Active Health Foods, Inc. - Annual Report: 2011 (Form 10-K)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-K

(Mark One)

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

For the fiscal year ended: December 31, 2011

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

For the transition period from ________ to ________

Commission File No. 333-164788

ACTIVE HEALTH FOODS, INC.

(Exact name of registrant as specified in its charter)

California		26-1736663
(State or other jurisdiction of incorporation or formation)		(I.R.S. employer identification number)

6185 Magnolia Ave.

Suite 403

Riverside, CA 92506

Email: nbdc@onebox.com

 (Address of principal executive offices) 

Registrant’s telephone number:	(626) 335-7750
Registrant’s facsimile number:	(626) 335-7750

N/A

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

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

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

(Title of Class)

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

                                                                Yes ¨ No x

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

                                                                 Yes ¨ No x

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

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Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 229.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes ¨ No x

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of 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. ¨

  

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

 

Large accelerated filer		¨	Accelerated filer		¨
Non-accelerated filer		¨	Smaller reporting company		x

 

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

State issuer’s revenues for its most recent fiscal year: $0

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

As of December 31, 2011, there were 800,350,000 shares of Common Stock, $0.001 par value per share, issued and outstanding.

As of December 31, 2011, there were 25,000,000 shares of Preferred Stock, $0.001 par value per share, issued and outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

None

 

 

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Table of Contents

 

			PAGE
PART I
	Item 1.	Description of Business.	4
	Item 1A.	Risk Factors	8
	Item 1B	Unresolved Staff Comments	10
	Item 2.	Properties	11
	Item 3.	Legal Proceedings.	11
	Item 4.	Submission of Matters to a Vote of Security Holders.	11
PART II
	Item 5.	Market for Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.	11
	Item 6	Selected Financial Data	13
	Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operation.	13
	Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	15
	Item 8.	Financial Statements and Supplementary Data	16
	Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.	27
	Item 9AT.	Controls and Procedures.	27
	Item 9B.	Other Information.	28
PART III
	Item 10.	Directors, Executive Officers, Promoters, Control Persons and Corporate Governance; Compliance with Section 16(a) of the Exchange Act.	28
	Item 11.	Executive Compensation.	30
	Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.	30
	Item 13.	Certain Relationships and Related Transactions, and Director Independence.	31
	Item 14.	Principal Accountant Fees and Services.	32
	Item 15.	Exhibits and Reports on Form 8-K	33
SIGNATURES			34

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PART I

FORWARD-LOOKING STATEMENTS

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

Item 1. Description of Business

Form and Year of Organization

 

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

 

Fiscal Year End

 

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

 

Bankruptcy, Receivership and Similar Proceedings

 

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

 

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

 

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

 

Description of Business

 

Principal Products and Services and Their Markets

 

Present Products

 

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

 

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►           Almond Chocolate Delight

 

►           Peanut Butter Chocolate Joy

 

►           Cashew Berry Dream

 

►           Coconut Cocoa Passion

 

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

  

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

 

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

 

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

 

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

 

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

 

Future Products

 

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

 

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

 

Services

 

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

 

Future Services

 

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

 

Product Availability

 

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

 

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Intellectual Properties

 

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

 

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

 

Sales and Marketing Strategy

 

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

 

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

 

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

 

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

 

Distribution Methods

 

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

 

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

 

Industry Background and Competitive Business Conditions

 

Currently, the organic and health food industry is growing and the Company faces considerable competition from other companies worldwide. This business is replete with competition at all levels of geographic settings, expertise and ethical variances. Our ability to remain competitive is based on our ability to provide our customers with a broad range of quality products, competitively priced, with superior customer service. The prospective ability to develop cost effective products that provide superior value is an integral component of our ability to stay competitive. We believe that the breadth and quality of our existing product line, the infrastructure in place to effectively source our products and the skill and dedication of our management will allow us to successfully compete in our chosen marketplace.

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

 

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

 

Sources and Availability of Raw Materials

 

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

 

Dependence upon One or a Few Major Customers

 

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

 

Extent that the Business Is Seasonal

 

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

 

Patients, Trademarks, Licenses, Franchises and Concessions

 

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

 

Need for Government Approval on Principal Products or Services

 

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

 

        Existing or Probably Government Regulations

 

The Company is not aware of any specific regulatory obstacles.  That is not to say that we are not generally aware of the multitude of rules, statutes and administrative regulations that may apply, including, but not limited to, local business licenses and regulations. However, we do not foresee these as prohibiting the implementation of our business plan, but merely as temporary administrative obstacles that will be addressed and overcome as they arise, or as best we can forecast their arrival.

