Attached files
As filed with the Securities and Exchange Commission on ______, 2010
Commission File No. 333- 122009
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-1
Amendment No. 3
Registration Statement Under
THE SECURITIES ACT OF 1933
NAPRODIS, INC.
(Exact name of registrant as specified in charter)
Nevada 2834 33-0903494
-------------------------- -------------------------- -------------------
(State or other jurisdiction (Primary Standard Classi- (IRS Employer
of incorporation) fication Code Number) I.D. Number)
1300 Danielson St., Suite K 13250 Gregg St Suite F
Poway, CA 92064
(858) 486-8655
--------------------------------------------------------
(Address and telephone number of principal executive offices)
1300 Danielson St., Suite K 13250 Gregg St Suite F
Poway, CA 92064
--------------------------------------------------------
(Address and telephone number of principal executive offices)
Paul Pettitt Petit
1300 Danielson St., Suite K 13417 Orange blossom Lane
Poway, CA 92064
(858) 486-8655
--------------------------------------------------------
(Name, address and telephone number of agent for service)
Copies of all communications, including all communications sent
to the agent for service, should be sent to:
William T. Hart, Esq.
Hart & Trinen, LLP
1624 Washington Street
Denver, Colorado 80203
303-839-0061
As soon as practicable after the effective date of this Registration Statement
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933 check the following box: [X]
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If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
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 12b2 of the Exchange Act.
Large accelerated filer [ ] Accelerated filer [ ]
Non-accelerated filer [ ] Smaller reporting company [X]
(Do not check if a smaller
reporting company)
CALCULATION OF REGISTRATION FEE
Title of each Proposed Proposed
Class of Maximum Maximum
Securities Securities Offering Aggregate Amount of
to be to be Price Per Offering Registration
Registered Registered Share (1) Price Fee
---------- ---------- --------- ----------- --------------
Common stock (2) 3,500,000 $0.15 $525,000
------------------------------------------------------------------------------
Common Stock (3) 1,150,000 $0.15 $172,500
------------------------------------------------------------------------------
Total $697,500 $39
------------------------------------------------------------------------------
(1) Offering price computed in accordance with Rule 457 (c).
(2) Shares of common stock offered by the Company.
(3) Shares of common stock offered by selling shareholders
Pursuant to Rule 416, this Registration Statement includes such
indeterminate number of additional securities as may be required for issuance as
a result of any stock dividends, stock splits or similar transactions.
The registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the registrant shall
file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of l933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
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PROSPECTUS
NAPRODIS, INC.
Common Stock
4,650,000 shares
By means of this prospectus we are offering for sale up to 3,500,000
shares of common stock at a price of $0.15 per share.
The shares we are offering will be sold directly by our executive
officers. We will not pay any commissions or other form of remuneration in
connection with the sale of these shares.
The offering of our shares is being conducted on a "self-underwritten"
basis. There is no minimum number of shares required to be sold. All proceeds
from the sale of these shares will be delivered directly to us and will not be
deposited in any escrow account. If all shares are sold, we will receive gross
proceeds of $525,000. We plan to end the offering on December 31, 2010. However,
we may, at our discretion, end the offering sooner or extend the offering until
January 31, 2011.
If and when our common stock becomes quoted on the OTC Bulletin Board or
listed on a securities exchange, and after we terminate our offering, a number
of our shareholders may also offer to sell, by means of this prospectus, up to
1,150,000 shares of our common stock at a price of $0.15 per share. The shares
owned by the selling shareholders may be sold at prices and terms then
prevailing or at prices related to the then-current market price, or in
negotiated transactions.
We will not receive any proceeds from the sale of the common stock by the
selling stockholders. We will pay for the expenses of this offering, which are
estimated to be $95,000, of which approximately $84,000 has been paid as of the
date of this prospectus.
As of the date of this prospectus there was no public market for our
common stock. As of the date of this prospectus, an application had not been
made to have our common stock quoted on the OTC Bulletin Board.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
accuracy or adequacy of this prospectus. Any representation to the contrary is a
criminal offense.
THESE SECURITIES ARE SPECULATIVE AND INVOLVE A HIGH DEGREE OF RISK. FOR A
DESCRIPTION OF CERTAIN IMPORTANT FACTORS THAT SHOULD BE CONSIDERED BY
PROSPECTIVE INVESTORS, SEE "RISK FACTORS" BEGINNING ON PAGE 4 OF THIS
PROSPECTUS.
The date of this prospectus is _______________
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SUMMARY
THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY THE MORE DETAILED
DESCRIPTIVE INFORMATION APPEARING ELSEWHERE IN THIS PROSPECTUS. PROSPECTIVE
INVESTORS SHOULD CAREFULLY READ THE ENTIRE PROSPECTUS AND SHOULD CONSIDER, AMONG
OTHER FACTORS, THE MATTERS SET FORTH UNDER THE "RISK FACTORS."
Naprodis, Inc.
We were incorporated in Nevada in June 1999. Since September 2000 we have
been in the business of developing, manufacturing and marketing nutritional and
personal care products. Our executive offices are located at 13000 Danielson
St., Suite J, 13250 Gregg St. Suite F Poway, CA 92064. Our telephone number is
(858) 486-8655.
As of July 31, 2010, we had 4,990,000 outstanding shares of common stock.
Our website is: www.naprodis.com.
The Offering
By means of this prospectus:
We are offering to sell up to 3,500,000 shares of common stock at a price
of $.15 per share, and
If and when our common stock becomes quoted on the OTC Bulletin Board or
listed on a securities exchange, and after we terminate our offering, a number
of our shareholders may offer to sell, by means of this prospectus, up to
1,150,000 shares of common stock at a price of $0.15 per share. The shares owned
by the selling shareholders may be sold at prices and terms then prevailing or
at prices related to the then-current market price, or in negotiated
transactions.
We intend to use the net proceeds from the sale of the shares we are
offering for general and administrative expenses, purchase of inventory,
research and development, marketing, and new equipment.
The purchase of the securities offered by this prospectus involves a high
degree of risk. Risk factors include our history of losses and the need for
additional capital. See "Risk Factors" beginning on page 3 of this prospectus
for additional Risk Factors.
Forward Looking Statements
This prospectus contains various forward-looking statements that are based
on our beliefs as well as assumptions made by and information currently
available to us. When used in this prospectus, the words "believe", "expect",
"anticipate", "estimate" and similar expressions are intended to identify
forward-looking statements. Such statements are subject to certain risks,
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uncertainties and assumptions which could cause actual results to differ
materially from our projections or estimates. Factors which could cause actual
results to differ materially are discussed at length under the heading "Risk
Factors". Should one or more of the enumerated risks or uncertainties
materialize, or should underlying assumptions prove incorrect, actual results
may vary materially from those anticipated, estimated or projected. Investors
should not place undue reliance on forward-looking statements, all of which
speak only as of the date made.
RISK FACTORS
The securities being offered involve a high degree of risk. Prospective
investors should consider the following risk factors which affect our business
and this offering. These risk factors discuss all material risks which pertain
to an investment in our Company. If any of the risks discussed below
materialize, our common stock could decline in value or become worthless.
Risk Factors Related to this Offering
AS OF THE DATE OF THIS PROSPECTUS THERE WAS NO PUBLIC MARKET FOR OUR
COMMON STOCK AND IF NO PUBLIC MARKET DEVELOPS, PURCHASERS OF THE SHARES OFFERED
BY THIS PROSPECTUS MAY BE UNABLE TO SELL THEIR SHARES. Although we plan to have
our shares quoted on the OTC Bulletin Board after the termination of our
offering, we may not be successful in this regard. Even if a public market for
our common stock develops, trading may be sporadic and the quoted price for our
common stock could be volatile.
SHOULD A MARKET FOR OUR COMMON STOCK EVER DEVELOP, DISCLOSURE REQUIREMENTS
PERTAINING TO PENNY STOCKS MAY REDUCE THE LEVEL OF TRADING ACTIVITY IN THE
MARKET FOR OUR SHARES AND INVESTORS MAY FIND IT DIFFICULT TO SELL THEIR SHARES.
Trades of our common stock, should a market ever develop, will be subject to
Rule 15g-9 of the Securities and Exchange Commission, which rule imposes certain
requirements on broker/dealers who sell securities subject to the rule to
persons other than established customers and accredited investors. For
transactions covered by the rule, brokers/dealers must make a special
suitability determination for purchasers of the securities and receive the
purchaser's written agreement to the transaction prior to sale. The Securities
and Exchange Commission also has 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 that security is provided by the exchange or system). The penny
stock rules require a broker/ dealer, prior to a transaction in a penny stock
not otherwise exempt from the rules, to deliver a standardized risk disclosure
document prepared by the Commission that provides information about penny stocks
and the nature and level of risks in the penny stock market. The broker/dealer
also must provide the customer with current bid and offer quotations for the
penny stock, the compensation of the broker/dealer and its salesperson in the
transaction, and monthly account statements showing the market value of each
penny stock held in the customer's account. The bid and offer quotations, and
the broker/dealer and salesperson compensation information, must be given to the
customer orally or in writing prior to effecting the transaction and must be
given to the customer in writing before or with the customer's confirmation.
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BECAUSE THERE IS NO PUBLIC MARKET FOR OUR COMMON STOCK, THE PRICE FOR THE
SHARES WE ARE OFFERING WAS ARBITRARILY ESTABLISHED, DOES NOT BEAR ANY
RELATIONSHIP TO OUR ASSETS, BOOK VALUE OR NET WORTH, AND MAY BE GREATER THAN THE
PRICE WHICH INVESTORS IN THIS OFFERING MAY RECEIVE WHEN THEY RESELL OUR SHARES.
Accordingly, the offering price of our common stock should not be considered to
be any indication of the value of our shares. The factors considered in
determining the offering price include our future prospects and the likely
trading price for our common stock if a public market ever develops.
EVEN IF ALL SHARES OFFERED BY THIS PROSPECTUS ARE SOLD, OUR PRESIDENT AND
A COMPANY AFFILIATED WITH ONE OF OUR DIRECTORS WILL OWN APPROXIMATELY 58% OF OUR
OUTSTANDING SHARES AND WILL BE ABLE TO CONTROL ALL ASPECTS OF OUR OPERATIONS. As
a result, investors in this offering will not have the ability to elect any of
our directors or to adopt any resolution at any meeting of our shareholders.
THE ISSUANCE OF PREFERRED STOCK COULD BE DETRIMENTAL TO THE HOLDERS OF OUR
COMMON STOCK. Our directors have the authority, without shareholder approval, to
issues shares of preferred stock in one or more series and to establish the
voting powers, preferences, rights, qualifications, limitations and restrictions
of each series of preferred stock. Our directors may issue preferred stock with
multiple votes per share and dividend rights which would have priority over any
dividends paid to the holders of our common stock. The issuance of preferred
stock with these rights may make the removal of management difficult even if the
removal would be considered beneficial to our shareholders generally, and would
have the effect of limiting shareholder participation in transactions such as
mergers or tender offers if these transactions are not favored by our
management.
THE PRICE OF THE STOCK PURCHASED BY INVESTORS MAY BE NEGATIVELY IMPACTED
BECAUSE THERE IS NO MINIMUM AMOUNT OF SHARES TO BE SOLD PURSUANT TO THIS
OFFERING.
Risk Factors Related to our Business
OUR FAILURE TO OBTAIN CAPITAL MAY SIGNIFICANTLY RESTRICT OUR PROPOSED
OPERATIONS. We need additional capital to expand our business. Our offering is
being conducted on a "best efforts" basis. There is no minimum amount which is
required to be raised in our offering and all proceeds from the sale of the
shares will be delivered to us. If only a small number of shares are sold the
amount received from this offering may provide us little benefit. Even if all
shares offered are sold, we may need additional capital. Our issuance of equity
or equity-related securities to raise capital will dilute the ownership interest
of existing shareholders.
