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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

[X]            ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2013

Or

[ ]            TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _________ to _____________

Commission file number: 333-174859

 (Exact name of registrant as specified in its charter)

 

 

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes |_| No |X|

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes |X| No |_|

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data file required to be submitted and posted pursuant to Rule 405 of Regulation S-T (section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files)

Yes |X| No |_|

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (ss. 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. |X|

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check One).

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes |_| No |X|

The aggregate market value of voting stock held by non-affiliates (144,424,375 shares) of the registrant as of March 25, 2014 was $5,536,656, based upon an average of the closing bid and ask of $0.03925.

There were 745,761,432 shares outstanding of the registrant's Common Stock as of March 25, 2014.

PART I
ITEM 1		Business	3
ITEM 1 A.		Risk Factors	17
ITEM 1 B.		Unresolved Staff Comments	23
ITEM 2		Properties	23
ITEM 3		Legal Proceedings	24
ITEM 4		Mine Safety Disclosures	24
PART II
ITEM 5		Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	24
ITEM 6		Selected Financial Data	25
ITEM 7		Management's Discussion and Analysis of Financial Condition and Results of Operations	25
ITEM 7A		Quantitative and Qualitative Disclosures About Market Risk	29
ITEM 8		Financial Statements and Supplementary Data	29
ITEM 9		Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	31
ITEM 9A		Controls and Procedures	31
ITEM 9B		Other Information	32
PART III
ITEM 10		Directors, Executive Officers, and Corporate Governance	32
ITEM 11		Executive Compensation	35
ITEM 12		Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	37
ITEM 13		Certain Relationships and Related Transactions, and Director Independence	38
ITEM 14		Principal Accounting Fees and Services	39
PART IV
ITEM 15		Exhibits, Financial Statement Schedules	40
SIGNATURES			41

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Real Estate.	None.
Title to properties.	None.

               

Global Green does not hold any patents or pending patent applications for the Salmogenics Vaccine, rather the patents, patent applications and trademarks for the Salmogenics Vaccine are held in the name of NHIL, Global Green's majority shareholder and parent company.  Global Green licenses with NHIL for the usage of such intellectual property.  Pursuant to the License Agreement, Global Green is required to pay for the USDA approval of the products.

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NHIL holds the following patents and/or patent applications with the United States Patent and Trademark Office:

Patent Number	Patent Title	Patent Issuance Date	Patent Expiration Date
7,988,978	Composition and method for controlling intestinal pathogenic organisms	August 2, 2011	August 2027
7,935,355	Composition and method for controlling intestinal pathogenic organisms	May 3, 2011	February 2028

We have only very recently adopted the business plan described herein-above.  Potential investors should be made aware of the risk and difficulties encountered by a new enterprise in the vaccine business, especially in view of the intense competition from existing businesses in the industry.

We have historically incurred losses from operations while working to obtain USDA approval of our Salmogenics Vaccine. As of December 31, 2013, we had an accumulative deficit of ($428,382).   During the year ended December 31, 2013, we recognized a net loss of $115,954 and used cash of $125,495 to support operations.  We are unable to market or sell our Salmogenics Vaccine until we have obtained USDA approval.  Our ability to be profitable in the future will depend on obtaining USDA approval and successfully implementing our marketing and sales activities, all of which are subject to many risks beyond our control. Even if we become profitable on an annual basis, we cannot assure you that our profitability will be sustainable or increase on a periodic basis.

In addition, the independent registered public accounting firm's report on the Company's financial statements as of December 31, 2013, includes a "going concern" explanatory paragraph, that describes substantial doubt about the Company's ability to continue as a going concern.  If we are unable to continue as a going concern, realization of assets and settlement of liabilities in other than the normal course of business may be at amounts significantly different from those in the financial statements included in this registration statement.

We were formed on July 12, 2004, for the purpose of engaging in any lawful business and have adopted a plan to focus on the agriculture industry, more specifically, "Salmogenics," a poultry Salmonella vaccine.  We have had no revenues in the last five years.  We have only had operational activities during the last year.  We are not profitable and the business effort is considered to be in an early development stage.  We must be regarded as a new or developmental venture, and may be subject to unforeseen costs, expenses and problems, if we are not able to successfully complete Phase 4 testing and unable to secure USDA approval or successfully implement a marketing and sales strategy.  As a development venture, we may not be able to adequately forecast and budget our costs due to the unknown and unpredictable nature of new vaccine development, testing, and ultimately, if approved, manufacturing.  We could experience product failures, prolonged testing reformulation and unanticipated costs and availability of manufacturers if ultimately approved.  It should be assumed that any or all of these events could occur, with the result that anyone, if significant enough could prevent the proposed business from being successful and potential investors could lose all of their investment.

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Future operating performance is never certain, and if our operating results fall below the expectations of securities analysts or investors, the trading price of our common stock will likely decline. We have a history of operating losses.  We have not recognized revenues from the sale of our product, as we are still in the testing and trial stages. We expect that we will continue to incur financial losses until we have obtained USDA approval of our product and have begun to successfully market and sell the vaccine.   We may not be able to sustain or increase profitability on a quarterly or annual basis once we are able to begin marketing and sale of the vaccine.   Moreover, we anticipate that our operating and capital expenditures will increase significantly in 2015 and in future years primarily due to:

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additional spending to support the marketing and sales of vaccines;

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working capital requirements for sales of vaccines;

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growth in research and development expenses as we progress with the final phase development of our efficacy studies;

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leasing of facilities and purchases of capital equipment;

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investment in additional marketing capacity for our products and products in development.

Our ability to generate sufficient cash flow, or to raise sufficient capital, to fund these operating and capital expenditures depends on our ability to improve operating performance. This in turn depends, among other things, on finalizing our study and getting USDA approval and finding a partner to manufacture it and then successfully completing the product and finding a partner for marketing and sales first in USA and then worldwide. We may not successfully develop and commercialize these products.

Our capital needs consist primarily of expenses related to final field testing of the vaccine for the USDA approval general and administrative and potential marketing expenses and could exceed $1,900,000 in the next twelve months. Such funds are not currently committed, and we have cash as of December 31, 2013 of approximately $113,532.

We have limited funds, and such funds may not be adequate to carryout the business plan in the animal vaccine industry.  Our ultimate success depends upon our ability to raise additional capital.  While we have begun to investigate such sources, we are only the very early stages of investigation.  If we need additional capital, we have no assurance that funds will be available from any source or, if available, that they can be obtained on terms acceptable to us.  If not available, our operations will be limited to those that can be financed with our modest capital.

