as of the Closing Date.
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| COMPANY: |
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| GLUCOSE HEALTH, INC. |
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| By: |
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| Name: | Murray Fleming |
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| Title: | Chief Executive Officer |
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| PURCHASER: |
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| 12 |
Exhibit A
Purchased Stock, Purchase Price and Address for Notices
| Purchaser |
| Purchased Series E Preferred Stock |
| Series E Purchase Price |
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| Total Purchase Price |
| Address for Notices | ||
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| Totals: |
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| 13 |
Exhibit B
Certificate of Designation of Series E Preferred Stock
| 14 |
EXHIBIT 10.6
THIS PROMISSORY NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT’), OR WITH ANY STATE SECURITIES COMMISSION. THE SECURITY EVIDENCED BY THIS PROMISSORY NOTE IS RESTRICTED AND MAY NOT BE OFFERED, RESOLD, PLEDGED OR TRANSFERRED EXCEPT PURSUANT TO REGISTRATION UNDER THE ACT OR AN AVAILABLE EXEMPTION ESTABLISHED TO THE SATISFACTION OF THE COMPANY AND IN COMPLIANCE WITH THE TERMS HEREIN.
| $112,157.36 | April 1, 2016 |
CONSOLIDATED
CONVERTIBLE PROMISSORY NOTE
THIS CONSOLIDATED CONVERTIBLE PROMISSORY NOTE is made and issued by GLUCOSE HEALTH, INC. (the "Company” or “Maker”), a corporation duly organized and existing under the laws of the State of Nevada, under the following circumstances:
PRELIMINARY STATEMENTS
A. From August 2, 2013 through and including April 1, 2016, the Company issued 20 separate convertible promissory notes in various principal amounts aggregating a total principal amount of $112,157.36 (the “Old Notes”) payable to the order of BTB Management LLC. (the “Holder”).
B. The Company and the Holder have agreed that the Old Notes and all current obligations due and owing under the Old Notes shall be exchanged for, and henceforth evidenced by this Consolidated Convertible Promissory Note issued to the Holder by the Company.
NOW, THEREFORE, in consideration of the premises and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Company and the Holder hereby covenant and agree that the Old Notes have been exchanged and the outstanding principal and accrued interest due thereon are hereby consolidated and restated in their entirety as follows (as consolidated and restated, the “Note”):
FOR VALUE RECEIVED, the undersigned, Glucose Health Inc. (the “Company”), a Nevada corporation, located at 609 SW 8th Street, Suite 600, Bentonville, Arkansas 72712, promises to pay to the order of BTB Management LLC (the “Holder”), a 
, the principal sum of One-Hundred Twelve Thousand One Hundred Fifty-Seven Dollars and 36/100s ($112,157.36), plus accrued interest due and owing as of the date hereof in the amount of Five Thousand Nine Hundred Thirty-Nine Dollars and 05/100s ($5,939.05) together with 5.0% annual simple interest on the unpaid principal amount. All unpaid principal and accrued interest is due and payable in full on or before December 31, 2016 (the "Maturity Date") unless sooner paid by the Company or extended by the Holder. All payments of principal and interest shall be made to the Holder in lawful money of the United States a 
or such other address as the Holder shall designate in writing.
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THE UNDERSIGNED shall have the right to make prepayments of principal and/or interest at any time in any amount without premium or penalty under this Note.
THE UNDERSIGNED agrees to pay to the Holder on demand all costs and expenses (including reasonable attorney’s fees), if any, paid or incurred by the Holder hereof in connection with the enforcement of any of the rights and remedies of the Holder under this Note.
THE UNDERSIGNED hereby acknowledges, covenants and agrees that the obligation evidenced by this Note shall be subject to the following conversion rights and other provisions as set forth herein:
(a) Conversion Rights. The Holder will have the right, at its election from and after the date hereof, and then at any time, to convert all or part of the outstanding and unpaid principal sum and accrued interest due on the Note (“Conversion Amount”) into shares of fully paid and non-assessable shares of the common stock of the Company ("Common Stock") at a fixed conversion price of $0.011 per share (“Conversion Price”).