WE RELY ON TWO CUSTOMERS FOR A SIGNIFICANT AMOUNT OF OUR SALES AND THE
LOSS OF EITHER OF THESE CUSTOMERS WOULD HURT OUR BUSINESS. During the year ended
August 31, 2009 and the nine months ended May 31, 2010 two customers accounted
for 91 % and 91__%, respectively, of our total revenues. Either or both of these
customers could at any time choose to buy products and services from any of our
competitors.
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OUR FUTURE SALES COULD BE AFFECTED BY A NUMBER OF FACTORS WHICH ARE BEYOND
OUR CONTROL. We may have difficulty increasing our sales as the business of
developing and distributing nutritional and personal care products is highly
competitive. Many of our competitors are substantially larger than we are and
have greater financial resources and broader name recognition. The nutritional
supplement market may not be as large as we think and expected growth in this
market may not continue. A decline in the sales of nutritional supplements could
have a material averse effect on our business.
NONE OF OUR PRODUCTS ARE PROTECTED BY PATENTS AND COMPETITORS COULD
POTENTIALLY COPY OUR PRODUCTS. The labeling regulations governing our
nutritional supplements require that the ingredients of our products be
precisely and accurately indicated on product containers. Accordingly, patent
protection for nutritional supplements often is impractical given the large
number of manufacturers which produce nutritional supplements having many active
ingredients in common. Additionally, the nutritional supplement industry is
characterized by rapid change and frequent reformulations of products as the
body of scientific research and literature refines current understanding of the
application and efficacy of certain substances and interactions among various
substances. Our efforts to protect our trade secrets and other intellectual
property may not be successful. In addition third parties may assert claims
against us for infringement of the proprietary rights of others. If an
infringement claim is asserted, we may be required to obtain a license of such
rights, pay royalties on a retrospective or prospective basis or terminate the
manufacturing and marketing of our products that are alleged to have infringed.
Claims from third parties or litigation involving infringement claims could
result in substantial costs and diversion of management and other resources and
could have a material adverse effect on our business, financial condition and
operating results.
THE LOSS OF OUR PRESIDENT WOULD ADVERSELY AFFECT OUR BUSINESS. We depend
on the services of our founder, Dr. Paul Petit who serves as our President and
Chief Executive Officer. We do not have an employment agreement with Dr. Petit
and we do not carry key man life insurance on Dr. Petit. The loss or limitation
of Dr. Petit's services would have a material adverse effect upon our business,
financial condition and results of operations.
SINCE WE HAVE NO FORMAL AGREEMENTS WITH OUR MANUFACTURERS AND SUPPLIERS,
THE TERMS OF SUCH INFORMAL AGREEMENTS MAY CHANGE WHICH COULD NEGATIVELY AFFECT
OUR REVENUES.
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DILUTION AND COMPARATIVE SHARE DATA
As of July 31, 2010 we had 4,990,000 outstanding shares of common stock,
which had a book value as of that date of approximately $0.03 per share. If all
shares we are offering are sold (of which there can be no assurance), investors
will own 3,500,000 shares or approximately 46% of our common stock, for which
they will have paid $525,000 and our present shareholders will own approximately
54% of our common stock. If less than all shares offered are sold, the
percentage ownership of the investors in this offering will be less and the
dilution to the investors will be grater than if all shares offered were sold.
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The following table illustrates per share dilution and the comparative
stock ownership of our stockholders as compared to the investors in this
offering, based upon the number of shares sold.
Shares outstanding as of July 31, 2010 4,990,000 4,990,000 4,990,000 4,990,000
Shares to be sold in this offering 500,000 1,000,000 2,000,000 3,500,000
Shares to be outstanding upon completion
of offering 5,490,000 5,990,000 6,990,000 8,490,000
Tangible book value per share at as of
July 31, 2010 $0.02 $0.02 $0.02 $0.02
Offering price, per share $0.15 $0.15 $0.15 $0.15
Net tangible book value after offering $0.03 $0.04 $0.06 $0.08
Dilution to investors in this offering $0.12 $0.11 $0.09 $0.07
Gain to existing shareholders $0.01 $0.02 $0.04 $0.06
Equity ownership by investors in this offering 11% 19% 33% 46%
Equity ownership by present shareholders
after this offering 89% 81% 67% 54%
We do not have any outstanding options, warrants or similar securities
which could allow for the purchase of additional shares of our common stock.
USE OF PROCEEDS
The following table shows the intended use of the proceeds of this
offering, depending upon the number of shares sold:
Gross Offering Proceeds
-------------------------------------------
$75,000 $150,000 $300,000 $525,000
General and administrative expenses 4000 18,000 97,000 195,000
Purchase of raw materials 25,000 50,000 95,000 125,000
Marketing 20,000 40,000 60,000 125,000
Research and development 5,000 6,000 7,000 14,000
Manufacturing equipment and
building improvements 10,000 25,000 30,000 55,000
Offering Expenses 11,000 11,000 11,000 11,000
--------- ---------- ------- -------
$ 75,000 $150,000 $300,000 $525,000
======== ======== ======== ========
If less than $75,000 is raised in this offering, the offering proceeds
will be allocated in the following priority:
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o Offering Expenses 11,000
o General and administrative expenses 4000
o Purchase of raw materials 25,000
o Research and development 4,000
o Marketing 15,000
o Manufacturing equipment and building improvements 5,000
The total estimated expenses of this offering are approximately $119,000.
As of July 31, 2010 we had paid approximately $109,337 of these expenses with
cash which we received from the private sale of our common stock ($115,000). The
remaining expenses of this offering will be paid from the proceeds of this
offering and cash generated from our operations.
During the twelve months ended August 31, 2009 and the nine months ended
July 31, 2010, approximately 85% and 83%, respectively, of our gross product
sales were derived from the sale of the products which we manufactured. If at
least $ 150,000_ is raised in this offering, we will purchase additional
equipment and improve our manufacturing facility so that we eventually will be
able to manufacture products which would represent approximately 90% of our
gross sales.
None of the proceeds from this offering will be used to pay any amounts
owed to any officer or director or to any entity affiliated with any officer or
director.
The projected expenditures shown above are only estimates or
approximations and do not represent a firm commitment by us. To the extent that
the proposed expenditures are insufficient for the purposes indicated,
supplemental amounts required may be drawn from other categories of estimated
expenditures, if available. Conversely, any amounts not expended as proposed
will be used for general working capital.
We anticipate that our capital requirements for the twelve months ending
August 31, 2011 will be approximately $150,000. See "Management's Discussion and
Analysis and Plan of Operation" for more information concerning our anticipated
capital requirements.
There is no commitment by any person to purchase any of the shares of
common stock which we are offering and there can be no assurance that any shares
will be sold.
As of the date of this prospectus we did not have any commitments from
any person to provide us with any additional capital and there can be no
assurance that additional capital will be available to us in the future.
Pending expenditure of the proceeds of the offering substantially in the
manner described above, we will make temporary investments in interest-bearing
savings accounts, certificates of deposit, United States government obligations
and/or money market instruments.
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MARKET FOR COMMON STOCK.
Our common stock is not quoted on any exchange and there is no public
trading market.
As of July 31, 2010, we had 4,990,000 outstanding shares of common stock
and nine shareholders of record. We do not have any outstanding options,
warrants or other arrangements providing for the issuance of additional shares
of our capital stock.
Holders of our common stock are entitled to receive dividends as may be
declared by our Board of Directors. The Board of Directors is not obligated to
declare a dividend. No dividends have ever been declared and we do not
anticipate or intend upon paying dividends for the foreseeable future.
Our Articles of Incorporation authorize our Board of Directors to issue up
to 10,000,000 shares of preferred stock. The provisions in the Articles of
Incorporation relating to the preferred stock allow our directors to issue
preferred stock with multiple votes per share and dividend rights which would
have priority over any dividends paid with respect to the holders of our common
stock. The issuance of preferred stock with these rights may make the removal of
management difficult even if the removal would be considered beneficial to
shareholders generally, and will have the effect of limiting shareholder
participation in certain transactions such as mergers or tender offers if these
transactions are not favored by our management.
MANAGEMENT'S DISCUSSION AND ANALYSIS
AND PLAN OF OPERATIONS
Material changes of certain items in our Statement of Operations for the
year ended August 31, 2009, as compared to the same period last year, are
discussed below:
Increase (I)
Item or Decrease (D) Reason
Revenues I Opened new store orders with new line
Salaries and wages I Hired additional employees to fill and
ship orders
Other general and I Increased administrative activity
administrative expenses associated with increased sales and the
management of employees.
Material changes of certain items in our Statement of Operations for the
nine months ended May 31, 2010, as compared to the same period last year, are
discussed below:
Increase (I)
Item or Decrease (D) Reason
Revenues I Opened new store orders with new line
Gross Profit as a percent
of total revenue I Increased in-house manufacturing
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Salaries and Wages I Additional employees required to fill
and ship orders and increase in wages.
Other general and
administrative expenses I New facility required to expand our
line and increase our manufacturing
capabilities
The following is an explanation of our material sources and (uses) of cash
during the years ended August 31, 2009 and 2008:
2009 2008
---- ----
Cash provided by operations $18,136 $16,833
Purchase of equipment (13,278) (8,827)
Bank overdraft (5,182) 5,182
Loans from related party________ 15,755 5,951
Payment of amounts owed to Paul Petit (6,000) (26,219)
The following is an explanation of our material sources and (uses) of cash
during the nine months ended May 31, 2010 and 2009:
2010 2009
---- ----
Cash provided by operations $ 5,116 $18,136
Purchase of equipment 16,160 (13,275)
Bank overdraft 0 (5,182)
Loan from related party 27,347 15,755
Payments of amounts owed to Paul Pettitt 0 (6,000)
We do not know of any trends, events or uncertainties that have had, or
are reasonably expected to have, a material impact on our sales, revenues or
income from continuing operations, or liquidity and capital resources.
The total estimated expenses of this offering are approximately $119,000.
As of July 31, 2010 we had paid approximately $109,337 of these expenses with
cash which we received from the private sale of our common stock ($115,000). The
remaining expenses of this offering will be paid from the proceeds of this
offering or cash from generated from our operations. As of July 31, 2010 we had
cash on hand of approximately $14,000.
During the twelve months following the date of the prospectus, we plan to
expand our manufacturing facility, at a cost of approximately $35,000.
For at least one year following the date of this prospectus we will have
expenses, which we estimate will be at least $25,000, associated with preparing
reports on Forms 10-Q and 10-K.
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If less than $150,000 is raised from this offering, we will attempt to
raise additional capital through the private sale of our equity securities or
borrowings from third party lenders. We do not have any commitments or
arrangements from any person to provide us with any additional capital. If
additional financing is not available when needed, we may need to change our
business plan. We do not have any plans, arrangements or agreements to sell or
merge with another company.
BUSINESS
General
We were incorporated in Nevada in June 1999.
Since September 2000 we have been in the business of selling nutritional
and personal care products. We distribute our products primarily through private
label resellers and through spas, beauty salons, health professionals, and
health and beauty stores. As of the date of this prospectus our products were
being sold in the United States and Canada along with several foreign countries.
We rely upon referrals from our customers and our website to market our
products. We are not a blank check company required to comply with Rule 419 of
the Securities and Exchange Commission.
Although we sell more than 400 products, sales of the following products
represented the largest amount of our gross product sales during the year ended
August 31, 2009 and the nine months ended May 31, 2010.
