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UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-K


(Mark One)


[X]

ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


For the fiscal year ended: December 31, 2013


¨

TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


For the transition period from ________ to ________


Commission File No. 333-164788


ACTIVE HEALTH FOODS, INC.

(Exact name of registrant as specified in its charter)


California

 

26-1736663

(State or other jurisdiction of incorporation or formation)

 

(I.R.S. employer identification number)


6185 Magnolia Ave.

Suite 403

Riverside, CA 92506

Email: info@activehealthfoodsinc.com

 (Address of principal executive offices) 


Registrants telephone number:

(951) 360-9970

Registrants facsimile number:

(951) 360-9971


N/A

(Former name, former address and former fiscal year, if changed since last report)


Securities registered under Section 12(b) of the Exchange Act: None


Securities registered under Section 12(g) of the Exchange Act: None

(Title of Class)


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.

                                                                 Yes [  ] No [X]


Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act 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 [  ]




1


Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 229.405 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 (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrants 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. [  ]

  

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 the definitions of large accelerated filer, accelerated filer, "non-accelerated filer" and smaller reporting company in Rule 12b-2 of the Exchange Act. (Check one):

 

Large accelerated filer

 

[  ]

Accelerated filer

 

[  ]

 

 

 

 


 

            Non-accelerated filer

 

[  ]

Smaller reporting company

 

[X]

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No[X]


State issuers revenues for its most recent fiscal year: $0


The aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrants most recently completed second fiscal quarter is $0.


As of April 2, 2014, there were 95,719,033 shares of Common Stock, $0.001 par value per share, issued and outstanding.


As of April 2, 2014, there were 50,000,000 shares of Preferred Stock, $0.001 par value per share, issued and outstanding.


DOCUMENTS INCORPORATED BY REFERENCE


None

 











 




2


Table of Contents


 

 

 

 

PAGE

PART I

 

 

 

Item 1.

Description of Business.

  4

 

Item 1A.

Risk Factors

  8

 

Item 1B

Unresolved Staff Comments

  10

 

Item 2.

Properties

  11

 

Item 3.

Legal Proceedings.

  11

 

Item 4.

Submission of Matters to a Vote of Security Holders.

  11

 

 

 

 

PART II

 

 

 

Item 5.

Market for Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

  11

 

Item 6

Selected Financial Data

  13

 

Item 7.

Managements Discussion and Analysis of Financial Condition and Results of Operation.

  13

 

Item 7A.

Quantitative and Qualitative Disclosures About Market Risk

  15

 

Item 8.

Financial Statements and Supplementary Data

  16

 

Item 9.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.

27

 

Item 9AT.

Controls and Procedures.

  27

 

Item 9B.

Other Information.

  28

 

 

 

 

PART III

 

 

 

Item 10.

Directors, Executive Officers, Promoters, Control Persons and Corporate Governance; Compliance with Section 16(a) of the Exchange Act.

28

 

Item 11.

Executive Compensation.

30

 

Item 12.

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

  30

 

Item 13.

Certain Relationships and Related Transactions, and Director Independence.

  31

 

Item 14.

Principal Accountant Fees and Services.

  32

 

Item 15.

Exhibits and Reports on Form 8-K

  33

 

 

 

 

SIGNATURES

 

  34


CERTIFICATIONS


















3


PART I


FORWARD-LOOKING STATEMENTS


Certain statements made in this Annual Report on Form 10-K are forward-looking statements (within the meaning of the Private Securities Litigation Reform Act of 1995) regarding the plans and objectives of management for future operations. Such statements involve known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements of the Registrant to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. The forward-looking statements included herein are based on current expectations that involve numerous risks and uncertainties. The Registrants plans and objectives are based, in part, on assumptions involving the continued expansion of business. Assumptions relating to the foregoing involve judgments with respect to, among other things, future economic, competitive and market conditions and future business decisions, all of which are difficult or impossible to predict accurately and many of which are beyond the control of the Registrant. Although the Registrant believes its assumptions underlying the forward-looking statements are reasonable, any of the assumptions could prove inaccurate and, therefore, there can be no assurance the forward-looking statements included in this Report will prove to be accurate. In light of the significant uncertainties inherent in the forward-looking statements included herein, the inclusion of such information should not be regarded as a representation by the Registrant or any other person that the objectives and plans of the Registrant will be achieved.


Item 1. Description of Business


Form and Year of Organization

 

Active Health Foods, Inc. (AHF or the Company), was incorporated in the State of California on January 9, 2008, under the same name.

 

Fiscal Year End

 

Active Health Foods, Inc.s fiscal year end is December 31.

 

Bankruptcy, Receivership and Similar Proceedings

 

The Company has never been party to any bankruptcy, receivership or similar proceeding, nor has it undergone any material reclassification, merger, consolidation, purchase or sale of a significant amount of assets not in the ordinary course of business.

 

Reclassification, Merger, Consolidation, Purchase or Sale of Assets Not in the Ordinary Course of Business

 

Active Health Foods, Inc. has not reclassified, merged, consolidated, purchased or sold any assets.

 

Description of Business

 

Principal Products and Services and Their Markets

 

Present Products

 

Active Health Foods, Inc. has developed the brand name Active XTM for its energy bars. The term Active XTM was trademarked by the company on May 6, 2008. Active XTM energy bars are very moist and flavorful, made from a proprietary formula developed by and exclusive to Active Health Foods, Inc. This proprietary blend only uses high quality natural and organic ingredients. Active XTM energy bars come in four flavors:

 




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           Almond Chocolate Delight

 

           Peanut Butter Chocolate Joy

 

           Cashew Berry Dream

 

           Coconut Cocoa Passion

 

Each energy bar is 1.8 net ounces and comes wrapped in a distinctive, decorated full color wrapping. Each flavor is packaged into a full color decorated display box, which is specifically designed to be used as a counter display for the retailer.  Each uniquely designed display box holds 16 bars. There are eight display boxes to a case, for a total 128 bars per case.

  

At the present time, Active Health Foods, Inc. relies upon two (2) principal suppliers.  These suppliers are:

 

Betty Lous, Inc., 750 South East Booth Bend Road, McMinnville, Oregon for the standard Active XTM energy bars;

 

Think, Plan, Deliver, 1010 #B Southwest Eleventh Ave., Portland, Oregon produces the wrappings and boxes.

 

We do not have any written contracts with either of these companies.

 

Active Health Foods, Inc. itself does not acquire any raw materials and therefore does not have any sources or direct need for acquisition of any raw materials to make Active XTM energy bars. The suppliers to the Company, noted in the paragraph above, acquire any and all raw materials that they may require for production of the Active XTM energy bars and the wrappings and boxes. The raw materials that these suppliers do require are all natural products grown and/or readily available in the United States.

 

Future Products

 

Active Health Foods, Inc. anticipates future products to include additional flavors of its energy bars.  The Company also intends to develop a box package design for an assortment of Active XTM energy bars.

 

For additional future product distribution, besides expanding what is or will be in place, Active Health Foods, Inc. will explore fulfilling government, institutional, humanitarian and/or military requirements.

 

Services

 

Active Health Foods, Inc. does not provide any services.

 

Future Services

 

Active Health Foods, Inc. does not anticipate providing any services in the future.

 

Product Availability

 

Active Health Foods, Inc. itself does not acquire any raw materials and therefore does not have any sources or direct need for acquisition of any raw materials to make Active XTM energy bars. The suppliers to the Company, noted in the paragraph above, acquire any and all raw materials that they may require for production of the Active



5


XTM energy bars and the wrappings and boxes. The raw materials that these suppliers do require are all natural products grown and/or readily available in the United States.

 

Intellectual Properties

 

We believe our trademark, proprietary and non-proprietary formulas and information afford us reasonable protection against the unauthorized copying of our products. However, it is possible that competitors will develop products equal to or superior to ours without infringing upon our intellectual property.

 

Active Health Foods, Inc. does not foresee the need to protect any intellectual properties through formal means at this time. The Company will, however, continue to physically guard its proprietary formulas for the ingredients of Active XTM energy bars.

 

Sales and Marketing Strategy

 

Active Health Foods, Inc.s strategic focus of effort is on a long-term approach of communicating an unambiguous, attractive, creative marketing campaign, designed to resonate with the strongest key prospects for sales and service. This marketing undertaking will specifically identify Active Health Foods, Inc. to the marketplace end-user and will communicate a clear message of the products that Active Health Foods, Inc. can offer for the benefit of the consumer. Active Health Foods, Inc. believes in the lifetime value of a customer rather than the instant gratification of a quick sale.

 

Our sales and marketing strategy and the efforts we will undertake to market and sell our products will be the result of the efforts conducted solely by the Company management.  We have not received any independent evaluation of our strategy and there can be no assurance that our strategy is an accurate or prudent assessment of the competitive conditions in todays economic climate and our chosen industry in particular.

 

Once funds are available, Active Health Foods, Inc. intends to retain a management company that will sell to retail outlets including, but not limited to, health food stores and gyms, as well as any other location it is appropriate and viable for marketing Active XTM energy bars. The Company intends to explore additional marketing possibilities in other venues that sell energy bars such as grocery retail outlets, convenience stores like 7-11 and large box stores like Costco, Sams Club and Wal-Mart.

 

As an additional marketing tool, AHF will actively engage in membership in business and professional associations and participate in public events in order to develop direct public exposure and exploit networking opportunities that might enhance our market introduction.

 

Distribution Methods

 

Following production of the Active XTM energy bars, the energy bars will be shipped directly to distributors or retailers or the Company will have the bars shipped to a local warehouse to be stored until further consignment to vendors. Shipment will be by common carrier, which will vary depending on the size, weight and delivery time requirements of each shipment.

 

We are currently working to identify an experienced internet service provider to develop a comprehensive internet presence as resources become available.

 

Industry Background and Competitive Business Conditions

 

Currently, the organic and health food industry is growing and the Company faces considerable competition from other companies worldwide. This business is replete with competition at all levels of geographic settings, expertise and ethical variances. Our ability to remain competitive is based on our ability to provide our customers with a broad range of quality products, competitively priced, with superior customer service. The prospective ability to develop cost effective products that provide superior value is an integral component of our ability to stay



6


competitive. We believe that the breadth and quality of our existing product line, the infrastructure in place to effectively source our products and the skill and dedication of our management will allow us to successfully compete in our chosen marketplace.

 

No formal study has been commissioned or initiated to analyze the competition that the Company will or may face. The Companys internal management competitor analysis reveals that the health food industry is a competitive business with competition coming from small locally owned companies, major big box stores labeling generic brands with their signature label, to the more popular selling organic bars such as Clif and Luna. None of these produce and sell organic and natural food bars like Active XTM energy bars and as such they lack the nutritional value of an Active XTM energy bar.

 

All of our major competitors are generally better financed, have greater name recognition, an established customer loyalty base and a broader range of markets than we do presently. Our core philosophy of an organic and  natural product, reliability of not only product quality but delivery as well, along with a fair price, we believe will distinguish our Company from the competition. Even with the competitive nature of the business, there is an opportunity for the Company to position itself for success by recognizing and catering to an increasingly demanding consumer. If the Company is unable to compete successfully against any of these competitors, then revenues could be negatively impacted, which would adversely affect the business, results of operations and financial condition of the Company.

 

Sources and Availability of Raw Materials

 

Active Health Foods, Inc. itself does not acquire any raw materials and therefore does not have any sources or direct need for acquisition of any raw materials to make Active XTM energy bars. The suppliers to the Company, already identified herein, acquire any and all raw materials that they may require for production of the Active XTM energy bars.  The raw materials that they do acquire are all natural products grown and readily available in the United States.

 

Dependence upon One or a Few Major Customers

 

Active Health Foods, Inc. does not expect to rely upon one or just a few customers.  Management believes that the Active XTM energy bars will have a broad public appeal.

 

Extent that the Business Is Seasonal

 

Management does not believe that Active XTM energy bars are or will be seasonal.

 

Patients, Trademarks, Licenses, Franchises and Concessions

 

Active Health Foods, Inc. has one trademark, granted May 6, 2008 by the United States Patent and Trademark Office under Registration Number 3,424,563, for the term Active XTM. Said trademark will remain in full force and effect for a period of ten (10) years and is renewable thereafter. It is believed by management that the trademark Active XTM will become increasingly more important as the Active XTM brand becomes known to the public.

 

Need for Government Approval on Principal Products or Services

 

The Company is not aware of any government approval required for our products.