(b) Conversion Notice and Mechanics of Exercise. Subject to the terms and conditions hereof, the conversion rights granted, may be exercised by the Holder, in whole or in part, by delivery (whether via facsimile or otherwise) of a written notice of the Holder’s election to exercise the conversion rights granted herein (“Conversion Notice”). The Holder shall not be required to deliver the original of the Note, as amended, in order to effect an exercise hereunder.
(c) Delivery of Conversion Shares. Shares of Common Stock from any such Conversion Notice will be delivered to Holder within three (3) business days of such Conversion Notice delivery by Holder to the Company.
(d) Beneficial Ownership Limitation. At no time may the Holder deliver a Conversion Notice to the Company, such that if the shares of the Common Stock of the Company were issued to the Holder pursuant to the Conversion Notice, the Holder would then own more than 4.99% of the Common Stock outstanding of the Company. Notwithstanding section (c), the Company may, at its election, request notarized brokerage records providing evidence of the Holder’s beneficial stock holdings, prior to issuing any shares of Common Stock to the Holder.
(e) Company Payment. Upon receipt of a Conversion Notice, the Company shall pay, at its election and within five (5) days from receipt of the Conversion Notice, the Conversion Amount in cash or stock or combination thereof, subject to the beneficial ownership limitations set out section (d).
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(f) Adjustment of Conversion Price.
(i) The Conversion Price and the number of shares issued upon the exercise of the conversion right under the Note shall be subject to adjustment upon the occurrence of certain events described in this section (f); provided, that notwithstanding the provisions of this section (e), the Company shall not be required to make any adjustment if and to the extent that such adjustment would require the Company to issue a number of shares of Common Stock in excess of its authorized but unissued shares of Common Stock. If the Company does not have the requisite number of authorized but unissued shares of Common Stock to make any adjustment, the Company shall use its commercially reasonable efforts to obtain the necessary shareholder consent to increase the authorized number of shares of Common Stock to make such an adjustment pursuant to this section (f).
(ii) Subdivision or Combination of Stock. In case the Company shall at any time subdivide (whether by way of stock dividend, forward stock split or otherwise) its outstanding shares of Common Stock into a greater number of shares, the Conversion Price in effect immediately prior to such subdivision shall be proportionately reduced. If the outstanding shares of Common Stock of the Company shall be combined (whether by way of stock combination, reverse stock split or otherwise) into a smaller number of shares, the Conversion Price in effect immediately prior to such combination shall remain the same and not be adjusted. The Conversion Price, as so adjusted, shall be readjusted in the same manner upon the happening of any successive event or events described in this section (g)(ii).
(iii) Dividends in Stock, Property, Reclassification. If at any time, or from time to time, the holders of Common Stock (or any shares of stock or other securities at the time receivable upon the exercise of the Note) shall have received or become entitled to receive, without payment therefore:
(A) any shares of stock or other securities that are at any time directly or indirectly convertible into or exchangeable for Common Stock, or any rights or options to subscribe for, purchase or otherwise acquire any of the foregoing by way of dividend or other distribution, or
(B) additional stock or other securities or property (including cash) by way of spin-off, split-up, reclassification, combination of shares or similar corporate rearrangement (other than shares of Common Stock issued as a stock split or adjustments in respect of which shall be covered by the terms of section (f)(ii) above), then and in each such case, the Conversion Price shall be adjusted proportionately, and the Holder hereof shall, upon the exercise of the Note, be entitled to receive, in addition to the number of shares of Common Stock receivable thereupon, and without payment of any additional consideration therefore, the amount of stock and other securities and property (including cash in the cases referred to above) that such Holder would hold on the date of such exercise had such Holder been the holder of record of such Common Stock as of the date on which holders of Common Stock received or became entitled to receive such shares or all other additional stock and other securities and property. The Conversion Price, as so adjusted, shall be readjusted in the same manner upon the happening of any successive event or events described in this section (f)(iii).
