UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(Mark One)

Commission File No.: 000-54331

6117 Maxtown Road, Westerville, OH 43082

(Address of principal executive offices)

Registrant’s telephone number, including area code: (614) 898-9370

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

Securities registered pursuant to Section 12(g) of the Exchange Act:

Common Stock, Par Value $0.001

(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 Exchange Act. Yes ¨ No x

Indicate by check mark whether the registrant has (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ¨ No x

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No ¨

Indicate by check mark if disclosure of delinquent filers in response to Item 405 of Regulation S K (§229.405) is not contained herein, and will not be contained, to the best of the registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. Yes x No ¨

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" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check one):

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

The aggregate market value of the voting and non-voting common equity held by non-affiliates as of June 30, 2015, was $6,973,736 (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 registrant's most recently completed second fiscal quarter). For purposes of the foregoing calculation only, directors, executive officers, and holders of 10% or more of the issuer’s common capital stock have been deemed affiliates.

The number of shares outstanding of the Registrant’s Common Stock as August 31, 2016 was 83,343,057

DOCUMENTS INCORPORATED BY REFERENCE:

None.

THE GUITAMMER COMPANY

Annual Report on Form 10-K

TABLE OF CONTENTS

Item 1. Business

Historical Overview

The Guitammer Company (“Guitammer-Ohio”) was incorporated in Ohio on March 6, 1990, as a research, development and licensing company and manufacturer and marketer of low frequency audio transducers that allows users to feel low frequency sound (“bass”) like a subwoofer but silent. (See Articles of Incorporation and amendments thereto, Exhibits 3.0 through 3.2 inclusive, incorporated herein by reference.)

On May 18, 2011, Guitammer-Ohio caused the formation of a Nevada corporation with the same name (the “Registrant” “Company”, “Guitammer-Nevada”, “we”, “us” and “our”) and entered into a Plan and Agreement of Reorganization with Guitammer-Nevada pursuant to which (i) the shareholders of Guitammer-Ohio would exchange (on a one (1) for thirty-one thousand, two hundred and six (31,206) shares basis) their aggregate 1,602.3 issued and outstanding shares of common stock for an aggregate of 50,001,374 shares of Common Stock, par value $0.001 per share, of Guitammer-Nevada evidencing the same proportional interest in Guitammer-Nevada as they held in Guitammer-Ohio, and (ii) option and warrant holders to purchase an aggregate of 1,397.7 shares of common stock of Guitammer-Ohio would exchange (on a one (1) for thirty-one thousand, two hundred and six (31,206) shares basis) their options and warrants for options and warrants to purchase an aggregate of 43,616,626 shares of Common Stock, par value $0.001 per share, of Guitammer-Nevada in the same proportional interest in Guitammer-Nevada as they held in Guitammer-Ohio (the “Reorganization”). In addition, the Company issued to two lenders warrants to purchase shares of Guitammer-Ohio which because of the Reorganization would be converted into warrants to purchase an aggregate of 225,000 shares of our Common Stock, par value $0.001 per share. In order to save time and expense of creating and issuing new Guitammer-Nevada options and warrants, the Company’s Board of Directors passed a resolution that the outstanding Guitammer-Ohio options and warrants would be and are deemed to be and constitute the Guitammer-Nevada options and warrants (on the said 1 for 31,206 shares basis) to purchase an aggregate of 43,841,626 shares of our Common Stock.

The name, Guitammer – pronounced “Git”-“tammer” – comes from the conjunction of the words “guitar” and “hammer”. In January 1991 we finished development of and licensed for sale, our original product, the Hammer Jammer™, a patented guitar accessory. Our initial products (low frequency audio transducers) were developed to solve a problem of our founder, who was a musician and unable to feel the low frequency end of the music he was playing without turning the stage monitors up very loud which interfered with the playing ability of the rest of the musicians. Today our principal product is a low frequency transducer sold under the trademarked brand name ButtKickerÒ (“ButtKicker”). The ButtKicker enables the user to feel low frequency sound (or bass) in a realistic, powerful and exciting way. However, unlike the overly loud, booming subwoofers with which most people are familiar, the ButtKicker brand products enables the end user to accurately experience – i.e. “feel” – “bass” or low frequency vibrations without creating any sound.

ButtKicker brand products are used around the world by cinemas, home theater and video game enthusiast, by leading musicians and for commercial applications including simulators and industrial applications.

In 2007 we began to develop “4D Sports powered by ButtKicker”, originally named “ButtKicker Live!Ò” which enables haptic and tactile events to be broadcast in addition to and distinct from a live broadcasts’ audio and video. In March of 2011 the Company was issued US Patent #7,911328 for the “Capture and remote reproduction of haptic events in synchronous association with the video and audio capture and reproduction of these events”. In late 2011 we began marketing this technology to potential customers in the sports, broadcast and distribution business (i.e., cable, DBS, and FTTH companies).

We are focused on increasing the deployment and monetization of our patented broadcast technology, supported by on-going cinema and consumer hardware sales.

Broadcast Market Sizes

Broadcast Technology – “4D Sports powered by ButtKicker”; ButtKicker Live!Ò

In March of 2011 the Company was issued US Patent #7,911328 for the “Capture and remote reproduction of haptic events in synchronous association with the video and audio capture and reproduction of these events”. In late 2011 we began marketing this technology to potential customers in the sports, broadcast and distribution business (i.e., cable, DBS, and FTTH companies).

We believe that the benefits, market opportunities and competitive advantages of our broadcast technology include the following:

We believe that haptic-tactile broadcasting combined with growing trend of “over-the-top” content and the “second screen” viewer experiences, along with the increasing deployment of internet or IPTV broadcasting, will allow it to offer value added opportunities to broadcasters, distributors and sports leagues that enable its viewers to “play as” or “drive as” their favorite or fantasy player as a way to gain and maintain customers. Additionally, we see a large opportunity to generate revenue by being able to charge the end user an additional small fee ~ ($0.99 – $1.99) on a per player or driver basis.

On January 29, 2015, the Company filed additional US and International patents to help expand its intellectual property in the broadcast markets, (US Application No. 14/609,185 and Application No. PCT/US2015/013558) for “HAPTIC-TACTILE, MOTION OR MOVEMENT SIGNAL CONVERSION SYSTEM AND ASSEMBLY” with Mark Luden as the inventor and assigned to The Guitammer Company

On August 29, 2014 the Company, the San Jose Sharks (“Sharks”) NHL hockey team and Comcast SportsNet California (“CSNCA”) executed a “Letter Agreement Regarding Technology Initiative” to integrate Guitammer’s broadcast technology in the SAP Center at San Jose and into the CSNCA’s telecasts of the San Jose Sharks home games at the SAP Center. During the 2014/15 NHL season, all of the CSNCA’s Sharks telecasts were successfully broadcast with the addition of the haptic signal; i.e. “in 4D”, using Guitammer’s technology. Reviews were very favorable including this review which aired in the San Jose area in January of 2015: https://www.youtube.com/watch?v=0AkMpTo8tXs&feature=youtu.be

In July of 2013 the Company and the NHRA executed the “Broadcast Technology and Promotional Rights Agreement” between NHRA and The Guitammer Company. The NHRA telecasts were broadcast with an enhanced tactile effect (in “4D powered by ButtKicker” beginning with their September 14th, 2013 telecast and all subsequent 2013 telecasts on ESPN2.) We released “The Making of Tactile Broadcasting” in the fall of 2013 explaining and demonstrating this new broadcast technology available on the Guitammer YouTube channel or directly at http://www.youtube.com/watch?feature=player_embedded&v=RQ3lPbtDt5E . This Agreement ended in January of 2014.

We are actively engaged with the Society of Motion Pictures & Television Engineers (SMPTE) working to draft standards for haptic-tactile broadcasting that we believe will help facilitate wide adoption of haptic-tactile broadcasting using our technology.

We are pursuing more opportunities and strategic partnerships in the sports and broadcast space to deploy this technology in 2016.

Cinema Sales

In 2015 we continued to increase our cinema deployment notably with AMC Theatres for use in their “Dolby Cinema at AMC” in the US and with Lumiere Pavilions in China.

More information regarding our worldwide cinema deployments including locations and product information can be found at http://www.guitammer.com/theaters

We continue to increase our focus on cinema sales for the following reasons: it offers a large global market opportunity; and cinema installations can be a profitable cash flow positive means to large scale consumer advertising that we believe are more advantageous to the Company than “Big Box” product placements and in-store demonstrations. Cinema sales can result in a two-hour product demonstration while viewing the movie.

Marketing

Our marketing efforts in 2015 primarily focused on our efforts with the San Jose Sharks and Comcast SportsNet CA by way of a 30 second commercial that is designed to drive the fan to our direct sales website: www.shakemycouch.com .