During the year ended December 31, 2013, we received $235,000 in the form of a convertible advance from our officer and director.  We cannot guarantee or provide any assurances, that our officers and directors will be able to continue to provide us with funds to support our operations.

We may issue further shares as consideration for the cash or assets or services out of our authorized but unissued common stock that would, upon issuance, represent a majority of the voting power and equity of our Company.  The result of such an issuance would be those new stockholders and management would control our Company, and persons unknown could replace our management at this time.  Such an occurrence would result in a greatly reduced percentage of ownership of our Company by our current shareholders, which could present a risk to investors, in that the business focus of the Company could be completely changed with no say by current management and current shareholders.

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Because of the limited financial resources that we have, it is unlikely that we will be able to diversify our operations.  Our probable inability to diversify our activities into more than one area will subject us to economic fluctuations within the animal vaccine industry.  As a result we could incur continuing losses and not be able to generate revenues or periodic increases in revenue.

Together, Dr. Mehran P. Ghazvini, DC, Dr. Rene M. Reed, DC and Dr. Konky Sotomayor, DVM, through direct and indirect ownership, are majority shareholders of Nutritional Health Institute Laboratories ("NHIL"), the majority shareholder of our Company.  As such, they will be able to control the operations and the direction of the Company with very little outside influence.

Drs. Ghazvini, Reed and Sotomayor do not hold direct shares of common stock of the Company.  However, they are officers, directors and beneficial shareholders of Nutritional Health Institute Laboratories and have the ability to vote the shares of NHIL, our majority shareholder.

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Dr. Mehran P. Ghazvini, DC owns approximately 50% of NHIL, indirectly through family trusts and has the power to vote those interests on behalf of the trusts and disavows any ownership in the equity of NHIL held by family trusts;

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Dr. Rene M. Reed, DC owns approximately 16.66% of NHIL, indirectly through family trusts and has the power to vote those interests on behalf of the trusts and disavows any ownership in the equity of NHIL held by family trusts; and

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Dr. Konky Sotomayor, DVM owns approximately 16.66% of NHIL, indirectly through family trusts and has the power to vote those interest on behalf of the trusts and disavows any ownership in the equity of NHIL held by family trusts.

As such, they are the beneficial holders of the 601,337,057 shares held by NHIL.  Through their ownership in NHIL, Drs. Ghazvini, Reed, and Sotomayor as a group, control approximately 601,337,057 shares of common stock or approximately 80.63% of the voting stock of the Company.

We currently have three individuals who are serving as our officers and directors for up to 30 hours per week combined, each on a part-time basis.  All three directors, Dr. Ghazvini, DC, Dr. Reed, DC and Dr. Sotomayor, DVM are also acting as our officers.   None of the officers have an employment agreement with the Company. We will be heavily dependent upon their skills, talents, and abilities, as well as several consultants to us, to implement our business plan, and may, from time to time, find that the inability of the officers and directors to devote their full-time attention to our business results in a delay in progress toward implementing our business plan.  Because investors will not be able to manage our business, they should critically assess all of the information concerning our officers and directors.

Our directors and officers are owners of our majority shareholder, NHIL.  In the future they may become, in their individual capacities, officers, directors, controlling shareholder and/or partners of other entities engaged in a variety of businesses.  Thus, our officers and directors may have potential conflicts including their time and efforts involved in participation with other business entities.  In some circumstances this conflict may arise between their fiduciary duties to us and their fiduciary duties to NHIL'S business divisions.  It is possible that in this situation their judgment maybe more consistent with their fiduciary duties to these ventures and may be detrimental to our interests.

Presently there is no requirement contained in our Articles of Incorporation, Bylaws, or minutes which requires officers and directors of our business to disclose to us business opportunities which come to their attention.  Excluded from this duty would be opportunities which the person learns about through his involvement as an officer and director of another company.  We have no intention of merging with or acquiring business opportunity from any affiliate or officer or director.

We do not know of any reason other than outside business interests that would prevent them from devoting full-time to our Company, when the business may demand such full-time participation.

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To supplement the business experience of our officers and directors, we may be required to employ accountants, technical experts, appraisers, attorneys, or other consultants or advisors.  Our Board, without any input from stockholders, will make the selection of any such advisors.  Furthermore, we anticipate that such persons will be engaged on an "as needed" basis without a continuing fiduciary or other obligation to us.  In the event we consider it necessary to hire outside advisors, we may elect to hire persons who are affiliates, if they are able to provide the required services.

Florida Statutes provide for the indemnification of our directors, officers, employees, and agents, under certain circumstances, against attorney's fees and other expenses incurred by them in any litigation to which they become a party arising from their association with or activities on our behalf.  We will also bear the expenses of such litigation for any of our directors, officers, employees, or agents, upon such person's promise to repay us therefore if it is ultimately determined that any such person shall not have been entitled to indemnification.  This indemnification policy could result in substantial expenditures by us that we will be unable to recoup.

 

RISK FACTORS RELATING TO OUR BUSINESS

Because we depend, and expect to continue to depend, on sales of a single vaccine product for a substantial majority of our revenues, decreased or lower-than-anticipated demand for the vaccine, or our inability to meet demand, could materially adversely affect our operating results and harm our business.  Because we have not begun marketing vaccines, long-term effects of the vaccine are largely unknown. Adverse developments regarding the long-term safety and efficacy of the vaccines could adversely affect demand for the product, or restrict our ability to market and sell it for its current or potential indications. Other factors that would adversely affect sales of the vaccine include:

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competition from existing products or development of new, superior products;

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our ability to maintain adequate and uninterrupted sources of supply to meet demand;

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events adversely affecting the ability of our manufacturing partners to produce the vaccines;

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contamination of product lots or product recalls; and

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our inability to gain regulatory approval to market the vaccine.

Our dependence on a single contractor for testing poses a risk to our business.

We are dependent on one contractor, AHPharma, for our testing services for our proposed vaccine products, which may be a risk to the Company's business operations, if the services of AHPharma are not available to complete all of the testing which may be necessary or required for USDA approval to distribute and sell the proposed vaccine products.  While there are other potential contractors offering similar services, such services may be unavailable due to confidentiality agreements with other companies, full schedules or lack of immediate capacity for their services.  Such issues could cause a delay in the completion of Phase 4 testing and final approval of the USDA and, therefore, delay our future operations.

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Before obtaining final USDA approvals for the sale of any of our potential product, we must subject these products to a regulatory safety field trial to demonstrate the vaccine's effectiveness when applied on a large scale basis. If the final phase is unsuccessful, we will be unable to commercialize new products and, as a result, we may be unable to sustain the Company's growth or potential profitability. Results of initial efficacy are not necessarily indicative of results to be obtained from later efficacy studies and, as a result, we may suffer significant setbacks in advanced efficacy studies. We may not complete our clinical trials of products and the results of the trials may fail to demonstrate the safety and effectiveness of new products to the extent necessary to obtain regulatory approvals.