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(iv) Reorganization, Consolidation, Merger or Sale. If any recapitalization, reclassification or reorganization of the capital stock of the Company, or any consolidation or merger of the Company with another corporation, or the sale of all or substantially all of its assets or other transaction shall be effected in such a way that holders of Common Stock shall be entitled to receive stock, securities or other assets or property (an "Organic Change"), then lawful and adequate provisions shall be made by the Company whereby the Holder hereof shall thereafter have the right to purchase and receive (in lieu of the shares of Common Stock of the Company immediately theretofore purchasable and receivable upon the exercise of the rights represented by the Note) such shares of stock, securities or other assets or property as may be issued or payable with respect to or in exchange for a number of outstanding shares of such Common Stock equal to the number of shares of such stock immediately theretofore purchasable and receivable assuming the full exercise of the rights represented by the Note. In the event of any Organic Change, appropriate provision shall be made by the Company with respect to the rights and interests of the Holder of this Note to the end that the provisions hereof (including, without limitation, provisions for adjustments of the Conversion Price shall thereafter be applicable, in relation to any shares of stock, securities or assets thereafter deliverable upon the exercise hereof. To the extent necessary to effect the foregoing provisions, the successor corporation (if other than the Company) resulting from such consolidation or merger or the corporation purchasing such assets shall assume by written instrument reasonably satisfactory in form and substance to the Holder executed and mailed or delivered to the registered Holder hereof at the last address of such Holder appearing on the books of the Company, the obligation to deliver to such Holder such shares of stock, securities or assets as, in accordance with the foregoing provisions, such Holder may be entitled to purchase. If there is an Organic Change, then the Company shall cause to be mailed to the Holder at its last address as it shall appear on the books and records of the Company, at least 10 calendar days before the effective date of the Organic Change, a notice stating the date on which such Organic Change is expected to become effective or close, and the date as of which it is expected that holders of Common Stock of record shall be entitled to exchange their shares for securities, cash or other property delivered upon such Organic Change; provided, that the failure to mail such notice or any defect therein or in the mailing thereof shall not affect the validity of the corporate action required to be specified in such notice. The Holder is entitled to exercise the conversion of this Note during the 10-day period commencing on the date of such notice to the effective date of the event triggering such notice. In any event, the successor corporation (if other than the Company) resulting from such consolidation or merger or the corporation purchasing such assets shall be deemed to assume such obligation to deliver to such Holder such shares of stock, securities or assets even in the absence of a written instrument assuming such obligation to the extent such assumption occurs by operation of law,
(g) Certificate as to Adjustments. Upon the occurrence of each adjustment or readjustment pursuant to section (f) above, the Company at its expense shall promptly compute such adjustment or readjustment in accordance with the terms hereof and furnish to the Holder of this Note a certificate setting forth such adjustment or readjustment and showing in detail the facts upon which such adjustment or readjustment is based. The Company shall promptly furnish or cause to be furnished to such Holder a like certificate setting forth: (i) such adjustments and readjustments; and (ii) the number of shares and the amount, if any, of other property which at the time would be received upon the exercise of the conversion of the Note.
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(h) Certain Events. If any event occurs to which the other provisions of section (f) above are not strictly applicable, but the lack of any adjustment would not fairly protect the purchase rights of the Holder under this Note in accordance with the basic intent and principles of such provisions, or if strictly applicable would not fairly protect the purchase rights of the Holder under this Note in accordance with the basic intent and principles of such provisions, then the Company's Board of Directors will, in good faith and subject to applicable law, make an appropriate adjustment to protect the rights of the Holder.
THE UNDERSIGNED hereby waives demand and presentment for payment, notice of dishonor, protest, notice of acceleration and diligence in collection and consents to any extension or modification of time for payment or partial payment of this Note, before, at or after maturity. This Note shall be governed by and construed in accordance with the laws of the State of Nevada.