Our television commercials can be seen at www.shakemycouch .com and all of companies video and commercials can be seen at the Guitammer YouTube channel: https://www.youtube.com/user/Guitammer.

Other marketing efforts consist of online promotions with our major partners such as Amazon.com sponsorships of online racing and simulator leagues and teams, and endorsements from well known musicians.

ButtKicker^Ò Brand Consumer Electronics Hardware

We sell three (3) main categories of hardware products: 1) ButtKicker brand low frequency audio transducers, 2) audio amplifiers and 3) accessories, with different sizes and configurations based upon the market and use. We sell more than twenty (20) different standalone and all-in-one packaged products. Our products include six (6) different types of ButtKicker brand transducers which provide the vibration or low frequency audio (bass) effects, several models of amplifiers, two wireless options, and the accessories necessary to facilitate the use of our products in our core markets. Our products are sold for use in home theater, cinema, gaming in addition to utilization by musicians and professional audio technicians.

Three of our most popular products are the wireless ButtKicker Kit, the ButtKicker LFE Kit and the ButtKicker Gamer2, which are described in greater detail below.

Wireless ButtKicker Kit

The wireless ButtKicker Kit is designed for home theater and gaming use. Included in the kit is one ButtKicker Advance low frequency transducer, one ButtKicker Power Amplifier with wireless send and receive units and remote control, one Chair/Couch Mounting Kit, and all the cables and wires necessary to hook the system up to home theater and gaming systems. The mounting kit enables the average consumer to quickly and easily use the ButtKicker with any couch or chair. The entire system easily integrates into existing home theater and gaming systems as well. The wireless ButtKicker Kit currently retails from $199 to $399 depending on various marketing promotions and discounts available from time to time.

ButtKicker LFE Kit

The ButtKicker LFE Kit is designed for home theater and gaming use. Included in the kit is one ButtKicker LFE low frequency transducer, one ButtKicker 1,000 watt power amplifier, one Chair/Couch Mounting Kit, and all the cables and wires necessary to hook the system up to home theater and gaming systems. The mounting kit enables the average consumer to quickly and easily use the ButtKicker with any large three-person couch or chair. The entire system easily integrates into existing home theater and gaming systems as well. The ButtKicker LFE Kit currently retails from $599 -$699.

ButtKicker Gamer

The ButtKicker Gamer2 (the “Gamer”) is designed for gaming and simulator use with video games for use with personal computers, game consoles along with both racing and flight simulators. The Gamer enables the user to precisely and powerfully feel gunshots, explosions and special effects of video games as well as the bass beat for music. The Gamer works with all types of computers, all gaming systems and any type of digital music player; including any MP3 player or iPod. It works by simply splitting the audio signal from the personal computer, game console or iPod into the Gamer’s amplifier. The Gamer easily attaches to the center post of most office type chairs. Included in the kit are one ButtKicker Gamer with integrated chair mounting arm, one ButtKicker Gamer power amplifier and all the cables and wires necessary to hook the system up to personal computers, gaming systems and digital music players. A Quick Start Guide and manual are also included with the Gamer. The Gamer is priced at between $129 and $149.

Sales Strategy

Our products are sold worldwide through independent manufacturers’ sales representatives, dealers and distributors. Our sales network includes custom home theater, specialty electronics, furniture, musician, professional audio, consumer home theater and electronics dealers.

Historically, approximately 20% - 54% of our sales have been outside the United States. Our products have been sold globally having active distributors and dealers throughout the world.

Additionally, we have an royalty fee agreement with Pearl Drums whereby they sell “Pearl’s Throne Thumper by ButtKicker” to the musician and pro audio markets in the US and Europe.

We have historically not had large amounts of sales through traditional brick and mortar retail stores as we have focused our efforts with large online resellers such as Amazon.com, MusiciansFriend.com and other specialty consumer electronics retailers. In the future, we may choose to sell lower priced items which appeal more to individual consumers in more traditional brick and mortar retail stores.

Our ButtKicker brand hardware sales strategy is to continue to increase our cinema sales to help build brand awareness so as to increase our consumer hardware sales through all of our distribution channels.

Our “4D Sports powered by ButtKicker” broadcast technology sales strategy is to form strategic partnerships with larger companies involved in making broadcast, sports more immersive for fans and partner companies and use our technology in conjunction with their product offerings and marketing efforts to help facilitate those goals. We are engaged in discussions with several of these types of companies. Additionally, we are in discussions directly with other rights holders and broadcast partners to deploy our broadcast technology.

Manufacturing

We outsource the manufacturing of our products; however, we do perform kitting and light assembly of several products in our Westerville, Ohio facilities. The Company does have material contracts in place with LFT manufacturing (a related party, see Footnote 11). With our other suppliers, we purchase products under agreed upon payment and supply terms that may change from time to time.

Some of our products that are sourced in China are assembled by a manufacturing partner in the State of Kentucky. Additionally, some low volume products are sourced locally in Central Ohio. We are focused on reducing our cost of goods sold and sourcing all of our products as finished goods from China.       We are heavily dependent upon product purchased from three principal suppliers: Eminence Speaker, LLC (Eminence, KY); Shenzhen Actiway Industrial Co. - Shenzhen Actiway Electronics Co., Ltd. Factory (Shenzhen, China) and LFT Manufacturing, LLC (Westerville, Ohio). These three suppliers accounted for approximately 89% of Company product purchases in 2015 and 80% in 2014. Purchases from Eminence were 0% and 30% respectively of our total product purchases in 2015 and 2014. Purchases from Actiway were 20% and 30% respectively of our total product purchases in 2015 and 2014. Purchases from LFT were 69% and 20% respectively of our total product purchases in 2015 and 2014. We expect the percentages of Company product purchases from LFT to increase while the percentages of Company product purchases from the other suppliers will decrease proportionately for 2016.

Warehousing and Fulfillment

We ship most of our products from our warehouse in Westerville, Ohio. We also direct-ship products to Asia and Europe from our manufacturing partners in China significantly reducing transportation time and handling costs.

Broadcast Technology and Consumer Hardware Competition

We are not aware of competing products, technologies or plans to introduce anything to the market that is similar to our broadcast technology for live sports and events and believe we may very well have a “blocking patent” in this space. Accordingly, all brands of end user hardware, existing and yet to be developed, as well as broadcasters, distributors and content providers, would have to license Guitammer’s broadcast technology to take advantage of the technology.

There are several competitors in the low frequency or tactile transducer market segment (described below), we believe that the ButtKicker Brand is the leading brand due to its power, musical accuracy and longevity.

Competitive advantages which we believe ButtKicker Brand products have are:

Intellectual Property

We have a registered trademark for the name “ButtKicker” and the name “ButtKicker Live!”. In July 1998, Marvin Clamme filed a comprehensive patent for the Low Frequency Vibrator, ButtKicker technology. Subsequently, Mr. Clamme assigned to us all rights, title and interest to the patent in the United States and all foreign countries. In 1999, we were awarded a patent for the technology United States Patent Number 5,973,422. We have since secured patents in Europe, Canada and Japan for this technology.

In May 2009, we filed a provisional patent application for our ButtKicker Live! Technology which was assigned to us by Mr. Luden, Mr. Clamme and Mr. McCaw. On March 22, 2011, the United States Patent and Trademark Office issued such patent to the Company under patent number 7,911,328.

In September 2010, Marvin Clamme filed a provisional patent application for a new type of low frequency transducer which was assigned to us by Mr. Clamme. “Vibration Transducer and Actuator” Application No. 61,403,033, dated September 6, 2010. A patent application was filed for this invention on October 16, 2012 for both the United States and Europe.

On January 29, 2015, we filed International and US patents (US Application No. 14/609,185 and Application No. PCT/US2015/013558) for “HAPTIC-TACTILE, MOTION OR MOVEMENT SIGNAL CONVERSION SYSTEM AND ASSEMBLY” with Mark Luden as the inventor and assigned to The Guitammer Company.

Employees

We have seven full-time employees as well as several individuals working for us in contracted roles in manufacturing, sourcing, marketing, developing and selling our ButtKicker Brand hardware and “4D Sports powered by ButtKicker”; ButtKicker Live! Broadcast technology. None of our employees are covered by a collective bargaining agreement. We believe that we have a good relationship with our employees and contractors.

Item 1A. Risk Factors.

Guitammer is a smaller reporting company, and as such, is not required to provide information pursuant to this item.

Item 1B Unresolved Staff Comments.

None.

Item 2. Properties.    

We are located at 6117 Maxtown Road, Westerville, Ohio 48032. We lease approximately 15,000 square feet of office and warehouse space for $7,350 per month. The facilities include a loading dock, drive through overhead door, warehouse space, product development areas, showroom, demonstration theater and corporate offices. On September 1, 2009, the Company entered into a four year lease for the rental of the office and warehouse space expiring on August 31, 2013. In July of 2013, the Company entered into a four year extension of the lease for the rental of the office and warehouse space expiring on August 31, 2017. We believe that our current space is adequate to meet our current needs.