The USDA imposes substantial requirements on our products before it permits us to manufacture, market and sell them to the public or producer of poultry. Compliance with these requirements is costly and time-consuming, and could delay sales of products. To meet USDA requirements, we have spent and will continue to spend substantial resources on lengthy and detailed laboratory tests and efficacy studies. It typically takes many years to complete tests and trials for a product. The actual length of time involved depends on the type, complexity and novelty of the product. The USDA may not approve on a timely basis, if at all, some or all of our future products or may not approve some or all of our applications for additional indications for our previously approved products.  We are currently involved in Phase 4 testing.  The requirements of Phase 4 testing have been developed by the USDA, specifically for our product.

The Phase 4 testing involves proving the following:

1.

The vaccine product must be safely commercially manufactured at a USDA approved vaccine manufacturer;

2.

That every batch of the vaccine produced during Phase 4 testing not only meets the required standards, but does so consistently;

3.

That the vaccine product can be safely applied commercially by the potential customers.

4.

That the claims made regarding the vaccine are sustainable and reproducible when applied to larger populations.

At this time AHPharma, is not conducting any studies until the final evaluation is completed by Merial.  Upon the completion of final evaluation by Merial the Company will then take the following steps as part of Phase 4:

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In the process of negotiating with an USDA approved vaccine manufacturer.

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Assure that the requirements from the vaccine manufacturer will meet the standard batch consistency as defined by the USDA as part of the efficacy requirements.

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The conclusion of the USDA approved large bird efficacy study to be done by AHPharma which meets the following parameters:

o

That the vaccine product can be safely and standardly commercially applied by the intended customers.

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That the claims are sustainable and reproducible when applied to larger populations of birds.

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To see if the vaccine can be used in other circumstances such as a combined treatment with other vaccines. This part of the study has been completed and proven successful.

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Presentation of the data of the efficacy tests to be analyzed and send results to the USDA for final approval.

If we violate the requirements of Phase 4 testing as set by the USDA in this stage, whether before or after marketing approval is obtained, we may be fined (to be independently determined by the USDA) or forced to remove a product from the market or may experience other adverse consequences, including delay or increased costs, which could materially harm our financial results. Additionally, we may not be able to obtain approval for the labeling claims necessary or desirable for promoting our products. Even if approval is obtained, we may be required to undertake post-marketing trials to be determined by the USDA.

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If we or others identify side effects after any of our products are on the market, or if manufacturing problems occur, regulatory approval may be withdrawn and reformulation of our products, additional efficacy studies, additional changes in labeling of our products and changes to or re-approvals of our manufacturing facilities may be required, any of which could have a materially adverse effect on sales of the affected products and on our business and results of operations.

A number of our competitors have substantially more capital, research and development, regulatory, manufacturing, marketing, human and other resources and experience than we have. Furthermore, large pharmaceutical companies recently have been consolidating, which has increased their resources and concentrated valuable intellectual property assets. As a result, our competitors may:

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develop products that are more effective or less costly than any of our current or future products or that render our products obsolete;

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produce and market their products more successfully than we do;

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establish superior proprietary positions; or

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obtain USDA approval for labeling claims that are more favorable than those for our products.

The poultry vaccine business is especially competitive and dominated by a few large companies with an established global presence. In order for us to expand our sales of the vaccine, our product must be commercially accepted worldwide and compete effectively against the vaccines of these other companies. Our inability to compete successfully in the poultry vaccine sector could materially adversely affect our revenue growth.

Product liability is a major risk in testing and marketing biotechnology and pharmaceutical products. We could face substantial product liability and for products that we sell after regulatory approval. Product liability claims, regardless of their merits, could be costly and divert management's attention or adversely affect our reputation and the demand for our product. We do not maintain product liability insurance coverage. In the future, insurers may not offer us product liability insurance, may raise the price of this insurance or may limit the coverage.

We currently do not carry product liability insurance, though our License Agreement with NHIL provides that we will maintain product liability.  Currently, NHIL has agreed that we do not have to provide product liability insurance until we have completed Phase 4 testing and received USDA approval.

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There is no guarantee that our products will be successfully developed and marketed. In addition, we have not cleared the regulatory approval process for our product, and we cannot assure you that final regulatory approval will be obtained. Any delay in our final development of these products may materially adversely affect our revenue growth. Because of a number of factors, our product may not reach the market without lengthy delays, if at all. Some of the factors that may affect our development and marketing of new products include the following:

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potential products may require collaborative partners and we may be unable to identify partners or enter into arrangements on terms acceptable to us;

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we may not be able to produce or contract for the manufacture of new products at a cost or in quality or quantities necessary to make them commercially viable;

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domestic and international regulatory approval of these products may not be obtained or may be obtained only with lengthy delays;

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we may not be able to secure additional financing that may be needed to bring a potential product to market;

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we may experience unexpected safety, regulatory or efficacy concerns with respect to marketed products, whether or not scientifically justified, leading to adverse public reaction, product recalls, withdrawals or declining sales; and

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we may be unable to accurately predict market requirements and evolving standards.

 

Importance and Limitations of Patent and Proprietary Rights Protections

Some of our products and processes used to produce our products involve proprietary rights, including patents, which are held by our parent NHIL. Our competitors or potential competitors may have filed for or received United States and foreign patents and may obtain additional patents and proprietary rights relating to animal vaccines uses and/or processes which may compete with our existing products and our products under development.  We cannot be sure that others will not obtain patents of different technology that we would need to license or circumvent in order to practice our inventions. Even though we strive to take appropriate action to protect our intellectual property, there is a risk that competitive systems currently being developed and marketed could gain acceptance in the United States or elsewhere.