 

        Existing or Probably Government Regulations

 

The Company is not aware of any specific regulatory obstacles.  That is not to say that we are not generally aware of the multitude of rules, statutes and administrative regulations that may apply, including, but not limited to, local



7


business licenses and regulations. However, we do not foresee these as prohibiting the implementation of our business plan, but merely as temporary administrative obstacles that will be addressed and overcome as they arise, or as best we can forecast their arrival.

 

Should we be able to develop and open our own production facility, we would be subject to further regulation under local, state and federal authorities, including possible requirements regarding occupational safety, production and labor practices, environmental protection and hazardous substance control, if any, and may be subject to other present and future local, state and federal regulation

 

Research and Development

 

The founder, Gregory Manos, personally directed the research and development of our products prior to filing this registration statement.  No cost or expense was or will be borne directly by any customer.

 

No future research and development is anticipated at this time.

 

Compliance with Environmental Laws

 

Active Health Foods, Inc. does not conduct any activities requiring compliance with any federal, state or local environmental statutes or regulations.

 

Number of Employees

 

The Company does not presently have any full or part-time employees. The sole officer and director of the Company is providing time and services as necessary for the development of the Company.

 

Active Health Foods, Inc. is currently in the development stage.  During this development period, we plan to rely exclusively on the services of our sole officer and director to establish business operations and perform or supervise the minimal services required at this time. Our operations are currently on a small scale and, it is believed, manageable by the present management. The responsibilities are mainly administrative at this time, as our operations are minimal.

 

Anticipated Material Changes in Number of Employees

 

We do not anticipate any material change in the number of employees in the foreseeable future.

 

Acquisition or Disposition of Any Material Assets

 

The Company does not anticipate any acquisition or disposition of any material assets.

 

Material Acquisition of Plant and Equipment

 

The Company does not anticipate any material acquisition of any plant or equipment.

 

Reports to Security Holders

 

The Company will make available to shareholders audited annual financial reports certified by independent accountants, and may, in its discretion, make available unaudited quarterly financial reports. The Company will file periodic reports with the Securities and Exchange Commission as required to maintain a fully reporting status.

 

The public may read and copy any materials we file with the SEC at the SECs Public Reference Room at 450 Fifth Street, N.W., Washington, D.C. 20549 on official business days during the hours of 10:00 a.m. to 3:00 p.m. The



8


public may obtain information on the operation of the Public Reference Room by calling the Commission at 1-800-SEC-0330. The Commission maintains an internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the Commission.  The address of that site is:  http://www.sec.gov

 

Item 1A. Risk Factors


RISKS ASSOCIATED WITH OUR BUSINESS


RISK FACTORS


The following are risk factors which are directly related to the Companys business, financial condition and this offering. Investing in our securities involves a high degree of risk and you should not invest in these securities unless you can afford to lose your entire investment. You should read these risk factors in conjunction with other more detailed disclosures located elsewhere in this prospectus.


THE COMPANYS OPERATIONS DEPEND EXCLUSIVELY ON GREGORY MANOS WHO HAS NO EXPERIENCE IN PUBLIC COMPANIES


Active Health Foods, Inc.s operations depend solely on the efforts Gregory Manos, the sole officer and director of the Company.  Mr. Manos has no experience related to public company management.  Because of this, we may be unable to offer and sell the shares in this offering, develop our business or manage our public reporting requirements. The Company cannot guarantee that it will be able to overcome any such obstacles.


THE COMPANYS SOLE OFFICER AND DIRECTOR INVOLVED IN OTHER EMPLOYMENT OPPORTUNITIES


Gregory Manos, our sole officer and director, is involved in other employment opportunities and may periodically face a conflict in selecting between Active Health Foods, Inc. and other personal and professional interests. The Company has not formulated a policy for the resolution of such conflicts, should they occur. If the Company loses Mr. Manos to other pursuits without a sufficient warning, the Company may, consequently, go out of business.


ANY INVESTMENT IN THESE SECURITIES IS SPECULATIVE AND INVOLVES A HIGH DEGREE OF UNCERTAINTY


Investment in the securities offered herein is speculative, involves a high degree of uncertainty, is subject to a number of risks and is suitable only for investors of substantial financial means.  Prospective investors should carefully consider the following risk factors in addition to the other information contained in this prospectus, before making an investment decision concerning the common stock offered in this prospectus. Only those investors who are prepared to potentially risk a total financial loss of their investment in this company should consider investing. Any of the following risks could have a material adverse effect on the Companys business, financial condition, operations or prospects and cause the value of our common stock to decline, which could cause you to lose all or part of your investment. When determining whether to invest, you should also refer to and consider the other information in this prospectus, including, but not limited to, the financial statements and related notes.

 

ALL INFORMATION HEREIN INCLUDING ALL FORWARD-LOOKING STATEMENTS SHOULD BE CONSIDERED CAREFULLY


The factors set forth below, along with the other information contained herein, should be considered carefully in evaluating our prospects. Further, this document contains certain forward-looking statements that involve risks and uncertainties, such as statements of our plans, goals, objectives, expectations and intentions. The cautionary statements made in this section apply to all forward-looking statement wherever they appear in this document. Readers are cautioned that, while the forward-looking statements reflect our good faith beliefs, they are not guarantees of future performance, and involve risks and uncertainties. In addition, actual results could differ



9


materially from those discussed herein and our business, our financial condition or the results of operations could be materially and adversely affected. In such case, some of the factors that could cause or contribute to such differences include those discussed below, as well as those discussed elsewhere in this document. In the event that actual results do not meet expectations, there could be a consequent negative effect on the position of investors.


IF WE ARE UNABLE TO CONTINUE AS A GOING CONCERN, INVESTORS MAY FACE A COMPLETE LOSS OF THEIR INVESTMENT


As of the date of this prospectus, we have commenced operations and generated limited revenues.  Our independent registered public accounting firm has expressed substantial doubt about our ability to continue as a going concern. If our business fails, our investors in may face a complete loss of their investment.


BECAUSE WE HAVE ONLY RECENTLY COMMENCED BUSINESS OEPRATIONS, WE FACE A HIGH RISK OF BUSINESS FAILURE


We have no significant operating history nor do we have anyone experienced in managing a public company. There is no assurance that we will be able to maintain any sustainable operations. It is not possible at this time to predict success with any degree of certainty due to problems associated with the commencement of new business. An investor should consider the risks, expenses and uncertainties that a developing company like ours faces. Potential investors should be aware that there is a substantial risk of failure associated with any new business venture as a result of problems encountered in connection with the commencement of new operations. These problems include, but are not limited to, an unstable economy, unanticipated problems relating to the entry of new competition, unanticipated moves by existing competition and unexpected additional costs and expenses that may exceed current estimates. Also, to date, we have completed only partial development of our intended operations and we can provide no assurance that our company will have a successful commercial application. There is no operating history upon which to base any projections as to the likelihood that we will prove successful in our current business plan, and thus there can be no assurance that we will be a viable, ongoing concern.


WE MAY NOT BE ABLE TO ATTAIN PROFITABILITY WITHOUT ADDITIONAL FUNDING, WHICH MAY BE UNAVAILABLE


We have limited capital resources and require substantial capital to adequately fund the Company. To date, we have funded our operations with limited initial capital and minimal sales and have not generated sufficient funds from operations to be profitable or to maintain consistent operations. Unless we begin to generate sufficient revenues, on a consistent basis, to sustain an ongoing business operation, we may experience liquidity and solvency problems. Such liquidity and solvency problems may force us to cease operations if additional financing, under acceptable terms and conditions, is not available. In the event our cash resources are insufficient to continue operations, we intend to consider raising additional capital through offerings and sales of equity or debt securities. In the event we are unable to raise sufficient funds, we will be forced to terminate business operations. The possibility of such an outcome presents the risk of a complete loss of your investment in our common stock.

 

PURCHASERS IN THIS OFFERING WILL HAVE LIMITED CONTROL OVER DECISION MAKING BECAUSE THE COMPANYS SOLE OFFICER AND DIRECTOR CONTROLS A MAJORITY OF THE ISSUED AND OUTSTANDING COMMON STOCK


The present management owns a majority of the outstanding common stock at the present time and will continue to own a majority of

the outstanding common stock even if the maximum number of common shares is purchased in this offering. As a result of such ownership, investors in this offering will have limited control over matters requiring approval by our security holders, including the election of directors, the approval of significant corporate transactions and any change of control and management of the Company. This concentrated control may also make it difficult for our stockholders to receive a premium for their shares of their common stock in the event the Company enters into transactions which require stockholder approval.  

 




10


THE COSTS, EXPENSES AND COMPLEXITY OF SEC REPORTING AND COMPLIANCE MAY INHIBIT OR SEVERELY RESTRICT OUR OPERATIONS


The costs of complying with these complex requirements may be substantial and require extensive consumption of our time as well as retention of expensive specialists in this area. In the event we are unable to establish a base of operations that generates sufficient cash flows or cannot obtain additional equity or debt financing, the costs of maintaining our status as a reporting entity may inhibit our ability to continue our operations.


THE COMPANY MAY NOT BE ABLE TO GENERATE REVENUES


We expect to earn revenues solely in our chosen business area. In the opinion of our management, we reasonably believe that the Company will begin to generate significant revenues sufficient to maintain our operations. However, failure to generate sufficient and consistent revenues to fully execute and adequately maintain our business plan may result in failure of our business and the loss of your investment.

 

COMPETITORS WITH MORE RESOURCES MAY FORCE US OUT OF BUSINESS

 

The market for customers is intensely competitive and such competition is expected to continue to increase. Generally, our actual and potential competitors are larger companies with longer operating histories, greater financial and marketing resources, with superior name recognition and an entrenched client base. Therefore, many of these competitors may be able to devote greater resources to attracting customers and be able to grant preferred pricing. Competition by existing and future competitors could result in our inability to secure an adequate consumer base sufficient enough to support our endeavors. We cannot be assured that we will be able to compete successfully against present or future competitors or that the competitive pressure we may face will not force us to cease operations.


INVESTORS MAY HAVE DIFFICULTY LIQUIDATING THEIR INVESTMENT BECAUSE OUR STOCK WILL BE SUBJECT TO PENNY STOCK REGULATION


The SEC has adopted rules that regulate broker/dealer practices in connection with transactions in penny stocks. Penny stocks generally are equity securities with a price of less than $5.00 (other than securities registered on certain national securities exchanges or quoted on the NASDAQ system, provided that current price and volume information with respect to transactions in such securities is provided by the exchange system). The rules, in part, require broker/dealers to provide penny stock investors with increased risk disclosure documents and make a special written determination that a penny stock is a suitable investment for the purchaser and receive the purchasers written agreement to the transaction. These heightened disclosure requirements may have the effect of reducing the number of broker/dealers willing to make a market in our shares, thereby reducing the level of trading activity in any secondary market that may develop for our shares. Consequently, shareholders in our securities may find it difficult to sell their securities, if at all.


WE DO NOT CURRENTLY INTEND TO PAY DIVIDENDS ON OUR COMMON STOCK SO CONSEQUENTLY YOUR ABILITY TO ACHIEVE A RETURN ON YOUR INVESTMENT WILL DEPEND ON APPRECIATION IN THE PRICE OF OUR COMMON STOCK


Prospective investors should not anticipate receiving any dividends from our common stock. We intend to retain future earnings, if any, to finance our growth and development and do not plan to pay cash or stock dividends. The lack of dividend potential may discourage prospective investors from purchasing our common stock.

 

THE COMPANY MAY LOSE ITS TOP MANAGEMENT WITHOUT EMPLOYMENT AGREEMENTS


Our operations depend substantially on the skills, knowledge and experience of the present management, which devotes itself to the Company on a part-time basis. The Company has no other full or part-time individuals devoted to the development of our Company. Furthermore, the Company does not maintain key man life insurance. Without



11


an employment contract, we may lose the present management of the Company to other pursuits without a sufficient warning and, consequently, we may be forced to terminate our operations.


WE MAY BE UNABLE TO GENERATE SUSTAINABLE REVENUE WITHOUT SUBSTANTIAL SALES, MARKETING OR DISTRIBUTION CAPABILITIES


The Company has not substantially commenced its planned business strategy and does not have any significant sales or marketing capabilities in place yet. We cannot guarantee that we will be able to develop a sales and marketing plan or effective operational capabilities. In the event we are unable to successfully implement these objectives, we may be unable to continue operations.