Item 3. Legal Proceedings.

None.

Item 4. Mine Safety Disclosures.

Not applicable.

PART II

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

The common stock of the Company is traded on the OTC Bulletin Board Market under the symbol GTMM.OB. Due to the late filing of the Company’s 10-K, the Company was moved to the Pink Sheets until such time the 2015 10-K and 2016 quarterly 10-Q’s are filed within 6 months of the 2015 10-K due date. As of September 19, 2016, the last sales price of the Company's common stock was $0.09.

On May 27, 2011 the Company filed a General Form for the Registration of Securities on Form 10 to register its common stock, par value $0.001 per share pursuant to Section 12(g) of the Securities Exchange Act of 1934, as amended. The Registration became effective sixty days later. The Company secured a market maker, Finance 500 of Irvine, CA, who filed a Form 15(c)-211 with FINRA on behalf of the Company. On October 7, 2011 FINRA approved the Form 15(c)-211 and gave the Company the ticker symbol of “GTMM”. The Company began actively trading on November 17, 2011 on the Over-the-Counter Bulletin Board (“OTCBB”) as GTMM.OB.

               The following table sets forth the high and low bid prices of the Company's common stock as reported by the NASDAQ Trading and Market Services for the periods indicated:

The table above reflects inter-dealer prices without retail mark-up, mark-down or commission and may not represent actual transactions.

Dividend Policy

The Company has declared no cash dividends on our common stock, and does not expect to pay cash dividends in the near term. We intend to retain future earnings to provide funds for operations and the continued expansion of our business.

There are 84 holders of record of the Company's Common Stock as of December 31, 2015.

On February 1, 2012, the Board approved stock option grants in the amount of 600,000 stock options for three of its employees, with an exercise price of $.25 per share with a vesting schedule of 60% on the first anniversary of the grant, 20% on the second anniversary of the grant and the final 20% on the third anniversary of the grant.

On November 26, 2012, the Board approved stock option grants of 3,000,000 stock options to the President and CEO of the Company, with an exercise price of $.25 per share with a vesting schedule of 33 and 1/3% of the options on the first anniversary of the grant, 33 and 1/3% of the options on the second anniversary of the grant and the final 33 and 1/3% on the third anniversary of the grant.

On July 28, 2014, the Board of Directors authorized the Company to issue 200,000,000 of Common Stock at $0.001 per value per share.

On December 3, 2014, the Board reduced the exercise price on the 600,000 and 3,000,000 stock options issued on February 1, 2012 and November 26, 2012, respectively, from $.25 to $.075.

On December 3, 2014, the Board approved and granted 1,950,000 stock options to five of its employees with an exercise price of $.075 per share with a vesting schedule of 60% on the first anniversary of the grant, 20% on the second anniversary of the grant and the final 20% on the third anniversary of the grant. On December 3, 2014, the Board approved and granted 1,500,000 stock options to two of the Company’s directors with an exercise price of $.075 per share with a vesting schedule of 25% on the first anniversary of the grant, 25% on the second anniversary of the grant, 25% on the third anniversary of the grant and 25% on the fourth anniversary of the grant. Full vesting is to occur upon a change in ownership of the Company on the stock options.

On May 4, 2015, the Company sold in a private offering to a current Board member and to two other accredited investors that are existing shareholders, a total of 50,000 shares of its Series A Preferred Stock. The Preferred Stock pays an annual dividend of $.80 cents per share (payable in cash or Common Stock at the Company’s discretion) and each share is convertible into 66.67 shares of Common Stock at the Company’s discretion. Forty million shares of Common Stock have been reserved for the purposes of payment of dividends on preferred stock and the conversion of Preferred Stock into Common Stock. The Preferred Stock ranks senior to the Common Stock in liquidation.

On June 20, 2016, the Board of Directors declared a dividend to be paid to Preferred Stockholders, on record as of March 31, 2016, in common stock at a rate of $0.15 per share.

Item 6. Selected Financial Data

Not required for smaller reporting companies.

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operation

            The following discussion and analysis should be read in conjunction with Guitammer's Audited Consolidated Annual Financial Statements and notes thereto included elsewhere in this Form 10-K (the “Financial Statements”). Except for the historical information contained herein, the discussion in this Form 10-K contains certain forward looking statements that involve risks and uncertainties, such as statements of Guitammer’s plans, objectives, expectations and intentions. The cautionary statements made in this Form 10-K should be read as being applicable to all related forward-looking statements wherever they appear in this Form 10-K. These statements include, without limitation, statements concerning the potential operations and results of Guitammer described below. Guitammer's actual results could differ materially from those discussed here. Factors that could cause or contribute to such differences include, without limitation, those factors discussed herein and in Guitammer's Form 10 Registration Statement.

RESULTS OF OPERATIONS

Fiscal Year ended December 31, 2015 compared to Fiscal year ended December 31, 2014

All references below to per share and shares of Common Stock of the Company reflect the Reorganization.

Results of Operations

During the second half of 2014 and the first quarter of 2015, the Company spent considerable capital resources implementing and commercializing its patented haptic-tactile broadcast technology (“ButtKicker Live!Ò” /“4D Sports powered by ButtKicker”) for the Comcast SportsNet CA telecasts of the San Jose Sharks and in related activities with other broadcast parties in order to further demonstrate the technical and marketing viability of adding the “feel” of live sporting events to sports fans while watching in the comfort of their own home.

Additionally, the Company experienced a shortage of available working capital required to fund certain inventory requirements related to its existing consumer products business which had a corresponding negative effect on revenues for the year.

Management believes that the continued development and implementation of this broadcast technology will produce the greatest amount of long-term value for our shareholders and will help to enable it to secure the financing needed to purchase adequate levels of all inventory items in future periods while continuing the implementation and commercializing its patented haptic-tactile broadcast technology for live sporting events.

Revenue increased $526,653 or 50.1%, to $1,577,672 for the year ended December 31, 2015 compared to revenue of $1,051,019 for the year ended December 31, 2014. The Company was able to obtain key inventory items due to its relationship with LFT Manufacturing as explained in Note 11 of the financial statements which allowed the Company to secure some amount of inventory during most of the year and consequently, the Company was able to show significant improvement in revenue 2015 compared to 2014. Management believes revenues for the year ended December 31, 2015, could have been larger if it had sufficient inventory to meet its sales demands throughout the entire year.

Cost of goods sold increased $242,508 or 40%, to $848,442, for the year ended December 31, 2015, compared to cost of goods sold of $605,934 for the year ended December 31, 2014. This increase is in line with the revenue increase for the year.

Gross profit increased by $284,145 or 63.8% to $729,230 for the year ended December 31, 2015, compared to gross profit of $445,085 for the year ended December 31, 2014. Our gross margin percentage of revenue was 46.2% and 42.3% for the years ended December 31, 2015 and December 31, 2014, respectively due to a favorable product mix. 

General and administrative expenses decreased $95,641, or 6.1%, to $1,483,866 for the year ended December 31, 2015, compared to general and administrative expenses of $1,579,507 for the year ended December 31, 2014. Significant variations within the general and administrative expenses were as follows:

Payroll expense increased by $37,491 in the year ended December 31, 2015 compared to the year ended December 31, 2014 due to the cost of employee stock options issued in December, 2014 expensed over 3 year vesting schedule and the increase in officers’ salaries awarded by the Company’s Board in December, 2014 effective in 2015.

Stock warrant expense increased by $66,709 in the year ended December 31, 2015 compared to the year ended December 31, 2014 due to adjustment of the stock warrants liability based on the Black-Scholes valuation model which is used to estimate the fair value of the warrants in 2015.

Advertising and Marketing expense decreased by $40,863 in the year ended December 31, 2015 compared to the year ended December 31, 2014. The decrease is mainly due to the wind down of television commercial costs associated with the Company’s use of it haptic-tactile broadcast technology for Comcast Sports Net CA’s (“CSNCA”) telecasts of the San Jose Sharks’ home games from the SAP Center in the first quarter of 2015.

Professional fees decreased $71,817 in the year ended December 31, 2015 compared to the year ended December 31, 2014. The decrease was primarily due to a decrease in stock based consulting expense related to marketing the Company’s broadcast technology.

Freight and related expenses increased $3,913 in the year ended December 31, 2015 compared to the year ended December 31, 2014, primarily due to increased sales where shipping costs are paid by the Company in 2015.

Travel and entertainment expense decreased by $21,995 in the year ended December 31, 2015 compared to the year ended December 31, 2014. The primary reason for the decrease in personnel travel costs related to the use of the Company’s broadcast technology in the first quarter of 2015 with the CSNCA / San Jose Sharks broadcasts which did not continue for the balance of 2015.