Product Name Description
Aromune Water-based drink additive. Aromune contains oils
which can potentially enhance the immune response of
the body.
Nelboma Liniment Oil which is applied to skin to reduce
inflammations
Regenerative Cream Moisturizing face cream
Bronathome Throat spray to treat infections
Green Clay Clay applied to skin to drain and detoxify
tumors, abscesses and cysts.
Sulfate-Free Shampoo Organic and Ecocert approved ingredients with no
sulfates
Wet Shave Paste Men's shaving cream.
Oblige by Nature New line of organic Personal Care Products
Kinarome New line of Aromatherapy products (4 products)
We manufacture all of the products listed above, with the exception of the
Regenerative Cream and Eye cream. These two products are supplied to us by
unrelated third parties.
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During the year ended August 31, 2009, and the nine months ended May 31,
2010, none of our customers accounted for more than 5% of our total revenues.
Our products include nutritional supplements that are made from vitamins,
minerals, herbs and other substances for which there is a long history of human
consumption. Some of our products contain innovative ingredients or combinations
of ingredients. Although we believe all of our products to be safe when taken as
directed, there is little long-term experience with human consumption of certain
of these product ingredients or combinations of ingredients in concentrated
form. We conduct research and test the formulation and production of our
products, but we have not performed or sponsored any clinical studies relating
to our products. Furthermore, because we are highly dependent on consumers'
perception of the efficacy, safety and quality of our products, as well as
similar products distributed by other companies, we could be adversely affected
in the event those products should prove or be asserted to be ineffective or
harmful to consumers or in the event of adverse publicity associated with
illness or other adverse effects resulting from consumers use or misuse of our
products or a competitor's similar products.
Manufacturing and Product Supply
Our manufacturing facility is located in Poway, California and consists of
12,000 square feet of space. During the twelve months ended August 31, 2009 and
the nine months ended May 31, 2010, approximately 85_% and 87_% respectively, of
our gross product sales, with the exception of sales of raw materials, were
derived from the sale of products which we manufactured.
We believe that our ability to manufacture a significant portion of our
products is an advantage for the following reasons:
o We are able to better control the quality of raw materials and the
purity and potency of finished products.
o We can more reliably monitor the manufacturing process to reduce the
risk of product contamination, and
o We believe we can continually lower the costs associated with
manufacturing our products.
We use Manley Herbals to manufacture most of our products. Manley Herbals
is located in San Francisco and is not affiliated with us. We do not have any
written agreements with Manley Herbals or Joint Adventure Co.
If we can raise approximately $525,000 from this offering, or from other
sources, we plan to purchase additional equipment and improve our manufacturing
facility so that we eventually will be able to manufacture products which would
represent approximately 90% of our gross sales.
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None of the ingredients to any of our products is proprietary. Most of the
raw ingredients used in the manufacture of our products are available from a
number of suppliers. We have not generally experienced difficulty in obtaining
necessary quantities of raw ingredients for our products and we believe that
alternative sources of raw materials are readily available. We do not have any
agreements with any company to supply us with the raw ingredients we need to
manufacture our products.
We can customize our products depending on the preferences of our
customers. To customize a product, we will normally add or remove essential oils
or botanic extracts from our standard products. For large customers, we can
produce any product desired from raw materials available to us.
Distribution
We sell our products through the following channels:
Private Label Resellers - Our products are sold to spas, beauty salons
and other companies that repackage the
products under their own label.
Bulk Distribution - Raw materials used in our products are sold
to spas, beauty salons, health professionals
and health and beauty stores.
Internet - Sales are made through our website,
www.naprodis.com.
Retail - Mainly health food stores.
During the periods presented the percent of our sales through each
distribution channel were:
Year Ended Nine Months Ended
August 31, 2009 May 31, 2010
--------------- -----------------
Private Label Resellers 91% 89%
Bulk Distribution 7% 8%
Internet 1% 2%
Retail 1% 1%
During the next twelve months we will attempt to sell our products to
large health food store chains which have a regional or national presence. We
also plan to manufacture and sell shampoo, conditioners and skin care products
to beauty salons, which will resell the products under their own label.
Competition
The business of developing and distributing nutritional and personal care
products is highly competitive. Numerous manufacturers, distributors and
retailers compete for consumers. We compete with these entities by emphasizing
the underlying science, value and high quality of our products. However, many of
12
our competitors are substantially larger than we are and have greater financial
resources and broader name recognition. Our market is highly sensitive to the
introduction of new products that may rapidly capture a significant share of
those markets.
The nutritional supplement market may not be as large as we think and
expected growth in this market may not continue. Market data and projections are
inherently uncertain and subject to change. In addition, underlying market
conditions are subject to change based on economic conditions, consumer
references and other factors that are beyond our control. A slow-down in sales
of nutritional supplements could have a material adverse effect on our business,
financial condition or results of operations.
The nutritional supplement market is characterized by:
o Large selections of essentially similar products that are difficult to
differentiate,
o Retail consumer emphasis on value pricing,
o Constantly changing formulations based on evolving scientific
research,
o Low entry barriers resulting from low brand loyalty, rapid change,
widely available manufacturing, low regulatory requirements and ready
access to large distribution channels, and
o A lack of uniform standards regarding product ingredient sources,
potency, purity, absorption rate and form.
We may not be able to effectively compete in this intensely competitive
environment. In addition, nutritional and personal care products can be
purchased in a wide variety of channels of distribution, including retail
stores. Our products are relatively few compared to the wide variety of products
offered by many of our competitors. As a result, our ability to remain
competitive depends in part upon the successful introduction of new products and
enhancements of existing products.
Leading competitors in the nutritional and personal care product market
include Herbalife International, Inc., Nature's Sunshine Products, Inc., Twinlab
Corporation, Weider Nutrition, NBTY and Nu Skin International, Inc. We believe
that sales of organic nutritional and personal care products in 2009 exceeded
$1.65 billion. At the present time, we are an insignificant participant in this
market.
Intellectual Property
Our products are not protected by any patents or federal or state
trademarks.
However, we claim certain product names, and unregistered trademarks under
common law. Common law trademark rights do not provide the same level of
protection afforded by registration of a trademark. In addition, common law
trademark rights are limited to the geographic area in which the trademark is
actually used. We believe these trademarks, whether registered or claimed under
common law, constitute valuable assets, adding to the recognition of
13
our products. We therefore believe that these proprietary rights have been and
will continue to be important in enabling us to compete.
We also own certain trade secrets that we try to protect, primarily those
pertaining to the formulas for some of our products. There can be no assurance
that our trade secrets will not otherwise become known to or independently
developed by competitors.
Research and Development
During the past two years our research and development expenses have been
less than $1,500.
However, we believe that in order to be competitive we will need to commit
to continuous product innovation and improvement through research. Our research
efforts will combine in-house research, published research, and clinical studies
and will involve the following:
- Investigation of the in vitro activity of new natural extracts,
- Identification and research of combinations of nutrients that
may be suitable for new products,
- Analysis of the benefits of existing and newly identified
nutritional supplements,
- Improvement of existing products following new discoveries in
nutrition, and
- Improvements to our manufacturing process.
Government Regulation
The manufacturing, packaging, labeling, advertising, promoting,
distributing, and the selling of our products are subject to regulation by
numerous governmental agencies in the United States and other countries. In the
United States, the FDA regulates our products under the Food, Drug, and Cosmetic
Act ("FD&C") and regulations promulgated under the act. Our products are also
subject to regulation by, among others, the Consumer Product Safety Commission,
the US Department of Agriculture, and the Environmental Protection Agency.
Advertising of our products is regulated by the Federal Trade Commission ("FTC")
under the FTC Act. The manufacturing, labeling, and advertising of products are
also regulated by various governmental agencies in each foreign country in which
we distribute products.
The majority of our products are regulated as dietary supplements under
the FD&C. Dietary supplements are also regulated under the Dietary Supplement
Health and Education Act of 1994 ("DSHEA").
Under these regulations, a dietary supplement that contains a new dietary
ingredient (defined as an ingredient not on the market before October 15, 1994)
must have a history of use or other evidence of safety establishing that it is
reasonably expected to be safe. The manufacturer must notify the FDA at least 75
days before marketing products containing new
14
dietary ingredients and provide the FDA with the information upon which the
manufacturer based its conclusion that the product has a reasonable expectation
of safety.
We believe that we currently manufacture our dietary supplement products
according to the standards of the FDA's drug-level Good Manufacturing Practices.
However, we may be required to expend additional capital and resources on
manufacturing controls in the future in order if more stringent GMP's are
adopted.
Other products we market include cosmetics and products deemed to be
over-the-counter ("OTC") drugs. In general, our cosmetic products currently are
not subject to pre-market approval by the FDA. However, cosmetics are subject to
regulation by the FDA under the FD&C adulteration and misbranding provisions.
Cosmetics also are subject to specific labeling regulations, including warning
statements if the safety of a cosmetic is not adequately substantiated or if the
product may be hazardous, as well as ingredient statements and other packaging
requirements under the Fair Packaging and Labeling Act. Cosmetics that meet the
definition of a drug (i.e., that are intended to treat or prevent disease or
affect the structure or function of the body), such as medicated shampoos, are
regulated as drugs. OTC drug products may be marketed if they conform to the
requirements of the OTC monograph that is applicable to that drug. Drug products
not conforming to monograph requirements require an approved New Drug
Application ("NDA") before marketing. Under these provisions, if the agency were
to find that a product or ingredient of one of our OTC drug products is not
generally recognized as safe and effective or does not include it in a final
monograph applicable to one of our OTC drug products, we will have to
reformulate or cease marketing that product until it is the subject of an
approved NDA or until the time, if ever, that the monograph is amended to
include the product. If the rule becomes final, we would have to stop marketing
the product as currently formulated. Whether or not an OTC drug product conforms
to a monograph or is subject to an approved NDA, the drug must comply with other
requirements under the FD&C including GMP's, labeling, and the FD&C misbranding
and adulteration provisions.
Advertising of products is subject to regulation by the FTC under the FTC
Act. The FTC Act prohibits unfair methods of competition and unfair or deceptive
acts or practices in or affecting commerce. The FTC Act also provides that the
dissemination of or causing to be disseminated any false advertisement
pertaining to drugs or foods, which would include dietary supplements, is an
unfair or deceptive act or practice. Under the FTC's Substantiation Doctrine, an
advertiser is required to have a "reasonable basis" for all objective product
claims before the claims are made. Failure to adequately substantiate claims may
be considered either deceptive or unfair practices. Pursuant to this FTC
requirement, we are required to have adequate substantiation for all material
advertising claims made for our products. Although we believe our product claims
comply with the law, we may need to revise some product labeling at a future
date.
The FTC may enforce compliance with the law in a variety of ways, both
administratively and judicially, using compulsory process, cease and desist
orders, and injunctions. FTC enforcement can result in orders requiring, among
other things, limits on advertising, corrective advertising, consumer redress,
divestiture of assets, rescission of contracts, and such other relief as the
agency deems necessary to protect the public. Violation of
15
these orders could result in substantial financial or other penalties. We have
not been the subject of any action by the FTC, but any action in the future by
the FTC could materially adversely affect our ability to successfully market
its products.
In markets outside the United States, prior to commencing operations or
marketing products, we may be required to obtain approvals, licenses, or
certifications from a country's ministry of health or comparable agency.
Approvals or licensing may be conditioned on reformulation of our products for
the market or may be unavailable with respect to certain products or product
ingredients. We must also comply with local product labeling and packaging
regulations that vary from country to country.