We and NHIL believe that patent protection of materials or processes we develop and any products that may result from the research and development efforts of our licensors and us are important to the commercial success of our products. The loss of the protection of these patents and proprietary rights could materially and adversely affect our business and our competitive position in the market. The patent position of companies such as ours generally is highly uncertain and involves complex legal and factual questions. Some of the reasons for this uncertainty include the following:

 

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To date, no consistent regulatory policy has emerged regarding the breadth of claims allowed in biotechnology patents. Consequently, there can be no assurance that future patent applications relating to our products or technology will result in patents being issued or that, if issued, the patents will afford protection against competitors with similar technology;

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The License Agreement between us and NHIL may be immediately terminated upon the occurrence of a default by us in performing our responsibilities under the License Agreement;

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Companies that obtain patents claiming products or processes that are necessary for, or useful to, the development of our vaccine could bring legal actions against us, claiming infringement (though we currently are not the subject of any patent infringement claim);

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Issuance of a valid patent does not prevent other companies from using alternative, non-infringing technology, so we cannot be sure that any of our patents (or patents issued to others and licensed to us) will provide significant commercial protection;

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We may not have the financial resources necessary to obtain patent protection in some countries or to enforce any patent rights we may hold;

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The laws of some foreign countries may not protect proprietary rights to the same extent as the laws of the United States, and many companies have encountered significant problems in protecting their proprietary rights in these foreign countries; and

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We may be required to obtain licenses from others to develop, manufacture or market our products. We may not be able to obtain these licenses on commercially reasonable terms, and we cannot be sure that the patents underlying the licenses will be valid and enforceable.

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We and NHIL  attempt to protect our proprietary materials and processes by relying on trade secret laws and non-disclosure and confidentiality agreements with our future employees and other persons (i.e. future manufacturers) with access to our proprietary materials or processes or who will have licensing agreements with us. We plan to continue to use these protections in the future, but we cannot be sure that these agreements will not be breached or that we would have adequate remedies for any breach. Even with these protections, others may independently develop or obtain access to these materials or processes, which may materially and adversely affect our competitive position.

If we are sued for infringing the patent or other proprietary rights of a third party, we could incur substantial costs and diversion of management and technical personnel, whether or not the litigation is ultimately determined in our favor.

We currently do not have facilities for the production of our vaccine products. Therefore, we will rely principally upon relationships with contract manufacturers. At this time we have not identified or entered into an agreement with any to manufacture our product.  There can be no assurance that we can maintain manufacture and supply agreements on terms and at costs acceptable to us. There are a number of risks that will be associated with our dependence on contract manufacturers, including:

 

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reduced control over delivery schedules;

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potential inability to monitor and maintain inventory levels;

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reduced control over quality assurance;

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reduced control over manufacturing yields and costs;

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potential lack of adequate capacity during periods of unanticipated demand;

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limited warranties on products supplied to us;

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increases in prices at a higher rate than our ability to recover our increased costs through contractual price adjustments with customers;

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reduced control over regulatory efforts;

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potential misappropriation of our intellectual property;

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catastrophic loss of production capacity due to property damage, either man made or by nature;

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the loss of these contract manufacturers due to financial circumstances in their respective businesses or their exit from the business lines that manufacture our devices and products; and

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minimum purchase requirements, which could result in excessive inventories if the demand for products falls short of such minimum purchase requirements.

If our contract manufacturers were to fail to provide us with an adequate supply of vaccine products, our business would be harmed.

 

Any widespread poultry health problem or disease outbreak, such as avian influenza in poultry, could have a negative impact on global poultry production. Our revenues and earnings derived from both the U.S. and international poultry industry could be materially and adversely affected. In addition, the emergence of new disease variants, serotypes and strains in the domestic and/or global markets may reduce the efficacy of our vaccine products and result in reduced revenues and earnings.

 

Our future success depends on our ability to attract qualified independent distributors for the vaccine products. We may be unable to attract or retain these independent distributors. If we fail to attract or retain independent distributors, or fail to find end users for the vaccine products, we may be unable to successfully bring the vaccine products to the marketplace and to generate sufficient revenues to offset operating costs.

At this time, the Company has an exclusive license from NHIL, our majority shareholder. We may be dependent on NHIL for support of certain of our technologies and we may have to rely on NHIL for development of any future products. Future product candidates of the Company, as we begin to pursue our business strategy, may be subject to competition with potential products under development by NHIL.

As our officers and directors are officers, directors and shareholders of NHIL we cannot provide any assurances that any conflicts that may arise out of such competition would be resolved in a way favorable to the Company.

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RISK FACTORS RELATED TO OUR STOCK

The shares of Global Green common stock were approved for trading on the OTC Bulletin Board in March 2012, and, as result, they are thinly-traded, meaning that the number of persons interested in purchasing the Company's common shares at or near ask prices at any given time may be relatively small or non-existent.  This situation is attributable to a number of factors, including the fact that the Company is a small company which is relatively unknown to stock analysts, stock brokers, institutional investors and others in the investment community that generate or influence sales volume, and that even if it came to the attention of such persons, they tend to be risk-averse and would be reluctant to follow an unproven, early stage company such as Global Green or purchase or recommend the purchase of any of the Company's Securities until such time as the Company became more seasoned and viable.  As a consequence, there may be periods of several days or more when trading activity in the Company's Securities is minimal or non-existent, as compared to a seasoned issuer which has a large and steady volume of trading activity that will generally support continuous sales without an adverse effect on Securities price.  We cannot give you any assurance that a broader or more active public trading market for the Company's common Securities will develop or be sustained, or that any trading levels will be sustained.  Due to these conditions, the Company can give investors no assurance that they will be able to sell their shares at or near ask prices or at all if they need money or otherwise desire to liquidate their securities of the Company.

We are a "penny stock" company.  None of our securities currently trade in any market and, if ever available for trading, will be subject to a Securities and Exchange Commission rule that imposes special sales practice requirements upon broker-dealers who sell such securities to persons other than established customers or accredited investors.  For purposes of the rule, the phrase "accredited investors" means, in general terms, institutions with assets in excess of $5,000,000, or individuals having a net worth in excess of $1,000,000 or having an annual income that exceeds $200,000 (or that, when combined with a spouse's income, exceeds $300,000).  For transactions covered by the rule, the broker-dealer must make a special suitability determination for the purchaser and receive the purchaser's written agreement to the transaction prior to the sale.  Effectively, this discourages broker-dealers from executing trades in penny stocks.  Consequently, the rule will affect the ability of purchasers in this offering to sell their securities in any market that might develop therefore because it imposes additional regulatory burdens on penny stock transactions.

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In addition, the Securities and Exchange Commission has adopted a number of rules to regulate "penny stocks".  Such rules include Rules 3a51-1, 15g-1, 15g-2, 15g-3, 15g-4, 15g-5, 15g-6, 15g-7, and 15g-9 under the Securities and Exchange Act of 1934, as amended.  Because our securities constitute "penny stocks" within the meaning of the rules, the rules would apply to us and to our securities.  The rules will further affect the ability of owners of shares to sell our securities in any market that might develop for them because it imposes additional regulatory burdens on penny stock transactions.