License and permits expense decreased by $23,202 in the year ended December 31, 2015 compared to the year ended December 31, 2014 primarily due to more patents renewing, 2014 and the Company taking advantage of an early payment discount on the annual patent renewals.

Depreciation and amortization expense decreased by $10,159 in the year ended December 31, 2015 compared to the year ended December 31, 2014, primarily due to the additional depreciation in the first six months of 2014, associated with equipment purchased for use with NHRA broadcasts which was disposed in 2014.

Impairment of investment in Joint Venture in the amount of $93,500 represents an adjustment to the valuation of the Company’s investment in the Joint Venture. Based on events and circumstances that have occurred subsequent to December 31, 2015 but prior to issuance of these consolidated financial statements, management conducted an analysis of fair value of the investment in the Joint Venture. Based on this analysis, management determined the fair value of the investment to be less than the carrying value recorded at December 31, 2015. Therefore, management has recorded an impairment of investment in Joint Venture of $93,500 for the year ended December 31, 2015.

Research and Development expense decreased by $15,188 or 67.3% to $7,382 in the year ended December 31,2015 as compared to $22,750 in 2014. This decrease is a result of the wind down of development efforts associated with the NHRA and San Jose Sharks broadcasts beginning in the 2^nd Quarter of 2015.

Loss from operations decreased $394,474 or 34.1% for the year ended December 31, 2015 to $762,108 as compared to $1,156,992 for the year ended December 31, 2014. The decrease was caused by the increase in gross profit and the decrease in research and development expense and, to a minor degree, offset by an increase in payroll and related expense

Interest expense increased $49,184 or 22.2%, to $270,313 for the year ended December 31, 2015, compared to interest expense of $221,129 for the year ended December 31, 2014. The increase was due primarily to a retroactive and ongoing interest rate change from 12% to 25% per a provision in the loan agreement.

Our net loss decreased $275,474 for the year ended December 31, 2015. We had net loss of $1,102,627 (or basic and diluted net loss per share of $0.01) compared to net loss of $1,378,101 (or basic and diluted net loss per share of $0.02) for the year ended December 31, 2014. The decrease in loss was caused by the increase in gross profit offset by increase in interest expense.

The following table sets forth EBITDA and adjusted EBITDA for the Company, which is a non-GAAP measurement. EBITDA is defined as earnings (loss) before net interest expense, income taxes, depreciation and amortization. Adjusted EBITDA is defined as earnings before net interest expense, income taxes, depreciation, amortization, and non-cash expenses such as stock warrant expense and stock based compensation to consultants and employees. Although EBITDA and Adjusted EBITDA are not measures of performance calculated in accordance with generally accepted accounting principles (“GAAP”), management believes that these non-GAAP measures will allow for a better evaluation of the operating performance of the business and facilitate meaningful comparison of the results in the current period to those in prior periods and future periods. However, investors should not consider these measures in isolation or as a substitute for net income (loss), operating income (loss), or any other measure for determining the Company’s operating performance that is calculated in accordance with GAAP. A reconciliation of EBITDA and Adjusted EBITDA to the most comparable GAAP financial measure, net loss, follows:

EBITDA increased $314,499 or 28.3% to $(796,139) for the year ended December 31, 2015, compared to $(1,110,638) for the year ended December 31, 2014. The increase was mainly due to the decrease in net loss from operations and an increase in interest expense.

Adjusted EBITDA, increased $291,702 or 31.5% to $(634,933) for year ended December 31, 2015, compared to Adjusted EBITDA, of $(926,635) for the year ended December 31, 2014. Adjusted EBITDA increased from the prior year primarily due to increase warrant expense, reduction of payment of warrants to consultants in the year ended December 31, 2015 compared to the year ended December 31, 2014.

Liquidity and Capital Resources

Total current assets were $253,447 at year ended December 31, 2015, consisting of cash of $12,305, net accounts receivable of $103,123, inventory of $137,888 and prepaid and other current assets of $131.

Total current liabilities were $3,158,989 as of December 31, 2015 consisting of accounts payable and accrued expenses of $1,446,646, current maturities of long-term debt of $1,675,921 and other current liabilities of $62,833.

As of December 31, 2015, our working capital deficit increased $610,768 or 26.7% to $(2,905,542) compared to our working capital deficit of $(2,294,774) for the year ended December 31, 2014.

Cash Flows during the year ended December 31, 2015

During the year ended December 31, 2015, we had a net decrease in cash and cash equivalents of $3,880 consisting of net cash used in operating activities of $425,805 and $3,890 used in investing activities, offset by net cash provided by financing activities of $425,815.

Net cash used in operating activities was $425,805 for the year ended December 31, 2015, due primarily to the decrease in the net operating loss and increases in accounts payable and accrued expenses offset by decrease in net inventory.

Net cash provided by financing activities was $425,815 for the year ended December 31, 2015, primarily consisting of proceeds from the private offering of preferred stock offset by payments on outstanding debt.

The Company historically has incurred net losses, negative cash flows from operating activities, and has an accumulated deficit of approximately $11,687,523 at December 31, 2015. In addition at December 31, 2015 the Company had a cash balance of $12,305 and working capital deficiency of approximately $2,905,542. Without additional financing, the Company is and will be in an illiquid position. The Company received cash through the sales of Common Stock and warrants to purchase Common Stock in the amount of $237,125 in the third quarter of 2014 and $172,400 in the fourth quarter of 2014. During 2015, $500,000 was received from the sale of preferred stock. The Company believes that the receipt of additional equity will enable it to purchase adequate inventory to meet its existing sales demand and to be able to increase sales through advertising and marketing related activities. There is no assurance that the Company will have any additional sales of stock or that the Company will be able to become operationally cash flow positive.

If the Company is successful in raising significant additional capital, the Company intends to increase its budgets for advertising and marketing, targeting consumers who have shown an interest in the Company’s or similar products. The Company also intends to hire one or more sales people to sell the Company’s products to key markets including cinema, home theater and video gaming and international markets.

At this time, we have not secured additional financing. We do not have any commitments for additional capital from third parties or from our officers or directors or any of our shareholders to supplement our operations or provide us with financing in the future. There can be no assurance that additional capital will be available to us, or that, if available, it will be on terms satisfactory to us. If we are unable to increase revenues from operations, to raise additional capital from conventional sources and/or additional sales of stock in the future, we may be forced to curtail or cease our operations. These factors raise substantial doubt in our ability to continue as a going concern. Our financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the outcome of this uncertainty. There is substantial doubt that we can continue as a going concern for the next 12 months unless additional funding is secured by the Company.

For a discussion of critical accounting policies and estimates, please see Note 1 to our consolidated financial statements, which are included in this report.

For a discussion of recently issued accounting pronouncements, please see Note 1 to our consolidated financial statements, which are included in this report.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk.

Foreign Currency Exchange

Our customers are located in the US and around the world. However, all payments received are in U.S. currency dollars with the exception of one customer in China whose price may be adjusted by the Company to compensate for currency fluctuations. Payments to our China-based suppliers are also in U.S. currency. Accordingly, we have limited foreign currency exchange exposure.

Item 8. Financial Statements and Supplementary Data

               Information required by this Item appears in the Consolidated Financial Statements and Report of Independent Registered Public Accounting Firm contained in Item 15(a) (1 and 2).

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

The Company has no disagreements with its accountants.

Item 9A. Controls and Procedures

Disclosure Controls and Procedures

Disclosure controls and procedures are designed to ensure that information required to be disclosed in the reports filed or submitted under the Securities Exchange Act of 1934 (the "Exchange Act") is recorded, processed, summarized and reported, within the time period specified in the SEC's rules and forms and is accumulated and communicated to the Company's management, as appropriate, in order to allow timely decisions in connection with required disclosure.

Evaluation of Disclosure Controls and Procedures

Pursuant to Rule 13a-15(b) under the Securities Exchange Act of 1934 ("Exchange Act"), the Company carried out an evaluation, with the participation of the Company’s management, including Mark Luden, the Company's Chief Executive Officer ("CEO") and Richard Conn, the Company's Chief Financial Officer ("CFO") (the Company’s principal financial and accounting officer), of the effectiveness of the Company’s disclosure controls and procedures (as defined under Rule 13a-15(e) under the Exchange Act) as of the end of the period covered by this report. Based upon that evaluation, the Company’s CEO and CFO concluded that the Company’s disclosure controls and procedures were not effective as of December 31, 2015 to ensure that information required to be disclosed by the Company in the reports that the Company files or submits under the Exchange Act, is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to the Company’s management, including the Company’s CEO and CFO, as appropriate, to allow timely decisions regarding required disclosure, due to the material weaknesses described below.