We cannot predict the nature of any future laws, regulations,
interpretations, or applications, nor can we determine what effect additional
governmental regulations or administrative orders, when and if promulgated,
would have on our business in the future. They could include, however,
requirements for the reformulation of certain products to meet new standards,
the recall or discontinuation of certain products that cannot be reformulated,
additional record keeping, expanded documentation of the properties of certain
products, expanded or different labeling, and additional scientific
substantiation. Any or all of these requirements could have a material adverse
effect on our business, financial condition and results of operations.
Employees
As of July 31, 2010 we had 13 full time employees and 14 part time
employees.
Facilities
Our offices and manufacturing facility are located at 13000 Danielson St.,
Suite K, 13250 Gregg St. Suite F, Poway, CA 92064 and consist of 12,000 2,000
square feet which we rent for approximately $12,000 per month. The lease on this
space expires on February 2015. The space we currently occupy is expected to be
adequate to meet our foreseeable future needs.
MANAGEMENT
Name Age Title
---- --- -----
Dr. Paul F. Petit 58 President, Principal Financial Officer, Principal
Accounting Officer and a Director
Jean-Philippe Petit 28 Vice President, Principal Operating Officer
Alain S. Petit 47 Vice President and IT Director
Kelley A. Thompson 43 Production Manager
Dr. Paul Petit has served as our President, Chief Executive Officer and as
a director since September 2000. Prior to his association with us, Dr. Petit was
employed with S.A.R.L. NAPRODIS France. Dr. Petit is a Certified Chiropractic
Sport Physician, a Phyto-aromatherapist, a Naturopath and a Psychologist. Dr.
Petit was in private practice in France from
16
1978 to 1985, was Director of the "Centre Chiropractique de l'Anjou" in France
from 1985 to 1994, and was an independent parapharmaceutical consultant from
1994 to 1997. Dr. Petit was Director of Technical Services and Research at
Phybiosis between 1997 and 2000.Although Dr Petit received a degree in finance
and accounting from the Institute of Technology in Angers, France, Dr. Petit
has not had any practical experience in accounting and financial reporting
during the past five years.
Jean-Philippe Petit has been our Vice President and Chiel Operating
Officer since 2008. He has an Engineering degree in Chemistry and has been
providing the company with operational expertise.
Alain S. Petit has been our Vice President and a director since 2000.
Between 2000 and 2001 Mr. Petit provided consulting advice in the areas of
computer networking, internet applications and information technology. Since
2002 Mr. Petit has been employed by Capital One Bank One in Richmond, Virginia
in their computer information technology department.
Kelley A. Thompson has been our production manager since May 2003.
Dr. Petit may be considered a "promoter," as that term is defined in the
rules and regulations of the Securities and Exchange Commission. Our directors
are elected to hold office until the next annual meeting of shareholders and
until their successors have been elected and qualified. Our executive officers
are elected by the Board of Directors and hold office until resignation or
removal by the Board of Directors.
Dr. Paul Petit and Alain Petit are brothers. Dr. Paul Petit is the husband
of Kelley Thompson.
Jean-Philippe Petit is the son of Paul Petit. Jean-Philippe Petit devotes
100% of his time to our business.
Dr. Petit and Ms. Thompson devote 100% of their time to our business.
Alain Petit allocates approximately 10% of his time to our business.
Executive Compensation
The following table sets forth in summary form the compensation received
by our Chief Executive Officer. None of our officers have ever received in
excess of $100,000 in compensation during any fiscal year.
17
Stock Option All Other
Name and Principal Salary Bonus Awards Awards Compensation
Position Period (1) (2) (3) (4) (5) Total
------------------ ------ ------ ----- ------ ------ ------------ -----
Paul Petit, 2009 76,115 -- -- -- -- 76,115
President and 2008 33,000 -- -- -- -- 33,000
Chief Executive 2007 33,000 -- -- -- -- 33,000
Officer
We do not have any consulting or employment agreements with any of our
officers or directors. We may in the future compensate our officers for past
services. However, we have not determined what amount may be paid in this
respect and none of the proceeds from this offering will be used to pay our
officers for compensation which is accrued but unpaid as of the date of this
prospectus. As of the date of this prospectus, the Company had no immediate
plans to pay compensation for past services.
Our board of directors may increase the compensation paid to our officers
depending upon a variety of factors, including the results of our future
operations.
The following table shows the amount which we expect to pay to our
executive officers during the twelve months ending August 31, 2011 and the
amount of time these officers expect to devote to our business.
Percentage of Time
Projected to be Devoted
Name Compensation to Our Operations
Paul Petit 95,000 100%
Jean-Philippe Petit 60,000 100%
Alain Petit 0 10%
Kelley Thompson 60,000 100%
Stock Options. We have not granted any stock options a of the date of
this prospectus. In the future, we may grant stock options to our officers,
directors, employees or consultants.
Long-Term Incentive Plans. We do not provide our officers or employees
with pension, stock appreciation rights, long-term incentive or other plans and
have no intention of implementing any of these plans for the foreseeable future.
Employee Pension, Profit Sharing or other Retirement Plans. We do not have
a defined benefit, pension plan, profit sharing or other retirement plan,
although we may adopt one or more of such plans in the future.
Compensation of Directors. Our directors do not receive any compensation
pursuant to any standard arrangement for their services as directors. Although
our bylaws permit us to pay our directors for attending meetings, we do not
compensate our directors for attending meetings.
18
Transactions with Related Parties and Recent Sales of Securities
In June 1999 we issued 1,200,000 restricted shares of common stock to Paul
Petit and 1,800,000 restricted shares of common stock to S.A.R.L. Naprodis for
services in organizing the Company. The services were valued at $100 in the case
of Dr. Petit and $150 in the case of S.A.R.L. Naprodis.
Between August and December 2003 we sold 1,150,000 shares of common stock
in a private offering at a price of $0.10 per share. By means of this prospectus
the purchasers of these shares are offering their shares for sale to the public.
See "Selling Shareholders" for more information.
Many of our products are sold under the brand name "Phybiosis." Phybiosis
is the name of a partnership that between 1991 and 2000 sold nutritional and
personal care products similar to those which we sell. After Phybiosis
discontinued sales in 2000 Phybiosis had inventory of raw materials on hand
which we purchase from time-to-time as the need arises. Purchases from Phybosis
during periods indicated were:
Nine months ended May 31, 2010: $11,172
Year ended August 31, 2009: $ 5,122
Year ended August 31, 2008: $ 7,636
Year ended August 31, 2007: $12,909
Paul Petit and Alain Petit, two of our officers and directors, are the
partners of Phybiosis.
S.A.R.L. Naprodis is a French corporation which owns 43% of our
outstanding shares. S.A.R.L. Naprodis supplies us with the essential oils, clay
and salt which we use in the manufacture of our products.
Purchases from S.A.R.L. Naprodis during periods indicated were:
Nine months ended May 31, 2010: $ 10,129
Year ended August 31, 2009: $ 8,756
Year ended August 31, 2008: $ 15,596
Year ended August 31, 2007: $ 33,821
Alain Petit owns 40% of S.A.R.L. Naprodis. The remaining 60% of S.A.R.L.
Naprodis is owned by persons who are not affiliated with us.
19
We purchase raw materials from Phybiosis and S.A.R.L. Naprodis at their
cost. We pay the shipping charges for any raw materials purchased from S.A.R.L.
Naprodis.
S.A.R.L. NAPRODIS has not purchased any products from us during the past three
years.
PRINCIPAL SHAREHOLDERS
The following table sets forth certain information regarding the ownership
of our common stock as of the date of this prospectus, by each shareholder known
by us to be the beneficial owner of more than 5% of our outstanding shares of
common stock, each director and executive officer and all directors and
executive officers as a group. Except as otherwise indicated, each shareholder
has sole voting and investment power with respect to the shares they
beneficially own.
Shares
Name and Address of Beneficially Percent of
Beneficial Owner Owned Class
------------------ ------------ ----------
Paul Petit 1,200,000 29%
13417 Orange Blossom Lane
Poway, CA 92064
Alain S. Petit -- (1) --
5409 Bennett Lane
Glen Allen, VA 23059
Kelly A. Thompson -- --
13417 Orange Blossom Lane
Poway, CA 92064
S.A.R.L. Naprodis 1,800,000 (1) 43%
Le Haut Marais
49370 St. Clement de la Place France
*All Executive Officers and
Directors as a group (3 persons) 3,000,000 72%
20
(1) S.A.R.L. Naprodis is a French corporation. Alain S. Petit owns 40% of
S.A.R.L. Naprodis. The remaining 60% of S.A.R.L. Naprodis is owned by
persons who are not affiliated with us.
OFFERING BY NAPRODIS
By means of this prospectus we are offering to the public up to 3,500,000
shares of our common stock at a price of $0.15 per share. We arbitrarily
determined the $0.15 offering price and this price does not bear any
relationship to our assets, book value or any other generally accepted criteria
of value for investment.
We will offer the shares through our officers, Paul Petit and Alain Petit,
on a "best efforts" basis. Paul Petit and Alain Petit are not registered with
the Securities and Exchange Commission as brokers or dealers. Paul Petit and
Alain Petit are not required to be registered as brokers or dealers since
neither Paul Petit or Alain Petit are engaged in the business of buying or
selling securities for others.
In addition, Paul Petit and Alain Petit will be relying on the exemption
provided by Rule 3a4-1 of the Securities and Exchange Commission with respect to
their participation in this offering. Rule 3a4-1 provides, in part, that an
officer of an issuer of securities will not be deemed to be a broker solely by
reason of his participation in the sale of the securities of the issuer if the
officer:
(1) Is not subject to a statutory disqualification, as that term is
defined in Section 3(a)(39) of the Securities Exchange Act of 1934, at the time
of his participation;
(2) Is not compensated in connection with his participation by the payment
of commissions or other remuneration based either directly or indirectly on
transactions in securities;
(3) Is not at the time of his participation an associated person of a
broker or dealer;
(4) The officer primarily performs, or is intended primarily to perform at
the end of the offering, substantial duties for or on behalf of the issuer
otherwise than in connection with transactions in securities;
(5) The officer was not a broker or dealer, or an associated person of a
broker or dealer, within the preceding twelve months; and
(6) The officer does not participate in selling an offering of securities
for any issuer more than once every twelve months.
Paul Petit and Alain Petit meet the requirements of Rule 3a4-1 since
neither Paul Petit nor Alain Petit:
21
o Are subject to a statutory disqualification, as that term is
defined in Section 3(a)(39) of the Securities Exchange Act of 1934;
o Will be compensated in connection with their participation in the
offering by the payment of commissions or other remuneration based
either directly or indirectly on the sale of our common stock; and
o Are an associated person of a broker or dealer.
In addition, both Paul Petit and Alain Petit:
o Perform, and will perform at the end of the offering, substantial
duties for or on behalf of us otherwise than in connection with the
offering;
o Have not been a broker or dealer, or an associated person of a
broker or dealer, within the preceding twelve months, and
o Have not participated in selling an offering of securities for any
issuer during the past twelve months.
We will not employ any brokers or sales agents to sell these shares and we
will not compensate any officer or third party for their participation in this
offering. There is no firm commitment by any person to purchase or sell any of
these shares and there is no assurance that any such shares offered will be
sold. All proceeds from the sale of the shares will be promptly delivered to us.
We plan to end the offering on December 31, 2010. However, we may at our
discretion end the offering sooner or extend the offering to January 31, 2011.
We have the right to refuse to accept subscriptions from any person for
any reason whatsoever. No subscription shall be deemed to be binding upon us
until accepted in writing by our President.
SELLING SHAREHOLDERS
The persons listed in the following table plan to offer the shares shown
opposite their respective names by means of this prospectus. The selling
shareholders acquired their shares from us in a private offering at a price of
$0.10 share.