 

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

 

Research and Development

 

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

 

No future research and development is anticipated at this time.

 

Compliance with Environmental Laws

 

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

 

Number of Employees

 

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

 

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

 

Anticipated Material Changes in Number of Employees

 

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

 

Acquisition or Disposition of Any Material Assets

 

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

 

Material Acquisition of Plant and Equipment

 

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

 

Reports to Security Holders

 

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

 

The public may read and copy any materials we file with the SEC at the SEC’s Public Reference Room at 450 Fifth Street, N.W., Washington, D.C. 20549 on official business days during the hours of 10:00 a.m. to 3:00 p.m. The public may obtain information on the operation of the Public Reference Room by calling the Commission at 1-800-SEC-0330. The Commission maintains an internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the Commission.  The address of that site is:  http://www.sec.gov

 

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Item 1A. Risk Factors

RISKS ASSOCIATED WITH OUR BUSINESS

RISK FACTORS

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

THE COMPANY’S OPERATIONS DEPEND EXCLUSIVELY ON GREGORY MANOS WHO HAS NO EXPERIENCE IN PUBLIC COMPANIES

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

THE COMPANY’S SOLE OFFICER AND DIRECTOR INVOLVED IN OTHER EMPLOYMENT OPPORTUNITIES

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

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

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

 

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

The factors set forth below, along with the other information contained herein, should be considered carefully in evaluating our prospects. Further, this document contains certain forward-looking statements that involve risks and uncertainties, such as statements of our plans, goals, objectives, expectations and intentions. The cautionary statements made in this section apply to all forward-looking statement wherever they appear in this document. Readers are cautioned that, while the forward-looking statements reflect our good faith beliefs, they are not guarantees of future performance, and involve risks and uncertainties. In addition, actual results could differ materially from those discussed herein and our business, our financial condition or the results of operations could be materially and adversely affected. In such case, some of the factors that could cause or contribute to such differences include those discussed below, as well as those discussed elsewhere in this document. In the event that actual results do not meet expectations, there could be a consequent negative effect on the position of investors.

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

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

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

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

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

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

 

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

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

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

 

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

The costs of complying with these complex requirements may be substantial and require extensive consumption of our time as well as retention of expensive specialists in this area. In the event we are unable to establish a base of

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operations that generates sufficient cash flows or cannot obtain additional equity or debt financing, the costs of maintaining our status as a reporting entity may inhibit our ability to continue our operations.

THE COMPANY MAY NOT BE ABLE TO GENERATE REVENUES

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

 

COMPETITORS WITH MORE RESOURCES MAY FORCE US OUT OF BUSINESS

 

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

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

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

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

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

 

THE COMPANY MAY LOSE ITS TOP MANAGEMENT WITHOUT EMPLOYMENT AGREEMENTS

Our operations depend substantially on the skills, knowledge and experience of the present management, which devotes itself to the Company on a part-time basis. The Company has no other full or part-time individuals devoted to the development of our Company. Furthermore, the Company does not maintain key man life insurance. Without an employment contract, we may lose the present management of the Company to other pursuits without a sufficient warning and, consequently, we may be forced to terminate our operations.

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

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

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

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

Item 1B. Unresolved Staff Comments

This section is not applicable.

 

Item 2. Description of Properties

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

Item 3. Legal Proceedings

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

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

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

 

PART II

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

Market Information

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

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Holders

As of December 31, 2011, we had 800,350,000 shares of $0.001 par value common stock issued and held by 13 shareholders of record.

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

Our current transfer agent is Holladay Stock Transfer.

Dividends

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

“Penny Stock” Regulations

 

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

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

 

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

 

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

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

Our Company Securities

(a) Capital Stock

Common Stock:

13

The Company is authorized by its Certificate of Incorporation, as amended, to issue an aggregate of 900,000,000 shares of common stock, par value $0.001 per share (the “Common Stock”). As of December 31, 2011, there were 800,350,000 shares of Common Stock issued and outstanding.

Preferred Stock:

The Company is authorized by its Certificate of Incorporation, as amended, to issue an aggregate of 50,000,000 shares of preferred stock, par value $0.001 per share (the “Preferred Stock”). As of December 31, 2011, there were 25,000,000 shares of Common Stock issued and outstanding.

Voting Rights:

Preemptive Rights

 

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

 

Non-Cumulative Voting

 

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

 

Dividend Policy

 

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

 

 (b) Market Information

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

(c) Holders of the Company's Securities

As of December 31, 2011, there were 13 holders of record of shares of the Company’s Common Stock.