Shareholders should be aware that, according to Securities and Exchange Commission, the market for penny stocks has suffered in recent years from patterns of fraud and abuse.  Such patterns include (i) control of the market for the security by one or a few broker-dealers that are often related to the promoter or issuer; (ii) manipulation of prices through prearranged matching of purchases and sales and false and misleading press releases; (iii) "boiler room" practices involving high-pressure sales tactics and unrealistic price projections by inexperienced sales persons; (iv) excessive and undisclosed bid-ask differentials and markups by selling broker-dealers; and (v) the wholesale dumping of the same securities by promoters and broker-dealers after prices have been manipulated to a desired consequent investor losses.  Our management is aware of the abuses that have occurred historically in the penny stock market.  Although we do not expect to be in a position to dictate the behavior of the market or of broker-dealers who participate in the market, management will strive within the confines of practical limitations to prevent the described patterns from being established with respect to our securities.

Inventory in penny stocks have limited remedies in the event of violations of penny stock rules.  While the courts are always available to seek remedies for fraud against the Company, most, if not all, brokerages require their customers to sign mandatory arbitration agreements in conjunctions with opening trading accounts.  Such arbitration may be through an independent arbiter.  Investors may file a complaint with FINRA against the broker allegedly at fault, and FINRA may be the arbiter, under FIRNA rules. Arbitration rules generally limit discovery and provide more expedient adjudication, but also provide limited remedies in damages usually only the actual economic loss in the account.  Investors should understand that if a fraud case is filed against a company in the courts it may be vigorously defended and may take years and great legal expenses and costs to pursue, which may not be economically feasible for small investors.

The fact that we are a penny stock company will cause many brokers to refuse to handle transactions in the stocks, and may discourage trading activity and volume, or result in wide disparities between bid and ask prices.  These may cause investors significant illiquidity of the stock at a price at which they may wish to sell or in the opportunity to complete a sale.  Investors will have no effective legal remedies for these illiquidity issues.

We have not paid dividends on our common stock and do not ever anticipate paying such dividends in the foreseeable future.  Investors whose investment criteria is dependent on dividends should not invest in our common stock.

Not Applicable.

FACILITIES

The Company operates out of facilities leased by NHIL at 2820 Remington Green Circle, Tallahassee, Florida 32308.

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We are not a party to any pending legal proceedings, nor are we aware of any civil proceeding or government authority contemplating any legal proceeding.

Not applicable.

Market Information

On March 21, 2012, the Company's common stock was accepted for trading by FINRA on the OTCBB and the Over The Counter Markets OTCQB and was assigned the symbol is "GOGC".  In November 2012, the Company's stock was declared eligible for depositing with Depository Trust.

The following table sets forth the range of high and low closing prices for the common stock of each full quarterly period during the years ended December 31, 2013 and 2012. The quotations were obtained from information published by the FINRA and reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not necessarily represent actual transactions.

		HIGH				LOW
Quarter Ended:
December 31, 2013		$	0.072			$	0.05
September 30, 2013		$	0.07			$	0.0080
June 30, 2013		$	0.0440			$	0.0101
March 31, 2013		$	0.06			$	0.031
Quarter Ended:
December 31, 2012		$	0.11			$	0.0450
September 30, 2012		$	0.25			$	0.09
June 30, 2012		$	0.55			$	0.20
March 31, 2012		$	--			$	--

Holders

There are approximately 290 holders of record of our common stock as of December 31, 2013.

Dividend Policy

Holders of our common stock are entitled to receive such dividends as may be declared by our board of directors.  We have not declared or paid any dividends on our common shares and it does not plan on declaring any dividends in the near future.  The Company currently intends to use all available funds to finance the operation and expansion of its business.

Recent Sales of Unregistered Securities

During the years ended December 31, 2013 and 2012, we did not make any sales of our unregistered securities.

Issuer Purchases of Equity Securities

The Company did not repurchase any shares of its common stock during the years ended December 31, 2013 and 2012.

 

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Not applicable.

MANAGEMENTS' DISCUSSION AND ANALYSIS

The following discussion should be read in conjunction with our audited consolidated financial statements and notes thereto included herein.

This discussion contains forward-looking statements, such as statements relating to our financial condition, results of operations, plans, objectives, future performance and business operations. These statements relate to expectations concerning matters that are not historical facts. These forward-looking statements reflect our current views and expectations based largely upon the information currently available to us and are subject to inherent risks and uncertainties. Although we believe our expectations are based on reasonable assumptions, they are not guarantees of future performance and there are a number of important factors that could cause actual results to differ materially from those expressed or implied by such forward-looking statements. By making these forward-looking statements, we do not undertake to update them in any manner except as may be required by our disclosure obligations in filings we make with the Securities and Exchange Commission under the Federal securities laws. Our actual results may differ materially from our forward-looking statements.

The independent registered public accounting firm's report on the Company's financial statements as of December 31, 2013 includes a "going concern" explanatory paragraph that describes substantial doubt about the Company's ability to continue as a going concern.

We had no operations prior to January 2009 and we did not have any revenues during the the fiscal years ended December 31, 2013 and 2012. We have minimal capital, minimal cash, and only our intangible assets consist of our patents and patent applications, business plan, relationships and contacts. We are illiquid and need cash infusions from investors or shareholders to provide capital, or loans from any sources.

In March 2012, the Company completed its Final Efficacy Testing and submitted the results to the USDA and are awaiting a response from the USDA.  Our continuing plan of operations will be as follows:

2nd Quarter 2014

•

Continuing Market Development

•

Awaiting completion of Merial evaluation.

•

Negotiating with NHIL for licensing agreements for new vaccines technologies.

3ndQuarter 2014

•

Continuing Market Development

•

Awaiting completion of Merial evaluation.

•

Negotiating with NHIL for licensing agreements for new vaccine technologies.

4th Quarter 2014

•

Continuing Market Development

•

Awaiting completion of Merial evaluation.

•

Negotiating with NHIL for licensing agreements for new vaccine technologies.

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The Company's status regarding its Phase 4 efficacy testing as of the time of this filing is based is upon the final evaluation by Merial.

In August 2012, the Company began a study to determine how long a chicken can be protected against Salmonella after it begins laying eggs. If a layer hen is not infected with the Salmonella bacteria or shows reduced levels of the bacteria, then neither the egg, nor the chick, when it hatches, will have Salmonella or the egg or chick will show reduced levels of the bacteria. There is a "timelined" vaccine effect that will be logged and sequenced during the study, beginning from a newly-hatched chicken, to the 18-20 weeks before the chicken becomes a layer hen, and, after that, until the end of the hen's productive life. At the time of this filing the protocols have been finished and we are in the process of identifying a manufacture.