Management’s Annual Report on Internal Control Over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting, as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act, is a process designed by, or under the supervision of, the chief executive officer and chief financial officer, or persons performing similar functions, and effected by the board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. GAAP and includes those policies and procedures that: (i) pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the Company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S. GAAP, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the financial statements.

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company's annual or interim financial statements will not be prevented or detected on a timely basis. The Company believes its weaknesses in internal controls and procedures is due in part to the Company's lack of sufficient personnel with expertise in the area of compliance with the financial reporting guidelines as established by the Securities and Exchange Commission, generally accepted accounting principles (GAAP) and tax accounting procedures. In addition, the Company lacks the personnel structure, size and complexity to segregate duties sufficiently for proper controls.

Because of 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.

Our management, under the supervision and with the participation of chief executive officer and chief financial officer, conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in Internal Control— Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 1992 (COSO). Based on its evaluation our management concluded that our internal control over financial reporting was not effective as of December 31, 2015.

Remediation of Material Weakness in Internal Control over Financial Reporting

The Company is currently seeking additional personnel with expertise in these areas necessary to segregate duties for proper controls; however, until such time as additional personnel is hired, the Company believes that it will continue to recognize a weakness in its internal controls and procedures. The Company’s plan is to hire additional personnel to properly implement a control structure when the appropriate funds become available. In the meantime, the Chief Executive Officer and Chief Financial Officer will continue to perform or supervise the performance of additional accounting, financial analyses and other post-closing procedures including detailed validation work with regard to balance sheet account balances, additional analysis on income statement amounts and managerial review of all significant account balances and disclosures, to ensure that the Company's Annual report and the financial statements forming part thereof are in accordance with accounting principles generally accepted in the United States of America.

Changes in Internal Controls

During the year ended December 31, 2015, there were no significant changes in internal controls of the Company or other factors that could significantly affect these controls subsequent to the date of their evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

Item 9B. Other Information

None.

PART III

Item 10. Directors, Executive Officers and Corporate Governance.

Our executive officers and directors and their ages and positions are as follows:

Mark A. Luden has served as our President, CEO, Secretary, Treasurer and a member of our board of directors since March 1999. Mr. Luden is a seasoned sales, marketing and management executive with over fourteen (14) years of sales, marketing and management experience in the enterprise financial software industry. From March 1998 to February 1999, Mr. Luden served as Director of Sales and Marketing for Invata International, a privately funded, startup enterprise real estate software company. At Invata, he was responsible for developing all sales and marketing programs. From February 1997 to March 1998, Mr. Luden served as National Accounts Manager for Computer Associates in Columbus, Ohio, where he was responsible for selling enterprise-wide systems, databases and applications software to Fortune 100 companies. From August 1987 to February 1997, he worked for CCH in various capacities including Sales Manager in the Ohio Division, Branch Manager in Dallas, Texas, Sales Director and Account Representative in Columbus, Ohio, and Sales Representative in Bangor, Maine. While with CCH, Mr. Luden was part of a four person executive team managing the $80 million ProSystem fx tax software business unit.

In addition to leading the strategic and day-by-day operations of the Company, Mr. Luden is a member of the Consumer Electronics Association (CEA) Board of Industry Leaders and has served as Chairman of the Small Business Council, Chairman of Division Executive Board, and was a member of the Executive Board of the CEA for 2010 and 2011. Mr. Luden is also a member of the Standards Committee of the Society of Motion Picture and Television Engineers (SMPTE). Mark is the author of one issued patent, "Capture and remote reproduction of haptic events in synchronous association with the video and audio capture and reproduction of those events." and one pending patent, “HAPTIC-TACTILE, MOTION OR MOVEMENT SIGNAL CONVERSION SYSTEM AND ASSEMBLY”. Mr. Luden’s past sales and managerial experience and serving as our President, CEO, Secretary, and a member of our board of directors since 1999, being a substantial shareholder of the Company and his affiliation with the CEA, led the Board of Directors to the conclusion that he is qualified to serve as a director of the Company.

Richard E. Conn has served as our Controller since April 2006 and CFO and Treasurer since May 18, 2011. From April 1982 to March 2006 he served as Vice President of Finance for CoreSource, Inc. whose principal business is Health insurance. Mr. Conn is a Certified Public Accountant in good standing and a member of the Ohio Society of Certified Public Accountants.

*Lawrence L. Lemoine assumed the offices of both Chief Operating Officer and Chief Financial Officer of the Company on February 5, 2016. Richard E. Conn, the previous Chief Financial Officer of The Guitammer Company has retired from his offices with the Company effective on the same date.

Before joining the Company, Mr. Lemoine, age 64, was CEO of Wave Entertainment Network where he created and successfully launched a new entertainment platform of a “first of its kind” IPTV worldwide entertainment platform for the maritime and hospitality industries. Prior to Wave, he was VP Finance of DIRECTV, involved in DIRECTV’s growth from the early stages to a subscriber base of over 12 million. In addition, Mr. Lemoine held the Controller post for the 1984 Olympic Organizing Committee, the most profitable Olympic Games in history and also served as an executive consultant to various start-ups that include a Paris-based satellite service organization, Daytona Prototype motor racing team (U.S.) and a sports video production organization. Mr. Lemoine and the Company entered into an agreement were he will receive 200,000 shares of common stock per month for three months and will receive $10,000 per month during this time period once the receipt by the Company of $6,000,000 of financing.

Marvin Clamme has served as a member of our board of directors and one of our employees since March 1999. Mr. Clamme resigned from the board of directors effective April 5, 2010 and was replaced by Mr. Doyle. Mr. Clamme is a professional studio engineer. Mr. Clamme is also the inventor of the ButtKicker low frequency audio transducer, and has since assigned all of his rights and interest in ButtKicker and the ButtKicker patent to the Company.

Kenneth McCaw, our founder, has served as a member of our board of directors since March 1990. Mr. McCaw is an accomplished producer, writer and inventor. He is a graduate of the University of California at Los Angles Film Scoring program. Mr. McCaw has written approximately 200 original music pieces and has produced over 25 albums. Mr. McCaw has written and produced music for The White House, Walt Disney Productions, The United States Olympic Committee, Opryland Productions, as well as numerous theaters and playhouses throughout the United States. Mr. McCaw is the inventor of the Hammer Jammer™, a patented, consumer key hammering mechanism for acoustic and electric guitars. Mr. McCaw founded the Company, been on the Board since its inception, invented the Hammer Jammer™ and is a substantial shareholder of the Company, all of which led the Board of Directors to the conclusion that he is qualified to serve as a director of the Company.

Walter J. Doyle was elected a director on April 5, 2010 at the Company’s Annual Meeting of Shareholders. Since January 1995, Mr. Doyle has served as the President of Forest Capital, an angel capital firm, located in Powell, Ohio. Previously, Mr. Doyle was founder, President and CEO of Industrial Data Technologies Corp. (IDT) for 21years. IDT designed, developed, manufactured and marketed high-tech products for factory automation projects in the steel, automotive, food and chemical industries. Earlier, he worked for Industrial Nucleonics/Accuray Corporation (NYC and Columbus, Ohio). Even earlier, he was a US Army Paratrooper.

Mr. Doyle earned an Electrical Engineering degree from The City College of New York (CCNY) and an MBA from the Harvard Business School. He is a member and/or on the board of a number of businesses and local civic organizations. As discussed below under Certain Relationships and Related Transactions and Director Independence, Forest Capital, a company controlled by Mr. Doyle, made the Working Capital Loan to the Company. As provided for in the loan documents, the Company agreed to provide Forest Capital the right to appoint one member of the board of directors of the Company, which member is Mr. Doyle. (See Working Capital Loan and Consulting Agreement,Exhibit 10.15, incorporated herein by reference.) Mr. Doyle’s said past executive experience being a substantial shareholder of the Company and being nominated to the Board by Forest Capital as aforesaid, led the Board of Directors to the conclusion that he is qualified to serve as a director of the Company.

There are no family relationships among our directors and executive officers. The Company does not have an audit, nominating or compensation committee. In the opinion of the Board of Directors, no Director may be deemed independent.

We are not aware of the occurrence during the last ten years of any events that are material to an evaluation of the ability or integrity of any of our directors or executive officers such as the following:

Other Directorships

Other than as indicated above, none of the Company's directors hold or have been nominated to hold a directorship in any company with a class of securities registered pursuant to Section 12 of the Securities Exchange Act of 1934 or subject to the requirements of Section 15(d) of the Securities Act of 1933 or any company registered as an investment company under the Investment Company Act of 1940.

Item 11. Executive Compensation.

Compensation Discussion and Analysis

General

We have provided what we believe is a competitive compensation package to our executive management team through a combination of base salary, equity participation and an employee benefits program.

This Compensation Discussion and Analysis explains our compensation philosophy, policies and practices since we became a public reporting company.