BLUE SKY LAWS MAY LIMIT YOUR ABILITY TO SELL YOUR SHARES. IF THE STATE LAWS ARE NOT FOLLOWED, YOU MAY NOT BE ABLE TO SELL YOUR SHARES AND YOU MAY LOOSE YOUR INVESTMENT


State Blue Sky laws may limit resale of the shares offered in this prospectus. The holders of our shares of common stock and persons who desire to purchase them in any trading market that might develop in the future should be aware that there may be significant state law restrictions upon the ability of investors to resell our shares. We are unsure at this time in what state or states we intend to offer and sell the shares of common stock offered hereby.  However, we will not make any offer of these securities in any jurisdiction where the offer is not permitted.


Item 1B. Unresolved Staff Comments


This section is not applicable.

 

Item 2. Description of Properties


We do not own or lease any properties and at this time have no agreements to own or lease any properties in the near future.


Item 3. Legal Proceedings


The Company is not party to any legal proceedings nor is it aware of any investigation, claim or demand made on the Company that may reasonably result in any legal proceedings.


Item 4. Submission of Matters to a Vote of Security Holders


No matters have been submitted to a vote of security holders.

 

PART II


Item 5. Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities


Market Information


Our common stock is not yet quoted on OTC Bulletin Board. We cannot guarantee that a meaningful trading market will ever develop.  If a market ever develops for our common stock, of which we cannot guarantee, the trading price of our common stock could be subject to wide fluctuations in response to various events or factors, many of which are or will be beyond our control.  In addition, the stock market may experience extreme price and volume fluctuations, which, without a direct relationship to our operating performance, may affect the market price of our stock.




12


Holders


As of December 31, 2013, we had 28,248,785 shares of $0.001 par value common stock issued and held by 13 shareholders of record.


The holders of our common stock are entitled to one vote for each share held of record on all matters submitted to a vote of stockholders. Holders of the common stock have no preemptive rights and no right to convert their common stock into any other securities. There are no redemption or sinking fund provisions applicable to our common stock.


Our current transfer agent is Holladay Stock Transfer.


Dividends


We have never declared or paid any cash dividend on our capital stock. We currently intend to retain future earnings, if any, for development of our business and therefore do not anticipate that we will declare or pay cash dividends on our capital stock in the foreseeable future.


Penny Stock Regulations

 

The Securities and Exchange Commission has adopted Rule 15g-9 which establishes the definition of a "penny stock," for the purposes relevant to us, as any equity security that has a market price of less than $5.00 per share or with an exercise price of less than $5.00 per share, subject to certain exceptions. For any transaction involving a penny stock, unless exempt, the rules require: (1) that a broker or dealer approve a persons account for transactions in penny stocks; and (2) the broker or dealer receives from the investor a written agreement to the transaction, setting forth the identity and quantity of the penny stock to be purchased.


In order to approve a person's account for transactions in penny stocks, the broker or dealer must: (1) obtain financial information and investment experience objectives of the person; and (2) make a reasonable determination that the transactions in penny stocks are suitable for that person and the person has sufficient knowledge and experience in financial matters to be capable of evaluating the risks of transactions in penny stocks.

 

The broker or dealer must also deliver, prior to any transaction in a penny stock, a disclosure schedule prescribed by the Securities and Exchange Commission relating to the penny stock market, which, in highlight form sets forth the basis on which the broker or dealer made the suitability determination and that the broker or dealer received a signed, written agreement from the investor prior to the transaction.

 

Generally, brokers may be less willing to execute transactions in securities subject to the "penny stock" rules. This may make it more difficult for investors to dispose of our common stock and cause a decline in the market value of our stock.


Disclosure also has to be made about the risks of investing in penny stocks in both public offerings and in secondary trading and about the commissions payable to both the broker-dealer and the registered representative, current quotations for the securities and the rights and remedies available to an investor in cases of fraud in penny stock transactions. Finally, monthly statements have to be sent disclosing recent price information for the penny stock held in the account and information on the limited market in penny stocks.


Our Company Securities


(a) Capital Stock


Common Stock:




13


The Company is authorized by its Certificate of Incorporation, as amended, to issue an aggregate of 2,000,000,000 shares of common stock, par value $0.001 per share (the Common Stock). As of December 31, 2013, there were 29,248,785 shares of Common Stock issued and outstanding.


Preferred Stock:


The Company is authorized by its Certificate of Incorporation, as amended, to issue an aggregate of 100,000,000 shares of preferred stock, par value $0.001 per share (the Preferred Stock). As of December 31, 2013, there were 50,000,000 shares of Common Stock issued and outstanding.


Voting Rights:


Preemptive Rights

 

No holder of any shares of Active Health Foods, Inc.s stock has preemptive or preferential rights to acquire or subscribe to any unissued shares of any class of stock or any unauthorized securities convertible into or carrying any right, option or warrant to subscribe for or acquire shares of any class of stock not disclosed herein.

 

Non-Cumulative Voting

 

Holders of Active Health Foods, Inc. common stock do not have cumulative voting rights.

 

Dividend Policy

 

As of the date of this prospectus, Active Health Foods, Inc. has never declared nor paid any cash dividends to stockholders. The declaration of any future cash dividend will be at the discretion of the Board of Directors and will depend upon earnings, if any, capital requirements, our financial position, general economic conditions, and other factors deemed pertinent by the Board of Directors. The Company does not contemplate declaring dividends in the foreseeable future.

 

 (b) Market Information


Our common stock is not yet quoted on OTC Bulletin Board. We cannot guarantee that a meaningful trading market will ever develop.  If a market ever develops for our common stock, of which we cannot guarantee, the trading price of our common stock could be subject to wide fluctuations in response to various events or factors, many of which are or will be beyond our control.  In addition, the stock market may experience extreme price and volume fluctuations, which, without a direct relationship to our operating performance, may affect the market price of our stock.


(c) Holders of the Company's Securities


As of December 31, 2013, there were 13 holders of record of shares of the Companys Common Stock.


(d) Dividends


We have never declared or paid any cash dividend on our capital stock. We currently intend to retain future earnings, if any, for development of our business and therefore do not anticipate that we will declare or pay cash dividends on our capital stock in the foreseeable future.


Recent Sales of Unregistered Securities


There have been no sales of unregistered securities during the time period of this report.

 



14


Item 6. Selected Financial Data


This section is not applicable.


Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations


You should read the following discussion together with our consolidated financial statements and the related notes included elsewhere in this Annual Report. This discussion contains forward-looking statements, which involve risks and uncertainties. Our actual results may differ materially from those we currently anticipate as a result of many factors, including the factors we describe under "Risk Factors and elsewhere in this Annual Report.


Forward Looking Statements


Some of the information in this section contains forward-looking statements that involve substantial risks and uncertainties. You can identify these statements by forward-looking words such as "may," "will," "expect," "anticipate," "believe," "estimate" and "continue," or similar words. You should read statements that contain these words carefully because they discuss our future expectations, contain projections of our future results of operations or of our financial condition, and state other forward-looking information.


We believe it is important to communicate our expectations. However, there may be events in the future that we are not able to accurately predict or over which we have no control. Our actual results and the timing of certain events could differ materially from those anticipated in these forward-looking statements as a result of certain factors, including those set forth under "Risk Factors," "Business" and elsewhere in this Annual Report. See "Risk Factors."


Unless stated otherwise, the words we, us, our, the Company or Active in this Annual Report collectively refers to the Company.


Plan of Operation

 

Active Health Foods, Inc. was incorporated on January 9, 2008 in the State of California, under the same name. 


As of December 31, 2010, the Company is not a shell company as defined in Rule 12b-2 of the Exchange Act.


Active Health Foods, Inc. has a principal business objective of providing competitively priced, premium quality, organic energy bars. Active Health Foods, Inc. has developed the brand name Active XTM for its energy bars. The term Active XTM was trademarked by the company on May 6, 2008.  Active XTM energy bars are very moist, organic and natural, made from a proprietary formula developed by and exclusive to Active Health Foods, Inc. This proprietary blend only uses high quality natural and organic ingredients. Active XTM energy bars come in four flavors:

 

           Almond Chocolate Delight

 

           Peanut Butter Chocolate Joy

 

           Cashew Berry Dream

 

           Coconut Cocoa Passion

 

Each energy bar is 1.8 net ounces and comes wrapped in a distinctive, decorated full color wrapping. Each flavor is packaged into a full color decorated display box, which is specifically designed to be used as a counter display for the retailer. Each uniquely designed display box holds 16 bars. There are eight display boxes to a case, for a total of 128 bars per case



15


 

As of the date of this document, we have generated nominal revenues and substantial expenses. This resulted in a net loss since inception, which is attributable to general and administrative expenses.

 

Since incorporation, we have financed our operations primarily through minimal initial capitalization and nominal sales.

 

To date we have not implemented our planned principal operations. The realization of revenues in the next 12 months is critically important in the execution of our plan of operations. However, we cannot guarantee that we will generate such growth. If we do not produce sufficient cash flow to support our operations over the next 12 months, we may need to raise additional capital by issuing stock in exchange for cash in order to continue as a going concern. There are no formal or informal agreements to attain any financing. We cannot assure any investor that, if needed, sufficient financing can be obtained or, if available, that it will be available on reasonable terms. Without realization of additional capital, if needed, it would be unlikely for operations to continue.

 

Active Health Foods, Inc.s management does not expect to conduct any research and development.

 

Active Health Foods, Inc. currently does not own any significant plant facilities or equipment that it would seek to refinance or sell in the near future. The Company does not envision purchasing any significant equipment in the near future.  

 

Our management does not anticipate any significant changes in the number of employees in the next 12 months. Currently, we believe the services provided by our sole officer and director are sufficient at this time.

 

We have not paid for expenses on behalf of any director. Additionally, we believe that this practice will not materially change.

 

Liquidity and Capital Resources


As of December 31, 2013, we had limited cash of $138 and an accumulated deficit of $6,965,379. Our operating activities had a net loss of $1,360,811 for the fiscal year ended December 31, 2013, while our operations had a net loss of $5,227,970 in the fiscal year ended December 31, 2012. The increase in operating loss was primarily attributable to an increase in salaries and wages and professional fees.

 

We had revenue of $29,483 during the fiscal year ended December 31, 2013 as compared to revenues of $75,683  for the period ending December 31, 2012.  


In order to continue as a going concern and achieve a profitable level of operations, the Company will need, among other things, additional capital resources and development of a consistent source of revenues. The ability of the Company to continue as a going concern is dependent upon its ability to successfully accomplish its strategic business plan, become profitable and to be able to sustain such profitability. The accompanying financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.


Management believes that the Company will require substantial cash infusion for the next twelve months to fund its full operations. There is no guarantee that such cash infusion will be available.


At December 31, 2013, the Company had loans and notes outstanding of $9,500, convertible debt net of discounts of $46,224, derivative liabilities of $109,996, related-party payables of $200,816 and accounts payable and accrued expenses of $19,691.







16


Results of Operations

 

Fiscal Year Ended December 31, 2013 Compared to December 31, 2012


The following table summarizes the results of our operations during the fiscal years ended December 31, 2013 and 2012, respectively, and provides information regarding the dollar and percentage increase or (decrease) from the current 12-month period to the prior 12-month period:


 

 

Line Item

 

12/31/2013

(Audited)

 

 

12/31/2012

(Audited)

 

 

Increase

(Decrease)

 

 

Percentage

Increase

(Decrease)

 

Revenues

 

$

29,483

 

 

$

75,683

 

 

$

(46,200)

 

 

 

(61)%

 

Cost of Sales


$

31,655



$

62,695



$

(31,040)




(50)%


Total Operating Expenses

 

$

827,191

 

 

$

5,191,040

 

 

$

(4,363,849)

 

 

 

(84)%

 

Net (Loss)

 

$

(1,360,811)

 

 

$

(5,227,970)

 

 

$

3,857,098

 

 

 

(74)%

 

Loss Per Share of Common Stock

 

$

(0.00)

 

 

$

(0.01)

 

 

$

0.01

 

 

 

(74)%

 


Assets. On December 31, 2013, we had $138 cash on hand. On December 31, 2012, we had $4,459 cash on hand. On December 31, 2013, we had $41,555 in inventory and $39 in accounts receivable. On December 31, 2012, we had $20,546   in inventory and $28,697 in accounts receivable.


Total Current Liabilities. Our Total Current Liabilities decreased to $339,034 on December 31, 2013 from $596,755 on December 31, 2012. This decrease in Total Current Liabilities was primarily due to a decrease in convertible debt.