IN WITNESS WHEREOF, this Note is executed as of the day and year below written, to be effective as of April 1, 2016 (the “Effective Date”).
| Glucose Heath Inc. | |||
| By: | /s/ Murray Fleming | ||
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| Murray Fleming, CEO | |
| Date of Execution: June 2, 2016 | |||
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EXHIBIT 10.7
SERVICES AGREEMENT
THIS AGREEMENT, is made as of April 1, 2022, between Glucose Health, Inc. (“Company”) and BTB Management Company (“Consultant”) and super cedes a previous agreement dated July 1, 2021, between the Company and Murray Fleming, and all provisions set forth in this Agreement shall govern.
| 1. | SERVICES. Consultant agrees to perform the services of management of corporate operations. Principal of Consultant agrees to serve as CEO and CFO of Company. | ||
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| 2. | RATE OF PAYMENT. $8,000.00 per month, ($24,000.00 per quarter) is payable to Consultant upon execution of this agreement. | ||
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| 3. | BONUS COMPENSATION FOR PERFORMANCE. An additional $100,000 in bonus compensation is payable or achievement of any combination of the following performance metrics. | ||
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| a. | Revenue: $50,000 bonus upon achieving $1 million Revenue. |
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| b. | Stockholder Equity: $25,000 bonus upon achieving $2 million Stockholder Equity. |
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| c. | Gross Margin: $10,000 for achieving 35% Gross Margin in a quarterly period. |
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| d. | Sales: $15,000 upon securing placement of a national or large regional retailer (upon receipt of first invoice payment). |
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| 4. | TERMS FOR SERVICES. This agreement renews quarterly until terminated by either party. |
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| 5. | CONFIDENTIAL INFORMATION. Each party hereto (“Such Party”) shall hold in trust for the other party hereto (“Such Other Party”) and shall not disclose to any non-party to the Agreement, any confidential information of Such Other Party. Confidential information is information which relates to Such Other Party’s research, development, trade secrets or business affairs, but does not include information which is generally known or easily ascertainable by non-parties of ordinary skill in computer systems design and programming. |
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| The Consultant hereby acknowledges that during the performance of this contract, the Consultant may learn or receive confidential Company information and therefore Consultant hereby confirms that all such information relating to the Company’s business will be kept confidential by the Consultant, except to the extent that such information is required to be divulged to the Consultant’s clerical or support staff or associates in order to enable Consultant to perform Consultant’s contract obligation. |
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| 6. | INDEPENDENT CONTRACTOR. Consultant is an independent contractor. Consultant is not an employee, agent, joint venture or partner of Company. Nothing shall be interpreted as creating an employment relationship. Consultant shall have control of the manner and means by which its services are provided to Company. CONSULTANT IS SOLELY LIABLE FOR ANY FEDERAL AND STATE INCOME AND WITHHOLDING TAXES, UNEMPLOYMENT TAXES, FICA TAXES, AND WORKER'S COMPENSATION PAYMENTS AND PREMIUMS APPLICABLE TO THIS AGREEMENT. |
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| 7. | COMPLETE AGREEMENT. This Agreement contains the entire agreement between the parties hereto with respect to the matters covered herein. No other agreements, representations, warranties or other matters, oral or written, purportedly agreed to or represented by or on behalf of the Consultant by any of its agents, or contained in any sales materials or brochures, shall be deemed to bind the parties hereto with respect to the subject matter hereof. The Company and Consultant acknowledge that they are entering into this Agreement solely on the basis of the representations contained herein. |
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| 8. | GENERAL PROVISIONS. This Agreement is binding upon the parties hereto and their respective successors, assignees and personal representatives. This Agreement shall be interpreted, construed and governed in accordance with the laws of the State of Nevada. This Agreement may be executed in counterparts and may be executed by telefax signature, which shall be valid and binding as original signatures for all purposes (evidentiary or otherwise). |
IN WITNESS WHEREOF, the parties hereto, have signed this Agreement, as of the date first above written:
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| FOR GLUCOSE HEALTH, INC. |
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| Per: | /s/ Murray Fleming |
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| Murray Fleming, CEO/CFO |
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| FOR BTB MANAGEMENT COMPANY |
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| Per: | /s/ Murray Fleming |
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| Murray Fleming, Principal |
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EXHIBIT 10.8
AGREEMENT
THIS AGREEMENT made and entered into as of February 1, 2022 (hereinafter referred to as the “Effective Date”), by and between CASCADIA MANAGING BRANDS, LLC, a Delaware Limited Liability Company, having its principal place of business at 120 East Main Street, Suite 375, Ramsey, NJ 07446 (“CMB”) and Glucose Health, Inc., a Nevada Corporation, having its principal place of business at 609 SW 8h Street, Suite 600, Bentonville AR 72712 (the “Company”).