Our objective is to attract and retain executives with the ability and the experience necessary to lead us and deliver strong performance and value to our shareholders. We strive to provide a total compensation package that is competitive with compensation commensurate with executives in companies within our industry of similar size in terms of revenue and capitalization.

The compensation package for our executive officers may include both cash and equity incentive plans that align an executive's compensation with our short-term and long-term performance goals and objectives.

Offer competitive benefits package to all full-time employees.

We provide a benefits package to all full-time employees including health and welfare benefits such as medical insurance. We have no structured executive perquisite benefits (e.g., club memberships or sports tickets) for any executive officer, including the Named Executive Officers, and we currently do not provide any deferred compensation programs or supplemental pensions to any executive officer, including the Named Executive Officers.

Provide fair and equitable compensation.

We provide a total compensation program that we believe will be perceived by both our executive officers and our shareholders as fair and equitable. In addition to market pay levels and the consideration individual circumstances related to each executive officer, we also consider the pay of each executive officer relative to each other executive officer and to other members of the management team. We have designed the total compensation programs to be consistent within our executive management team.

Our Executive Compensation Process

Our executive officers are elected by the Board of Directors. The Board also acts as our Compensation Committee. The following discussions are generally based on the Board of Directors' historical understanding of executive compensation for comparable positions at similar companies, experience in making these types of decisions and judgment. Compensation is proposed by our Chief Executive Officer followed by approval by the Board of Directors.

We have two executive officers whose annual performance review is considered by the Board of Directors when making decisions on setting base salary and grants of long-term equity incentive awards.

The Board of Directors review the annual performance of personnel reporting to the CEO and consider the recommendations of the related person's direct supervisor with respect to base salary along with grants of long-term equity incentive awards. The Board of Directors review and may approve these recommendations with modifications as deemed appropriate.

Our Executive Compensation Programs

Overall, our executive compensation programs are designed to be consistent with the objectives and principles set forth above. The basic elements of our executive compensation programs are summarized in the table below, followed by a more detailed discussion of each compensation program.

Allocation between Long-Term and Currently Paid Out Compensation

The compensation we currently pay consists of a base salary. The long-term compensation includes awards of stock options pursuant to our stock option plans. The allocation between long-term and current compensation is based on our objectives and how comparable companies use long-term and base salaries paid to their executive officers.

Allocation between Cash and Non-Cash Compensation

It is our policy to allocate all currently paid compensation in the form of cash and all long-term compensation in the form of awards of options to purchase our common stock. We consider competitive markets when determining the allocation between cash and non-cash compensation.

Other Material Policies and Information

All pay elements are cash-based except for the long-term equity incentive program, which is an equity-based (stock options) award. We consider market pay practices and practices of comparable companies in determining the amounts to be paid in the combination of cash and equity and the percentage of compensation in short-term versus long-term compensation opportunities for our executive officers. Our compensation packages are designed to be competitive with comparable companies and believe that a substantial portion of compensation should be in performance-based pay.

In determining whether to increase or decrease annual compensation to our executive officers, including our Named Executive Officers, we take into account the changes (if any) in market pay levels, the contributions made, performance, increases or decreases in responsibilities and roles, business needs, transferability of managerial skills to another employer, relevance of experience to other potential employers and readiness to assume a more significant role with another organization. In addition, we consider the executive officer's current base salary in relation to the market pay of similar companies.

Compensation or amounts realized by executives from prior compensation from us, such as gains from previously awarded stock options or options awards, are taken into account in setting other elements of executive compensation, such as base pay or awards of stock options under our long-term equity incentive program. We believe that our executive officers should be fairly compensated each year relative to market pay levels of similar companies and equity among all our executive officers. Moreover, we believe that our long-term incentive compensation program furthers our significant emphasis on pay for performance compensation.

Annual Cash Compensation

To attract and retain executives with the ability and the experience necessary to lead us and deliver strong performance to our shareholders, we provide a competitive total compensation package for companies comparable to Guitammer. To ensure that each executive is appropriately compensated, base salaries and total compensation are targeted to market levels of similar companies in addition to considering individual performance and experience.

Base Salary

Annually, we review salary ranges and individual salaries for our executive officers. Base salary for each executive officer is determined on consideration by market pay levels of similar companies and internal factors, such as the individual's performance, experience and the pay of others on the executive team.

We consider market pay levels among comparable industry positions with transferable skills within our industry and comparable companies in general industry. When establishing the base salary of any executive officer, we also consider business requirements for certain skills, individual experience, contributions, and roles and responsibilities of and other relevant factors. We believe a competitive base salary is necessary to attract and retain an executive management team with the appropriate abilities and experience required to lead us. Approximately 30% to 90% of an executive officer’s total cash compensation, depending on the executive's role with us, is paid as a base salary.

The base salaries that are paid to our Named Executive Officers are set forth below in the Summary Compensation Table - See "Summary of Compensation." For the fiscal year ended December 31, 2015, cash compensation to our Named Executive Officers was $153,870 to our Chief Executive Officer and $67,245 to our Chief Financial Officer.

Long-term Equity Incentive Compensation

We award long-term equity incentive grants to executive officers and directors, including certain Named Executive Officers, as part of our total compensation package. These awards are consistent with our pay for performance principles and align the interests of the executive officers to the interests of our shareholders. The Board of Directors review and approve the amount of each award to be granted to each named executive officer. Long-term equity incentive awards are made pursuant to our stock option plans.

Our long-term equity incentive compensation is currently exclusively in the form of options to acquire our common stock. The value of the stock options awarded is dependent upon the performance of our common stock price. The Board of Directors and management believe that stock options currently are the appropriate vehicle to provide long-term incentive compensation to our executive officers. Other types of long-term equity incentive compensation may be considered in the future as our business strategy evolves. Stock options are awarded on the basis of anticipated service to us and vest as determined by the Board of Directors.

Options are granted with an exercise price equal to the fair market value of our common stock on the date of grant. Fair market value is defined as the closing market price of a share of our common stock on the date of grant. We do consider or offer programs, plans or practices of setting the exercise price based on a date or price other than the fair market value of our common stock on the grant date. Like our other pay components, long-term equity incentive award grants are determined based on competitive market levels of comparable companies.

Generally, we do not consider an executive officer's stock holdings or previous stock option grants in determining the number of stock options to be granted. We believe that our executive officers should be fairly compensated each year relative to market pay levels of comparable companies and relative to our other executive officers. Moreover, we believe that our long-term incentive compensation program furthers our significant emphasis on pay for performance compensation. We do not have any requirement that executive officers hold a specific amount of our common stock or stock options.

The Board of Directors have the discretion to make stock option awards to executive officers at other times such as the hiring of a new executive officer, the promotion of an executive officer, to reward executive officers, for retention purposes or other circumstances recommended by management. The exercise price of any such grant is the fair market value of our stock on the grant date.

For accounting purposes, we apply the guidance in Accounting Standards Codification 718, stock compensation (ASC 718), to record compensation expense for our stock option grants. ASC 718 is used to develop the assumptions necessary and the model appropriate to value the awards as well as the timing of the expense recognition over the requisite service period, generally the vesting period, of the award.

Executive officers recognize taxable income from stock option awards when a vested option is exercised. We generally receive a corresponding tax deduction for compensation expense in the year of exercise. The amount included in the executive officer's wages and the amount we may deduct is equal to the common stock price when the stock options are exercised less the exercise price multiplied by the number of stock options exercised. We currently do not pay or reimburse any executive officer for any taxes due upon exercise of a stock option.

Overview of 2015 Compensation

We believe that the total compensation paid to our Named Executive Officers for the fiscal year ended December 31, 2015 achieves the overall objectives of our executive compensation program. Executive compensation for 2015 was competitive with comparable companies. See "Summary of Compensation."

Other Benefits

Health and Welfare Benefits

All full-time employees, including our Named Executive Officers, may participate in our health and welfare benefit program.

Stock Ownership Guidelines

Stock ownership guidelines have not been implemented by the Board of Directors for our executive officers. We continue to periodically review best practices and re-evaluate our position with respect to stock ownership guidelines.

Securities Trading Policy

Our securities trading policy states that executive officers, including the named executive officers, and directors may not purchase or sell puts or calls to sell or buy our stock, engage in short sales with respect to our stock, or buy our securities on margin.

Tax Deductibility of Executive Compensation

Limitations on deductibility of compensation may occur under Section 162(m) of the Internal Revenue Code which generally limits the tax deductibility of compensation paid by a public company to its chief executive officer and certain other highly compensated executive officers to one million dollars in the year the compensation becomes taxable to the executive officer. There is an exception to the limit on deductibility for performance-based compensation that meets certain requirements.