We will not receive any proceeds from the sale of the shares by the
selling shareholders. The selling shareholders may resell the shares they
acquire by means of this prospectus from time to time in the public market. We
will pay all costs of registering the shares offered by the selling
shareholders, estimated to be $5,000. The selling shareholders will pay all
sales commissions and other costs of the sale of the shares offered by them.
22
Shares to Share
Be Sold Ownership
Shares in this After
Name Owned Offering Offering
Trevor Haywood 250,000 250,000 --
Alan A. Ligi 250,000 250,000 --
Socorro Austria 100,000 100,000 --
Archie Pavek 250,000 250,000 --
Kraig M. Butrum 100,000 100,000 --
Dr. Gary Chin 100,000 100,000 --
Dr. Stanley C. Lee 100,000 100,000 --
Manner of Sale
If and when our common stock becomes quoted on the OTC Bulletin Board the
shares of common stock owned by the selling shareholders may be offered and sold
by means of this prospectus from time to time as market conditions permit. The
shares owned by the selling shareholders may be sold in the over-the-counter
market, or otherwise, at prices and terms then prevailing or at prices related
to the then-current market price, or in negotiated transactions. These shares
may be sold by one or more of the following methods, without limitation:
o a block trade in which a broker or dealer so engaged will attempt to
sell the shares as agent but may position and resell a portion of the
block as principal to facilitate the transaction;
o purchases by a broker or dealer as principal and resale by such
broker or dealer for its account pursuant to this prospectus;
o ordinary brokerage transactions and transactions in which the
broker solicits purchasers; and
o face-to-face transactions between sellers and purchasers without a
broker/dealer.
In competing sales, brokers or dealers engaged by the selling shareholders
may arrange for other brokers or dealers to participate. Brokers or dealers may
receive commissions or discounts from selling shareholders in amounts to be
negotiated.
The selling shareholders and any broker/dealers who act in connection with
the sale of the shares may be deemed to be "underwriters" within the meaning of
ss.2(11) of the Securities Acts of 1933, and any commissions received by them
and any profit on any resale of the shares as principal might be deemed to be
underwriting discounts and commissions under the Securities Act. We have agreed
to indemnify the selling shareholders and any securities broker/dealers who may
be deemed to be underwriters against certain liabilities, including liabilities
under the Securities Act as underwriters or otherwise.
If any selling shareholder enters into an agreement to sell his shares to
a broker-dealer as principal, and the broker-dealer is acting as an underwriter,
we will file a post-effective amendment to the registration statement, of which
this prospectus is a part, identifying the
23
broker-dealer, providing required information concerning the plan of
distribution, and otherwise revising the disclosures in this prospectus as
needed. We will also file the agreement between the selling shareholder and
the broker-dealer as an exhibit to the post-effective amendment to the
registration statement.
We have advised the selling shareholders that they and any securities
broker/dealers or others who may be deemed to be statutory underwriters will be
subject to the prospectus delivery requirements under the Securities Act of
1933. We have also advised each selling shareholder that in the event of a
"distribution" of the shares owned by the selling shareholder, such selling
shareholder, any "affiliated purchasers", and any broker/dealer or other person
who participates in the distribution may be subject to Rule 102 under the
Securities Exchange Act of 1934 ("1934 Act") until their participation in that
distribution is completed. Rule 102 makes it unlawful for any person who is
participating in a distribution to bid for or purchase stock of the same class
as is the subject of the distribution. A "distribution" is defined in Rule 102
as an offering of securities "that is distinguished from ordinary trading
transactions by the magnitude of the offering and the presence of special
selling efforts and selling methods". We have also advised the selling
shareholders that Rule 101 under the 1934 Act prohibits any "stabilizing bid" or
"stabilizing purchase" for the purpose of pegging, fixing or stabilizing the
price of the common stock in connection with this offering.
DESCRIPTION OF SECURITIES
Our authorized capital consists of 60,000,000 shares of common stock and
10,000,000 shares of preferred stock. As of July 31, 2010, we had 4,150,000
outstanding shares of common stock. We have not issued any shares of preferred
stock and we do not have any plans to issue any shares of preferred stock.
Common Stock
All shares of common stock have equal voting rights and, when validly
issued and outstanding, are entitled to one vote per share in all matters to be
voted upon by shareholders. The shares of common stock have no preemptive,
subscription, conversion or redemption rights and may be issued only as
fully-paid and non-assessable shares. Cumulative voting in the election of
directors is not permitted; which means that the holders of a majority of the
issued and outstanding shares of common stock represented at any meeting at
which a quorum is present will be able to elect the entire Board of Directors if
they so choose. In that event, the holders of the remaining shares of common
stock will not be able to elect any directors. In the event of our liquidation,
each shareholder is entitled to receive a proportionate share of the assets
available for distribution to shareholders after the payment of liabilities and
after distribution in full of preferential amounts, if any, to be distributed to
holders of the preferred stock. All shares of our common stock issued and
outstanding are fully-paid and non-assessable. The shares offered by this
prospectus, when issued, will be fully-paid and non-assessable.
Holders of shares of common stock are entitled to share pro rata in
dividends and distributions with respect to the common stock when, as and if
declared by the Board of Directors out of funds legally available for dividends.
This is after requirements with respect to
24
preferential dividends on, and other matters relating to, the preferred stock,
if any, have been met. We have not paid any dividends on our common stock and
intend to retain earnings, if any, to finance the development and expansion of
our business. Future dividend policy is subject to the discretion of the Board
of Directors and will depend upon a number of factors, including future
earnings, capital requirements and our financial condition.
Preferred Stock
Shares of preferred stock may be issued from time to time in one or more
series as may be determined by our directors. Our directors have the authority
to establish the voting powers, preferences, rights, qualifications, limitations
and restrictions of each series of preferred stock. Our directors may issue
preferred stock with multiple votes per share and dividend rights which would
have priority over any dividends paid to the holders of our common stock. The
issuance of preferred stock with these rights may make the removal of management
difficult even if the removal would be considered beneficial to our shareholders
generally, and would have the effect of limiting shareholder participation in
transactions such as mergers or tender offers if these transactions are not
favored by our management. As of the date of this prospectus we had not issued
any shares of preferred stock.
Transfer Agent
As of July 31, 2010 we did not have a transfer agent for our common stock.
LEGAL PROCEEDINGS
We know of no legal proceedings to which we are a party or to which any of
our property is the subject that are pending, threatened or contemplated.
EXPERTS
Our balance sheet as of August 31, 2009, and the statements of operations,
stockholders' equity, and cash flows for the two years ended August 31, 2009,
have been included in this prospectus in reliance on the report of John
Kinross-Kennedy, an independent registered public accountant given on the
authority of Mr. Kinross-Kennedy as an expert in accounting and auditing.
INDEMNIFICATION
Pursuant to Section 78.751 of the Nevada Revised Statutes, we may
indemnify our officers and directors for various expenses and damages resulting
from their acting in these capacities. Insofar as indemnification for
liabilities arising under the Securities Act of 1933 may be permitted to our
officers or directors pursuant to those provisions, we have been informed that
in the opinion of the U.S. Securities and Exchange Commission the
indemnification is against public policy as expressed in the Securities Act of
1933, and is therefore unenforceable.
25
AVAILABLE INFORMATION
We have filed with the Securities and Exchange Commission a Registration
Statement on Form S-1 (together with all amendments and exhibits) under the
Securities Act of 1933, as amended, with respect to the Securities offered by
this prospectus. This prospectus does not contain all of the information set
forth in the Registration Statement, certain parts of which are omitted in
accordance with the rules and regulations of the Securities and Exchange
Commission. For further information, reference is made to the Registration
Statement which may be read and copied at the Commission's Public Reference Room
at 100 F Street, NE, Washington, DC 20549. The public may obtain information on
the operation of the Public Reference Room by calling the Commission at
1-800-SEC-0330. The registration statement is also available at www.sec.gov, the
website of the Securities and Exchange Commission.
26
NAPRODIS, INC.
AUDITED FINANCIAL STATEMENTS
For the year ended
August 31, 2009
John Kinross-Kennedy, C.P.A.
17848 Skypark Circle
Irvine, CA 92614-6401
(949) 955-2522. Fax (949)724-5087
jkinross@zamucen.com
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
John Kinross-Kennedy, CPA
17848 Skypark Circle
Irvine, CA 92614-6401
(949) 955-2522. Fax (949)724-3817
jkinross@zamucen.com
Member:
American Institute of CPAs
California Society of CPAs
To: The Board of Directors and Shareholders
Naprodis, Inc.
13250 Gregg Street, Suite F
Poway, California 92064
I have audited the accompanying balance sheet of Naprodis, Inc. as of August 31,
2009 and 2008 and the related statements of income, shareholders' equity and
cash flows for the years ended August 31, 2009 and 2008. These financial
statements are the responsibility of the Company's management. My responsibility
is to express an opinion on these financial statements based on my audit.
I conducted my audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States), (PCAOB). Those standards require
that I plan and perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. I believe that my audit
provides a reasonable basis for my opinion.
In my opinion the financial statements referred to above present fairly, in all
material respects, the financial position of Naprodis, Inc. as of August 31,
2009 and 2008 and the results of its operations and its cash flows for the years
ended August 31, 2009 and 2008 in conformity with United States generally
accepted accounting principles.
/s/
John Kinross-Kennedy
Certified Public Accountant
Irvine, California
May 19, 2010
NAPRODIS, INC.
BALANCE SHEET
as at August 31,
ASSETS 2009 2008
---- ----
Current Assets
Cash and cash equivalents 9,434 -
-------- ----------
Accounts Receivable 87,200 109,772
Inventory 112,822 124,978
Prepaid Expenses 6,010 3,870
-------- ----------
215,466 238,620
Property and equipment,
net of accumulated depreciation 21,568 19,909
Other Assets
Deposits 5,164 5,164
-------- ----------
$ 242,198 263,693
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Bank overdraft $ -- $ 5,182
Accounts Payable and accrued
expenses 51,058 24,748
Accrued payroll and payroll taxes 10,932 74,067
Accrued Interest 12,550 11,012
Payables to related party 62,198 46,443
Note payable to related party 32,469 38,469
-------- ----------
169,207 199,921
-------- ----------
Stockholders' Equity
Preferred stock, $0.001 par value,
10,000,000 shares authorized, 0 shares issued
Common Stock, $0.001 par value, authorized
60,000,000; issued and outstanding
4,150,000 as at August 31, 2009 and
4,150,000 as at August 31, 2008 4,150 4,150
Additional paid-in capital 111,100 111,100
Accumulated Deficit (42,259) (51,478)
--------- --------
72,991 63,772
--------- --------
$ 242,198 $ 263,693
========= =========
The accompanying notes are an integral part of these financial statements
1
NAPRODIS, INC.
INCOME STATEMENT
For the years ended
August 31,
2009 2008
------------- -------------
Revenues $ 784,442 $ 647,926
Cost of Sales 138,564 73,726
--------- ----------
Gross Profit 645,878 574,200
--------- --------
Expenses
Occupancy Costs 63,978 66,815
Salaries and wages 314,682 142,592
Freight 71,251 52,448
Legal and professional fees 10,387 31,075
Other general and administrative expenses 174,823 106,907
---------- -----------
Total general and administrative expenses 635,121 399,837
---------- -----------
Net Income before other income and expenses 10,757 174,363
Interest expense 1,538 1,942
----------- -----------
Net Income 9,219 172,421
=========== ===========
Basic and Dilutive earnings per share $ - $ 0.04
=========== ==========
Weighted average number
of shares outstanding 4,150,000 4,150,000
========== ==========
The accompanying notes are an integral part of these financial statements
2
NAPRODIS, INC.