In September 2013, the Company announced the signing of an agreement with Merial Ltd., the Animal Health Division of Sanofi, to conduct an internal evaluation of the Company's patented Salmogenics vaccine technology. At the conclusion of the evaluation, Merial has the first option to enter into a license agreement with the Company for the manufacture, distribution, and sale of the vaccine. Details of the evaluation agreement are confidential. At the time of this filing, the evaluation with Merial is ongoing.

In January 2013, the Company entered into a convertible advance with the Company's Chief Executive Officer and Chairman, Dr. Ghazvini. The convertible advance with a face value of $300,000, bears interest at 5% per annum and is payable on demand. The convertible advance is convertible, at the holder's option, into the Company's common or preferred shares based on the value of the shares at the execution date of the advance.  At December 31, 2013, the convertible advance had a balance of $253,000.   Accrued interest related to this advance was $12,987 at December 31, 2013 and is included in accounts payable and accrued expenses on the balance sheet.

We will need substantial additional capital to support our proposed future operations.  We have no revenues.  We have no committed source for any funds as of date hereof.  No representation is made that any funds will be available when needed.  In the event funds cannot be raised when needed, we may not be able to carry out our business plan, may never achieve sales, and could fail in business as a result of these uncertainties.

RESULTS OF OPERATIONS

During the year ended December 31, 2013 and 2012, the Company did not recognize any revenues from its operations.  Management does not anticipate recognizing any revenues from the sale of the Salmogenic vaccine, until the final approval of the USDA has been granted and at that time, the Company will be able to begin sales and marketing efforts.

During the year ended December 31, 2013, the Company incurred total operating expenses of $115,954 compared to $114,900 for the year ended December 31, 2012.  The increase of $1,054 was primarily a result of the increase of $21,284 increase in general and administrative expenses combined with a $22,231 increase in investor relations and a $12,987 increase in interest expense offset by a $43,352 decrease in professional expenses and a $10,000 decrease in consulting expenses. The decreases in professional expenses and consulting expenses were a result of our activities to maintain our SEC reporting status, have our stock approved for trading and clear our stock for depositing with depository trust being completed. We expect that we will continue to see an increase in expenses, as we complete Phase 4 testing and gain final approval of the USDA and begin to develop our sales and marketing efforts.

During the year ended December 31, 2013, we recognized a net loss of $115,954 compared to $114,900 during the year ended December 31, 2012.  The decrease of $1,054 was a result of the increases and decreases in expenses as discussed above.

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The independent registered public accounting firm's report on the Company's financial statements as of December 31, 2013, and for each of the years in the two-year period then ended, includes a "going concern" explanatory paragraph, that describes substantial doubt about the Company's ability to continue as a going concern.

At December 31, 2013, the Company had total current assets of $120,282, consisting of $113,532 in cash, a travel advance to an officer of $6,000 and prepaid expenses of $750 and total current liabilities of $261,428, consisting of $25,928 in accounts payable and accrued expenses, $500 due to shareholders and a $235,000 convertible advance due to an officer and director of the Company.  At December 31, 2013, the Company had working capital of $93,854.

During the year ended December 31, 2013, the Company used $125,495 in funds in its operational activities.  During the year ended December 31, 2013, the Company recognized a net loss of $115,954, which was adjusted for $336 in amortization expense.  During the year ended December 31, 2012, the Company used $99,333 in funds on its operational activities.  During the year ended December 31, 2012, the Company recognized a net loss of $114,900, which was adjusted for $336 in amortization expense.

During the year ended December 31, 2013, the Company received funds of $235,000 from its financing activities.  During the year ended December 31, 2012, the Company did not receive or use funds from/in its financing activities.

In January 2013, the Company entered into a convertible advance with the Company's Chief Executive Officer and Chairman, Dr. Ghazvini. The convertible advance with a face value of $300,000, bears interest at 5% per annum and is payable on demand. The convertible advance is convertible, at the holder's option, into the Company's common or preferred shares based on the value of the shares at the execution date of the advance.  At December 31, 2013, the convertible advance had a balance of $235,000.   Accrued interest related to this advance was $12,987 at December 31, 2013 and is included in accounts payable and accrued expenses on the balance sheet.

Short- Term

On a short-term basis, the Company has not generated any revenue or revenues sufficient to cover operations.  For short- term needs the Company will be dependent on receipt, if any, of offering proceeds.

Capital Resources

The Company has only common stock as its capital resource.

The Company has no material commitments for capital expenditures within the next year, however if operations are commenced, substantial capital will be needed to pay for participation, investigation, exploration, acquisition and working capital.

Need for Additional Financing

The Company does not have capital sufficient to meet its cash needs.  The Company will have to seek loans or equity placements to cover such cash needs.  Once manufacturing and sales efforts commence, its needs for additional financing is likely to increase substantially.

No commitments to provide additional funds have been made by the Company's management or other stockholders.  Accordingly, there can be no assurance that any additional funds will be available to the Company to allow it to cover the Company's expenses as they may be incurred.

The Company will need substantial additional capital to support its proposed operations.  The Company has no revenues.  The Company has no committed source for any funds as of the date hereof.  No representation is made that any funds will be available when needed.  In the event funds cannot be raised when needed, the Company may not be able to carry out its business plan, may never achieve sales, and could fail in business as a result of these uncertainties.

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The Company may borrow money to finance its future operations, although it does not currently contemplate doing so.  Any such borrowing will increase the risk of loss to the investor in the event it is unsuccessful in repaying such loans.

Critical Accounting Policies

The Company considers all investments with a maturity date of three months or less when purchased to be cash equivalents.  There were no cash equivalents at December 31, 2013 or 2012.

The Company recognizes revenue on arrangements in accordance with Securities and Exchange Commission Staff Accounting Bulletin No. 13, "Revenue Recognition" and Financial Accounting Standards Board's ("FASB") Accounting Standards Codification ("ASC") 605-15-25, "Revenue Recognition".  In all cases, revenue is recognized only when the price is fixed or determinable, persuasive evidence of an arrangement exists, the service is performed and collectability is reasonably assured.  For the years ended December 31, 2013 and 2012, and the period from inception to December 31, 2013, the Company did not report any revenues.

Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Additionally, the recognition of future tax benefits, such as net operating loss carryforwards, is required to the extent that realization of such benefits is more likely than not. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which the assets and liabilities are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income tax expense in the period that includes the enactment date.