WHEREAS, the Company is in the business of developing, marketing, selling and promoting beverage products under the brand names “GLUCODOWN® and FIBER UP®” (the “Products”);
WHEREAS, CMB is in the business of assisting brands in the brand management of beverage products;
WHEREAS, the Company is willing to grant to CMB, an exclusive right, subject to the exceptions set forth herein, to act as its brand manager in the Territory (as hereinafter defined) for the duration of the Term (as hereinafter defined).
NOW, THEREFORE, in consideration of the foregoing premises and the mutual representations and agreements set forth herein, and other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the Company and CMB, intending to be legally bound, hereby agree as follows:
1. Appointment
a) Company hereby appoints CMB, under the terms and conditions hereinafter set forth, as its exclusive brand management company in all channels of trade including but not limited to distributors, wholesalers, direct accounts, supermarkets, convenience store chains, drug store chains, price clubs, etc. throughout the United States (the “Territory”).
b) This Agreement shall commence on February 1, 2022, and shall remain in effect for an initial term of 12 months thereafter (herein the "Initial Term").
c) Nothing herein contained shall be construed to create an employer-employee relationship between the parties hereto. CMB is retained hereunder strictly as an independent contractor and Company acknowledges that CMB may enter into consulting agreements with other entities.
2. Obligations of CMB
a) CMB shall undertake the following services (collectively the “Services”) for the Company:
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| · | Perform the roles of Director of Sales (contract), Director of Sales Operations (contract) and be identified on Company websites and collateral, as required. |
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| · | Determine and establish a sales, marketing and distribution plan for the Products include targeted markets, channels, distributors, brokers, sales agents and customers. |
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| · | Work with Company to establish a sales, marketing and distribution budget. |
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| · | Action new distributor, broker, sales agent authorizations and new or enhanced existing placements for the Products with customers. |
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| · | Attendance and participation at key account presentations, trade shows and other events such as investor presentations, as required. |
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| · | Manage all distributor, broker, sales agent relationships in the territory. |
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| · | Assist in the creation of new sales presentations, marketing materials and advertising campaigns, as required. |
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| · | Review existing sales presentations, marketing materials and advertising and make recommendations, as required. |
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| · | Provide input into the formulation, commercialization and production of the existing Products and new products. |
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| · | Recommend and/or provide introductions to manufacturing partners such as co-packers, bottlers, packaging and ingredients vendors, as required. |
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| · | Other initiatives as Company and CMB mutually agree. |
b) It is specifically understood that the collection of any monies due to the Company by a distributor or account of any kind shall be undertaken by the Company and not CMB, and CMB shall not be liable for any payment deficiencies or accounts receivables from any of the Company’s accounts.
c) It is specifically understood that CMB shall not be responsible for the Products specific performance, consumer, retailer or distributor response or level of sales generated by the Company during the term of this Agreement.
d) It is specifically understood that it is the responsibility of the Company to run credit checks of potential distributors/direct accounts if they so elect.