Revenues. Our Revenues were $29,483 for the fiscal year ended December 31, 2013, and $75,683 for the fiscal year ended December 31, 2012. This decrease was due to the Company unsuccessfully getting products to market and generating sales.


Operating Expenses. Our Total Operating Expenses were $827,191 for the fiscal year ended December 31, 2013 compared to $5,191,040 for the fiscal year ended December 31, 2012. This decrease in total operating expenses was due to decreased operations and business activity.

 

Net Loss. We recorded a Net Loss of $1,360,811 for the fiscal year ended December 31, 2013 as compared with a Net Loss of $5,227,970 for the fiscal year ended December 31, 2012. The decrease in Net Losses was primarily due to a decrease in salaries and wages expense.


Total Stockholders Deficit. Total Stockholders Deficit decreased to $351,302 on December 31, 2013 from $543,053 on December 31, 2012. This decrease in Total Stockholders Equity was primarily due to a decrease in salaries and wages expense.


Since inception, we have incurred a cumulative net loss of $6,965,379

 

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 or capital expenditures or capital resources that is material to an investor in our securities.

 

Seasonality


Our operating results are not affected by seasonality.




17


Inflation


Our business and operating results are not affected in any material way by inflation.


Critical Accounting Policies


Revenue Recognition

The Companys revenue recognition policies are in compliance with Staff Accounting Bulletin (SAB) 104. Sales revenue is recognized at the date of shipment to customers when a formal arrangement exists, the price is fixed or determinable, the delivery is completed, no other significant obligations of the Company exist and collectability is reasonably assured. The Company recognizes revenue net of an allowance for estimated returns, at the time the merchandise is sold or services performed. The allowance for sales returns is estimated based on the Companys historical experience. Sales taxes are presented on a net basis (excluded from revenues and costs). Payments received before all of the relevant criteria for revenue recognition are satisfied are recorded as unearned revenue.                                                        


Stock-based Compensation

The Company follows the provisions of ASC 718 which requires all share-based payments to employees, including grants of employee stock options, to be recognized in the income statement based on their fair values.  The Company uses the Black-Scholes pricing model for determining the fair value of stock-based compensation.  


Fair Value of Financial Instruments

 ASC 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). The Company utilizes market data or assumptions that market participants would use in pricing the asset or liability, including assumptions about risk and the risks inherent in the inputs to the valuation technique. These inputs can be readily observable, market corroborated, or generally unobservable. The Company classifies fair value balances based on the observability of those inputs.


Item 7A. Quantitative and Qualitative Disclosures about Market Risk


This section is not applicable. 


Item 8. Financial Statements and Supplementary Data


 


 



















18


REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM



To the Board of Directors

Active Health Foods, Inc.

Riverside, CA


We have audited the accompanying balance sheets of Active Health Foods, Inc. (the Company), as of December 31, 2013 and 2012 and the related statements of operations, changes in stockholders equity and cash flows for each of the years then ended. These financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these financial statements based on our audits.


We conducted our audits in accordance with standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatements. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Companys internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall consolidated financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.


In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Active Health Foods, Inc. as of December 31, 2013 and 2012 and the results of their operations and their cash flows for each of the years then ended in conformity with accounting principles generally accepted in the United States of America.


The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company has suffered recurring losses from operations, which raises substantial doubt about its ability to continue as a going concern. Managements, plans regarding those matters are described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.



/s/ MALONEBAILEY, LLP

www.malonebailey.com

Houston, Texas

April 7, 2014



ACTIVE HEALTH FOODS, INC.

 

Balance Sheets

 










ASSETS

 














December 31,


December 31,





2013


2012





 


 

CURRENT ASSETS







Cash


$

                138


$

             4,459


Accounts receivable


                  39



           28,697


Inventory

 

           41,555


 

           20,546












Total Current Assets

 

           41,732


 

           53,702












TOTAL ASSETS

$

           41,732


$

           53,702










LIABILITIES AND STOCKHOLDERS' DEFICIT

 










CURRENT LIABILITIES







Accounts payable and accrued expenses

$

           19,691


$

           47,865


Related-party payables


          200,816



          241,817


Interest payable


             6,807



             5,967


Convertible debt, net


           46,224



          190,000


Derivative liability


          109,996



           34,106


Notes payable

 

             9,500


 

           77,000












Total Current Liabilities

 

          393,034


 

          596,755












TOTAL LIABILITIES

 

          393,034


 

          596,755










STOCKHOLDERS' DEFICIT







Preferred stock; 100,000,000 shares authorized,







  at $0.001 par value,  50,000,000 and 25,000,000







  shares issued  and outstanding, respectively


                    -


 

           50,000


Common stock; 2,000,000,000 shares authorized,







  at $0.001 par value, 28,248,785 and 729,958







  shares issued  and outstanding, respectively


           29,248



                730


Additional paid-in capital


       6,584,829



       5,010,785


Accumulated deficit

 

      (6,965,379)


 

      (5,604,568)












Total Stockholders' Deficit

 

         (351,302)


 

         (543,053)












TOTAL LIABILITIES AND

 



 




  STOCKHOLDERS' DEFICIT

$

           41,732


$

           53,702










The accompanying notes are an integral part of these financial statements.

 



ACTIVE HEALTH FOODS, INC.

Statements of Operations






For the Year Ended






December 31,






2013


2012












REVENUES


$

             29,483


$

                75,683


COST OF SALES


 

             31,655


 

                62,695












GROSS PROFIT


 

              (2,172)


 

                12,988












OPERATING EXPENSES



















Loss on inventory write-off



                      -



              101,344



Advertising expense



             12,522



                28,399



Professional fees



             57,693



              178,855



Salaries and Wages



           693,068



           4,804,008



General and administrative


 

             63,908


 

                78,434














Total Operating Expenses


 

           827,191


 

           5,191,040












LOSS FROM OPERATIONS


 

          (829,363)


 

          (5,178,052)












OTHER EXPENSE



















Loss on conversion of debt



                      -



                 (4,100)



Other expense



                      -



               (28,000)



Loss on derivative



          (113,208)



               (11,851)



Interest expense


 

          (418,240)


 

                 (5,967)














Total Other Expense


 

          (531,448)


 

               (49,918)












LOSS BEFORE INCOME TAXES



       (1,360,811)



          (5,227,970)


PROVISION FOR INCOME TAXES


 

                      -


 

                         -












NET LOSS


$

       (1,360,811)


$

          (5,227,970)












BASIC AND DILUTED LOSS








  PER SHARE


$

(0.00)


$

(0.01)












WEIGHTED AVERAGE








  NUMBER OF COMMON SHARES








  OUTSTANDING


 

584,184,490


 

584,184,490












The accompanying notes are an integral part of these financial statements




ACTIVE HEALTH FOODS, INC.

Statements of Stockholders' Deficit




















 

 















 Deficit



 















 Accumulated


   

 












 Additional


 During the


 Total

 


Preferred Stock


 Common Stock


 Paid-In


 Development


 Stockholders'

 


Shares


Amount


 Shares


 Amount


 Capital


 Stage


 Deficit

 




















 

 

Balance, December 31, 2011

     25,000,000


$

    25,000


800,350


$

              800


$

71,500


$

 (376,598)


$

 (279,298)

 

 

Common stock issued for services



















 

 

at $0.0078 per share

                    -



             -


447,650



              448



3,491,222



                  -



     3,491,670

 

 

Common stock issued for services



















 

 

at $0.008 per share






                    700



                  1



          5,599



-



           5,600

 

 

Common stock issued for services

-



-















 

 

at $0.0027 per share






               38,000



                38



102,562



-



        102,600

 

 

Common shares issued for cash  



















 

 

  at $0.0078 per share

                    -



             -


                 5,000



                  5



49,995



                  -



          50,000

 

 

Common stock issued for services



















 

 

at $0.003 per share

-



-


215,000



              215



644,785



-



        645,000

 

 

Common stock issued for services



















 

 

at $0.0018 per share

-



-


285,000



              285



512,715



-



        513,000

 

 

Common stock issued for services



















 

 

at $0.0018 per share

     50,000,000



50,000








40,000



-



          90,000

 

 

Common stock issued for services



















 

 

at $0.0008 per share

-



-


               35,000



                35



27,965



-



          28,000

 

 

Cancellation of common stock

                    -



             -


 (1,124,742)



 (1,125)



          1,125



                  -



                  -

 

 

Common stock issued for



















 

 

  conversion of debt






               28,000



                28



38,317



-



          38,345

 

 

Cancellation of Preferred  stock

 (25,000,000)



 (25,000)


-



-



25,000



-



                  -

 

 

Net loss for year ended


















   

 

 

  December 31, 2012

                    -


 

             -


                        -


 

                   -


 

                 -


 

 (5,227,970)


 

 (5,227,970)

 

 




















 

 

Balance, December 31, 2012

     50,000,000


 

50,000


729,958


   

              730


   

5,010,785


   

 (5,604,568)


   

 (543,053)

 

 




















 

 

Common stock issued for



















 

 

  conversion of debt

                    -



             -


15,090,831



15,090



345,327



                  -



        360,417

 

 

Cancellation of Preferred  stock

 (50,000,000)



 (50,000)


                        -



                   -



50,000



                  -



                  -

 

 

Cancellation of Common  stock

                    -



             -


 (18,000)



 (18)



               18



                  -



                  -

 

 

Common stock issued for merger

                    -



             -


               40,996



                41



          4,059



                  -



           4,100

 

 

Common stock issued for services

                    -



             -


13,340,000



13,340



683,420



                  -



        696,760

 

 

Common stock issued for cash

                    -



             -


               65,000



                65



          8,935



                  -



           9,000

 

 

Derivative write off due to debt conversions

                    -



             -


                        -



                   -



482,285



                  -



        482,285

 

 

Net loss for year ended


















   

 

 

  December 31, 2013

                    -


 

             -


                        -


 

                   -


 

                 -


 

    (1,360,811)


 

    (1,360,811)

 

 




















 

 

Balance, December 31, 2013

                    -


$

             -


         29,248,785


 $

          29,248


 $

    6,584,829


 $

    (6,965,379)


 $

       (351,302)

 

 




















 

 

The accompanying notes are an integral part of these financial statements.





ACTIVE HEALTH FOODS, INC.

Statements of Cash Flows






 


 







For the Year Ended







December 31,







2013


2012


OPERATING ACTIVITIES







 


Net loss


$

      (1,360,811)


$

      (5,227,970)

 

 


Adjustments to reconcile net loss to net cash







 


  used by operating activities:







 



Common stock issued for services


          426,760



       4,875,870




Common stock issued for merger expenses


          274,100



                    -




Loss on inventory write-off


                    -



          101,344




Loss on conversion of debt


                    -



             4,100




Loss on re-measurement of derivative liability


          113,208



           11,851




Amortization of discount on notes payable


395,051



           29,000



Changes in operating assets and liabilities:







 



Inventory


          (21,009)



          (88,414)




Deposits


                    -



           10,512




Accounts receivable


           28,658



          (28,697)




Accounts payable and accrued expenses

 

            11,222


 

           43,821

 




Net Cash Used in Operating Activities

 

         (132,821)


 

         (268,583)













FINANCING ACTIVITIES







 



Proceeds from related-party loans


          143,661



           82,118




Proceeds from notes payable


             9,500



                    -




Proceeds from convertible debt


          151,000



          210,500




Repayment of notes payable


                    -



                    -




Sale of common stock


             9,000



           50,000




Repayment of related-party loans

 

         (184,661)


 

          (70,706)





Net Cash Provided by Financing Activities

 

          128,500


 

          271,912





 










NET INCREASE IN CASH

   

            (4,321)


   

             3,329




CASH AT BEGINNING OF PERIOD

 

             4,459


 

             1,130




CASH AT END OF PERIOD

$

                138


$

             4,459













 

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION







 


CASH PAID FOR:







 



Interest


$

                    -


$

                    -




Income taxes

$

                    -


$

                    -














NON CASH FINANCING ACTIVITIES:







 



Cancellation of preferred stock

$

           50,000


$

           25,000




Cancellation of common stock

$

                  18


$

       1,124,742




Debt converted to equity

$

          360,417


$

           23,100




Derivative liabilities due to convertible notes

$

                    -


$

           37,500




Notes payable transferred to convertible notes

$

           77,000


$

                    -




Write-off of derivative liabilities due to conversion of debt

$

          482,285


$

           15,245




Debt Discounts recognized

$

          444,966


$

                    -




Convertible debt issued for services

$

26,500


$

-



The accompanying notes are an integral part of these condensed financial statements.