In the event the future tax consequences of differences between the financial reporting bases and the tax bases of the Company's assets and liabilities result in deferred tax assets, an evaluation of the probability of being able to realize the future benefits indicated by such asset is required. A valuation allowance is provided for the portion of the deferred tax asset when it is more likely than not that some or all of the deferred tax asset will not be realized. In assessing the realizability of the deferred tax assets, management considers the scheduled reversals of deferred tax liabilities, projected future taxable income, and tax planning strategies.

The Company files income tax returns in the United States and Florida, which are subject to examination by the tax authorities in these jurisdictions. Generally, the statute of limitations related to the Company's federal and state income tax return is three years. The state impact of any federal changes for prior years remains subject to examination for a period up to five years after formal notification to the states.

Management has evaluated tax positions in accordance with FASB ASC 740, Income Taxes and has not identified any significant tax positions, other than those disclosed.

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29

GLOBAL GREEN, INC.

(A DEVELOPMENT STAGE COMPANY)

CONSOLIDATED FINANCIAL STATEMENTS

AND INDEPENDENT AUDITORS' REPORT

DECEMBER 31, 2013 AND 2012

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholders

Global Green, Inc.

We have audited the accompanying consolidated balance sheets of Global Green, Inc. (a development stage company) and its wholly owned subsidiary (together, the "Company") as of December 31, 2013 and 2012, and the related consolidated statements of operations, shareholders' equity and cash flows for the years then ended and the cumulative period from July 12, 2004 (inception) to December 31, 2013. These financial statements are the responsibility of the Global Green, Inc.'s management. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audits in accordance with generally accepted auditing standards in the United States of America. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement.  An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluation of the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Global Green, Inc., as of December 31, 2013 and 2012, and the consolidated results of its operations and its cash flows for the years then ended and the cumulative period from July 12, 2004 (inception) to December 31, 2013, in conformity with generally accepted accounting principles in effect in the United States.

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the consolidated financial statements, the Company has incurred net losses and negative cash flows since inception.  These conditions raise substantial doubt about its ability to continue as a going concern.  Management's plans regarding those matters also are described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. Our opinion on the financial statements is not modified with respect to this matter.

/s/ Accell Audit & Compliance, P.A.

Tampa, Florida

March 24, 2014

 

 

 

4868 West Gandy Boulevard • Tampa, Florida 33611 • 813.440.6380

 

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F - 1

F - 2

Global Green, Inc.

(A Development Stage Company)

Consolidated Statement of Shareholders' Deficit

For the Period from Inception (July 12, 2004) to December 31, 2013

 

See accompanying notes to the consolidated financial statements and Report of Independent Registered Public Accounting Firm.

 

 

---

 

See accompanying notes to the consolidated financial statements and Report of Independent Registered Public Accounting Firm.

 

 

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NOTE 1

NATURE OF ORGANIZATION

Global Green, Inc. (the "Company") is a Florida Corporation incorporated on July 12, 2004 as a wholly owned subsidiary of Global Assets & Services, Inc.  In September 2004, the Company was spun out into a separate legal entity.  The Company changed its name from The Global Tech Assets, Inc. to Global Green, Inc. in April 2010 and its fiscal period end is December 31.

The Company is in the development stage.  The principal activities during the development stage include organizing the corporate structure, implementing the Company's business plan and raising capital.  Although the Company was formed in 2004, it did not have any operating activities until 2010.

Under the Share Exchange Agreement executed on November 29, 2010, between the Company and Nutritional Health Institute, LLC ("NHIL"), the Company acquired 100% of the issued and outstanding stock of Global Green International, Inc. ("GGII"), a wholly owned subsidiary of NHIL. At the same time, the Company issued approximately 683 million shares of its common stock, representing 93% of the ownership of the Company, to NHIL. After the above mentioned acquisition as per the Share Exchange Agreement, the Company has become a majority-owned subsidiary of NHIL. As the effective control over GGII did not change, in accordance with Financial Accounting Standards Board's ("FASB") Accounting Standards Codification ("ASC") 805 Business Combinations, GGII is consolidated at its book value (See Note 4).  Prior to November 2010, GGII had no assets or operations, so there is no impact to the historical financial statements.

GGII, a wholly-owned subsidiary of the Company, has been granted the exclusive worldwide rights (the "Licensing Agreement") to manufacture, distribute, market and sell a Salmonella Antigen and Vaccine (the "Vaccine").  The Licensing Agreement was executed between NHIL and GGII before the Company acquired the 100% ownership of GGII and is the only asset of GGII.

In February 2011, the Vaccine has been entered into the final phase of becoming a United States Department of Agriculture ("USDA") approved vaccine for the in ovo vaccination of chicken eggs to provide immunity against Salmonella bacteria. In May 2011, the United States Patent and Trademark Office granted a patent for the method and composition in the Vaccine. In August 2011, an additional patent was granted related to the vaccine.

NOTE 2

GOING CONCERN

These consolidated financial statements have been prepared on a going concern basis which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business for the foreseeable future.  As of December 31, 2013, the Company has incurred net losses of $428,382 since inception (July 12, 2004).

Management's plans include raising capital through the equity markets to fund operations and eventually, the generating of revenue through its business; however, there can be no assurance that the Company will be successful in such activities.  These consolidated financial statements do not include any adjustments relating to the recovery of the recorded assets or the classifications of the liabilities that might be necessary should the Company be unable to continue as a going concern.

 

 

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NOTE 3

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") on the accrual basis of accounting.  All significant intercompany accounts and transactions have been eliminated in consolidation.  The interim financial statements reflect all adjustments, which are, in the opinion of management, necessary in order to make the financial statements not misleading.

The preparation of financial statements in conformity with GAAP requires management to adopt accounting policies and make estimates and assumptions that affect amounts reported in the financial statements.  The significant accounting policies, estimates and related judgments underlying the Company's financial statements are summarized below.  In applying these policies, management makes subjective judgments that frequently require estimates about matters that are inherently uncertain.

The Company considers all investments with a maturity date of three months or less when purchased to be cash equivalents.  There were no cash equivalents at December 31, 2013 and 2012.

The Company recognizes revenue on arrangements in accordance with Securities and Exchange Commission Staff Accounting Bulletin Topic 13, Revenue Recognition and ASC 605-15-25, Revenue Recognition.  In all cases, revenue is recognized only when the price is fixed or determinable, persuasive evidence of an arrangement exists, the service is performed and collectability is reasonably assured. The Company did not report any revenues from inception to December 31, 2013.

The Company has adopted ASC 260-10-50, Earnings Per Share, which provides for calculation of "basic" and "diluted" earnings per share. Basic earnings per share includes no dilution and is computed by dividing net income or loss available to common shareholders by the weighted average common shares outstanding for the period. Diluted earnings per share reflect the potential dilution of securities that could share in the earnings of an entity. Basic and diluted losses per share were the same at the reporting dates as there were no common stock equivalents outstanding at December 31, 2013 and 2012.

Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash.

Occasionally, cash balances may exceed amounts insured by the Federal Deposit Insurance Corporation ("FDIC").  Accordingly, the Company places its cash and cash equivalents with financial institutions considered by management to be of high credit quality.  At times, the Company's cash balances may be in excess of the FDIC limits.

 

 

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Global Green, Inc.

(A Development Stage Company)

Notes to the Consolidated Financial Statements

December 31, 2013 and 2012

 

The Company adopted Statement of Financial Accounting Standards ("SFAS") No. 157 Fair Value Measurements ("SFAS 157"), superseded by ASC 820-10, which defines fair value, establishes a framework for measuring fair value and expands required disclosure about fair value measurements of assets and liabilities. The impact of adopting ASC 820-10 was not significant to the Company's financial statements. ASC 820-10 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 820-10 also establishes a fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard describes three levels of inputs that may be used to measure fair value:

Level 1 – Valuation based on quoted market prices in active markets for identical assets or liabilities.

Level 2 – Valuation based on quoted market prices for similar assets and liabilities in active markets.

Level 3 – Valuation based on unobservable inputs that are supported by little or no market activity, therefore requiring management's best estimate of what market participants would use as fair value.

In instances where the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety.  Our assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the asset or liability.  The valuation of our derivative liability is determined using Level 1 inputs, which consider (i) time value, (ii) current market and (iii) contractual prices. 

Fair value estimates discussed herein are based upon certain market assumptions and pertinent information available to management as of December 31, 2013 and December 31, 2012.  The respective carrying value of certain on-balance-sheet financial instruments approximated their fair values due to the short-term nature of these instruments.  These financial instruments include cash, accounts payable, accrued expenses and advance.

Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Additionally, the recognition of future tax benefits, such as net operating loss carryforwards, is required to the extent that realization of such benefits is more likely than not. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which the assets and liabilities are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income tax expense in the period that includes the enactment date.

In the event the future tax consequences of differences between the financial reporting bases and the tax bases of the Company's assets and liabilities result in deferred tax assets, an evaluation of the probability of being able to realize the future benefits indicated by such asset is required. A valuation allowance is provided for the portion of the deferred tax asset when it is more likely than not that some or all of the deferred tax asset will not be realized. In assessing the realizability of the deferred tax assets, management considers the scheduled reversals of deferred tax liabilities, projected future taxable income, and tax planning strategies.

 

 

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The Company files income tax returns in the United States and Florida, which are subject to examination by the tax authorities in these jurisdictions. Generally, the statute of limitations related to the Company's federal and state income tax return is three years. The state impact of any federal changes for prior years remains subject to examination for a period up to five years after formal notification to the states.

Management has evaluated tax positions in accordance with ASC 740, Income Taxes, and has not identified any significant tax positions, other than those disclosed.

In accordance with ASC 855, Subsequent Events, the Company evaluated subsequent events through March 24, 2013, the date the financial statements were available for issue.

 

 

F - 8

The components of income tax expense for the periods ended are as follows:

		December 31, 2013				December 31, 2012				Inception to December 31, 2013 (unaudited)
Current tax benefit		$	(43,599	)		$	(43,202	)		$	(161,073	)
Change in valuation allowance			43,599				43,202				161,073
		$	-			$	-			$	-

 

The difference between income tax expense computed by applying the statutory federal income tax rate to earnings before taxes for the periods ended are as follows:

		December 31, 2013				December 31, 2012				Inception to December 31, 2013 (unaudited)
Pretax loss at federal statutory rate		$	(39,425	)		$	(39,066	)		$	(145,652	)
State income benefit, net of federal benefit			(4,174	)			(4,136	)			(15,421	)
Change in valuation allowance			43,599				43,202				161,073
		$	-			$	-			$	-

 

The components of deferred taxes are as follows:

		December 31, 2013				December 31, 2012
Deferred income tax assets:
Operating loss carryforwards		$	161,073			$	117,474
Less: Valuation allowance			(161,073	)			(117,474	)
Net deferred tax asset		$	-			$	-

At December 31, 2013 and 2012, a valuation allowance was established for the entire amount of the net deferred tax asset as the realization of the deferred tax asset is dependent on future taxable income.

At December 31, 2013, the Company had net operating loss carryforwards for tax purposes of $428,362 which will expire beginning in 2031, if not previously utilized.

 

F - 9

In May 2010, the Company had a 10-to-1 stock forward split, changing its par value from $.0001 per share to $.00001 per share.  Right after the said stock split, the Company issued 20,000,000 shares of its common stock to certain shareholders for services rendered valued at $200.  This is recorded as a non-cash expense in the accompanying statement of operations.

In November 2010 the Company issued approximately 683 million shares of common stock, representing 93% of the ownership of the Company, to NHIL. After the above mentioned issuance, the Company has become a majority-owned subsidiary of NHIL.

On March 21, 2011, the Company completed a private placement of common stock to accredited investors and raised $286,000 of working capital.

On January 15, 2013 the Company entered into a convertible advance with the Company's Chief Executive Officer and Chairman. The convertible advance, with a face value of $300,000, bears interest at 5% per annum and matures on January 31, 2015. The convertible advance is convertible, at the holder's option, into the Company's common or preferred shares based on the value of the shares at the execution date of the advance.  The convertible advance is valued at the greater of the face value of the advance or the fair value of the shares, if converted.  At December 31, 2013, the convertible advance was recorded at $235,000.  Accrued interest related to this advance was $12,987 and $0 at December 31, 2013 and 2012, respectively, and is included in accounts payable and accrued expenses on the balance sheet.

Through its wholly-owned subsidiary, GGII, the Company has exclusive rights to the Licensing Agreement with NHIL, the Company's majority shareholder.  In accordance with this agreement, GGII assumes the financial responsibility for the acquisition and maintenance of all patents, as well as USDA's approval of the Vaccine.

During the normal course of business, the Company may be exposed to litigation.  When the Company becomes aware of potential litigation, it evaluates the merits of the case in accordance with ASC 450-20-50, Contingencies.  The Company evaluates its exposure to the matter, possible legal or settlement strategies and the likelihood of an unfavorable outcome.  If the Company determines that an unfavorable outcome is probable and can be reasonably estimated, it establishes the necessary accruals.  As of December 31, 2013, the Company is not aware of any contingent liabilities that should be reflected in the accompanying financial statements.

F - 10

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