STATEMENT OF CASH FLOWS
For the years ended August 31,
2009 2008
------------- ------------
Cash Flows from Operating Activities
Net Income after taxes 9,219 172,421
Adjustments to reconcile net loss to net cash
used by operations
Depreciation 11,616 4,599
Accounts Receivable 22,572 (72,548)
Accounts Payable and accrued expenses 26,310 (140)
Accrued payroll and payroll taxes (63,135) (41,655)
Accrued Interest 1,538 11,012
Inventory 12,156 (53,598)
Prepaid expenses (2,140) (3,258)
--------- ------------
Net Cash provided by
Operating Activities 1 8,136 16,833
--------- ------------
Cash Flows from Investing Activities
Purchase of Property and Equipment (13,275) (8,827)
-------- ------------
Net Cash (used by) Investing Activities 13,275) (8,827)
-------- ------------
Cash Flows from Financing Activities
Bank overdraft (5,182) 5,182
Proceeds of loan from related party 15,755 5,951
Repayment of note to related party (6,000) (26,219)
-------- ------------
Net Cash (used by) Financing Activities 4,573 (15,086)
-------- -----------
Net increase (decrease) in cash 9,434 (7,080)
Cash and cash equivalents, beginning of period - 7,080
-------- -----------
Cash and cash equivalents, end of period $ 9,434 $ -
======== ===========
Supplemental disclosure of cash flow information
Income taxes paid $ - $ -
======== ===========
Interest paid $ - $ -
======== ===========
The accompanying notes are an integral part of these financial statements
3
NAPRODIS, INC.
STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)
For the period August 31, 2005 to August 31, 2009
Additional Stockholders'
Common Stock Paid-in Accumulated Equity (Deficit)
Shares Amount Capital Deficit Total
-------- ------ -------- ------------- ----------------
Balances, August 31, 2005 4,150,000 $ 4,150 $ 111,100 $ (76,806) $ 38,444
Net loss for the year ended
August 31, 2006 _________ _______ ________ (73,705) (73,705)
Balances, August 31, 2006 4,150,000 $ 4,150 $ 111,100 $ (150,511) $ (35,261)
Net loss for the year ended
August 31, 2007 _________ _______ ________ (73,388) (73,388)
------------ -----------
Balances at August 31, 2007 4,150,000 $ 4,150 $ 111,100 $ (223,899) $ (108,649)
Net income for the year ended
August 31, 2008 _________ _______ ________ 172,421 172,421
------------ -----------
Balances at August 31, 2008 4,150,000 $ 4,150 $ 111,100 $ (51,478) $ 63,772
Net income for the year ended
August 31, 2009 _________ _______ ________ 9,219 9,219
------------ -----------
Balances at August 31, 2009 4,150,000 $ 4,150 $ 111,100 $ (42,259) $ 72,991
========= ======= ========= ============ ============
The accompanying notes are an integral part of these financial statements
4
NAPRODISC, INC.
NOTES TO FINANCIAL STATEMENTS
AUGUST 31, 2009
NOTE 1- NATURE OF BUSINESS AND SUMARY OF SIGNIFICANT ACCOUNTING POLICIES
NATURE OF BUSINESS
Naprodis, Inc. (the "Company") was incorporated in the state of Nevada on June
4, 1999. The Company is a pharmaceutical manufacturer, supplying natural raw
materials and natural health care products to the health supplement and beauty
product industry. The Company also markets its own line of beauty products from
its offices and laboratory in Poway, California.
REVENUE RECOGNITION
Revenue is recognized when there is persuasive evidence of an arrangement,
shipment has occurred, price has been fixed or is determinable, and collectible
can be reasonably assured. Revenue from wholesale customers is recognized at the
time title passes and risk of loss is transferred to the customer, i.e. FOB
"freight on board". Discounts are based on trade terms. E-commerce revenue is
recognized upon receipt of payment and shipment to the customer. The Company
accounts for sales taxes by excluding such taxes from revenue and cost of
revenue.
SHIPPING AND HANDLING COSTS
Shipping and handling charges billed to customers are included in general
revenue. Costs associated with shipping goods to customers that are not billed
are reflected as Selling Costs.
COST OF GOODS SOLD
Cost of Goods Sold includes the expenses incurred to acquire and produce
inventory for sale, including product costs, freight in and import costs, as
well as changes in reserves for inventory shrinkage and obsolescence.
INVENTORIES
Inventory is recorded as lower of cost (first in, first out) or market. When
required, a provision is made to reduce excess and obsolete inventory to
estimated net value. Inventory at August 31, 2009 and 2008 consists of raw
materials, work in process, and finished goods as follows:
2009 2008
Raw materials $ 111,680 $ 122,777
Work in process 202 648
Finished goods 1,000 1,553
------------ ---------
Total inventory $ 112,882 $ 124,978
========= =========
5
DEPOSITS
Deposits represent amounts paid under the Company's office space lease.
USE OF ESTIMATES
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 reported periods. Actual results could materially differ from those
estimates. Significant estimates made by management are, among others,
realizability of long-lived assets and deferred taxes.
The financial statements presented include all adjustments which are, in the
opinion of management, necessary to present fairly the financial position,
results of operations and cash flows for the period presented in accordance with
the accounting principles generally accepted in the United States of America.
All adjustments are of a normal recurring nature
CASH AND CASH EQUIVALENTS
For purposes of the statements of cash flows, cash equivalents include all
highly liquid debt instruments with original maturities of three months or less
which are not securing any corporate obligations.
CONCENTRATION OF CREDIT RISK
Cash and cash equivalents: The Company maintains its cash deposits in one bank
account, which at times may exceed federally insured limits.
Revenues and Accounts Receivable: For the years ended August 31, 2009 and 2008,
the Company had one customer whose sales amounted to approximately 85% of total
revenue. Of total accounts receivable at August 31, 2009, approximately 96% (98%
in 2008) was due from this customer.
Product Purchases and Accounts Payable: The Company purchases approximately 42%
of its products from two companies that are related parties (See Note 5).
ALLOWANCE FOR DOUBTFUL ACCOUNTS
The allowance for doubtful accounts on accounts receivable is changed to
operations in amounts sufficient to maintain the allowance for uncollectible
accounts at a level management believes is adequate to cover any probable
losses. Management determines the adequacy of the allowance based on historical
write-off percentages and the current status of accounts receivable. Accounts
6
receivable are charged off against the allowance when collectability is
determined to be permanently impaired. As of August 31, 2009, there was no
allowance for doubtful accounts recorded, as all of the Company's receivables
were considered collectible.
PROPERTY AND EQUIPMENT
Property and equipment are stated at cost less accumulated depreciation and
amortization. Depreciation and amortization are calculated using the
straight-line method with useful lives used in computing depreciation ranging
from 5 to 7 years. When property and equipment are retired or otherwise disposed
of, the related cost and accumulated depreciation are removed from the
respective accounts, and any gain or loss is included in operations.
Expenditures for maintenance and repairs are charged to operations as incurred;
additions, renewals and betterments are capitalized.
LONG-LIVED ASSETS
The Company accounts for its long-lived assets in accordance with SFAS No. 144,
"Accounting for the Impairment or Disposal of Long-lived Assets." SFAS No. 144
requires that long-lived assets be reviewed for impairment whenever events or
changes in circumstances indicates that the historical cost carrying value of an
asset may no longer be appropriate. The Company assesses recoverability of the
carrying value of an asset by estimating the future net cash flows expected to
result from the asset, including eventual disposition. If the future net cash
flows are less than the carrying values and fair value or disposable value. As
of August 31, 2009, the Company did not deem any of its long-term assets to be
impaired.
BASIC AND DILUTED INCOME (LOSS) PER SHARE
In accordance with SFAS no. 128, "Earnings Per Share," basic income ( loss) per
common share in computed by dividing net income (loss) available to common
stockholders by the weighted average number of common shares outstanding.
Diluted income ( loss) per common share is computed similar to basic income per
common share except that the denominator is increased to include the number of
additional common shares that would have been outstanding if the potential
common shares had been issued and if the additional common shares were dilutive.
As of August 31, 2009, the Company did not have outstanding convertible
instruments.
PROVISION FOR INCOME TAXES
The Company accounts for income taxes under SFAS No 109, "Accounting for Income
Taxes". Under the asset and liability method of SFAS No 109, deferred tax assets
and liabilities are recognized for the future tax consequences attributable to
differences between the financial statements carrying amounts of existing assets
and liabilities and their respective tax bases. Deferred tax assets and
liabilities are measured using enacted tax rates expected to apply to taxable
income in the years in which those temporary differences are expected to be
recovered or settled. Under SFAS No 109, the effect on deferred tax assets and
liabilities of a change in tax
7
rates is recognized in income in the period the enactment occurs. A valuation
allowance is provided for certain deferred tax assets if it is more likely than
not that the Company will not realize tax assets through future operations.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The Financial Accounting Standards Board issued Statement of Financial
Accounting Standards ("SFAS") No. 107, "Disclosures About Fair Value of
Financial Instruments." SFAS No. 107 requires disclosure of fair value
information about financial instruments when it is practicable to estimate that
value. The carrying amounts of the Company's financial instruments as of August
31, 2009 approximate their respective fair values because of the short-term
nature of these instruments. Such instruments consist of cash, accounts payable
and accrued expenses. The fair value of related party payables is not
determinable.
NOTE 2 - PROPERTY AND EQUIPMENT
A summary as of August 31, 2009 and 2008 is as follows:
2009 2008
---- ----
Machinery and Equipment $ 40,936 $ 27,662
Automobile 6,800 6,800
Furniture and Fixtures 454 454
-------- ---------
48,190 34,916
Less accumulated depreciation (26,622) (15,007)
--------- ---------
Property and equipment, net $ 21,568 $ 19,009
======== ========
NOTE 3 - OPERATING LEASES
The Company leases office and warehouse space under a lease expiring January
31, 2010. The future minimum lease payments are as follows:
2010 $ 27,390
========
The Company also leases office equipment under a lease expiring February 27,
2010. The future minimum lease payments are as follows:
2010 $ 2,198
========
8
NOTE 4 - PROVISION FOR INCOME TAXES
The Company utilizes SFAS No. 109, "Accounting for Income Taxes," which requires
the recognition of deferred tax assets and liabilities for the expected future
tax consequences of events that have been included in the financial statements
or tax returns. Under this method, deferred tax assets and liabilities are
determined based on the difference between the tax basis of assets and
liabilities and their financial reporting amounts based on enacted tax laws and
statutory tax rates applicable to the periods in which the differences are
expected to affect taxable income. Deferred income taxes are reported using the
liabilities method.
Deferred tax assets are recognized for deductible temporary differences and for
carryforwards. Deferred tax liabilities are recognized for taxable temporary
differences. Temporary differences are the differences between the reported
amounts of assets and liabilities and their tax bases. Deferred tax assets are
reduced by a valuation allowance when, in the opinion of management, it is more
likely than not that some portion or all of the deferred tax assets will not be
realized.
The Company generated a deferred tax credit through net operating loss
carryforwards. As of August 31, 2009 the company had federal and state net
operating loss carryforwards of approximately $ 108,000 that can be used to
offset future federal income tax. The federal and state net operating losses are
reduced by a valuation allowance, when, in the opinion of management,
utilization is not reasonably assured.
A valuation allowance of 100% has been established, as the realization of the
deferred tax credits is not reasonably certain.
NOTE 5 - LEGAL PROCEEDINGS
There were no legal proceedings against the Company with respect to matters
arising in the ordinary course of business. Neither the Company nor any of its
officers or directors is involved in any other litigation either as plaintiffs
or defendants, and have no knowledge of any threatened or pending litigation
against them or any of the officers or directors.