23


ACTIVE HEALTH FOODS, INC.

Notes to Financial Statements

December 31, 2013 and 2012

NOTE 1 ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Description of Business and Basis of Presentation

Active Health Foods, Inc. (the Company) was incorporated on January 9, 2008, as a California corporation to develop and market health foods and nutritional supplements.


The Company's financial statements are prepared using generally accepted accounting principles in the United States of America applicable to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company has not yet established an ongoing source of revenues sufficient to cover its operating costs and allow it to continue as a going concern. The ability of the Company to continue as a going concern is dependent on the Company obtaining adequate capital to fund operating losses until it becomes profitable. If the Company is unable to obtain adequate capital, it could be forced to cease operations.  


Reclassification

Certain balances in previously issued financial statements have been reclassified to be consistent with the current period presentation.

Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.  Actual results could differ from those estimates.

Cash and Cash Equivalents

For purposes of financial statement presentation, the Company considers all highly liquid investments with a maturity of three months or less, from the date of purchase, to be cash equivalents.  


Concentrations of Risk

The Companys bank accounts are held in insured institutions. The funds are insured up to $250,000 USD. AtDecember 31, 2013 and 2012, the Companys bank deposits did not exceed the insured amounts.


Accounts Receivable

Accounts receivable are carried at original invoice amount less an estimate made for doubtful receivables based on a review of all outstanding amounts on a monthly basis.  Specific reserves are estimated by management based on certain assumptions and variables, including the customers financial condition, age of the customers receivables, and changes in payment histories.  As ofDecember 31, 2013 and 2012, an allowance for doubtful receivables $-0- and    $-0-, respectively, was considered necessary.  Trade receivables are written off when deemed uncollectible.  Recoveries of trade receivables previously written off are recorded when received.

Inventory

In accordance with ASC 330, the Companys inventories are recorded at the lower of cost or market. The Company had inventory totaling $41,555 and $20,546 as ofDecember 31, 2013 and 2012.  As of December 31, 2013 the Companys inventory consisted of raw materials, packaging materials, and finished goods. During the year ended December 31, 2013 and 2012 the Company wrote off $-0- and $101,344 of inventory which was recorded as other expense.







24


ACTIVE HEALTH FOODS, INC.

Notes to Financial Statements

December 31, 2013 and 2012

NOTE 1 ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)



December 31,


December 31,


2013


2012

Raw materials

$

11,901

$

$

10,949

Finished goods


29,654



9,597

Allowance for obsolete inventory


-



-

Total

$

41,555

$

$

20,546


Cost of Sales

The Companys Cost of sales includes product costs and shipping and handling costs.


Impairment of Long-Lived Assets

Long-lived tangible assets and definite-lived intangible assets are reviewed for possible impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. The Company uses an estimate of undiscounted future net cash flows of the assets over the remaining useful lives in determining whether the carrying value of the assets is recoverable. If the carrying values of the assets exceed the expected future cash flows of the assets, the Company recognizes an impairment loss equal to the difference between the carrying values of the assets and their estimated fair values. Impairment of long-lived assets is assessed at the lowest levels for which there are identifiable cash flows that are independent from other groups of assets. The evaluation of long-lived assets requires the Company to use estimates of future cash flows. However, actual cash flows may differ from the estimated future cash flows used in these impairment tests. During the years ended December 31, 2013 and 2012, the Company recorded no impairment of its assets.


Revenue Recognition

The Companys revenue recognition policies are in compliance with Staff Accounting Bulletin (SAB) 104. Sales revenue is recognized at the date of shipment to customers when a formal arrangement exists, the price is fixed or determinable, the delivery is completed, no other significant obligations of the Company exist and collectability is reasonably assured. The Company recognizes revenue net of an allowance for estimated returns, at the time the merchandise is sold or services performed. The allowance for sales returns is estimated based on the Companys historical experience. Sales taxes are presented on a net basis (excluded from revenues and costs). Payments received before all of the relevant criteria for revenue recognition are satisfied are recorded as unearned revenue.                                                        

Advertising

The Company follows the policy of charging the costs of advertising to expense as incurred. The Company incurred advertising costs of $12,522 and $28,399 during the years ended December 31, 2013 and 2012, respectively.


Provision for Taxes

The Company applies ASC 740, which requires the asset and liability method of accounting for income taxes.  The asset and liability method requires that the current or deferred tax consequences of all events recognized in the financial statements are measured by applying the provisions of enacted tax laws to determine the amount of taxes payable or refundable currently or in future years. Deferred tax assets are reviewed for recoverability and the Company records a valuation allowance to reduce its deferred tax assets when it is more likely than not that all or some portion of the deferred tax assets will not be recovered.



25


ACTIVE HEALTH FOODS, INC.

Notes to Financial Statements

December 31, 2013 and 2012

NOTE 1 ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)


The Company adopted ASC 740, at the beginning of fiscal year 2008. This interpretation requires recognition and measurement of uncertain tax positions using a more-likely-than-not approach, requiring the recognition and measurement of uncertain tax positions. The adoption of ASC 740 had no material impact on the Companys financial statements.


Stock-Based Compensation

The Company follows the provisions of ASC 718 which requires all share-based payments to employees, including grants of employee stock options, to be recognized in the income statement based on their fair values.  The Company uses the Black-Scholes pricing model for determining the fair value of stock-based compensation.  


Equity instruments issued to non-employees for goods or services are accounted at fair value when the service is complete or a performance commitment date is reached, whichever is earlier.


Basic Loss Per Share

The computations of basic loss per share of common stock are based on the weighted average number of shares outstanding at the date of the financial statements. The Company computes net income (loss) per share in accordance with ASC 260. ASC 260 requires presentation of both basic and diluted earnings per share (EPS) on the face of the income statement. Basic EPS is computed by dividing net income (loss) available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method and convertible preferred stock using the if-converted method. In computing Diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all dilutive potential shares if their effect is anti-dilutive. The Company had no common stock equivalents outstanding as of December 31, 2013 and 2012.


Recently Issued Accounting Pronouncements

Management has considered all recent accounting pronouncements issued since the last audit of our consolidated financial statements. The Companys management believes that these recent pronouncements will not have a material effect on the Companys financial statements.

Fair value measurements and derivative liability 

The Company evaluates all of it financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported as charges or credits to income. For option-based derivative financial instruments, the Company uses the Black-Scholes option-pricing model to value the derivative instruments at inception and subsequent valuation dates. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is re-assessed at the end of each reporting period. Derivative instrument liabilities are classified in the balance sheet as current or non-current based on whether or not net-cash settlement of the derivative instrument could be required within 12 months of the balance sheet date.


Under ASC-815 the conversion options embedded in the notes payable described in Note 6 require liability classification because they do not contain an explicit limit to the number of shares that could be issued upon settlement.




26


ACTIVE HEALTH FOODS, INC.

Notes to Financial Statements

December 31, 2013 and 2012

NOTE 1 ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

During 2013, certain notes payable were converted resulting in settlement of the related derivative

liabilities.  The Company re-measured the embedded conversion options at fair value on the date of settlement and recorded these amounts to additional paid-in capital.


During 2013, the Company issued additional convertible notes.  The conversion options and warrants were classified as derivative liabilities at their fair value on the date of issuance.


As defined in FASB ASC 820, fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). The Company utilized the market data of similar entities in its industry or assumptions that market participants would use in pricing the asset or liability, including assumptions about risk and the risks inherent in the inputs to the valuation technique. These inputs can be readily observable, market corroborated, or generally unobservable. The Company classifies fair value balances based on the observability of those inputs. FASB ASC 820 establishes a fair value hierarchy that prioritizes the inputs used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurement) and the lowest priority to unobservable inputs (level 3 measurement).

The three levels of the fair value hierarchy are as follows:




Level 1    

Quoted prices are available in active markets for identical assets or liabilities as of the reporting date. Active markets are those in which transactions for the asset or liability occur in sufficient frequency and volume to provide pricing information on an ongoing basis. Level 1 primarily consists of financial instruments such as exchange-traded derivatives, marketable securities and listed equities.




Level 2     -

Pricing inputs are other than quoted prices in active markets included in level 1, which are either directly or indirectly observable as of the reported date.




Level 3     

Pricing inputs include significant inputs that are generally less observable from objective sources. These inputs may be used with internally developed methodologies that result in managements best estimate of fair value.

 

The following table sets forth by level within the fair value hierarchy the Companys financial assets and liabilities that were accounted for at fair value as December 31, 2013.

















 

 

Recurring Fair Value Measures

Level 1

Level 2

Level 3

Total

  

 

 

 

 

LIABILITIES:

 

 

 

 

     Derivative liabilities, December 31, 2013

 

$

-

 

$

--

$

109,996

$

109,996

 








27


ACTIVE HEALTH FOODS, INC.

Notes to Financial Statements

December 31, 2013 and 2012

NOTE 1 ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)


The following table summarizes the changes in the derivative liabilities during the year ended December 31, 2013:


Ending balance as of December  31, 2012

 $

34,106

Reclassification of derivative liabilities to additional paid-in capital due to conversion of related notes payable

 

(482,284)

Additions due to new convertible debt and warrants issued

 

444,966

Change in fair value

 

113,208

Ending balance as of December 31, 2013

 $

109,996


The Company uses the Black-Scholes option pricing model to value the derivative liability and subsequent remeasurements.  Included in the model are the following assumptions: stock price at valuation date of $0.0006 - $0.03, exercise price of $0.0003 - $0.0151, dividend yield of zero, years to maturity of 0.00001  1, risk free rate of 0.04  0.13 percent, and annualized volatility of 269.137 898.42 percent.


NOTE 2 - GOING CONCERN

The Company's financial statements are prepared using generally accepted accounting principles in the United States of America applicable to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company has not yet established an ongoing source of revenues sufficient to cover its operating costs and allow it to continue as a going concern. The ability of the Company to continue as a going concern is dependent on the Company obtaining adequate capital to fund operating losses until it becomes profitable. If the Company is unable to obtain adequate capital, it could be forced to cease operations. These factors raise substantial doubt about the Company's ability to continue as a going concern.


In order to continue as a going concern, the Company will need, among other things, additional capital resources. Management's plan is to obtain such resources for the Company by obtaining capital from management and significant shareholders sufficient to meet its minimal operating expenses and seeking equity and/or debt financing. However management cannot provide any assurances that the Company will be successful in accomplishing any of its plans.


The ability of the Company to continue as a going concern is dependent upon its ability to successfully accomplish the plans described in the preceding paragraph and eventually secure other sources of financing and attain profitable operations. The accompanying financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.


NOTE 3  RELATED PARTY PAYABLES


As of December 31, 2013 and 2012, respectively, the Company had borrowed a net total of $200,816 and $241,817 from an officer of the Company to finance the ongoing operations of the Company.  These payables are non-interest bearing, unsecured, and are due on demand.








28


ACTIVE HEALTH FOODS, INC.

Notes to Financial Statements

December 31, 2013 and 2012

NOTE 4- NOTES PAYABLE


On January 17, 2008 the Company entered into an asset purchase agreement to acquire certain trade secrets and trademarks.  The Company paid $5,000 cash; issued 100,000 shares of common stock valued at $100 and assumed $59,492 of net liabilities in exchange for formulas and trade secrets.


The $59,492 of net liabilities are comprised of a $10,000 note, which was repaid shortly after the acquisition, and two $45,000 notes that are payable in equal monthly installments in the amount of five hundred dollars ($500) for ninety (90) months continuing through September, 2015.  In the event the Company were to become delinquent on payments, the notes would become payable on demand.  The notes do not accrue interest and have no prepayment penalty.  Since the notes do not accrue interest, the Company has computed an imputed interest on the notes and recorded a corresponding discount.  The interest rate used to calculate the imputed interest is eight percent (8%).  


During 2008, the Company was delinquent in its payments of these two notes, which accelerated the recognition of the discount into interest expense. During the year ended December 31, 2013 the entire remaining outstanding balance of the notes of $77,000 was transferred to convertible notes payable.


On September 23, 2013 the company borrowed $8,000 in the form of a promissory note. The note is due on October 4, 2014 along with $2,000 dollars of interest.


During the year ended December 31, 2013 the Company borrowed $1,500 in the form of a promissory note. The note bears no interest and is due on demand.


As of December 31, 2013 and, 2012, the notes payable balance totaled $9,500 and $77,000, respectively. 