(d) Dividends

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

Recent Sales of Unregistered Securities

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

 

14

Item 6. Selected Financial Data

This section is not applicable.

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

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

Forward Looking Statements

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

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

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

Plan of Operation

 

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

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

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

 

►           Almond Chocolate Delight

 

►           Peanut Butter Chocolate Joy

 

►           Cashew Berry Dream

 

►           Coconut Cocoa Passion

 

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

 

15

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

 

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

 

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

 

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

 

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

 

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

 

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

 

Liquidity and Capital Resources

As of December 31, 2011, we had limited cash of $1,130 and an accumulated deficit during the development stage (Inception to December 31, 2011) of $376,598. Our operating activities had a net loss of $100,636 in cash for the fiscal year period ended December 31, 2011, while our operations had a net loss of $19,082 in cash in the fiscal year ended December 31, 2010. The increase in operating loss was primarily attributable to an increase in professional fees.

 

We did not realize any revenue during the fiscal year ended December 31, 2011 as compared to revenues of $0 for the period ending December 31, 2010.  Since inception we have had revenues of $16,764. Due to the foregoing our auditors have expressed their doubt as to our ability to continue as a going concern.

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

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

At December 31, 2011, the Company had loans and notes outstanding of $84,000, related-party payables of $230,416 and a current accounts payable of $10,000.

16

Results of Operations

 

Fiscal Year Ended December 31, 2011 Compared to December 31, 2010

The following table summarizes the results of our operations during the fiscal years ended December 31, 2011 and 2010, respectively, and provides information regarding the dollar and percentage increase or (decrease) from the current 12-month period to the prior 12-month period:

Line Item		12/31/2011 (Audited)				12/31/2010 (Audited)				Increase (Decrease)				Percentage Increase (Decrease)
Revenues		$	0			$	0			$	0				0%
Total Operating Expenses		$	100,636			$	19,082			$	81,554				427%
Net (Loss)		$	(100,636)			$	(19,082)			$	81,554				427%
Loss Per Share of Common Stock		$	(0.00)			$	(0.00)			$	0.00				0%

Assets. On December 31, 2011, we had $1,130 cash on hand. On December 31, 2010, we had $150 cash on hand. This minimal amount of cash on hand and nominal increase was principally due continuing start-up costs and decreased sales activity. On December 31, 2011, we had $33,476 in inventory and $10,512 in Deposits. On December 31, 2010, we had $0 in inventory and $0 in deposit.

Total Current Liabilities. Our Total Current Liabilities increased to $324,416 on December 31, 2011 from $254,262 on December 31, 2010. This increase in Total Current Liabilities was due to additional start-up activities and increased administrative activity.

Revenues. Our Revenues were $0 for the fiscal year ended December 31, 2011, the same as for the fiscal year ended December 31, 2010. This was due to a lack of product to market and sell.

Operating Expenses. Our Total Operating Expenses were $100,636 for the fiscal year ended December 31, 2011 compared to $19,082 for the fiscal year ended December 31, 2010. This decrease in total operating expenses was due to increased business activity.

 

Net Loss. We recorded a Net Loss of $100,636 for the fiscal year ended December 31, 2011 as compared with a Net Loss of $19,082 for the fiscal year ended December 31, 2010. The increase in Net Losses was due to increased business activity.

Total Stockholders’ Deficit. Total Stockholders’ Deficit increased to $279,298 on December 31, 2011 from $254,112 on December 31, 2010. This increase in Total Stockholders’ Equity was due to expenses related to additional start-up costs and increased business activity.

Since inception, we have generated $16,764 in revenues and have incurred a cumulative net loss of $376,598.

 

Off-Balance Sheet Arrangements

 

We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity or capital expenditures or capital resources that is material to an investor in our securities.

 

Seasonality

Our operating results are not affected by seasonality.

17

Inflation

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

Critical Accounting Policies

The Securities and Exchange Commission issued Financial Reporting Release No. 60, "Cautionary Advice Regarding Disclosure About Critical Accounting Policies" suggesting that companies provide additional disclosure and commentary on their most critical accounting policies. In Financial Reporting Release No. 60, the Securities and Exchange Commission has defined the most critical accounting policies as the ones that are most important to the portrayal of a company's financial condition and operating results, and require management to make its most difficult and subjective judgments, often as a result of the need to make estimates of matters that are inherently uncertain. The nature of our business generally does not call for the preparation or use of estimates. Due to the fact that the Company does not have any operating business, we do not believe that we do not have any such critical accounting policies.