Although deductibility of compensation is preferred, tax deductibility is not a primary objective of our compensation programs. We believe that achieving our compensation objectives set forth above is more important than the benefit of tax deductibility and we reserve the right to maintain flexibility in how we compensate our executive officers that may result in limiting the deductibility of amounts of compensation from time to time.

Summary Compensation Table           

The table below sets forth for our last three completed fiscal years, the compensation earned by our President and CEO and CFO, who are our only “Named Executive Officers”.

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Compensation of Directors

We reimburse our directors for their reasonable expenses incurred in attending meetings of our board of directors. Provisions of Nevada Law allow us to indemnify our officers, employees, directors and director nominees against liabilities and other expenses incurred as the result of defending or administering any pending or anticipated legal issue in connection with their service to us if it is determined that that person acted in good faith and in a manner which he reasonably believed was in our best interest.

Retention and Bonus Plan for Key Employees

In December of 2006, our board of directors approved a retention and bonus plan for key employees. Our board approved the plan in order to induce key employees to remain with the Company, particularly in the event of a “change of control” such as the following: a merger or consolidation of which the Company is not the surviving corporation; a merger or consolidation in which the Company’s then current shareholders hold less than 50% of the Company’s outstanding stock; the sale of all or substantially all of the Company’s assets; the acquisition, sale or transfer of more than 50% of the outstanding voting securities of the Company; or the effectiveness of the filing of a registration statement for the public offering of securities of the Company and sale of more than 50% of the outstanding securities of the Company pursuant to such registration. If within six (6) months after a change of control a participant of the plan (which participants are determined in the sole discretion of the board of directors) is terminated from employment by the Company due to his or her disability, death or by the Company for any reason other than cause, such participant is due severance compensation from 0% to 250% of the participant’s base salary based on the amount of total consideration paid in connection with the change of control. Our board has sole authority to administer and/or amend the plan.

On November 16, 2011, the Board of Directors approved a stock option plan for its employees and approved 600,000 stock options for three of its employees. The Board was advised by its legal counsel that certain changes to the stock option plan were needed and would require the previous plan and option grants to be cancelled and then replaced with a new plan and new option grants. On February 1, 2012, the Board cancelled the plan approved on November 16, 2011 and approved a new 2012 Incentive Stock Option Plan (“2012 ISOP”) and 600,000 stock options for three of its employees, (500,000 of which were granted to Rich Conn, CFO) with an exercise price of $0.25 per share with a vesting schedule of 60% on the first anniversary of the grant, 20% on the second anniversary of the grant and the final 20% on the third anniversary of the grant. On November 26, 2012, the Board approved a stock option plan and granted 3,000,000 stock options to the Company’s president and CEO, with an exercise price of $.25 per share with a vesting schedule of 33 and 1/3% on the first anniversary of the grant, 33 and 1/3% on the second anniversary of the grant and the final 33 and 1/3% on the third anniversary of the grant. See discussion below of the 2012 ISOP that was approved by the Majority Shareholders on December 31, 2012. On November 26, 2012, the Board approved a CEO Compensation plan that resulted in the Company’s president and CEO being awarded a $10,000 bonus as a result of the Company’s revenues exceeding $2,100,000 dollars and the Company’s gross margin exceeding 37.5%. The compensation plan was for 2012 only.

On December 4, 2014, the Board of Directors approved the following: the exercise price of incentive stock options previous issued by the Company on February 1, 2012 and November 26, 2012, were changed to $0.075 per share, the closing price of the Company’s stock on December 4^th, 2014. The Company issued incentive stock options exercisable at $0.075 per share, the closing price of the Company’s stock on December 4^th, 2014, to incentivize the Company’s employees as follows: 1,000,000 incentive stock options to Marvin Clamme, 500,000 incentive stock options to Nancy Luden, 250,000 incentive stock options to Rich Conn, 100,000 incentive stock options to Brendan Kelly, 100,000 incentive stock options to Andrew Luden. The vesting schedule will be as follows: of 60% on the first anniversary of the grant, 20% on the second anniversary of the grant and the final 20% on the third anniversary of the grant. The Company will issue incentive stock options exercisable at $0.075 per share, the closing price of the Company’s stock on December 4^th, 2014 as follows: 750,000 incentive stock options to Walter Doyle and 750,000 incentive stock options to Ken McCaw. The vesting schedule will be as follows: 25% on the first anniversary of the grant, 25% on the second anniversary of the grant, 25% on the third anniversary of the grant and 25% on the fourth anniversary of the grant.

Outstanding Equity Awards at Fiscal Year End

The table below shows outstanding equity awards for the Company's executive officers as of the fiscal year ended December 31, 2015, which equity awards consists of ten-year, non-qualified stock options granted under the Company’s 1999 Non-Qualified Stock Option Plan (the "1999 Options"), all of which are vested and exercisable but none of which have been exercised and options granted under the 2012 ISOP, none of which are vested.

______________ 

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

The following table sets forth information concerning the beneficial ownership of the Company’s Common Stock on December 31, 2015 by (i) each person who is known by the Company to own beneficially more than 5% of the Common Stock, (ii) each director of The Guitammer Company, (iii) each of the executive officers of The Guitammer Company and (iv) all directors and executive officers of The Guitammer Company as a group.

_______________ 

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

Except for the transactions described below, none of our directors, officers or principal shareholders, or any associate or affiliate of the foregoing, have any interest, direct or indirect, in any transaction or in any proposed transactions, during the years ended December 31, 2015 and 2014.

In July of 2009, we entered into a Working Capital Loan and Consulting Agreement (the “Working Capital Loan”), with Forest Capital, LLC (“Forest”), which is controlled by Walter J. Doyle, a Director of the Company. Pursuant to the Working Capital Loan, Forest loaned us an aggregate of $250,000, which amount bore interest at the rate of 10% per annum. The principal amount of the loan was initially payable by us upon the earlier to occur of (a) the completion of a significant funding transaction or (b) December 31, 2009, provided that the Company could extend the loan to December 31, 2010, provided that we pay all of the accrued interest then due on the loan by December 31, 2009, and that we agree to increase the interest rate of the Working Capital Loan to 20% per annum, compounded monthly and payable annual. The Working Capital Loan was so extended and was due on demand. As of February 29, 2012, the balance due on this loan was $150,000. In consideration for Forest agreeing to the Working Capital Loan, we agreed to issue and in January 2010 issued to Forest 85.3 shares of Guitammer-Ohio which because of the Reorganization have been converted into an aggregate of 2,661,871 shares of the Company’s common stock (subsequently transferred to The Walter J. Doyle Trust) and granted 10-year options to purchase shares of Guitammer-Ohio which because of the Reorganization have been converted into options to purchase 655,326 shares of the Company’s Common Stock at an exercise price of $0.02 per share. Also, the Company’s directors, including Mr. Luden, Mr. McCaw and Mr. Clamme agreed to transfer and have each transferred to Forest options to purchase shares of Guitammer-Ohio which because of the Reorganization have been converted into options to purchase 2,014,971 shares of the Company’s Common Stock (a total of 6,044,914 shares) at an exercise price of $0.02 per share. Also, the Company agreed to provide Forest the right to appoint one member of the board of directors of the Company, which member is Mr. Doyle. On December 21, 2011, $100,000 of the principal and all interest due on the loan was converted to shares of the Company’s stock pursuant to the note conversion agreement. Also, the note was amended on December 21, 2011 reissued and now bears interest at a rate of 8%. The first interest payment was due on January 3, 2013 and was paid by issuing 49,562 shares of the Company’s stock. On January 27, 2014, the Guitammer Company (the Company) entered into a Note Restatement Agreement with a revised principal balance of $162,106.52, which is the sum of (a) $150,000, the original unpaid principal amount of the 2011 Note, plus (b) $12,106.52, which is the unpaid accrued interest on that original unpaid principal balance computed from January 1, 2013 through January 3, 2014, and which is being converted into unpaid principal as of January 3, 2014. All accrued and unpaid interest on the Note is payable on January 3, 2015, and all unpaid principal and all remaining accrued and unpaid interest on the Note is payable in full on January 3, 2016.

In May 2003, we borrowed $800,000 at 8% interest per annum from Thelma Gault (the “Gault Loan”) (a shareholder of the Company and owner of Eminence Speaker LLC, a manufacturing partner of the Company). The Gault Loan included a security interest over substantially all of our assets, and required that we needed Ms. Gault’s prior approval before incurring any additional debt. In connection with the Gault Loan, we granted Ms. Gault options to purchase shares of Guitammer-Ohio which because of the Reorganization have been converted into options to purchase an aggregate of 3,276,630 shares of our Common Stock. All of the options have an exercise price of $0.02 per share and have vested. The Gault Loan was originally due May 6, 2008.