NOTE 5 CONVERTIBLE NOTES PAYABLE

$37,500 Convertible Note - On June 26, 2012 the Company borrowed $37,500 from an unrelated third party entity in the form of a convertible note, $35,000 of which was received in cash and $2,500 of which was for legal fees.  The note bears interest at a rate of 8.0 percent per annum, with principal and interest due in full on March 27, 2013.  

 

The principal balance of the note along with accrued interest is convertible after 180 days, at the option of the note holder, into the Company's common stock at a price of 42 percent below the current market price.  The current market price is defined as the average of the lowest three trading prices for the Common Stock during the ten day period on the latest complete trading day prior to the conversion date.  


Pursuant to this conversion feature, the Company recognized a discount on convertible debt in the amount of $37,500 on the date the note became convertible.  As of December 31, 2013 the Company had amortized $37,500 of the debt discount to interest expense, leaving $-0- in unamortized debt discount at December 31, 2013. During the year ended December 31, 2013 the entire remaining balance of the note totaling $25,500 plus accrued interest of $1,500 was converted into 53,472 shares of the Companys common stock. The outstanding balance of the note as of December 31, 2013 and 2012 totaled $-0- and $25,500 respectively.








29


ACTIVE HEALTH FOODS, INC.

Notes to Financial Statements

December 31, 2013 and 2012

NOTE 5 CONVERTIBLE NOTES PAYABLE (Continued)

$53,000 Convertible Note - On August 7, 2012 the Company borrowed $53,000 from an unrelated third party entity in the form of a convertible note, $50,000 of which was received in cash and $3,000 of which was for lawyer fees.  The note bears interest at a rate of 8 percent per annum, with principal and interest due in full on May 9, 2013.  

 

The principal balance of the note along with accrued interest is convertible after 180 days, at the option of the note holder, into the Company's common stock at a price of 42 percent below the current market price.  The current market price is defined as the average of the lowest three trading prices for the Common Stock during the ten day period on the latest complete trading day prior to the conversion date.  


Pursuant to this conversion feature, the Company recognized a discount on convertible debt in the amount of $53,000 on the date the note became convertible.  As of December 31, 2013 the Company had amortized $53,000 of the debt discount to interest expense, leaving $-0- in unamortized debt discount at December 31, 2013. During the year ended December 31, 2013 the entire outstanding balance of the note totaling $53,000 plus accrued interest of $2,120 was converted into 87,788 shares of the Companys common stock. The outstanding balance of the note as of December 31, 2013 and 2012 totaled $-0- and $53,000 respectively.


$50,000 Convertible Note - On August 10, 2012 the Company borrowed $50,000 from an unrelated third party entity in the form of a convertible note, $48,500 of which was received in cash and $1,500 of which was for lawyer fees.  The note bears interest at a rate of 8 percent per annum, with principal and interest due in full on May 1, 2013. 


The principal balance of the note along with accrued interest is convertible beginning 180 days from the issuance date, at the option of the note holder, into the Company's common stock at a price of 50 percent below the current market price.  The current market price is defined as the average of the lowest three trading prices for the Common Stock during the thirty day period on the latest complete trading day prior to the conversion date. 


Pursuant to this conversion feature, the Company recognized a discount on convertible debt in the amount of $50,000 on the date the note became convertible.  As of December 31, 2013 the Company had amortized $50,000 of the debt discount to interest expense, leaving $-0- in unamortized debt discount at December 31, 2013. During the year ended December 31, 2013 the entire outstanding balance of the note totaling $50,000 plus accrued interest of $2,129 was converted into 140,901 shares of the Companys common stock. The outstanding balance of the note as of December 31, 2013 and December 31, 2012 totaled $-0- and $50,000 respectively.


$37,500 Convertible Note - On October 3, 2012 the Company borrowed $37,500 from an unrelated third party entity in the form of a convertible note, $35,000 of which was received in cash and $2,500 of which was for legal fees.  The note bears interest at a rate of 8.0 percent per annum, with principal and interest due in full on July 5, 2013.  

 

The principal balance of the note along with accrued interest is convertible beginning 180 days from the issuance date, at the option of the note holder, into the Company's common stock at a price of 42 percent below the current market price.  The current market price is defined as the average of the lowest three trading prices for the Common Stock during the ten day period on the latest complete trading day prior to the conversion date.





30


ACTIVE HEALTH FOODS, INC.

Notes to Financial Statements

December 31, 2013 and 2012

NOTE 5 CONVERTIBLE NOTES PAYABLE (Continued)

Pursuant to this conversion feature, the Company recognized a discount on convertible debt in the amount of $34,106 on the date the note became convertible.  As of December 31, 2013 the Company had amortized $34,106 of the debt discount to interest expense, leaving $0 in unamortized debt discount at December 31, 2013. During the year ended December 31, 2013 $37,500 of principal and $1,500 in interest was converted into 1,082,500 shares of the Companys common stock. The outstanding balance of the note as of December 31, 2013 and 2012 totaled $-0- and $37,500, respectively.


$32,500 Convertible Note - On November 1, 2012 the Company borrowed $32,500 from an unrelated third party entity in the form of a convertible note, $30,000 of which was received in cash and $2,500 of which was for legal fees.  The note bears interest at a rate of 8.0 percent per annum, with principal and interest due in full on August 5, 2013.  

 

The principal balance of the note along with accrued interest is convertible beginning 180 days from the issuance date, at the option of the note holder, into the Company's common stock at a price of 42 percent below the current market price.  The current market price is defined as the average of the lowest three trading prices for the Common Stock during the ten day period on the latest complete trading day prior to the conversion date.)


Pursuant to this conversion feature, the Company recognized a discount on convertible debt in the amount of $32,500 on the date the note became convertible.  As of December 31, 2013 the Company had amortized $32,500 of the debt discount to interest expense, leaving $-0- in unamortized debt discount at December 31, 2013. During the year ended December 31, 2013 $32,500 of principal and $1,300 in interest was converted into 3,032,413 shares of the Companys common stock. The outstanding balance of the note as of December 31, 2013 and 2012 totaled $-0- and $32,500 respectively.


$32,500 Convertible Note - On January 8, 2013 the Company borrowed $32,500 from an unrelated third party entity in the form of a convertible note, $32,500 of which was received in cash.  The note bears interest at a rate of 8.0 percent per annum, with principal and interest due in full on September 9, 2013.

 

The principal balance of the note along with accrued interest is convertible beginning 180 days from the issuance date, at the option of the note holder, into the Company's common stock at a price of 42 percent below the current market price.  The current market price is defined as the average of the lowest three trading prices for the Common Stock during the ten day period on the latest complete trading day prior to the conversion date.


Pursuant to this conversion feature, the Company recognized a discount on convertible debt in the amount of $32,500 on the date the note became convertible.  As of December 31, 2013 the Company had amortized $32,500 of the debt discount to interest expense, leaving $-0- in unamortized debt discount at December 31, 2013. During the year ended December 31, 2013 $32,500 of principal and $2,670 in interest was converted into 3,889,631 shares of the Companys

common stock. The outstanding balance of the note as of December 31, 2013 and 2012 totaled $-0- and $32,500 respectively.


$32,500 Convertible Note - On March 18, 2013 the Company borrowed $32,500 from an unrelated third party entity in the form of a convertible note, all of which was received in cash.  The note bears interest at a rate of 8.0 percent per annum, with principal and interest due in full on December 12, 2013.

 

The principal balance of the note along with accrued interest is convertible beginning 180 days from the issuance date, at the option of the note holder, into the Company's common stock at a price of 42 percent



31


ACTIVE HEALTH FOODS, INC.

Notes to Financial Statements

December 31, 2013 and 2012

NOTE 5 CONVERTIBLE NOTES PAYABLE (Continued)

below the current market price.  The current market price is defined as the average of the lowest three trading prices for the Common Stock during the ten day period on the latest complete trading day prior to the conversion date.


Pursuant to this conversion feature, the Company recognized a discount on convertible debt in the amount of $32,500 on the date the note became convertible.  As of December 30, 2013 the Company had amortized $32,500 of the debt discount to interest expense, leaving $-0- in unamortized debt discount at December 31, 2013. During the year ended December 31, 2013 $24,400 of principal was converted into 3,696,970 shares of the Companys common stock. The outstanding balance of the note as of December 31, 2013 and 2012 totaled $8,100 and $32,500 respectively.


$37,500 Convertible Note - On June19, 2013 the Company borrowed $37,500 from an unrelated third party entity in the form of a convertible note, all of which was received in cash.  The note bears interest at a rate of 8.0 percent per annum, with principal and interest due in full on March 21, 2014.

 

The principal balance of the note along with accrued interest is convertible beginning 180 days from the issuance date, at the option of the note holder, into the Company's common stock at a price of 42 percent below the current market price.  The current market price is defined as the average of the lowest three trading prices for the Common Stock during the ten day period on the latest complete trading day prior to the conversion date.


Pursuant to this conversion feature, the Company recognized a discount on convertible debt in the amount of $34,106 on the date the note became convertible.  As of December 31, 2013 the Company had amortized $5,385 of the debt discount to interest expense, leaving $28,721 in unamortized debt discount at December 31, 2013. The outstanding balance of the note as of December 31, 2013 and 2012 totaled $37,500 and $-0- respectively.


$35,000 Convertible Note - On March 13, 2013 the Company borrowed $35,000 from an unrelated third party entity in the form of a convertible note, $-0- of which was received in cash and $35,000 of which was for paying off a $35,000 note payable. The note bears interest at a rate of 10.0 percent per annum, with principal and interest due on demand.

 

The principal balance of the note along with accrued interest is convertible at the option of the note holder, into the Company's common stock at a price of 50 percent below the current market price.  The current market price is defined as the average of the lowest three trading prices for the Common Stock during the 10 day period on the latest complete trading day prior to the conversion date.


Pursuant to this conversion feature, the Company recognized a discount on convertible debt in the amount of $35,000 on the note date.  As of December 31, 2013 the Company had amortized $35,500 of the debt discount to interest expense, leaving $-0- in unamortized debt discount at December 31, 2013. During the year ended December 31, 2013 $35,000 of the outstanding balance was converted into 274,667 shares of the Companys common stock. The outstanding balance of the note as of December 31, 2013 and December 31, 2012 totaled $-0- and $-0- respectively.


$25,000 Convertible Note - On March 13, 2013 the Company borrowed $25,000 from an unrelated third party entity in the form of a convertible note, $23,500 of which was received in cash and $1,500 which was for legal fees. The note bears interest at a rate of 8.0 percent per annum, with principal and interest due March 15, 2014.

 



32


ACTIVE HEALTH FOODS, INC.

Notes to Financial Statements

December 31, 2013 and 2012

NOTE 5 CONVERTIBLE NOTES PAYABLE (Continued)

The principal balance of the note along with accrued interest is convertible at the option of the note holder, into the Company's common stock at a price of 50 percent below the current market price.  The current market price is defined as the average of the lowest three trading prices for the Common Stock during the thirty day period on the latest complete trading day prior to the conversion date.


Pursuant to this conversion feature, the Company recognized a discount on convertible debt in the amount of $25,000 on the note date.  As of December 31, 2013 the Company had amortized $24,096 of the debt discount to interest expense, leaving $904 in unamortized debt discount at December 31, 2013. During the year ended December 31, 2013 $16,615 of the outstanding balance was converted into 2,562,833 shares of the Companys common stock. The outstanding balance of the note as of December 3, 2013 totaled $14,930.


On December 3, 2013 the notes principal balance of $18,446 was purchased by and assigned to an unrelated third party. The purchase price for the assigned portion of the note was $20,996. Pursuant to the purchase and assignment agreement a replacement note was issued on December 3, 2013. Pursuant to the terms of the replacement note, the replacement note bears interest at 6 percent per annum and is due on December 3, 2014.  The principal balance of the replacement note along with accrued interest is convertible at the option of the note holder, into the Company's common stock at a price of 55 percent below the current market price.  The current market price is defined as the lowest closing bid price for the Common Stock during the five day period on the latest complete trading day prior to the conversion date.


$42,000 Convertible Note - On March 13, 2013 the Company borrowed $42,000 from an unrelated third party entity in the form of a convertible note, $-0- of which was received in cash and $42,000 of which was for paying off a $42,000 note payable. The note bears interest at a rate of 8.0 percent per annum, with principal and interest due March 15, 2014.

 

The principal balance of the note along with accrued interest is convertible at the option of the note holder, into the Company's common stock at a price of 50 percent below the current market price.  The current market price is defined as the average of the lowest three trading prices for the Common Stock during the thirty day period on the latest complete trading day prior to the conversion date.