3. Order Acceptance and Transmittal
a) All negotiations by CMB for the account of the Company shall be conducted in accordance with such prices, terms, and conditions as the Company specifies from time to time.
b) Copies of all orders of the Products shall be promptly forwarded to CMB by the Company within three (3) days following Company’s receipt of same. In addition, the Company will provide to CMB a written monthly sales report set forth by distributor and distributor warehouse in both cases sold and dollar amounts (the “Monthly Sales Report”), which Monthly Sales Report shall be delivered to CMB within ten (10) business days following the last business day of each month.
c) It is understood and agreed that neither CMB nor its owners, directors nor employees shall be considered employees of the Company and neither party shall in any event be held liable or accountable for any obligations incurred by the other party other than as specified in this Agreement.
4. Compensation/Expenses
a) The Company shall pay to CMB a monthly fee of Five Thousand Dollars ($5,000.00) the “Cash Monthly Fee”) for the Services, which shall be due and payable via wire or electronic transfer no later than the first (1st) day of each month, or the Company shall pay to CMB a five percent (5%) “Net Sale Commission” (as hereinafter defined), whichever is greater. If a broker has been appointed with respect to a particular sale of any Product, the Net Sale Commission shall be reduced to three percent (3%). In addition, the Company shall instruct its transfer agent to record 30,000 shares of the Company's common stock in the name of CMB or its designated beneficiary, with said shares earned at the rate of 2,500 shares per month for the Initial Term of the Agreement.
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If The Company elects to pay by credit card the Company agrees to add to the payment the fee that the credit card company charges CMB.
For the purposes of this Agreement, the “Net Sale Commission” shall be calculated as the total price at which an order is invoiced to an account, less all discounts negotiated by CMB and the Company with respect to a particular customer or account.
In order to determine the compensation due CMB, at the end of each month, the Net Sale Commission will be calculated and compared with the cash Monthly Fee that was paid. If the five percent (5%) (or 3% if brokers have been appointed) Net Sale Commission exceeds the cash Monthly Fee that was paid, the Company will pay the difference between the percentage Net Sale Commission and the cash Monthly Fee within ten (10) days of receipt by the Company of a payment invoice from CMB.
b) In the event brokers are approved by the Company and appointed, it will be the responsibility of the Company to pay such brokers’ commission, not to exceed five percent (5%), as well as any agreed to monthly compensation due and owing CMB.
c) The Company agrees to reimburse CMB for its travel expenses incurred in connection with the performance of this Agreement, including airfare, lodging, meals, car rental, parking, tolls, gas and other related travel expenses. All travel expenses will be pre-approved by the Company.
d) It is the responsibility of the Company to send out sample requests submitted by CMB. The Company has final decision whether to send out any requested samples and will advise CMB if it declines to send the samples.
5. Non-Solicitation
a) The Company covenants and agrees that during the term of this agreement and for twelve (12) months after the termination thereof, it will not, directly or indirectly, on behalf of or in conjunction with any person or legal entity, recruit, solicit, induce, retain or hire any employee of CMB.
6. Termination
This Agreement may be terminated as follows:
a) By either party hereto immediately in the event that the other party (i) becomes insolvent or ceases to carry on business, or takes any action to liquidate its assets; (ii) stops making payments in the usual course of business (provided that the foregoing shall not be construed so as to prohibit a bona fide reorganization); (iii) makes an assignment for the benefit of creditors; (iv) is subject to a petition for bankruptcy, and such petition is not dismissed within ninety (90) days; (v) is adjudicated bankrupt; or (vi) becomes subject to a receiver or any other person with like powers appointed to take charge of and liquidate such party’s business, property or assets;
b) By CMB, if the Company fails or refuses to pay promptly any amount payable under this Agreement when and as the same shall become due and payable, and such default is not cured within ten (10) days after the Company’s receipt of written notice to cure from CMB. Upon non-payment the balance of the Cash Monthly Fees for the Initial Term of the Agreement will be immediately due and payable. By the Company, upon one month's notice and payment of Cash Monthly Fees, for all remaining months of the Initial Term.