The Gault Loan was amended in January 2008 to increase the interest rate to 10% per annum (beginning on May 6, 2008), provide for 72 monthly payments to be made on the loan starting in June 2008, to extend the due date of the loan until June 1, 2014, and to provide that in the event the Company obtains financing of over $4,000,000, the Company shall use commercially reasonable efforts to negotiate to use a portion of the funding to repay the Gault Note and that the Company shall use its commercially reasonable efforts to make yearly prepayments on the loan in an amount equal to 7.5% of the Company’s available cash on hand as of the end of the immediately preceding year. The amendment to the Gault Loan also added certain events of default under the loan including if Mark Luden is no longer active in the day-to-day operations of the Company, absent the written approval of a replacement by Ms. Gault.

On April 25, 2008 Ms. Gault signed an Intercreditor Agreement with the Director of Development of the State of Ohio, also a creditor of the Company, in which she agreed to share, paripassu, with the Director her security interest in the assets of the Company securing the Gault Loan.

In February 2009, the Gault Loan was amended again to subordinate the repayment of the loan to the repayment of the Credit Agreement described below. In November 2010, the Gault Loan was amended once again to subordinate the repayment of the loan to the repayment of the Julie E. Jacobs Trust’s and the Standard Energy Company’s loans described below. The outstanding balance on the Gault Loan as of December 31, 2013 was $584,352 and it is due on demand.

On March 9, 2009, we entered into a Credit Facilitation Agreement (the “Credit Agreement”) with Walter J. Doyle, as Trustee of the Walter J. Doyle Trust dated February 5, 1992, and Francine I. Jacobs, Trustee of the Revocable Trust created by Julie E. Jacobs under Agreement dated November 25, 2009 (collectively “Doyle and Jacobs”), both of whom were investors in the Company. Pursuant to the Credit Agreement, Doyle and Jacobs each agreed to guarantee 50% of a Merrill Lynch line of credit loan to the Company of $400,000, which loan carries a variable interest rate tied to the LIBOR rate. The amount loaned pursuant to the Credit Agreement was to be used to acquire inventory and finance accounts receivable. The loan is secured by a first priority security interest and lien on all of Guitammer property and assets. We agreed to pay Doyle and Jacobs an annual fee of 4% of the outstanding amount of the Credit Agreement, to sell to each of Doyle and Jacobs an aggregate of 20% of the then outstanding shares of Guitammer-Ohio for $1.00 per share, or 292 shares of Guitammer-Ohio each which because of the Reorganization have been converted into 9,112,152 shares of our Common Stock, an aggregate of 18,224,304 shares, and pay the legal fees associated with the Credit Agreement. On December 21, 2011, the annual fee that was due on the loans was converted to shares of the Company’s stock pursuant to the note conversion agreement.

Additionally, in connection with the Credit Agreement, we agreed to grant to certain of our key employees, directors and officers options to purchase shares of Guitammer-Ohio which because of the Reorganization were converted into options to purchase shares of our Common Stock, as follows:

All of the options have an exercise price of $0.02 per share and have vested.

The Credit Agreement is due and payable on demand. The balance due of the Credit Agreement as of December 31, 2013 was $395,350.

On April 7, 2010 the Julie E. Jacobs Trust (“Jacobs Trust”) loaned us $100,000. The loan was due on June 7, 2010 but has not been paid. The Note bore interest at the rate of 30% per annum and was payable on demand. As additional consideration for the loan, the Company agreed to issue to the Jacobs Trust Warrants to purchase 125,003 shares of our Common Stock post- Reorganization at $0.005 per share at the time of a Company IPO. On December 21, 2011, the interest due on the loan was converted to shares of the Company’s stock pursuant to the note conversion agreement. Also, the note was amended on December 21, 2011 reissued and now bears interest at a rate of 8%. The first interest payment was due on January 3, 2013 and was paid by issuing 33,042 shares of the Company’s stock. On January 27, 2014, the Company entered into a Note Restatement Agreement with the Julie Jacobs Trust with a revised principal balance of $108,071.01, which is the sum of (a) $100,000, the original unpaid principal amount of the 2011 Note, plus (b) $8,071.01, which is the unpaid accrued interest on that original unpaid principal balance computed from January 1, 2013 through January 3, 2014, and which is being converted into unpaid principal as of January 3, 2014. All accrued and unpaid interest on the Note is payable on January 3, 2015, and all unpaid principal and all remaining accrued and unpaid interest on the Note is payable in full on January 3, 2016.

On October 5, 2010 the Standard Energy Company loaned us $100,000. Standard Energy Company is controlled by Gerald Jacobs, a substantial shareholder of the Company. The loan bore interest at the rate of 10% per annum, is unsecured and was payable September 30, 2011. On December 21, 2011, the principal and interest due on the loan was converted to shares of the Company’s stock pursuant to the note conversion agreement.

On October 5, 2010 the Company issued its Promissory Note payable to Walter J. Doyle Trust in the amount of $25,000 to evidence a loan made to the Company that date. The note bore interest at the rate of 10% per annum and was due September 30, 2011. On December 21, 2011, the principal and interest due on the loan was converted into 112,108 shares of the Company’s Common Stock.

On November 12, 2010 the Company arranged an inventory financing agreement with the Walter J. Doyle Trust and the Julie E. Jacobs Trust, for an aggregate of $300,000 and a monthly interest rate of 2%. The loan was evidenced by two-$150,000 promissory notes payable to the lenders (one of which is the Standard Energy Company) and secured by a first lien on all of the assets of the Company. The notes were due on October 14, 2011. On December 21, 2011, the principal and interest on the loan was converted into 1,500,456 shares of the Company’s Common Stock.

Director Independence

In the opinion of the Board of Directors, no Director may be deemed independent.

Item 14. Principal Accounting Fees and Services

PART IV

Item 15. Exhibits, Financial Statement Schedules

1. Consolidated Financial Statements.

The following consolidated financial statements of The Guitammer Company and subsidiary, are submitted as a separate section of this report (See F-pages) and are incorporated by reference in Item 8:

 All schedules are omitted because they are either not required or not applicable or the required information is shown in the Consolidated Financial Statements or Notes thereto.

 2. Exhibits

a. The following exhibits are filed as part of this report or incorporated herein as indicated.

* Filed with the SEC on July 8, 2011 as Exhibits to Amendment No. 1 to the Company’s Form 10 Registration Statement and are incorporated herein by reference.

** Filed with the SEC on July 28, 2011 as Exhibits to Amendment No. 2 to the Company’s Form 10 Registration Statement and are incorporated herein by reference.

*** Filed with the SEC on August 12, 2011 as Exhibit to Amendment No. 3 to the Company’s Form 10 Registration Statement and is incorporated herein by reference.

# Filed with the SEC on December 23, 2011 as Exhibits to Form 8K

## Filed with the SEC on February 2, 2012 as Exhibits to Form 8K

### Filed with the SEC on February 6, 2012 as Exhibits to Form 8K

&& Filed with the SEC on April 6, 2012 as Exhibits to Form 10K

**** Filed with the SEC on May 15, 2012 as Exhibits to Form 10Q

&&& Filed with the SEC on August 13, 2012.

+&+ Filed with the SEC on January 31, 2014 as Exhibits to Form 8-K.

-@-      Filed with the SEC on March 14, 2014 as Exhibits to Form 10K

@@ Filed with the SEC on November 14, 2014 as Exhibits to Form 10Q

%% Filed with the SEC herewith.

Signatures

In accordance with Section 13 or 15(d) of the Securities Exchange Act, the Company has caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 Pursuant to the requirements 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.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of
The Guitammer Company

We have audited the accompanying consolidated balance sheets of The Guitammer Company (the Company) as of December 31, 2015 and 2014, and the related consolidated statements of operations, changes in stockholders’ deficit, and cash flows for each of the years in the two-year period ended December 31, 2015 and 2014. The Guitammer Company’s management is responsible for these consolidated financial statements. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

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

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of The Guitammer Company as of December 31, 2015 and 2014 and the results of its operations and its cash flows for each of the years in the two-year period ended December 31, 2015 and 2014 in conformity with accounting principles generally accepted in the United States of America.

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the consolidated financial statements, the Company has suffered recurring losses from operations and has a net capital deficiency that raises substantial doubt about its ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 2. The consolidated financial statements do not include any adjustments that might result from the outcome of these uncertainties.

/s/ Schneider Downs & Co., Inc. 

Columbus, Ohio

September 19, 2016

THE GUITAMMER COMPANY

 CONSOLIDATED BALANCE SHEETS

See accompanying Notes to Consolidated Financial Statements.

THE GUITAMMER COMPANY

CONSOLIDATED STATEMENTS OF OPERATIONS

See accompanying Notes to Consolidated Financial Statements.

THE GUITAMMER COMPANY

CONSOLIDATED STATEMENT OF CHANGES  IN STOCKHOLDERS' DEFICIT

YEARS ENDED DECEMBER 31, 2015 and 2014