Pursuant to this conversion feature, the Company recognized a discount on convertible debt in the amount of $42,000 on the note date.  As of December 31, 2013 the Company had amortized $42,000 of the debt discount to interest expense, leaving $-0- in unamortized debt discount at December 31, 2013. During the year ended December 31, 2013 the Company converted $42,000 of the outstanding note balance into 269,656 shares of the Companys common stock. The outstanding balance of the note as of December 31, 2013 and December 31, 2012 totaled $-0- and $-0- respectively.


$25,000 Convertible Note  On July 16, 2013 the Company borrowed $25,000 from an unrelated third party entity in the form of a convertible note. The note matures one year after date of issue. The note bears no interest and is convertible into shares of the Companys common stock when it reaches maturity.


On December 30, 2013 the notes principal balance of $25,000 was purchased by and assigned to an unrelated third party. The purchase price for the assigned portion of the note was $25,000. Pursuant to the purchase and assignment agreement a replacement note was issued on December 30, 2013. Pursuant to the terms of the replacement note, the replacement note bears interest at 8 percent per annum and is due on December 30, 2014.  The principal balance of the replacement note along with accrued interest is convertible at the option of the note holder, into the Company's common stock at a price of 50 percent of the lowest daily VWAP of the common stock for the twenty prior trading days including the day upon



33


ACTIVE HEALTH FOODS, INC.

Notes to Financial Statements

December 31, 2013 and 2012

NOTE 5 CONVERTIBLE NOTES PAYABLE (Continued)

which a notice of conversion is received by the Company (provided such notice of conversion is delivered by fax or other electronic method of communication to the Company after 4 P.M. Eastern Standard or Daylight Savings Time if the Holder wishes to include the same day closing price).  


$25,000 Convertible Note - On December 3, 2013 the Company borrowed $25,000 from an unrelated third party entity in the form of a convertible note, $25,000 of which was for professional fees. The note bears interest at a rate of 6.0 percent per annum, with principal and interest due December 3, 2014.

 

The principal balance of the note along with accrued interest is convertible after 180 days, at the option of the note holder, into the Company's common stock at a price of 65 percent below the current market price.  The current market price is defined as the lowest closing bid price for the Common Stock during the five day period on the latest complete trading day prior to the conversion date.  


NOTE 6- EQUITY TRANSACTIONS


The Company is authorized by its Certificate of Incorporation, as amended, to issue an aggregate of 5,000,000,000 shares of common stock, par value $0.001 per share (the Common Stock). As of December 31, 2013, there were 29,248,785 shares of Common Stock issued and outstanding.


The Company is authorized by its Certificate of Incorporation, as amended, to issue an aggregate of 100,000,000 shares of preferred stock, par value $0.001 per share (the Preferred Stock). As of December 31, 2013, there were no shares of Preferred Stock issued and outstanding.


During the year ended December 31, 2012 the Company issued 50,000,000 shares of preferred stock for services with a fair value of $50,000 which was recorded to compensation expense.


During the year ended December 31, 2012 the Company issued 5,000,000 shares of common stock for cash of $50,000.


During the year ended December 31, 2012 the Company issued 1,021,350,000 shares of common stock for services with a fair value of $4,825,870 which was recorded to compensation expense.


During the year ended December 31, 2012 the Company issued 28,000,000 shares of common stock for conversion of debt.


During the year ended December 31, 2012 the Company issued 35,000,000 shares of the Companys common stock as a philanthropic gift at $.008 per share, for an aggregate total of $28,000.


During the year ended December 31, 2012, 1,124,742,000 shares of common stock were returned to the Company by the CEO and cancelled.  These shares were originally issued for compensation and were returned to ensure the Company had sufficient authorized common shares to issue for transactions approved during 2012. There was no accounting impact from the return and cancellation of these common shares.

On January 22, 2013 the Company amended its Articles of Incorporation to increase the number of authorized common shares from 2,000,000,000 to 5,000,000,000.


On July 11, 2013, the Company declared a 1:1,000 reverse stock split of common stock.




34


ACTIVE HEALTH FOODS, INC.

Notes to Financial Statements

December 31, 2013 and 2012

NOTE 6- EQUITY TRANSACTIONS (Continued)

During the year ended December 31, 2013, 50,000,000 shares of preferred stock and 18,000 shares of common stock were returned to the Company by the CEO and cancelled.


During the year ended December 31, 2013 the Company issued 15,090,831 shares of common stock for conversion of debt of $360,417.


During the year ended December 31, 2013 the Company issued 65,000 shares of common stock for cash of $9,000.


During the year ended December 31, 2013 the Company issued 40,996 shares of common stock in relation to the merger with Manos Beverage, Inc. At the time of the merger Manos Beverage, Inc. had no operations and no assets. The shares were valued at fair market value at $0.001 per share totaling $4,100.


During the year ended December, 31, 2013 the Company issued 13,340,000 shares of common stock for services. The shares were valued at fair market value of $696,760.


NOTE 7 - INCOME TAXES


No provision has been made in the financial statements for income taxes because the Company has accumulated losses from operations since inception.  Any deferred tax benefit arising from the operating loss carried forward is offset entirely by a valuation allowance since it is currently not likely that the Company will be significantly profitable in the near future to take advantage of the losses.  The income tax provision differs from the amount of income tax determined by applying the combined U.S. federal and state income tax rates of 42.8% to pretax income from continuing operations for the years ended December 31, 2013 and 2012 due to the following:



Years Ended December 31,


2013


2012

Current taxes

$

(284,214)


$

(150,699)

Valuation allowance

 

284,214



150,699

Total provision for income taxes

$

-


$

-


The following table shows the components of the Companys deferred tax assets.




Years Ended December 31,



2013


2012

Deferred Tax Assets





Loss carryforwards (expire through 2032)


$        (2,636,227)


$        (1,972,176)

Stock compensation expense


-


-

Total gross deferred tax asset


2,636,227


1,972,176

Valuation allowance


(2,636,227)


(1,972,176)

Net deferred taxes


-


-

Deferred tax liabilities


-


-

Net deferred taxes


$                         -


$                         -





35


ACTIVE HEALTH FOODS, INC.

Notes to Financial Statements

December 31, 2013 and 2012

NOTE 7 - INCOME TAXES (Continued)


The Companys net operating loss carry forwards of approximately $2,636,227 expire in various years through 2033. The Company has not evaluated the impact of Section 382, if any, on its ability to utilize its net operating loss carry forwards in future years.


The Company adopted the provisions of ASC 740 at the beginning of fiscal year 2008. As a result of this adoption, the Company has not made any adjustments to deferred tax assets or liabilities. The Company did not identify any material uncertain tax positions on returns that have been filed or that will be filed. The Company has not had operations resulting in net income and is carrying a large Net Operating Loss as disclosed above.  Since it is not thought that this Net Operating Loss will ever produce a tax benefit, even if examined by taxing authorities and disallowed entirely, there would be no effect on the financial statements.


NOTE 8 - SUBSEQUENT EVENTS


Subsequent to December 31, 2013 the Company issued 10,561,154 shares of common stock for conversion of $72,077 of debt.


Subsequent to December 31, 2013 the Company issued 55,909,082 shares of common stock for services valued at fair market value of $344,545.








36



Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure


There have been no changes or disagreements with our accounting firm.

 

Item 9A(T). Controls and Procedures


Evaluation of Disclosure Controls and Procedures


In connection with the preparation of this annual report, an evaluation was carried out by the Companys management, with the participation of the principal executive officer and the principal financial officer, of the effectiveness of the Companys disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (Exchange Act)) as of December 31, 2013. Disclosure controls and procedures are designed to ensure that information required to be disclosed in reports filed or submitted under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the Commissions rules and forms, and that such information is accumulated and communicated to management, including the chief executive officer and the chief financial officer, to allow timely decisions regarding required disclosures.


Based on that evaluation, the Companys management concluded, as of the end of the period covered by this report, that the Companys disclosure controls and procedures were not effective in recording, processing, summarizing, and reporting information required to be disclosed, within the time periods specified in the Commissions rules and forms, and that such information was not accumulated and communicated to management, including the principal executive officer and the principal financial officer, to allow timely decisions regarding required disclosures.


Managements Report on Internal Control over Financial Reporting


The management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting. The Companys internal control over financial reporting is a process, under the supervision of the principal executive officer and the principal financial officer, designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the Companys financial statements for external purposes in accordance with United States generally accepted accounting principles (GAAP). Internal control over financial reporting includes those policies and procedures that:

 

 

Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the Companys assets;


 

Provide reasonable assurance that transactions are recorded as necessary to permit preparation of the financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures are being made only in accordance with authorizations of management and the board of directors; and


 

Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Companys assets that could have a material effect on the financial statements.


Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate.


The Companys management conducted an assessment of the effectiveness of our internal control over financial reporting as of December 31, 2013, based on criteria established in Internal Control Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission, which assessment identified material weaknesses in internal control over financial reporting. A material weakness is a control deficiency, or a combination of deficiencies in internal control over financial reporting that creates a reasonable possibility that a



37



material misstatement in annual or interim financial statements will not be prevented or detected on a timely basis. Since the assessment of the effectiveness of our internal control over financial reporting did identify a material weakness, management considers its internal control over financial reporting to be ineffective.


Management has concluded that our internal control over financial reporting had the following material weaknesses:


·

We were unable to maintain any segregation of duties within our business operations due to our reliance on a single individual fulfilling the role of sole officer and director.

·

Lack of expertise in accounting for convertible debt, equity, derivatives and various expenses


 

To the extent reasonably possible, given our limited resources, our goal is, upon consummation of a merger with a private operating company, to separate the responsibilities of principal executive officer and principal financial officer, intending to rely on two or more individuals. We will also seek to expand our current board of directors to include additional individuals willing to perform directorial functions. Since the recited remedial actions will require that we hire or engage additional personnel, this material weakness may not be overcome in the near term due to our limited financial resources. Until such remedial actions can be realized, we will continue to rely on the advice of outside professionals and consultants.


This annual report does not include an attestation report of our independent registered public accounting firm regarding internal control over financial reporting. We were not required to have, nor have we, engaged our independent registered public accounting firm to perform an audit of internal control over financial reporting pursuant to the rules of the Commission that permit us to provide only managements report in this annual report.


Changes in Internal Controls over Financial Reporting


During the year ended December 31, 2013, there has been no change in internal control over financial reporting that has materially affected, or is reasonably likely to materially affect our internal control over financial reporting.


Item 9B. Other Information


None

PART III


Item 10. Directors, Executive Officers and Corporate Governance


Identification of Directors and Executive Officers


The following table sets forth certain information concerning our officers and directors.


Name and Address                                Age           Position                                                      Period of Service


Gregory Manos                                       57      President,                           January 9, 2008 (inception) to the present

  Secretary,

  Chief Executive Officer

  Chief Accounting Officer,

  Director,

  Treasurer


 

Our directors hold office until the next annual meeting of the stockholders, typically held on or near the anniversary date of inception, and until successors have been elected and qualified. Our officers are appointed by our directors and hold office until resignation or removal from office.



38



 Identification of Significant Employees

 

The Company does not presently have any full or part-time employees. The sole officer and director of the Company is providing time and services as necessary for the development of the Company. We do not anticipate hiring any employees in the future until we further develop our business plan.


Family Relationships

 

There are no family relationships between any director, executive officer, or person nominated or chosen by the registrant to become a director or executive officer.