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7. Indemnification
a) CMB hereby agrees and shall defend and promptly indemnify and hold harmless the Company, its affiliates, partners, officers, directors, shareholders, employees, agents, and assigns from and against any and all damages, claims, losses, liabilities, costs and expenses, including without limitation reasonable attorneys’ fees and other costs and expenses (hereinafter “Losses”) resulting from, arising out of, or by reason of (i) CMB breach of any of its covenants and agreements contained herein or the default or breach of any of its obligations hereunder; (ii) CMB’s failure to perform the Services in accordance with applicable federal, state and local laws, rules and regulations; or (iii) any act, omission, or negligence of CMB or its employees, agents, or contractors in connection with its or their performance hereunder except to the extent any such Losses are caused by or arise from the Company’s gross negligence, recklessness or willful misconduct.
b) The Company hereby agrees and shall defend and promptly indemnify and hold harmless CMB, its affiliates, partners, officers, directors, shareholders, employees, agents, and assigns from and against Losses resulting from, arising out of, or by reason of (i) the Company’s default or breach of any of its material obligations hereunder or (ii) the Company’s Products causing damage or being adulterated as defined in Section 342 of the Federal Food, Drug and Cosmetic Act, as amended (hereinafter, the “Federal Act”), or being misbranded as defined in Section 343 of the Federal Act, except in the event where the Losses occurred as a result of the gross negligence, recklessness or willful misconduct of CMB. Notwithstanding anything to the contrary in this Agreement, unless, and then only to the extent that, a court of competent jurisdiction acting pursuant to Section 7 of this Agreement, determines that CMB is fairly and reasonably entitled to indemnification, the Company shall not indemnify CMB under this Agreement:
8. Insurance
The Company agrees to furnish CMB with a certificate of insurance demonstrating that the Company has obtained product liability insurance in the minimum amount of $2,000,000. The Company shall cause CMB to be named as an additional insured.
9. Ownership Rights
CMB acknowledges and agrees that the ownership of all trademarks, trade names, trade secrets, trade dress, copyrights, logo types, commercial symbols, patents, branding labels and the designs use on, or in connection with, the Products, and the good will symbolized by the Products (collectively, the “Company IP”), shall be and remain vested solely with the Company, its successors and assigns. The Company grants CMB the right, during the Term, to use the Company IP solely to promote the goodwill and sale of the Products in the Territory. Any use of the Company IP by CMB shall be to promote the Products in the best possible manner as determined by the Company in its sole discretion. In connection therewith, CMB agrees that it shall not at any time do or suffer to be done any act which will in any way impair the Company’s right, title and interest in and to the Company IP.
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10. Confidentiality
a) CMB hereby acknowledges that, during the Term, the Company may disclose certain confidential information, which confidential information includes, but is not limited to, the terms of this Agreement and any information pertaining to the Company’s financial affairs, business systems, marketing strategies, trade secrets, products, designs, flavors, equipment, manufacturing process, technology and other technical and commercial information, to CMB solely to permit CMB to perform its obligations under this Agreement. CMB hereby agrees to maintain the secrecy of the Confidential Information, whether written or oral, which is disclosed to CMB by the Company in or pursuant to this Agreement or otherwise has been disclosed to CMB in the strictest confidence and, accordingly, CMB hereby agrees that it shall not, except in accordance with and as contemplated by this Agreement, either during the term of this Agreement or at any time thereafter, make use of or disclose to anyone any of the Confidential Information, for its own purposes or any other purpose whatsoever.
b) Without limiting the generality of the foregoing, and except as permitted herein, each party hereto agrees to keep this Agreement, the provisions hereof, and the transactions contemplated hereby in confidence, except for such information that may be disclosed to directors, officers, employees, or professional advisors who need to know such information for the purpose of approving, advising as to or effecting the transactions contemplated hereby, or as otherwise may be required by a court or any other authority with jurisdiction over the subject matter contained herein.