Item 7A. Quantitative and Qualitative Disclosures about Market Risk

This section is not applicable. 

18

Item 8. Financial Statements and Supplementary Data

ACTIVE HEALTH FOODS, INC.

 (A Development Stage Company)

AUDIT REPORT OF INDEPENDENT ACCOUNTANTS

AND

FINANCIAL STATEMENTS

For the years ended December 31, 2011 and 2010

19

ACTIVE HEALTH FOODS, INC.

 (A Development Stage Company)

Table of Contents

Page

Audit Report of Independent Accountants

F-1

Balance Sheet – December 31, 2011 and 2010

F-2

Statement of Operations for the years ended December 31, 2011 and 2010

and for the period from inception on January 9, 2008 through December 31, 2011

F-3

Statements of Stockholders’ Equity for the period from

inception on January 9, 2008 through December 31, 2011

 F-4

Statement of Cash Flows for the years ended December 31, 2011 and 2010

and for the period from inception on January 9, 2008 through December 31, 2011

 F-5

Notes to Financial Statements

F-6

_______________________________________

0

SADLER, GIBB & ASSOCIATES, L.L.C.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors

Active Health Foods, Inc.

(A Development Stage Company)

We have audited the accompanying balance sheets of Active Health Foods, Inc., as of December 31, 2011 and 2010, and the related statements of operations, stockholders’ deficit and cash flows for the years ended December 31, 2011 and 2010 and for the cumulative period from inception on January 9, 2008 through December 31, 2011. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the financial statements based on our audit.

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 audits 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 audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the 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 financial statement referred to above present fairly, in all material respects, the financial position of Active Health Foods, Inc., as of December 31, 2011 and 2010, and the related statements of operations, stockholders’ deficit and cash flows for the years ended December 31, 2011 and 2010 and for the cumulative period from inception on January 9, 2008 through December 31, 2011, in conformity with accounting principles generally accepted in the United States of America.

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company has not yet established an ongoing source of revenue sufficient to cover its operating costs which raises substantial doubt about its ability to continue as a going concern. Management’s plans concerning these matters are also described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

/s/ Sadler, Gibb & Associates, LLC

Sadler, Gibb & Associates, LLC

Salt Lake City, UT

March 2, 2011

ASSETS
				December 31,			December 31,
				2011			2010
CURRENT ASSETS
	Cash			$	1,130		$	150
	Inventory				33,476
	Deposits				10,512			-
		Total Current Assets			45,118			150
		TOTAL ASSETS		$	45,118		$	150
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES
	Accounts payable and accrued expenses			$	10,000		$	10,292
	Related-party payables				230,416			159,970
	Notes payable				84,000			84,000
		Total Current Liabilities			324,416			254,262
		TOTAL LIABILITIES			324,416			254,262
STOCKHOLDERS' DEFICIT
	Preferred stock; 50,000,000 shares authorized,
	at $0.001 par value,  25,000,000 and -0-
	shares issued  and outstanding, respectively				25,000			-
	Common stock; 900,000,000 shares authorized,
	at $0.001 par value, 800,350,000 and 2,275,000,000
	shares issued  and outstanding, respectively				800,350			2,275,000
	Additional paid-in capital				(728,050)			(2,253,150)
	Deficit accumulated during the development stage				(376,598)			(275,962)
		Total Stockholders' Deficit			(279,298)			(254,112)
		TOTAL LIABILITIES AND
		STOCKHOLDERS' DEFICIT		$	45,118		$	150

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

F-6

ACTIVE HEALTH FOODS, INC.

(A Development Stage Company)

Statements of Cash Flows

NOTE 1 – ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Business and Organization

Active Health Foods, Inc. (“the Company”) was incorporated on January 9, 2008, as a California corporation to develop and market health foods and nutritional supplements.  The Company has limited revenues and operations and accordingly, therefore is classified as being in the development stage.

Reclassification

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

Use of Estimates

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

Cash and Cash Equivalents

For purposes of financial statement presentation, the Company considers all highly liquid investments with a maturity of three months or less, from the date of purchase, to be cash equivalents.  The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.  Actual results could differ from those estimates.

Concentrations of Risk

The Company’s bank accounts are held in insured institutions. The funds are insured up to $250,000 USD. At December 31, 2011 and 2010, the Company’s bank deposits did not exceed the insured amounts.