9
NAPRODIS, INC.
INTERIM FINANCIAL STATMENTS
MAY 31, 2010
10
NAPRODIS, INC.
BALANCE SHEET
August 31,
ASSETS May 31, 2010 2009
------------- ---------------
(Unaudited)
Current Assets
Cash and cash equivalents $14,874 $ 9,434
Accounts Receivable 69,628 87,200
Inventory 145,637 112,822
Prepaid Expenses 6,010 6,010
----------- ----------
236,149 215,466
Property and equipment,
net of accumulated depreciation 12,855 21,568
Other Assets
Deposits 5,164 5,164
----------- ----------
$ 254,168 $ 242,198
=========== ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts Payable and accrued expenses 63,387 51,058
Accrued payroll and payroll taxes 11,469 10,932
Accrued Interest 13,710 12,550
Payables to related party 62,198 62,198
Note payable to related party 32,793 32,469
----------- ----------
183,557 169,207
----------- ----------
Stockholders' Equity
Preferred stock, $0.001 par value,
10,000,000 shares authorized,
0 shares issued
Common Stock, $0.001 par value, 60,000,000
authorized; issued and outstanding
4,150,000 as at May 31, 2010 and
4,150,000 as at August 31, 2009 4,150 4,150
Additional paid-in capital 111,100 111,100
Accumulated Deficit (44,639) (42,259)
----------- ----------
70,611 72,991
------------ ----------
$ 254,168 $ 242,198
=========== =========
The accompanying notes are an integral part of these financial statements
1
NAPRODIS, INC.
INCOME STATEMENT
For the nine months ended
May 31,
(Unaudited)
2010 2009
--------- --------
Revenues $ 636,277 $ 590,965
Cost of Sales 40,704 65,131
--------- --------
Gross Profit 595,573 525,834
--------- --------
Expenses
Occupancy Costs 49,082 50,799
Salaries and wages 316,208 226,530
Freight 54,557 54,410
Legal and professional fees 10,387 4,238
Other general and administrative expenses 167,719 122,073
--------- --------
Total general and administrative expenses 597,953 458,050
--------- --------
Net Income before other income
and expenses (2,380) 67,784
Interest expense
--------- --------
Net Income (2,380) 67,784
========= ========
Basic and Dilutive earnings per share $ - $ 0.02
========= ========
Weighted average number
of shares outstanding 4,150,000 4,150,000
========= ========
The accompanying notes are an integral part of these financial statements
2
NAPRODIS, INC.
STATEMENT OF CASH FLOWS
For the years ended
May 31,
(Unaudited)
2010 2009
---- -----
Cash Flows from Operating Activities
Net Income after taxes (2,380) 9,219
Adjustments to reconcile net loss to net cash
used by operations
Depreciation 8,713 11,616
Accounts Receivable 17,572 22,572
Accounts Payable and accrued expenses 12,329 26,310
Accrued payroll and payroll taxes 537 (63,135)
Accrued Interest 1,160 1,538
Inventory (32,815) 12,156
Prepaid expenses _______ (2,140)
---------
Net Cash provided by Operating Activities 5,116 18,136
------- ---------
Cash Flows from Investing Activities
Purchase of Property and Equipment - (13,275)
------- ---------
Net Cash (used by) Investing Activities - (13,275)
------- ---------
Cash Flows from Financing Activities
Bank overdraft - (5,182)
Proceeds of payable to related party 15,755
Repayment of note payable to related party 324 (6,000)
------- ---------
Net Cash (used by) Financing Activities 324 4,573
------- ---------
Net increase (decrease) in cash 5,440 9,434
Cash and cash equivalents, beginning of period 9,434 -
------- ---------
Cash and cash equivalents, end of period $ 14,874 $ 9,434
========= =========
Supplemental disclosure of cash flow information
Income taxes paid $ - $ -
========= =========
Interest paid $ - $ -
========= =========
The accompanying notes are an integral part of these financial statements
3
NAPRODIS, INC.
STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)
For the period August 31, 2005 to May 31, 2010
(Unaudited)
Additional Stockholders'
Common Stock Paid-in Accumulated Equity(Deficit)
Shares Amount Capital Deficit Total
Balances, August 31,
2005 4,150,000 $ 4,150 $ 111,100 $ (76,806) $ 38,444
Net loss for the year ended
August 31, 2006 (73,705) (73,705)
---------- ------- --------- ---------- -----------
Balances, August 31,
2006 4,150,000 $ 4,150 $ 111,100 $(150,511) $ (35,261)
Net loss for the year ended
August 31, 2007 (73,388) ( 73,388)
---------- ------- --------- ---------- -----------
Balances at August 31,
2007 4,150,000 $ 4,150 $ 111,100 $(223,899) $ (108,649)
Net income for the year
ended August 31, 2008 172,421 172,421
---------- ------- --------- ---------- -----------
Balances at August 31,
2008 4,150,000 $ 4,150 $ 111,100 $ (51,478) $ 63,772
Net income for the year
ended August 31, 2009 9,219 9,219
---------- ------- --------- ----------- ------------
Balances at August 31,
2009 4,150,000 $ 4,150 $ 111,100 $ (42,259) $ 72,991
Net income for the 9 months
ended May 31, 2010 (2,380) (2,380)
---------- ------- --------- ------------ -------------
Balances at May 31,
2010 4,150,000 $ 4,150 $ 111,100 $ (44,639) $ 70,611
========= ======= ========== =========== ============
The accompanying notes are an integral part of these financial statements
4
NAPRODIS, INC.
NOTES TO FINANCIAL STATEMENTS
MAY 31, 2010
NOTE 1- BASIS OF PRESENTATION AND NATURE OF BUSINESS
The interim financial statements as of and for the nine months ended May 31,
2010 reflect all adjustments which, in the opinion of management, are necessary
to present fairly the financial position, results of operations and cash flows
for the period presented in accordance with the accounting principles generally
accepted in the United States of America. All adjustments are of a normal
recurring nature.
These interim financial statements should be read in conjunction with the
Company's financial statements and notes thereto included in the Company's
August 31, 2009 report. The Company assumes that the users of the interim
financial information herein have read, or have access to, the audited financial
statements for the preceding period, and that the adequacy of additional
disclosure needed for a fair presentation may be determined in that context. The
results of operations for the nine month period ended May 31, 2010 are not
necessarily indicative of results for the entire year ending August 31, 2010.
NATURE OF BUSINESS
Naprodis, Inc. (the "Company") was incorporated in the state of Nevada on June
4, 1999. The Company is a pharmaceutical manufacturer, supplying natural raw
materials and natural health care products to the health supplement and beauty
product industry. The Company also markets its own line of beauty products from
its offices and laboratory in Poway, California.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
REVENUE RECOGNITION
Revenue is recognized when there is persuasive evidence of an arrangement,
shipment has occurred, price has been fixed or is determinable, and collectible
can be reasonably assured. Revenue from wholesale customers is recognized at the
time title passes and risk of loss is transferred to the customer, i.e. FOB
"freight on board". Discounts are based on trade terms. E-commerce revenue is
recognized upon receipt of payment and shipment to the customer. The Company
accounts for sales taxes by excluding such taxes from revenue and cost of
revenue.
SHIPPING AND HANDLING COSTS
Shipping and handling charges billed to customers are included in general
revenue. Costs associated with shipping goods to customers that are not billed
are reflected as Selling Costs.
5
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont'd)
COST OF GOODS SOLD
Cost of Goods Sold includes the expenses incurred to acquire and produce
inventory for sale, including product costs, freight in and import costs, as
well as changes in reserves for inventory shrinkage and obsolescence.
INVENTORIES
Inventory is recorded as lower of cost (first in, first out) or market. When
required, a provision is made to reduce excess and obsolete inventory to
estimated net value. Inventory at May 31, 2010 and 2009 consists of raw
materials, work in process, and finished goods as follows:
2010 2009
Raw materials $ 144,451 $122,777
Work in process 186 648
Finished goods 1,000 1,553
----------- ----------
Total inventory $ 145,637 $ 124,978
========= =========
DEPOSITS
Deposits represent amounts paid under the Company's office space lease.
USE OF ESTIMATES
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 reported periods. Actual results could materially differ from those
estimates. Significant estimates made by management are, among others,
realizability of long-lived assets and deferred taxes.
The financial statements presented include all adjustments which are, in the
opinion of management, necessary to present fairly the financial position,
results of operations and cash flows for the period presented in accordance with
the accounting principles generally accepted in the United States of America.
All adjustments are of a normal recurring nature
6
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont'd)
CASH AND CASH EQUIVALENTS
For purposes of the statements of cash flows, cash equivalents include all
highly liquid debt instruments with original maturities of three months or less
which are not securing any corporate obligations.
CONCENTRATION OF CREDIT RISK
Cash and cash equivalents: The Company maintains its cash deposits in one bank
account, which at times may exceed federally insured limits.
Revenues and Accounts Receivable: For the nine months ended May 31, 2010 and
2009, the Company had one customer whose sales amounted to approximately 85% of
total revenue. Of total accounts receivable at May 31, 2010, approximately 96%
(98% in 2008) was due from this customer.
Product Purchases and Accounts Payable: The Company purchases approximately 42%
of its products from two companies that are related parties (See Note 5).
ALLOWANCE FOR DOUBTFUL ACCOUNTS
The allowance for doubtful accounts on accounts receivable is changed to
operations in amounts sufficient to maintain the allowance for uncollectible
accounts at a level management believes is adequate to cover any probable
losses. Management determines the adequacy of the allowance based on historical
write-off percentages and the current status of accounts receivable. Accounts
receivable are charged off against the allowance when collectability is
determined to be permanently impaired. As of August 31, 2009, there was no
allowance for doubtful accounts recorded, as all of the Company's receivables
were considered collectible.
PROPERTY AND EQUIPMENT
Property and equipment are stated at cost less accumulated depreciation and
amortization. Depreciation and amortization are calculated using the
straight-line method with useful lives used in computing depreciation ranging
from 5 to 7 years. When property and equipment are retired or otherwise disposed
of, the related cost and accumulated depreciation are removed from the
respective accounts, and any gain or loss is included in operations.
Expenditures for maintenance and repairs are charged to operations as incurred;
additions, renewals and betterments are capitalized.
7
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont'd)
LONG-LIVED ASSETS
The Company accounts for its long-lived assets in accordance with SFAS No. 144,
"Accounting for the Impairment or Disposal of Long-lived Assets." SFAS No. 144
requires that long-lived assets be reviewed for impairment whenever events or
changes in circumstances indicates that the historical cost carrying value of an
asset may no longer be appropriate. The Company assesses recoverability of the
carrying value of an asset by estimating the future net cash flows expected to
result from the asset, including eventual disposition. If the future net cash
flows are less than the carrying values and fair value or disposable value. As
of May 31, 2010, the Company did not deem any of its long-term assets to be
impaired.
BASIC AND DILUTED INCOME (LOSS) PER SHARE
In accordance with SFAS no. 128, "Earnings Per Share," basic income ( loss) per
common share in computed by dividing net income (loss) available to common
stockholders by the weighted average number of common shares outstanding.
Diluted income ( loss) per common share is computed similar to basic income per
common share except that the denominator is increased to include the number of
additional common shares that would have been outstanding if the potential
common shares had been issued and if the additional common shares were dilutive.
As of May 31, 2010, the Company did not have outstanding convertible
instruments.
