Glucose Health, Inc.

What they do

Glucose Health, Inc. manufactures and distributes a dietary supplement called Glucose Health, formulated to help maintain healthy blood sugar, triglyceride, and cholesterol levels. The company targets consumers concerned about pre-diabetes and Type-2 diabetes. It sells through national and regional pharmacy retailers, its own website, and other online marketplaces. The company contracts for production, warehousing, and fulfillment.

Revenue drivers

• Glucose Health dietary supplement — The sole product line, sold through pharmacies, direct-to-consumer website, and online marketplaces. Annual revenue grew from $4,272 in 2015 to $313,229 in 2016.
• Wal-Mart Stores, Inc. distribution — A General Merchandise Supplier Agreement was executed on January 6, 2016, with material purchase orders received on March 8, 2016, expected to be a significant channel.
• Direct and online sales — Secondary focus on direct sales via the product website and other online marketplaces, including Amazon, supplementing retail distribution.

Recent performance

For the nine months ended September 30, 2017, the company reported gross profit of $57,240 and net income of $39,018, or $0.01 per share, versus a net loss of $286,363 or $0.11 per share in the same 2016 period. Revenue for the first three quarters of 2017 was $72,940 (Q1 $15,111, Q2 $34,046, Q3 $23,783), compared to revenue of $15,190 in Q4 2016. For full year 2016, revenue was $313,229 with a net loss of $410,443. Total assets were $26,353 and shareholder equity was negative $426,232 as of September 30, 2017.

Strategy

Management focuses on building the Glucose Health brand and expanding distribution through national and regional pharmacies, with secondary online sales. The company invested in product development, including retaining a former Nestle beverage developer and FDA/FTC compliance counsel. It completed CGMP implementation in January 2015 and holds trademark protection for Glucose Health. The company executed a non-recourse receivables financing agreement with Citibank in October 2016 to support operations.

Risks

• Penny stock issuer limitations — As a penny stock issuer, the company cannot rely on the statutory safe harbor for forward-looking statements, increasing legal exposure.
• Limited operating history and losses — The company has generated net losses every year from 2012 through 2016 and had negative shareholder equity of $426,232 as of September 30, 2017.
• Customer concentration risk — The company's revenue is heavily reliant on Wal-Mart Stores, Inc. under a General Merchandise Supplier Agreement; loss of this customer would materially impact results.
• Early-stage market adoption — The product is in early stages of manufacturing and marketing, and there is no assurance of consumer acceptance or retailer stocking beyond current agreements.

Outlook

Management points to a large and growing market of consumers concerned about pre-diabetes and Type-2 diabetes, citing CDC estimates. They intend to continue building the Glucose Health brand and expand retail distribution, leveraging the Wal-Mart agreement. The company expects to generate additional sales through its website and online marketplaces, including Amazon.