Accounts Receivable

Accounts receivable are carried at original invoice amount less an estimate made for doubtful receivables based on a review of all outstanding amounts on a monthly basis.  Specific reserves are estimated by management based on certain assumptions and variables, including the customer’s financial condition, age of the customer’s receivables, and changes in payment histories.  As of December 31, 2011 and 2010, an allowance for doubtful receivables $-0- and    $-0-, respectively, was considered necessary.  Trade receivables are written off when deemed uncollectible.  Recoveries of trade receivables previously written off are recorded when received.

Inventory

In accordance with ASC 330, the Company’s inventories are recorded at the lower of cost or market. The Company had inventory totaling $33,476 and $-0- as of December 31, 2011 and 2010.  As of December 31, 2011 the Company’s inventory consisted of raw materials and packaging materials.

F-7

ACTIVE HEALTH FOODS, INC.

(A Development Stage Company)

Statements of Cash Flows

NOTE 1 – ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

	December 31,			December 31,
	2011			2010
Raw materials	$	33,476		$	-
Finished goods		-			-
Allowance for obsolete inventory		-			-
Total	$	33,476		$	-

Impairment of Long-Lived Assets

Long-lived tangible assets and definite-lived intangible assets are reviewed for possible impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. The Company uses an estimate of undiscounted future net cash flows of the assets over the remaining useful lives in determining whether the carrying value of the assets is recoverable. If the carrying values of the assets exceed the expected future cash flows of the assets, the Company recognizes an impairment loss equal to the difference between the carrying values of the assets and their estimated fair values. Impairment of long-lived assets is assessed at the lowest levels for which there are identifiable cash flows that are independent from other groups of assets. The evaluation of long-lived assets requires the Company to use estimates of future cash flows. However, actual cash flows may differ from the estimated future cash flows used in these impairment tests. During the years ended December 31, 2011 and 2010, the Company recorded no impairment of its assets.

Revenue Recognition

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

Advertising

The Company follows the policy of charging the costs of advertising to expense as incurred. The Company incurred advertising costs of $2,528 and $8,962 during the years ended December 31, 2011 and 2010, respectively.

Provision for Taxes

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

F-8

ACTIVE HEALTH FOODS, INC.

(A Development Stage Company)

Statements of Cash Flows

NOTE 1 – ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

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

Basic Loss Per Share

The computations of basic loss per share of common stock are based on the weighted average number of shares outstanding at the date of the financial statements. The Company computes net income (loss) per share in accordance with ASC 260. ASC 260 requires presentation of both basic and diluted earnings per share (EPS) on the face of the income statement. Basic EPS is computed by dividing net income (loss) available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method and convertible preferred stock using the if-converted method. In computing Diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all dilutive potential shares if their effect is anti dilutive. The Company had no common stock equivalents outstanding as of December 31, 2011 and 2010.

		For the Year Ended December 31,
		2011			2010
Net Loss  (Numerator)		$	(100,636)		$	(19,082)
Shares (Denominator)			1,971,758,356			2,275,000,000
Per share (total)		$	(0.00)		$	(0.00)

Recently Issued Accounting Pronouncements

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

NOTE 2 - GOING CONCERN

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

F-9

ACTIVE HEALTH FOODS, INC.

(A Development Stage Company)

Statements of Cash Flows

NOTE 2 - GOING CONCERN (CONTINUED)

In order to continue as a going concern, the Company will need, among other things, additional capital resources. Management's plan is to obtain such resources for the Company by obtaining capital from

management and significant shareholders sufficient to meet its minimal operating expenses and seeking

equity and/or debt financing. However management cannot provide any assurances that the Company will be successful in accomplishing any of its plans.

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

NOTE 3 – RELATED PARTY PAYABLES

During the year ended December 31, 2011, the Company received $93,828 in additional cash loans from related parties, and had $4,499 in expenses paid on its behalf by related parties. The Company made cash payments on these notes totaling $27,881 during the year ended December 31, 2011.  

NOTE 4- NOTES PAYABLE

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

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

A summary of the calculation of the discount on the notes is as follows:

PV of loan discounted at 8%	$	49,491
Undiscounted value of loan		90,000
Net discount	$	(40,509)

As of December 31, 2008, the Company was delinquent in its payments of these two notes.  Therefore, the Company recognized the full discount on the note as interest expense and has reclassified the entire note balance to current liabilities.   As of December 31, 2010 the Company has recognized at total of $40,509 in imputed interest expense.  As of December 31, 2011 and 2010 the balance of the notes totaled $84,000.  As the notes are due on demand, thus there are no future annual maturities to report.  

F-10