PROVISION FOR INCOME TAXES
The Company accounts for income taxes under SFAS No 109, "Accounting for Income
Taxes". Under the asset and liability method of SFAS No 109, deferred tax assets
and liabilities are recognized for the future tax consequences attributable to
differences between the financial statements carrying amounts of existing assets
and liabilities and their respective tax bases. Deferred tax assets and
liabilities are measured using enacted tax rates expected to apply to taxable
income in the years in which those temporary differences are expected to be
recovered or settled. Under SFAS No 109, the effect on deferred tax assets and
liabilities of a change in tax rates is recognized in income in the period the
enactment occurs. A valuation allowance is provided for certain deferred tax
assets if it is more likely than not that the Company will not realize tax
assets through future operations.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The Financial Accounting Standards Board issued Statement of Financial
Accounting Standards ("SFAS") No. 107, "Disclosures About Fair Value of
Financial Instruments." SFAS No. 107 requires disclosure of fair value
information about financial instruments when it is practicable to
estimate that value. The carrying amounts of the Company's financial
instruments as of May 31, 2010 approximate their respective fair values
because of the short-term nature of these
8
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont'd)
instruments. Such instruments consist of cash, accounts payable and accrued
expenses. The fair value of related party payables is not determinable.
NOTE 3 - RECENT ACCOUNTING PRONOUNCEMENTS
In May, 2009, the FASB issued SFAS No. 165, Subsequent Events, which established
general accounting standards and disclosure for subsequent events. In accordance
with SFAS No. 165, the Company has evaluated subsequent events through the date
the financial statements were filed.
In June, 2009, the FASB issued SFAS No. 168 - The FASB Accounting Standards
Codification and the Hierarchy of Generally Accepted Accounting Principles - a
replacement of FASB Statement No. 162. SFAS 168 establishes the FASB Accounting
Standards Codification as the single source of authoritative US generally
accepted accounting principles recognized by the FASB to be applied to
nongovernmental entities. SFAS 168 is effective for financial statements issued
for interim and annual periods ending after September 15, 2009. The adoption of
SFAS 168 will not have an impact on the Company's financial position, results of
operations or cash flows.
NOTE 4 - PROPERTY AND EQUIPMENT
A summary as of May 31, 2010 and 2009 is as follows:
2009 2008
Machinery and Equipment $ 40,936 $40,936
Automobile 6,800 6,800
Furniture and Fixtures 454 454
-------- ---------
48,190 48,190
Less accumulated depreciation (35,335) ( 26,622)
--------- ---------
Property and equipment, net $ 12,855 $ 21,568
======== ========
NOTE 5 - PROVISION FOR INCOME TAXES
The Company utilizes SFAS No. 109, "Accounting for Income Taxes," which requires
the recognition of deferred tax assets and liabilities for the expected future
tax consequences of events that have been included in the financial statements
or tax returns. Under this method, deferred tax assets and liabilities are
determined based on the difference between the tax basis of
9
NOTE 5 - PROVISION FOR INCOME TAXES (cont'd)
assets and liabilities and their financial reporting amounts based on enacted
tax laws and statutory tax rates applicable to the periods in which the
differences are expected to affect taxable income. Deferred income taxes are
reported using the liabilities method.
Deferred tax assets are recognized for deductible temporary differences and for
carryforwards. Deferred tax liabilities are recognized for taxable temporary
differences. Temporary differences are the differences between the reported
amounts of assets and liabilities and their tax bases. Deferred tax assets are
reduced by a valuation allowance when, in the opinion of management, it is more
likely than not that some portion or all of the deferred tax assets will not be
realized.
The Company generated a deferred tax credit through net operating loss
carryforwards. As of May 31, 2010 the company had federal and state net
operating loss carryforwards of approximately $ 108,000 that can be used to
offset future federal income tax. The federal and state net operating losses are
reduced by a valuation allowance, when, in the opinion of management,
utilization is not reasonably assured.
A valuation allowance of 100% has been established, as the realization of the
deferred tax credits is not reasonably certain.
NOTE 6 - CAPITAL STUCTURE
There was no stock issued in the nine months ended May 31, 2010. As of May 31,
2010 the Company was authorized to issue 10,000,000 shares of preferred stock,
of which none was issued and outstanding, and was authorized to issue 60,000,000
shares of common stock, of which 4,150,000 was issued and outstanding.
NOTE 7 - LEGAL PROCEEDINGS
There were no legal proceedings against the Company with respect to matters
arising in the ordinary course of business. Neither the Company nor any of its
officers or directors is involved in any other litigation either as plaintiffs
or defendants, and have no knowledge of any threatened or pending litigation
against them or any of the officers or directors.
10
TABLE OF CONTENTS
Page
PROSPECTUS SUMMARY ..................................................
FORWARD LOOKING STATEMENTS ..........................................
RISK FACTORS ........................................................
DILUTION AND COMPARATIVE SHARE DATA..................................
USE OF PROCEEDS .....................................................
MARKET FOR COMMON STOCK .............................................
MANAGEMENT'S DISCUSSION AND ANALYSIS
AND PLAN OF OPERATION ..........................................
BUSINESS.............................................................
MANAGEMENT ..........................................................
PRINCIPAL SHAREHOLDERS...............................................
OFFERING BY NAPRODIS ................................................
SELLING SHAREHOLDERS.................................................
DESCRIPTION OF SECURITIES............................................
LEGAL PROCEEDINGS....................................................
EXPERTS .............................................................
INDEMNIFICATION .....................................................
AVAILABLE INFORMATION................................................
FINANCIAL STATEMENTS.................................................
No dealer, salesperson or other person has been authorized to give any
information or to make any representation not contained in this prospectus, and
if given or made, such information or representations must not be relied upon as
having been authorized by Naprodis. This prospectus does not constitute an offer
to sell, or a solicitation of an offer to buy, any of the securities offered in
any jurisdiction to any person to whom it is unlawful to make an offer by means
of this prospectus.
Until _______, 2010 all dealers effecting transactions in the registered
securities, whether or not participating in this distribution, may be required
to deliver a prospectus. This is in addition to the obligation of dealers to
deliver a prospectus when acting as underwriters and with respect to their
unsold allotments or subscriptions.
PART II
Information Not Required in Prospectus
Item 13. Other Expenses of Issuance and Distribution.
The following table sets forth the costs and expenses payable by the
Company in connection with the issuance and distribution of the securities being
registered. No expenses will be charged to the selling stockholders.
SEC Filing Fee $ 41
Blue Sky Fees and Expenses 1,000
Printing and Engraving Expenses 500
Legal Fees and Expenses 25,000
Accounting Fees and Expenses 36,000
--------
TOTAL $62,541
=======
All expenses other than the SEC filing fee are estimated.
Item 14. Indemnification of Officers and Directors
Section 78.751 of the Nevada Revised Statutes and Article VIII of the
Company's bylaws provide that the Company may indemnify any and all of its
officers, directors, employees or agents or former officers, directors,
employees or agents, against expenses actually and necessarily incurred by them,
in connection with the defense of any legal proceeding or threatened legal
proceeding, except as to matters in which such persons shall be determined to
not have acted in good faith and in the Company's best interest.
Item 15. Recent Sales of Unregistered Securities.
With the exception of the forgoing, the Company had not sold any
unregistered securities since December 2003.
Item 16. Exhibits
The following Exhibits are filed with this Registration Statement:
Exhibit
Number Exhibit Name
3.1 Articles of Incorporation, as amended *
3.2 Bylaws *
1
23.1 Consent of Attorneys *
23.1 Consent of Accountants
* Filed with original registration statement
Item 17. Undertakings
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by Section l0 (a)(3) of the
Securities Act:
(ii) To reflect in the prospectus any facts or events which,
individually or together, represent a fundamental change in the information in
the registration statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any deviation
from the low or high end of the estimated maximum offering range may be
reflected in the form of prospectus filed with the Commission pursuant to Rule
424(b) if, in the aggregate, the changes in volume and price represent no more
than a 20% change in the maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective registration statement;
and
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities that remain unsold at the termination of the offering.
Insofar as indemnification for liabilities arising under the Securities Act
of l933 (the "Act") may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
2
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question of whether such indemnification by it is against
public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
(5) That, for the purpose of determining liability under the Securities
Act of 1933 to any purchaser:
(i) If the registrant is relying on Rule 430B:
(A) Each prospectus filed by the registrant pursuant to Rule
424(b)(3) shall be deemed to be part of the registration statement as of the
date the filed prospectus was deemed part of and included in the registration
statement; and
(B) Each prospectus required to be filed pursuant to Rule 424(b)(2),
(b)(5), or (b)(7) as part of a registration statement in reliance on Rule 430B
relating to an offering made pursuant to Rule 415(a)(1)(i), (vii), or (x) for
the purpose of providing the information required by section 10(a) of the
Securities Act of 1933 shall be deemed to be part of and included in the
registration statement as of the earlier of the date such form of prospectus is
first used after effectiveness or the date of the first contract of sale of
securities in the offering described in the prospectus. As provided in Rule
430B, for liability purposes of the issuer and any person that is at that date
an underwriter, such date shall be deemed to be a new effective date of the
registration statement relating to the securities in the registration statement
to which that prospectus relates, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof. Provided,
however, that no statement made in a registration statement or prospectus that
is part of the registration statement or made in a document incorporated or
deemed incorporated by reference into the registration statement or prospectus
that is part of the registration statement will, as to a purchaser with a time
of contract of sale prior to such effective date, supersede or modify any
statement that was made in the registration statement or prospectus that was
part of the registration statement or made in any such document immediately
prior to such effective date; or
(ii) If the registrant is subject to Rule 430C, each prospectus filed
pursuant to Rule 424(b) as part of a registration statement relating to an
offering, other than registration statements relying on Rule 430B or other than
prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and
included in the registration statement as of the date it is first used after
effectiveness. Provided, however, that no statement made in a registration
statement or prospectus that is part of the registration statement or made in a
document incorporated or deemed incorporated by reference into the registration
statement or prospectus that is part of the registration statement will, as to a
purchaser with a time of contract of sale prior to such first use, supersede or
modify any statement that was made in the registration statement or prospectus
that was part of the registration statement or made in any such document
immediately prior to such date of first use.
(6) That, for the purpose of determining liability of the registrant under
the Securities Act of 1933 to any purchaser in the initial distribution of the
securities:
3
The undersigned registrant undertakes that in a primary offering of
securities of the undersigned registrant pursuant to this registration
statement, regardless of the underwriting method used to sell the securities to
the purchaser, if the securities are offered or sold to such purchaser bye means
of any of the following communications, the undersigned registrant will be a
seller to the purchaser and will be considered to offer or sell such securities
to such purchaser:
(i) Any preliminary prospectus or prospectus of the undersigned registrant
relating to the offering required to be filed pursuant to Rule 424;
(ii) Any free writing prospectus relating to the offering prepared by or
on behalf of the undersigned registrant or used or referred to by the
undersigned registrant;
(iii) The portion of any other free writing prospectus relating to the
offering containing material information about the undersigned registrant or its
securities provided by or on behalf of the undersigned registrant; and
(iv) Any other communication that is an offer in the offering made by the
undersigned registrant to the purchaser.
4
SIGNATURES
In accordance with the requirements of the Securities Act of l933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-1 and authorized this registration
statement to be signed on its behalf by the undersigned, in the City of Poway,
State of California on the __ of July, 2010.
NAPRODIS, INC.
Date: July 30, 2010 By: /s/ Paul Petit
-------------------------------
Paul Petit, Chief Executive Officer,
Principal Financial Officer and Principal
Accounting Officer
In accordance with the requirements of the Securities Act of l933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated:
Signature Title Date
/s/ Paul Petit Director July 30, 2010
------------------------
Paul Petit
/s/ Alain S. Petit Director July 30, 2010
--------------------------
Alain S. Petit
NAPRODIS, INC.
FORM S-1
EXHIBIT