 

Business Experience of Each Director and Executive Officer

 

Gregory Manos, President, Treasurer, Chief Executive Officer, Chief Accounting Officer, and Director Gregory Manos has been in all facets of the food and beverage industry with over 35 years experience in the industry at every level including sales and management. Mr. Manos extensive background includes: the position of department manager with Ralphs Grocery Company from 1972 to 1979, where he performed the duties of department manager in all departments of this major grocery chain store, and completed Ralphs two year management program; general sales manager with Markstein Beverage Company from 1977 to 1982, where he was responsible for the sales department of one of the largest Budweiser distributors on the West Coast, managing a sales and delivery staff of 112; district manager with Wisdom Import Company from 1982 to 1984, where he was responsible for sales and marketing of all product lines for Northern California and Nevada, directing 35 independent beer distributors, and had the additional responsibility for product sales in all major chain stores; regional sales manager for Golden Brands Marketing from 1984 to 1989, where he was responsible for sales and marketing of all company product lines on the West Coast, directed and managed independent distributors and introduced Evian Water and Jolt Cola to the marketplace; regional sales manager for Labatts USA, Inc from 1989 to 1992, where he was responsible for sales and marketing of all company product lines for the West Coast, developed and managed marketing plans, sales goals and budgets, established and maintained trade relationships with key individuals to facilitate program acceptance and secured business relationships with all major chain store headquarters; regional sales manager for Golden Brands Marketing Company from 1992 to 1996, where he was responsible for sales and marketing of all company product lines, managed all aspects of the new business operation for the West Coast, developed and structured the entire business for the parent company, including opening expansion markets, hiring and training new employees, creating and implementing marketing plans, sales, goals and budgets and oversaw the introduction of Clearly Canadian to the entire West Coast; national sales manager for Aloe Splash, Inc. from 2000 to 2003, where he was responsible for the entire business operations including the initial market introduction, roll-out for a beverage called Aloe Splash, hiring of employees, managing all distributors, developing market plans and overseeing the entire market execution through a network of beer distributors; director of sales of Aqua Vie Beverage Corporation from 2003 to 2005, where he was responsible for the introduction and placement of the brand Aqua Vie into all of the major chain store accounts in the states of California, Nevada, Arizona and Texas.

 

Mr. Manos has a proven record in successful product identification, development and introduction and consistently builds organizations with major sales and profitability for consumer products.

 

Legal Proceedings

 

Gregory Manos, the sole officer and director of the Company, has never filed for bankruptcy nor had a receiver, fiscal agent or similar officer appointed by a court for any business or property of his, has never been convicted in a criminal proceeding and is not a named subject of any pending criminal proceeding.  Nor has Gregory Manos ever been the subject of any order enjoining him from any type of business, securities or banking activities, or ever been found to have violated any federal or state securities law.

 






39



Promoters and Control Persons

 

At the time of this filing, we are not engaged in any transactions, either directly or indirectly, with any persons or organizations considered promoters.


Board Committees

 

Our board of directors has not established any committees, including an audit committee, a compensation committee, a nominating committee or any committee or committees performing similar functions. The functions of those committees are being undertaken by the entire board as a whole. Because we do not have any independent directors, our board of directors believes that the establishment of committees of the board would not provide any benefits to our company, could be considered more form than substance and would distract from our present goals of implementing our strategic production and marketing plans and becoming an economically viable company.

 

Compliance with Section 16(A) of the Securities Exchange Act of 1934


Section 16(a) of the Securities Exchange Act of 1934, as amended, requires the Company's executive officers and directors and persons who own more than 10% of a registered class of the Company's equity securities, to file with the Securities and Exchange Commission (hereinafter referred to as the "Commission") initial statements of beneficial ownership, reports of changes in ownership and annual reports concerning their ownership, of Common Stock and other equity securities of the Company on Forms 3, 4, and 5, respectively. Executive officers, directors and greater than 10% shareholders are required by Commission regulations to furnish the Company with copies of all Section 16(a) reports they file. To the Company's knowledge, all of the Company's executive officers, directors and greater than 10% beneficial owners of its Common Stock have complied with Section 16(a) filing requirements applicable to them during the Company's most recent fiscal year.

 

Code of Business Conduct and Code of Ethics


Our Board of Directors has adopted a code of business conduct and ethics which was previously filed with the Securities and Exchange Commission.


Item 11. Executive Compensation


DIRECTOR AND OFFICER COMPENSATION


Summary Compensation Table

 

 

Annual Compensation

 

Long-Term Compensation

Name and

Principal Position

Year

Salary ($)

Bonus ($)

Other Annual Compensation ($)

Restricted Stock Awards ($)

Securities Underlying Options (#)

LTIP Payouts ($)

All Other Compensation ($)

 

 

Gregory Manos

2012

-

-

-

-

-

-

-

 

Officer and Director

2013

-

-

-

-

-

-

-

 

 


We have not formulated plans as to the amounts of future cash compensation. Any additional personnel required would have salaries negotiated.


No past officer or director of the Company has received any compensation and none is due or payable. Our sole current officer and director, Gregory Manos, does not receive any compensation for the services he renders to the Company, has not received compensation in the past, and is not accruing any compensation pursuant to any agreement with the Company. We currently have no formal written salary arrangement with our sole officer. Mr. Manos may receive a salary or other compensation for services that he provides to the Company in the future. No



40



retirement, pension, profit sharing, stock option or insurance programs or other similar programs have been adopted by the Company for the benefit of the Companys employees.

 

Significant Employees

 

We have no significant employees other than our executive officers and directors named in this Annual Report.

 

Committees of the Board of Directors

 

Because of our limited resources, our Board does not currently have an established audit committee or executive committee. The current member of the Board performs the functions of an audit committee, governance/nominating committee, and any other committee on an as needed basis. If and when the Company grows its business and/or becomes profitable, the Board intends to establish such committees.

 

Code of Business Conduct and Code of Ethics


Our Board of Directors has not adopted a Code of Business Conduct and Ethics.

 

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters


Securities Authorized for Issuance under Equity Compensation Plans


This section is not applicable.

 

Security Ownership of Certain Beneficial Owners and Management


The following table sets forth certain information regarding the beneficial ownership of our Common Stock as of the date of this Annual Report by (i) each Named Executive Officer, (ii) each member of our Board of Directors, (iii) each person deemed to be the beneficial owner of more than five percent (5%) of any class of our common stock, and (iv) all of our executive officers and directors as a group. Unless otherwise indicated, each person named in the following table is assumed to have sole voting power and investment power with respect to all shares of our common stock listed as owned by such person. The address of each person is deemed to be the address of the issuer unless otherwise noted.

 

Title of Class

Name of 

Beneficial Owner

 

Amount and Nature 

of Beneficial Owner

 

 

Percent of Class(1)

 

 

 

 

 

 

 

 

 

 

 

 

Common Stock

Gregory Manos

President and Secretary

 

 

423,000

 

 

 

1%

 

Common Stock

E. Robert Gates, PhD

CEO



10,177,000




26%


Preferred Stock

Gregory Manos

President, and Secretary

 

 

50,000,000




100%

 

 

 (1)

The percentage of common stock held by each listed person is based on 39,801,000 shares of common stock issued and outstanding as of the date of this Annual Report. Pursuant to Rule 13d-3 promulgated under the Exchange Act, any securities not outstanding which are subject to warrants, rights or conversion privileges exercisable within 60 days are deemed to be outstanding for purposes of computing the percentage of outstanding securities of the class owned by such person but are not deemed to be outstanding for the purposes of computing the percentage of any other person.

 

(2)

 The percentage of preferred stock held by each listed person is based on 500,000 shares of preferred stock issued and outstanding as of the date of this Annual Report. Pursuant to Rule 13d-3 promulgated under the Exchange Act, any securities not outstanding which are subject to warrants, rights or conversion privileges exercisable within 60 days are deemed to be outstanding for purposes of computing the percentage of outstanding securities of the class owned by such person but are not deemed to be outstanding for the purposes of computing the percentage of any other person.




Item 13. Certain Relationships and Related Transactions, and Director Independence


Transactions with Related Persons


There have been no transactions or any currently proposed transaction, in which the registrant was or is to be a participant and in which any related person had or will have a direct or indirect material interest.


Promoters and Certain Control Persons


The Company has not had a promoter at any time. The only two control person are the founder and officer and director, Gregory Manos and officer and director, E. Robert Gates, PhD.


Director Independence


The OTCBB to which we are attempting to have our shares of common stock quoted does not have any director independence requirements. In determining whether our directors are independent, we refer to NASDAQ Stock Market Rule 4200(a)(15). Based on those widely-accepted criteria, we have determined that our Directors are not independent at this time.


No member of management is or will be required by us to work on a full time basis,. Accordingly, certain conflicts of interest may arise between us and our officer(s) and director(s) in that they may have other business interests in the future to which they devote their attention, and they may be expected to continue to do so although management time must also be devoted to our business. As a result, conflicts of interest may arise that can be resolved only through their exercise of such judgment as is consistent with each officer's understanding of his/her fiduciary duties to us.


The Sarbanes-Oxley Act of 2002, as well as rule changes proposed and enacted by the SEC, the New York and American Stock Exchanges and the Nasdaq Stock Market, as a result of Sarbanes-Oxley, require the implementation of various measures relating to corporate governance. These measures are designed to enhance the integrity of corporate management and the securities markets and apply to securities that are listed on those exchanges or the Nasdaq Stock Market. Because we are not presently required to comply with many of the corporate governance provisions and because we chose to avoid incurring the substantial additional costs associated with such compliance any sooner than legally required, we have not yet adopted these measures. Because none of our directors are independent directors, we do not currently have independent audit or compensation committees. As a result, these directors have the ability, among other things, to determine their own level of compensation. Until we comply with such corporate governance measures, regardless of whether such compliance is required, the absence of such standards of corporate governance may leave our stockholders without protections against interested director transactions, conflicts of interest, if any, and similar matters and investors may be reluctant to provide us with funds necessary to expand our operations.

 

We intend to comply with all corporate governance measures relating to director independence as and when required. However, we may find it very difficult or be unable to attract and retain qualified officers, directors and members of board committees required to provide for our effective management as a result of Sarbanes-Oxley Act of 2002. The enactment of the Sarbanes-Oxley Act of 2002 has resulted in a series of rules and regulations by the SEC that increase responsibilities and liabilities of directors and executive officers. The perceived increased



42



personal risk associated with these recent changes may make it more costly or deter qualified individuals from accepting these roles.

  

Item 14. Principal Accountant Fees and Services


(1) Audit Fees

 

The aggregate fees billed for each of the last two fiscal years for professional services rendered by the principal accountant for our audit of annual financial statements and review of financial statements included in our quarterly reports or services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for those fiscal years were:

 

2013

$

21,000

 

2012

$

21,500

 

 

(2) Audit-Related Fees

 

The aggregate fees billed in each of the last two fiscal years for assurance and related services by the principal accountants that are reasonably related to the performance of the audit or review of our financial statements and are not reported in the preceding paragraph:

 

2013

$

0

 

2012

$

0

 


(3) Tax Fees

 

The aggregate fees billed in each of the last two fiscal years for professional services rendered by the principal accountant for tax compliance, tax advice, and tax planning were:

 

2013

$

0

 

2012

$

0

 


 (4) All Other Fees

 

The aggregate fees billed in each of the last two fiscal years for the products and services provided by the principal accountant, other than the services reported in paragraphs (1), (2), and (3) was: 

 

2013

$

0

 

2012

$

0

 

 

The percentage of hours expended on the principal accountants engagement to audit our financial statements for the most recent fiscal year ended December 31, 2013 that were attributed to work performed by persons other than the principal accountants full time permanent employees was 0%.

 




43



PART IV.


Item 15. Exhibits and Financial Statement Schedules


(a)(1)  Financial Statements


The following is a list of the Financial Statements required to be filed and included in Item 8 of Part II of this report:


Financial Statements and Schedules

Page

 

 

Audit Report of Independent Accountants

19

 

 

Balance Sheets December 31, 2013 and 2012

20

Statements of Operations for the Years Ended December 31, 2013 and December 31, 2012

21

 

 

Statements of Stockholders' Deficit for the Years Ended December 31, 2013 and December 31, 2012

22

Statements of Cash Flows for the Year Ended December 31, 2013 and December 31, 2012

23

 

 

Notes to Financial Statements

24

 

 

(a)(2)  Financial Statement Schedules


Schedules not included herein are omitted because they are inapplicable, not required or because the required information is provided in the financial statements and notes thereto.

 

(a)(3)  Exhibits


Exhibit

Description

 

 

31.1

Certification of the Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2

Certification of the Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1

Certification of Principal Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.2

Certification of Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

 

 












 



SIGNATURES


Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

 

 

 

 

ACTIVE HEALTH FOODS, INC.

 

 

 

Dated: April 8, 2014

By:

/s/ Gregory Manos

 

Gregory Manos

 

President and Secretary


Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

 

 

 

 

/s/ Gregory Manos

 

April 8, 2014

Gregory Manos

 

 

Principal Executive Officer

 

 

 

 

 

/s/ Gregory Manos

 

April 8, 2014

Gregory Manos

 

 

Principal Financial Officer

 

 

 

 

 

/s/ Gregory Manos

 

April 8, 2014

Gregory Manos

 

 

Principal Accounting Officer

 

 

 

/s/ Gregory Manos

 

 

April 8, 2014

Gregory Manos

 

 

Director

 

 


 




44