11. Entire Agreement
This Agreement contains the entire agreement of the parties, and there are no other promises or conditions in any other agreement whether written or oral. This Agreement supersedes any prior written or oral agreements between the parties. This Agreement may be modified or amended if the amendment is made in writing and is signed by both parties.
12. Severability
If any provision of the Agreement shall be held to be invalid or unenforceable for any reason, the remaining provisions shall continue to be valid and enforceable. If a court finds that any provision of the Agreement is invalid or unenforceable, but that by limiting such provision it would become valid and enforceable, then such provisions shall be deemed to be written, construed, and enforced as so limited.
13. Waiver
The failure of either party to enforce any provision of this Agreement shall not be construed as a waiver or limitation of that party’s right to subsequently enforce and compel strict compliance with every provision of this Agreement.
14. Applicable Law/Choice of Venue
The parties agree that this Agreement is to be governed by and construed under the law of the State of New Jersey without regard to its conflicts of law provisions. The parties further agree that all disputes shall be resolved exclusively in state or federal court in Bergen County, New Jersey.
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15. Counterparts
This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same Agreement.
16. Force Majeure
A party is not liable for failure to perform the party's obligations if such failure is as a result of Acts of God (including fire, flood, earthquake, storm, hurricane or other natural disaster), war, invasion, act of foreign enemies, hostilities (regardless of whether war is declared), civil war, rebellion, revolution, insurrection, military or usurped power or confiscation, terrorist activities, nationalization, government sanction, blockage, embargo, labor dispute, strike, lockout or interruption or failure of electricity or telephone service.
17. Binding Effect
This Agreement shall be binding upon and enforceable against the parties hereto, their successors and assigns, and shall inure to the benefit of and be enforceable by the parties hereto and their successors and assigns, provided that CMB may not assign its rights or delegate its duties under this Agreement without the prior written consent of the Company, which the Company shall not be obliged to give.
ACCEPTED AND AGREED this 31st day of January, 2022.
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| By: | Murray Fleming |
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| Title: | CEO |
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| CASCADIA MANAGING BRANDS, LLC |
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| /s/ William Sipper |
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| By: | William Sipper |
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| Title: | Managing Partner |
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EXHIBIT 23.1
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We consent to the inclusion in the Registration Statement on Form S-1 (File No. TBD) of our audit report dated May 2, 2022, with respect to the balance sheets of Glucose Health, Inc. as of December 31, 2021 and 2020, and the related statements of operations, stockholders’ equity, and cash flows for the each of the years in the two-year period ended December 31, 2021. Our report relating to those financial statements includes an emphasis of matter paragraph regarding the Company’s ability to continue as a going concern.
We also consent to the references to us under the heading “Experts” within the Registration Statement.
Spokane, Washington
May 26, 2022
EXHIBIT 99.4
CONSENT OF DIRECTOR NOMINEE
In connection with the filing by Glucose Health, Inc. (the “Company”) of a Registration Statement on Form S-1 (together with any amendments or supplements thereto, the “Registration Statement”) with the Securities and Exchange Commission under the Securities Act of 1933, as amended (the “Securities Act”), the undersigned hereby consents, as required by Rule 438 under the Securities Act, to being named in the Registration Statement as a Director Nominee.
May 18, 2022
| By: | /s/ Robert Sipper |
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| Name: | Robert Sipper |
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EXHIBIT 99.5
CONSENT OF DIRECTOR NOMINEE
In connection with the filing by Glucose Health, Inc. (the “Company”) of a Registration Statement on Form S-1 (together with any amendments or supplements thereto, the “Registration Statement”) with the Securities and Exchange Commission under the Securities Act of 1933, as amended (the “Securities Act”), the undersigned hereby consents, as required by Rule 438 under the Securities Act, to being named in the Registration Statement as a Director Nominee.
May 18, 2022
| By: | /s/ William Sipper |
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| Name: | William Sipper |
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